Exhibit 99.01
OFFICE LEASE
KILROY REALTY
6340 SEQUENCE DRIVE
KILROY REALTY, L.P.
a Delaware limited partnership,
as Landlord,
and
DEXCOM, INC.,
a Delaware corporation,
as Tenant.
TABLE OF CONTENTS
|
Page
|
ARTICLE 1 PREMISES, BUILDING, PROJECT, AND COMMON
AREAS
|
5
|
|
|
ARTICLE 2 LEASE TERM; OPTION TERM(S)
|
6
|
|
|
ARTICLE 3 BASE RENT
|
10
|
|
|
ARTICLE 4 ADDITIONAL RENT
|
11
|
|
|
ARTICLE 5 USE OF PREMISES
|
19
|
|
|
ARTICLE 6 SERVICES AND UTILITIES
|
20
|
|
|
ARTICLE 7 REPAIRS
|
22
|
|
|
ARTICLE 8 ADDITIONS AND ALTERATIONS
|
23
|
|
|
ARTICLE 9 COVENANT AGAINST LIENS
|
26
|
|
|
ARTICLE 10 INSURANCE
|
26
|
|
|
ARTICLE 11 DAMAGE AND DESTRUCTION
|
31
|
|
|
ARTICLE 12 NONWAIVER
|
34
|
|
|
ARTICLE 13 CONDEMNATION
|
34
|
|
|
ARTICLE 14 ASSIGNMENT AND SUBLETTING
|
35
|
|
|
ARTICLE 15 SURRENDER OF PREMISES; OWNERSHIP AND
REMOVAL OF TRADE FIXTURES
|
39
|
|
|
ARTICLE 16 HOLDING OVER
|
40
|
|
|
ARTICLE 17 ESTOPPEL CERTIFICATES
|
41
|
|
|
ARTICLE 18 SUBORDINATION
|
41
|
|
|
ARTICLE 19 DEFAULTS; REMEDIES
|
42
|
|
|
ARTICLE 20 COVENANT OF QUIET ENJOYMENT
|
45
|
|
|
ARTICLE 21 SECURITY DEPOSIT
|
45
|
|
|
ARTICLE 22 LETTER OF CREDIT
|
46
|
|
|
ARTICLE 23 SIGNS
|
47
|
i
ARTICLE 24 COMPLIANCE WITH LAW
|
49
|
|
|
ARTICLE 25 LATE CHARGES
|
50
|
|
|
ARTICLE 26 LANDLORDS RIGHT TO CURE DEFAULT; PAYMENTS
BY TENANT
|
51
|
|
|
ARTICLE 27 ENTRY BY LANDLORD
|
51
|
|
|
ARTICLE 28 TENANT PARKING
|
52
|
|
|
ARTICLE 29 MISCELLANEOUS PROVISIONS
|
53
|
ii
INDEX
|
Page(s)
|
|
|
Abatement Event
|
22
|
Accountant
|
18
|
Additional Notice
|
22
|
Additional Rent
|
11
|
Agreement
|
1
|
Alterations
|
23
|
Applicable Laws
|
49
|
Award
|
9
|
Bank Prime Loan
|
50
|
Base Building
|
24
|
Base Rent
|
10
|
Brokers
|
57
|
BS Exception
|
23
|
Building
|
1
|
Building Monument Sign
|
48
|
Building Structure
|
22
|
Building Systems
|
20
|
CC&Rs
|
19
|
Common
Areas
|
6
|
Comparable Area
|
8
|
Comparable Buildings
|
8
|
Comparable Deals
|
7
|
Comparable Term
|
8
|
Control,
|
39
|
Cosmetic Alterations
|
24
|
Current CC&Rs
|
19
|
Damage Determination Notice
|
32
|
Damage Termination Date
|
33
|
Damage Termination Notice
|
33
|
Declaration
|
1
|
Direct Expense Cap Period
|
16
|
Direct Expenses
|
11
|
Eligibility Period
|
22
|
Environmental
Laws
|
60
|
Estimate
|
17
|
Estimate Statement
|
17
|
Estimated Direct Expenses
|
17
|
Event of Default
|
42
|
Excess
|
16
|
Exercise Notice
|
8
|
Expense Year
|
11
|
Force Majeure
|
55
|
Haz Mat Documents
|
61
|
Hazardous Material(s)
|
59
|
iii
|
Page(s)
|
|
|
Hazardous Materials List
|
61
|
HVAC
|
20
|
Identification Requirements
|
59
|
Initial Notice
|
22
|
Initial Premises
|
5
|
Initial Premises Rent Abatement
|
10
|
Interest Rate
|
50
|
IP Rent Abatement Period
|
10
|
Landlord
|
1
|
Landlord Parties
|
26
|
Landlord Repair Notice
|
31
|
Landlord Response Date
|
8
|
Landlord Response Notice
|
8
|
Landlords Option Rent Calculation
|
8
|
L-C
|
46
|
L-C Amount
|
46
|
Lease
|
1
|
Lease Commencement Date
|
6
|
Lease Expiration Date
|
6
|
Lease Term
|
6
|
Lease Year
|
6
|
Letter of Credit Amount
|
3
|
Lines
|
59
|
Mail
|
56
|
Market Rent
|
7
|
MTS Rent Abatement Period
|
10
|
Must-Take Space
|
5
|
Must-Take Space Rent Abatement
|
10
|
Neutral Arbitrator
|
9
|
Nondisturbance Agreement
|
41
|
Notices
|
55
|
Objectionable Name
|
48
|
Operating Expenses
|
12
|
Option Rent
|
7
|
Option Term
|
7
|
Option Term TI Allowance
|
8
|
Original Improvements
|
29
|
Outside Agreement Date
|
9
|
Permitted Transferee.
|
39
|
Pollution Legal Liability
Environmental Insurance
|
28
|
Premises
|
5
|
Project
|
5
|
Property
|
1
|
Proposition 13
|
15
|
Renovations
|
58
|
iv
|
Page(s)
|
|
|
Rent Abatement
|
10
|
Rent Concessions
|
7
|
Rent
|
11
|
Review Period
|
18
|
Security Deposit
|
45
|
Security Deposit Laws
|
47
|
Service Contract
|
21
|
Sign Specifications
|
48
|
Statement
|
16
|
Subject Space
|
35
|
Summary
|
1
|
Tax Expenses
|
15
|
TCCs
|
5
|
Tenant
|
1
|
Tenant Haz Mat
|
60
|
Tenants Option Rent Calculation
|
8
|
Tenants Share
|
16
|
Tenants Signage
|
47
|
Transfer
|
38
|
Transfer Notice
|
35
|
Transfer Premium
|
37
|
Transferee
|
35
|
Transfers
|
35
|
Work Letter Agreements
|
5
|
v
6340 SEQUENCE DRIVE
OFFICE LEASE
This Office Lease
(the
Lease
), dated as of the date set forth
in
Section 1
of the Summary of Basic Lease Information (the
Summary
), below, is made by and between
KILROY REALTY, L.P.
, a Delaware limited
partnership (
Landlord
), and
DEXCOM, INC.
, a Delaware corporation (
Tenant
).
SUMMARY OF BASIC LEASE
INFORMATION
|
TERMS OF LEASE
|
|
DESCRIPTION
|
|
|
|
|
1.
|
Date:
|
|
March 31,
2006.
|
|
|
|
|
2.
|
Premises:
|
|
|
|
2.1
|
Building:
|
|
That
certain two (2)-story building (the
Building
)
located at 6340 Sequence Drive, San Diego, California 92121, which Building
contains 66,400 rentable square feet of space.
|
|
|
|
|
|
|
2.2
|
Premises:
|
|
All
of the Building, consisting of (i) all of the first (1
st
)
level the Building containing 38,381 rentable square feet of space (the
Initial Premises
), and (ii) all of
the second (2
nd
) level of the Building containing 28,019 rentable
square feet of space (the
Must-Take Space
),
all as more particularly identified in
Exhibit A
to this Lease.
|
|
|
|
|
|
|
2.3
|
Project:
|
|
The
Building is the primary component of a single-building office project known
as
6340 Sequence Drive
, as
further set forth in
Section 1.1.2
of this Lease.
|
|
|
|
|
|
3.
|
Lease Term
(
Article 2
):
|
|
|
|
3.1
|
Length
of Term:
|
|
Eight
(8) years and no (0) months.
|
|
3.2
|
Lease
Commencement Date:
|
|
May 1,
2006.
|
|
3.3
|
Lease
Expiration Date:
|
|
April 30,
2014.
|
|
3.4
|
Option
Term(s):
|
|
One (1) five
(5)-year option(s) to renew, as more particularly set forth in
Section 2.2
of this Lease.
|
4.
|
Base Rent (
Article 3
):
|
Period during
Lease Term
|
|
Annualized
Base Rent*
|
|
Monthly
Installment
of Base Rent*
|
|
Monthly
Rental Rate
per Rentable
Square Foot*
|
|
May 1, 2006 to August 31, 2006**
|
|
$
|
0.00
|
|
$
|
0.00
|
|
$
|
0.000
|
|
September 1, 2006 to August 31, 2007**
|
|
$
|
621,772.20
|
|
$
|
51,814.35
|
|
$
|
1.350
|
|
September 1, 2007 to October 31, 2007**
|
|
$
|
646,644.00
|
|
$
|
53,887.00
|
|
$
|
1.404
|
|
November 1, 2007 to August 31, 2008
|
|
$
|
1,118,706.00
|
|
$
|
93,225.50
|
|
$
|
1.404
|
|
September 1, 2008 to August 31, 2009
|
|
$
|
1,163,454.00
|
|
$
|
96,954.50
|
|
$
|
1.460
|
|
September 1, 2009 to August 31, 2010
|
|
$
|
1,209,993.00
|
|
$
|
100,832.75
|
|
$
|
1.519
|
|
September 1, 2010 to August 31, 2011
|
|
$
|
1,258,392.00
|
|
$
|
104,866.00
|
|
$
|
1.579
|
|
September 1, 2011 to August 31, 2012
|
|
$
|
1,308,729.00
|
|
$
|
109,060.75
|
|
$
|
1.642
|
|
September 1, 2012 to August 31, 2013
|
|
$
|
1,361,079.00
|
|
$
|
113,423.25
|
|
$
|
1.708
|
|
September 1, 2013 to April 30, 2014
|
|
$
|
1,415,520.00
|
|
$
|
117,960.00
|
|
$
|
1.777
|
|
*
The
initial Monthly Installment of Base Rent (and Annualized Base Rent) was
calculated by multiplying the applicable Monthly Rental Rate per Rentable
Square Foot by the then-applicable number of rentable square feet of space in
the Premises. In all subsequent Lease Years, the calculation of the Monthly
Installment of Base Rent (and corresponding Annualized Base Rent) reflects an
annual increase of 4.0%; provided, however, (i) in each instance the
resulting Monthly Installment of Base Rent was rounded up or down, as
applicable, to the nearest twenty-five cents ($0.25), (ii) the
corresponding Annualized Base Rent is, therefore, an amount equal to exactly
twelve (12) times such rounded Monthly Installment of Base Rent amount, and (iii) the
Monthly Rental Rate per Rentable Square Foot is, in each instance where such
rounding occurred, only an approximation for reference purposes only.
**
The
foregoing schedule is reflective of (i) the Initial Premises Rent
Abatement applicable during the first four (4) month period of the
initial Lease Term, pursuant to the terms and conditions of
Section 3.2.1
of the Lease, and (ii) the Must-Take Space Rent Abatement applicable
during the period commencing on the Lease Commencement Date and ending on the
earlier to occur of (A) the date Tenant commences business operations from
the Must Take Space, and (B) November 1, 2007 (i.e., the first day of
the nineteenth (19
th
) calendar month of the initial Lease Term),
pursuant to the terms and conditions of
Section 3.2.2
of the Lease.
2
5.
|
Tenants
Share
(
Article 4
):
|
|
One
hundred percent (100%).
|
|
|
|
|
6.
|
Permitted
Use
(
Article 5
):
|
|
Tenant
shall use the Premises solely for (i) general office use, (ii) research
and development/product testing laboratory use, (iii) medical device
manufacturing, (iv) storage, and (v) uses incidental thereto (the
Permitted Use
); provided, however, that
notwithstanding anything to the contrary set forth hereinabove, and as more
particularly set forth in the Lease, Tenant shall be responsible for
operating and maintaining the Premises pursuant to, and in no event may Tenants
Permitted Use violate, (A) Landlords Rules and Regulations, as
that term is set forth in
Section 5.2
of this Lease, (B) all
Applicable Laws, as that term is set forth in
Article 24
of
this Lease, (C) all applicable zoning (
i.e.
,
the existing IP-1-1 zone in which the Building is located), building codes
and the CC&Rs, as that term is set forth in
Section 5.3
of
this Lease, and (D) the character of the Project as a first-class office
Project.
|
|
|
|
|
7.
|
Security
Deposit
(
Article 21
):
|
|
$89,640.00.
|
|
|
|
|
8.
|
Letter
of Credit
(
Article 22
):
|
|
Subject
to the terms and conditions of
Article 22
of the Lease, Tenant
shall provide Landlord with a Letter of Credit in an amount (the
Letter of Credit Amount
) equal to Six
Hundred Sixty-Four Thousand and No/100 Dollars ($664,000.00) (
i.e.
, an amount equal to the Improvement
Allowances).
|
|
|
|
|
9.
|
Parking
Spaces
(
Article 28
):
|
|
A
total of two hundred forty-three (243) parking spaces.
|
3
10.
|
Address
of Tenant
(
Section 29.18
):
|
|
DexCom, Inc.
5555 Oberlin Drive
San Diego, CA 92121
|
|
|
|
Attention:
|
Mr. Steve
Kemper
|
|
|
|
|
Chief
Financial Officer
|
|
|
|
(
Prior to Lease Commencement Date
)
and
DexCom, Inc.
6340 Sequence Drive
San Diego, CA 92121
|
|
|
|
Attention:
|
Mr. Steve
Kemper
|
|
|
|
|
Chief
Financial Officer
|
|
|
|
(
After Lease Commencement Date
)
|
|
|
|
|
11.
|
Address
of Landlord
(
Section 29.18
):
|
|
See
Section 29.18
of the Lease.
|
|
|
|
|
12.
|
Broker(s)
(
Section 29.24
):
Representing Tenant:
Irving Hughes
655 West Broadway, Suite 1650
San Diego, CA 92101
|
|
Representing Landlord:
Cushman & Wakefield | CREA
9191 Towne Centre Drive, Suite 600
San Diego, CA 92122
|
|
Attention:
Mr. Shaun Burnett
|
|
Attention:
|
Mr. Eric
A. Nortbrook
|
|
|
|
|
Mr. Michael
J. Macie
|
|
|
|
|
|
13.
|
Improvement
Allowances
(
Section 2
of
Exhibits B
and
B-1
):
Initial Premises Allowance
:
Must-Take Space Allowance
:
|
|
$383,810.00 (which amount was calculated based upon $10.00 per Rentable Square
Foot for each of the 38,381 Rentable Square Feet of space in the Initial
Premises).
$280,190.00 (which amount was calculated based upon $10.00 per Rentable
Square Foot for each of the 28,019 Rentable Square Feet of space in the
Must-Take Space).
|
|
|
|
|
|
|
4
ARTICLE 1
PREMISES, BUILDING, PROJECT, AND COMMON AREAS
1.1
Premises, Building, Project and Common Areas
.
1.1.1
The Premises
. Landlord
hereby leases to Tenant and Tenant hereby leases from Landlord the initial
premises set forth in
Section 2.2
of the Summary (the
Initial Premises
) and the expansion
premises set forth in
Section 2.2
of the Summary (the
Must-Take Space
) (such Initial Premises
and Must-Take Space are, collectively, the
Premises
).
The outline of the Premises is set forth in
Exhibit A
attached hereto and contains
approximately
the number of rentable square
feet as set forth in
Section 2.2
of the Summary. Subject to the
conditions of
Section 29.25
of this Lease, the parties hereto agree
that the lease of the Premises is upon and subject to the terms, covenants and
conditions (the
TCCs
)
herein set forth, and Tenant covenants as
a material part of the consideration for this Lease to keep and perform each
and all of such TCCs by it to be kept and performed and that this Lease is made
upon the condition of such performance. The parties hereto hereby acknowledge
that the purpose of
Exhibit A
is to show the approximate location
of the Premises and the
Building
,
as that term is defined in
Section 1.1.2
, below, only, and such Exhibit is
not meant to constitute an agreement, representation or warranty as to the
construction of the Premises, the precise area thereof or the specific location
of the
Common Areas
, as that
term is defined in
Section 1.1.3
, below, or the elements thereof or
of the accessways to the Premises or the
Project
,
as that term is defined in
Section 1.1.2
, below. Except as
specifically set forth in this Lease and in the Work Letter Agreements attached
hereto as
Exhibits B
and
B-1
(the
Work Letter
Agreements
), Landlord shall not be obligated to provide or pay for
any improvement work or services related to the improvement of the Premises. Tenant
also acknowledges that neither Landlord nor any agent of Landlord has made any
representation or warranty regarding the condition of the Premises, the
Building or the Project or with respect to the suitability of any of the
foregoing for the conduct of Tenants business, except as specifically set
forth in this Lease and the Work Letter Agreements. The taking of possession of
the Premises by Tenant shall conclusively establish that the Premises and the
Building were at such time in good and sanitary order, condition and repair,
subject only to (i) punchlist items provided to Landlord in writing within
thirty (30) days following Landlords delivery of the Premises to Tenant, (ii) the
good working order requirements of
Section 1.2
of the Work Letter
Agreement attached to this Lease as
Exhibit B
,
and (iii) Landlords ongoing obligations set forth in
Article 7
of this Lease.
1.1.2
The Building and The Project
. The
Premises (
i.e.
, the Initial
Premises and Must-Take Space) constitutes the entire building set forth in
Section 2.1
of the Summary (the
Building
). The
Building is the principle component of a single-building office project known
as
6340 Sequence Drive
. The term
Project
,
as used in this Lease, shall mean (i) the Building and the Common Areas,
and (ii) the land (which is improved with landscaping, parking facilities
and other improvements) upon which the Building and the Common Areas are
located.
1.1.3
Common Areas
. Landlord
and Tenant acknowledge that as the Premises constitutes all (or substantially
all) of the Building, there are no common areas in the Building to which third
parties have general rights of access or use; provided, however, given Landlords
ownership of the Building, Project and ongoing obligations and rights set forth
in this Lease,
5
Landlord
may nevertheless reasonably designate certain areas within the Building
and Project as
Common Areas
,
including certain areas designated for the exclusive use of Landlord, or to be
shared by Landlord and Tenant and, where applicable, third party owners and
tenants of properties adjacent to the Project; provided further, however, in no
event shall any portion of the Building be deemed Common Area for purposes of
such third parties. Subject to the Rules and Regulations, Tenant shall
have the non-exclusive right to use in common with Landlord and other
reasonably designated parties, such Common Areas. The manner in which the
Common Areas are maintained and operated shall be at the reasonable discretion
of Landlord and the use thereof shall be subject to such reasonable and non-discriminatory
rules, regulations and restrictions as Landlord may make from time to time
,
provided that such rules, regulations and restrictions do not unreasonably
interfere with the rights granted to Tenant under this Lease and the permitted
use granted under
Section 5.1
, below
. Landlord reserves the right to
close temporarily, make alterations or additions to, or change the location of
elements of the Project and the Common Areas
; provided
that no such changes shall be permitted which materially reduce Tenants rights
or access hereunder. Except when and where Tenants right of access is
specifically excluded in this Lease, Tenant shall have the right of access to
the Premises, the Building, and the Project parking facility twenty-four (24)
hours per day, seven (7) days per week during the Lease Term, as that
term is defined in
Section 2.1
, below
.
1.2
Stipulation of Rentable Square Feet of Premises and Building
. For
purposes of this Lease, rentable square feet and usable square feet of the
Premises (
i.e.
, the Initial
Premises and the Must-Take Space) shall be deemed as set forth in
Section 2.2
of the Summary and the rentable square feet of the Building shall be deemed as
set forth in
Section 2.1
of the Summary.
ARTICLE 2
LEASE TERM; OPTION TERM(S)
2.1
Initial Lease Term
. The TCCs and
provisions of this Lease shall be effective as of the date of this Lease. The
term of this Lease (the
Lease Term
)
shall be as set forth in
Section 3.1
of the Summary, shall commence
on the date set forth in
Section 3.2
of the Summary (the
Lease Commencement Date
), and shall terminate on the date
set forth in
Section 3.3
of the Summary (the
Lease
Expiration Date
) unless this Lease is sooner terminated as
hereinafter provided. For purposes of this Lease, the term
Lease Year
shall in general mean each consecutive twelve
(12) month period during the Lease Term; provided, however, (i) that the
first Lease Year shall commence on the Lease Commencement Date and end on August 31,
2007, (ii) the second and each succeeding Lease Year shall run from September 1
st
though August 31
st
of the following calendar year, and (iii) the
last Lease Year shall end on the Lease Expiration Date. At any time during the
Lease Term, Landlord may deliver to Tenant a notice in the form as
set forth in
Exhibit C
, attached
hereto, as a confirmation only of the information set forth therein, which
Tenant shall execute and return to Landlord within five (5) days of
receipt thereof.
6
2.2
Option Term(s)
.
2.2.1
Option Right
.
Landlord hereby grants the Original
Tenant and any Permitted Transferee, as that term is set forth in
Section 14.8
of this Lease, one (1) option to extend the Lease Term for the entire
Premises by a period of five (5) years (the
Option Term
). Such option shall be exercisable only by Notice
delivered by Tenant to Landlord as provided below, provided that, as of the
date of delivery of such Notice, (i) no Event of Default, as that term
is set forth in Section 19.1 of this Lease, is then occurring, (ii) no
more than one (1) Event of Default has occurred during the prior twelve
(12) month period, (iii) no more than three (3) Events of Default
have occurred during the Lease Term, and (iv) the Original Tenant and any
Permitted Transferee is in occupancy of no less than seventy-five percent (75%)
of the then-existing Premises. Upon the proper exercise of such option to
extend, and provided that, as of the end of the then applicable Lease term, (A) no
Event of Default is then occurring, (B) no more than one (1) Event of
Default has occurred during the prior twelve (12) month period, (C) no
more than three (3) Events of Default have occurred during the Lease Term,
and (D) the Original Tenant and any Permitted Transferee is in occupancy
of no less than seventy-five percent (75%) of the then-existing Premises, then
the Lease Term, as it applies to the entire Premises (i.e., the Initial
Premises and Must-Take Space, shall be extended for a period of five (5) years.
The rights contained in this
Section 2.2
shall only be exercised by
the Original Tenant and/or its Permitted Transferee (and not any other
assignee, sublessee or other transferee of the Original Tenants interest in
this Lease).
2.2.2
Option Rent
. The Rent payable by Tenant
during the Option Term (the
Option Rent
)
shall be equal to the Market Rent as set forth below.
For purposes of this Lease, the term
Market Rent
shall mean rent
(including additional rent and considering any base year or expense stop
applicable thereto), including all escalations, at which tenants, as of the
commencement of the applicable term are, pursuant to transactions completed
within the twenty-four (24) months prior to the first day of the applicable
Option Term, leasing non-sublease, non-encumbered, non-synthetic, non-equity
space (unless such space was leased pursuant to a definition of fair market
comparable to the definition of Market Rent) comparable in size, location and
quality to the Premises for a Comparable Term, as that term is defined in
this
Section 2.2.2
(the
Comparable
Deals
), which comparable space is located in the Comparable
Buildings, as that term is defined in this
Section 2.2.2
, giving
appropriate consideration to the annual rental rates per rentable square foot
(adjusting the base rent component of such rate to reflect a net value after
accounting for whether or not utility expenses are directly paid by the tenant
such as Tenants direct utility payments provided for in
Section 6.1
of this Lease), the standard of measurement by which the rentable square
footage is measured, the ratio of rentable square feet to usable square feet,
and taking into consideration only, and granting only, the following
concessions (provided that the rent payable in Comparable Deals in which the
terms of such Comparable Deals are determined by use of a discounted fair
market rate formula shall be equitably increased in order that such Comparable
Deals will not reflect a discounted rate) (collectively, the
Rent Concessions
): (a) rental abatement concessions or
build-out periods, if any, being granted such tenants in connection with such
comparable spaces; (b) improvements or improvement allowances provided or
to be provided for such comparable space, taking into account the value of the
existing improvements in the Premises, such value to be based upon the age,
quality and layout of the improvements and the extent to which the same could
be utilized by general office users as contrasted with this specific Tenant, (c) any
Proposition 13 protection,
7
and (d) all
other monetary concessions, if any, being granted such tenants in connection
with such comparable space; provided, however, that notwithstanding anything to
the contrary herein, no consideration shall be given to the fact that Landlord
is or is not required to pay a real estate brokerage commission in connection
with the applicable term or the fact that the Comparable Deals do or do not
involve the payment of real estate brokerage commissions. The term
Comparable Term
shall refer to the length
of the lease term, without consideration of options to extend such term, for
the space in question. In addition, the determination of the Market Rent shall
include a determination as to whether, and if so to what extent, Tenant must
provide Landlord with financial security, such as a letter of credit or
guaranty, for Tenants rent obligations during any Option Term. Such
determination shall be made by reviewing the extent of financial security then generally
being imposed in Comparable Transactions upon tenants of comparable financial
condition and credit history to the then existing financial condition and
credit history of Tenant (with appropriate adjustments to account for
differences in the then-existing financial condition of Tenant and such other
tenants). If in determining the Market Rent, Tenant is entitled to a
improvement allowance or comparable allowance for the improvement of the
Premises (the
Option Term TI Allowance
),
Landlord may, at Landlords sole option, elect any or a portion of the
following: (A) to grant some or all
of the Option Term TI Allowance to Tenant in the form as described above
(i.e., as an improvement allowance), and/or (B) to reduce the rental rate
component of the Market Rent to be an effective rental rate which takes into
consideration that Tenant will not receive the total dollar value of such
excess Option Term TI Allowance (in which case the Option Term TI Allowance
evidenced in the effective rental rate shall not be granted to Tenant). The
term
Comparable Buildings
shall
mean the Building and other institutionally owned, office / lab buildings which
are comparable to the Building in terms of age (based upon the date of
completion of construction or major renovation as to the building containing
the portion of the Premises in question), quality of construction, level of
services and amenities (including parking availability, type and cost), size
and appearance, and are located in the Sorrento Mesa / UTC area of San Diego,
California (the
Comparable Area
).
2.2.3
Exercise of Option
. The option contained in this
Section 2.2
shall be exercised by Tenant, if at all, only in the manner set forth in this
Section 2.2.3
.
Tenant shall deliver notice (the
Exercise
Notice
) to Landlord not more than fifteen (15) months nor less than
twelve (12) months prior to the expiration of the then existing Lease Term,
stating that Tenant is thereby exercising its option. Within thirty (30) days
following its delivery of such Exercise Notice, Tenant shall deliver to
Landlord Tenants calculation of the Market Rent (the
Tenants Option Rent Calculation
). Landlord
shall deliver notice (the
Landlord Response
Notice
) to Tenant on or before the date which is thirty (30) days
after Landlords receipt of Tenants Option Rent Calculation (the
Landlord Response Date
), stating that (A) Landlord
is accepting Tenants Option Rent Calculation as the Market Rent, or (B) rejecting
Tenants Option Rent Calculation and setting forth Landlords calculation of
the Market Rent (the
Landlords Option Rent
Calculation
). Within ten (10) business days of its receipt of
the Landlord Response Notice, Tenant may, at its option, accept Landlords
Option Rent Calculation. If Tenant does not affirmatively accept or Tenant
rejects Landlords Option Rent Calculation, the parties shall follow the
procedure, and the Market Rent shall be determined as set forth in
Section 2.2.4
.
8
2.2.4
Determination of Market Rent
. In the event Tenant objects
or is deemed to have objected to the Market Rent, Landlord and Tenant shall
attempt to agree upon the Market Rent using reasonable good-faith efforts. If
Landlord and Tenant fail to reach agreement within sixty (60) days following
Tenants objection or deemed objection to the Landlords Option Rent
Calculation (the
Outside Agreement Date
),
then, within two (2) business days following such Outside Agreement Date,
(
x
) Landlord may reestablish
the Landlords Option Rent Calculation by delivering written notice thereof to
Tenant, and (
y
) Tenant may reestablish
the Tenants Option Rent Calculation by delivering written notice thereof to
Tenant. If Landlord and Tenant thereafter fail to reach agreement within seven (7) business
days of the Outside Agreement Date, then in connection with the Option Rent,
Landlords Option Rent Calculation and Tenants Option Rent Calculation, each
as most recently delivered to the other party pursuant to the TCCs of this
Section 2.2
,
shall be submitted to the Neutral Arbitrator, as that term is defined in
Section 2.2.4.1
of this Lease, pursuant to the TCCs of this
Section 2.2.4
;
provided, however, to the extent Tenant delivers to Landlord, within seven (7) business
days of the Outside Agreement Date, a written notice rescinding its Exercise
Notice, then the Lease Term shall not be extended for the Option Term, but
shall instead expire as originally scheduled, pursuant to the remaining TCCs of
this Lease. The submittals shall be made concurrently with the selection of the
Neutral Arbitrator pursuant to this
Section 2.2.4
and shall be
submitted to arbitration in accordance with
Section 2.2.4.1
through 2.2.4.5
of this Lease, but subject to the conditions, when
appropriate, of
Section 2.2.3
.
2.2.4.1
Landlord and Tenant shall mutually,
reasonably appoint one (1) arbitrator who shall by profession be a real
estate broker, appraiser or attorney who shall have been active over the five (5) year
period ending on the date of such appointment in the leasing (or appraisal, as
the case may be) of first-class corporate headquarters properties in
the Comparable Area (the
Neutral Arbitrator
).
The determination of the Neutral Arbitrator shall be limited solely to the
issue of whether Landlords Option Rent Calculation or Tenants Option Rent
Calculation, each as submitted to the Neutral Arbitrator pursuant to
Section 2.2.4
,
above, is the closest to the actual Market Rent as determined by such Neutral
Arbitrator, taking into account the requirements of
Section 2.2.2
of this Lease. Such Neutral Arbitrator shall be appointed within fifteen (15)
days after the applicable Outside Agreement Date. Neither the Landlord or
Tenant may, directly or indirectly, consult with the Neutral Arbitrator prior
to subsequent to his or her appearance. The Neutral Arbitrator shall be
retained via an engagement letter jointly prepared by Landlords counsel and
Tenants counsel.
2.2.4.2
The Neutral Arbitrator shall, within
thirty (30) days of his/her appointment, reach a decision as to Market Rent and
determine whether the Landlords Option Rent Calculation or Tenants Option
Rent Calculation, each as submitted to the Neutral Arbitrator pursuant to
Section 2.2.4
,
above, is closest to Market Rent as determined by such Neutral Arbitrator and
simultaneously publish a ruling (
Award
)
indicating whether Landlords Option Rent Calculation or Tenants Option Rent
Calculation is closest to the Market Rent as determined such Neutral Arbitrator.
Following notification of the Award, the Landlords Option Rent Calculation or
Tenants Option Rent Calculation, whichever is selected by the Neutral
Arbitrator as being closest to Market Rent, shall become the then applicable
Option Rent.
2.2.4.3
The Award issued by such Neutral
Arbitrator shall be binding upon Landlord and Tenant.
9
2.2.4.4
If Landlord and Tenant fail to appoint
the Neutral Arbitrator within fifteen (15) days after the applicable Outside
Agreement Date, either party may petition the presiding judge of the
Superior Court of San Diego County to appoint such Neutral Arbitrator subject
to the criteria in
Section 2.2.4.1
of this Lease, or if he or she
refuses to act, either party may petition any judge having jurisdiction
over the parties to appoint such Neutral Arbitrator.
2.2.4.5
The cost of arbitration shall be paid by
Landlord and Tenant equally.
ARTICLE 3
BASE RENT
3.1
Base Rent
. Tenant shall pay, without
prior notice or demand, to Landlord or Landlords agent at such place as
Landlord may from time to time designate in writing, by a check for
currency which, at the time of payment, is legal tender for private or public
debts in the United States of America, base rent (
Base Rent
)
as set forth in
Section 4
of the Summary, payable in equal monthly
installments as set forth in
Section 4
of the Summary in advance on
or before the first day of each and every calendar month during the Lease Term,
without any setoff or deduction whatsoever. The Base Rent for the first full
month of the Lease Term which occurs after the expiration of any free rent
period shall be paid at the time of Tenants execution of this Lease. If any
Rent payment date (including the Lease Commencement Date) falls on a day of the
month other than the first day of such month or if any payment of Rent is for a
period which is shorter than one month, the Rent for any such fractional month
shall accrue on a daily basis during such fractional month and shall total an
amount equal to the product of (i) a fraction, the numerator of which is the
number of days in such fractional month and the denominator of which is the
actual number of days occurring in such calendar month, and (ii) the
then-applicable Monthly Installment of Base Rent. All other payments or
adjustments required to be made under the TCCs of this Lease that require
proration on a time basis shall be prorated on the same basis.
3.2
Abated Base Rent
.
3.2.1
Initial Premises Rent Abatement
. Provided that no Event of
Default is then occurring, then during the period beginning on the Lease
Commencement Date and ending on August 31, 2006 (the
IP Rent Abatement Period
), Tenant shall
not be obligated to pay any Base Rent otherwise attributable to the Initial
Premises for such IP Rent Abatement Period (the
Initial Premises Rent Abatement
).
3.2.2
Must-Take Space Rent Abatement
. Provided that no Event of
Default is then occurring, then during the period beginning on the Lease
Commencement Date and ending upon the earlier to occur of (i) the date
upon which Tenant first commences to conduct business in the Must-Take Space,
and (ii) October 31, 2007 (the
MTS
Rent Abatement Period
), Tenant shall not be obligated to pay Base
Rent otherwise attributable to the Must Take Space throughout such MTS Rent
Abatement Period (the
Must-Take Space Rent
Abatement
).
3.2.3
In General
. The Initial Premises Rent Abatement and the
Must-Take Space Rent Abatement are, collectively, the
Rent Abatement
). Tenant acknowledges and
10
agrees that notwithstanding such Rent Abatement, the IP Rent Abatement
Period and/or the MTS Rent Abatement Period, such abatement of Base Rent shall
have no effect on the calculation of any future increases in Base Rent,
Operating Expenses or Tax Expenses payable by Tenant pursuant to the terms of
this Lease, which increases shall be calculated without regard to such
abatement of Base Rent or corresponding abatement periods. Such Rent Abatement
has been granted to Tenant as additional consideration for entering into this
Lease, and for agreeing to pay the rent and performing the terms and conditions
otherwise required under the Lease, as amended. Notwithstanding anything to the
contrary set forth in this
Section 3.2
, to the extent an Event of
Default is then occurring, then Landlord may at its option, by notice to
Tenant, elect, in addition to any other remedies Landlord may have under
the Lease, one or both of the following remedies: (i) that Tenant shall immediately become
obligated to pay to Landlord all Base Rent abated hereunder during the IP Rent
Abatement Period and/or MTS Rent Abatement Period, as applicable, with interest
as provided pursuant to the Lease from the date such Base Rent would have
otherwise been due but for the abatement provided herein, or (ii) that the
dollar amount of the unapplied portion of the Rent Abatement as of such Event
of Default shall be converted to a credit to be applied to the Base Rent
applicable to the Premises at the end of the Lease Term and Tenant shall
immediately be obligated to begin paying Base Rent for the entire Premises in
full.
ARTICLE 4
ADDITIONAL RENT
4.1
General Terms
. In addition
to paying the Base Rent specified in
Article 3
of this Lease,
Tenant shall pay
Tenants Share
of the annual
Direct Expenses
,
as those terms are defined in
Sections 4.2.6 and 4.2.2
,
respectively, of this Lease. Such payments by Tenant, together with any and all
other amounts payable by Tenant to Landlord pursuant to the TCCs of this Lease,
are hereinafter collectively referred to as the
Additional Rent
, and the Base Rent and the
Additional Rent are herein collectively referred to as
Rent
. All amounts due under this
Article 4
as Additional Rent shall be payable for the same periods and in the same manner
as the Base Rent. Without limitation on other obligations of Tenant which
survive the expiration of the Lease Term, the obligations of Tenant to pay the
Additional Rent provided for in this
Article 4
shall survive the
expiration of the Lease Term.
4.2
Definitions of Key Terms Relating to Additional Rent
. As used in
this
Article 4
, the following terms shall have the meanings
hereinafter set forth:
4.2.1
Intentionally
Deleted.
4.2.2
Direct Expenses
shall mean Operating
Expenses and Tax Expenses.
4.2.3
Expense Year
shall mean each calendar year
in which any portion of the Lease Term falls, through and including the
calendar year in which the Lease Term expires, provided that Landlord, upon
notice to Tenant, may change the Expense Year from time to time to any
other twelve (12) consecutive month period, and, in the event of any such
change, Tenants Share of Direct Expenses shall be equitably adjusted for any
Expense Year involved in any such change.
11
4.2.4
Operating
Expenses
shall mean, without duplication, all expenses, costs and
amounts of every kind and nature which Landlord pays or accrues during any
Expense Year because of or in connection with the ownership, management,
maintenance, security, repair, replacement, restoration or operation of the
Project, or any portion thereof, in accordance with sound real estate
management and accounting principles, consistently applied. Without limiting
the generality of the foregoing, Operating Expenses shall specifically include
any and all of the following: (i) the
cost of supplying all utilities, the cost of operating, repairing, maintaining,
and renovating the utility, telephone, mechanical, sanitary, storm drainage,
and elevator systems, and the cost of maintenance and service contracts in connection
therewith; (ii) the cost of licenses, certificates, permits and
inspections and the cost of contesting any governmental enactments which may affect
Operating Expenses, and the costs incurred in connection with a governmentally
mandated transportation system management program or similar program; (iii) the
cost of all insurance carried by Landlord in connection with the Project; (iv) the
cost of landscaping, relamping, and all supplies, tools, equipment and
materials used in the operation, repair and maintenance of the Project, or any
portion thereof; (v) costs incurred in connection with the parking areas
servicing the Project; (vi) fees and other costs, including management
fees, consulting fees, legal fees and accounting fees, of all contractors and
consultants in connection with the management, operation, maintenance and
repair of the Project; (vii) payments under any equipment rental
agreements and the fair rental value of any management office space; (viii) wages,
salaries and other compensation and benefits, including taxes levied thereon,
of all persons
(other than persons generally considered to
be higher in rank than the position of Project manager)
engaged in the operation,
maintenance and security of the Project; (ix) costs under any instrument
pertaining to the sharing of costs by the Project; (x) operation, repair,
maintenance and replacement of all systems and equipment and components thereof
of the Building; (xi) the cost of janitorial, alarm, security and other
services, replacement of wall and floor coverings, ceiling tiles and fixtures
in common areas, maintenance and replacement of curbs and walkways, repair to
roofs and re-roofing; (xii) amortization of the cost of acquiring or the
rental expense of personal property used in the maintenance, operation and
repair of the Project, or any portion thereof (which amortization calculation
shall include interest at the Interest Rate, as that term is set forth in
Article 25
of this Lease); (xiii) the cost of capital improvements or other costs
incurred in connection with the Project (A) which are intended to effect
economies in the operation or maintenance of the Project, or any portion
thereof, (B) that are required to comply with present or anticipated
conservation programs, (C) which are replacements or modifications of
nonstructural items located in the Common Areas required to keep the Common
Areas in good order or condition, or (D) that are required under any
governmental law or regulation
by a federal, state or
local governmental agency, except for capital repairs, replacements or other
improvements to remedy a condition existing prior to the Lease Commencement
Date which an applicable governmental authority, if it had knowledge of such
condition prior to the Lease Commencement Date, would have then required to be
remedied pursuant to then-current governmental laws or regulations in their form existing
as of the Lease Commencement Date and pursuant to the then-current
interpretation of such governmental laws or regulations by the applicable
governmental authority as of the Lease Commencement Date
; provided, however, that any
capital expenditure shall be shall be amortized with interest at the Interest
Rate over the shorter of (
X
) seven
(7) years, or (
Y
) its
useful life as Landlord shall reasonably determine in accordance with sound
real estate management and accounting principles; (xiv) costs, fees,
charges or assessments imposed by, or
12
resulting
from any mandate imposed on Landlord by, any federal, state or local government
for fire and police protection, trash removal, community services, or other
services which do not constitute Tax Expenses as that term is defined in
Section 4.2.5
,
below; and (xv) payments under any easement, license, operating agreement,
declaration, restrictive covenant, or instrument pertaining to the sharing of
costs by the Building.
Notwithstanding the foregoing, for
purposes of this Lease, Operating Expenses shall not, however, include:
(a)
costs,
including marketing costs, legal fees, space planners fees, advertising and
promotional expenses, and brokerage fees incurred in connection with the
original construction or development, or original or future leasing of the
Project, and costs, including permit, license and inspection costs, incurred
with respect to the installation of improvements made for new tenants initially
occupying space in the Project after the Lease Commencement Date or incurred in
renovating or otherwise improving, decorating, painting or redecorating vacant
space for tenants or other occupants of the Project (excluding, however, such
costs relating to any common areas of the Project or parking facilities);
(b)
except
as set forth in items (xii), (xiii), and (xiv) above, amortization of any expenditures
of a capital nature, depreciation, interest and/or principal payments on
mortgages and other debt costs, if any, penalties and interest;
(c)
costs
for which the Landlord is reimbursed by any tenant or occupant of the Project
or by insurance by its carrier or any tenants carrier or by anyone else, and
electric power costs for which any tenant directly contracts with the local
public service company;
(d)
any
bad debt loss, rent loss, reserves for bad debts or rent loss, or any other
reserves;
(e)
costs
associated with the operation of the business of the partnership or entity
which constitutes the Landlord, as the same are distinguished from the costs of
operation of the Project (which shall specifically include, but not be limited
to, accounting costs associated with the operation of the Project). Costs
associated with the operation of the business of the partnership or entity
which constitutes the Landlord include costs of partnership accounting and
legal matters, costs of defending any lawsuits with any mortgagee (except as
the actions of the Tenant may be in issue), costs of selling, syndicating,
financing, mortgaging or hypothecating any of the Landlords interest in the
Project, and costs incurred in connection with any disputes between Landlord
and its employees, between Landlord and Project management, or between Landlord
and other tenants or occupants, and Landlords general corporate overhead and
general and administrative expenses;
(f)
the
wages and benefits of any employee who does not devote substantially all of his
or her employed time to the Project unless such wages and benefits are prorated
to reflect time spent on operating and managing the Project vis-a-vis time
spent on matters unrelated to operating and managing the Project; provided,
that in no event shall Operating Expenses for purposes of this Lease include
wages and/or benefits attributable to personnel above the level of Project
manager;
13
(g)
amount
paid as ground rental for the Project by the Landlord;
(h)
overhead
and profit increment paid to the Landlord or to subsidiaries or affiliates of
the Landlord for services in the Project to the extent the same exceeds the
costs of such services rendered by qualified, first-class unaffiliated
third parties on a competitive basis;
(i)
any
compensation paid to clerks, attendants or other persons in commercial
concessions operated by the Landlord, provided that any compensation paid to
any concierge at the Project shall be includable as an Operating Expense;
(j)
rentals
and other related expenses incurred in leasing air conditioning systems,
elevators or other equipment which if purchased the cost of which would be
excluded from Operating Expenses as a capital cost, except equipment not
affixed to the Project which is used in providing janitorial or similar
services and, further excepting from this exclusion such equipment rented or
leased to remedy or ameliorate an emergency condition in the Project ;
(k)
all
items and services for which Tenant or any other tenant in the Project
reimburses Landlord or which Landlord provides selectively to one or more
tenants (other than Tenant) without reimbursement;
(l)
costs,
other than those incurred in ordinary maintenance and repair, for sculpture,
paintings, fountains or other objects of art;
(m)
any
costs expressly excluded from Operating Expenses elsewhere in this Lease;
(n)
rent
for any office space occupied by Project management personnel to the extent the
size or rental rate of such office space exceeds the size or fair market rental
value of office space occupied by management personnel of the Comparable
Buildings in the vicinity of the Building, with adjustment where appropriate
for the size of the applicable project;
(o)
costs
arising from the negligence or willful misconduct of Landlord or its agents,
employees, vendors, contractors, or providers of materials or services; and
(p)
costs
incurred to comply with Applicable Laws with regard to Hazardous Material, as
that term is set forth in Section 29.33.1 of this Lease, which was in
existence in the Building or on the Project prior to the Lease Commencement
Date; and costs incurred with respect to Hazardous Material, which Hazardous
Material is brought into the Building or onto the Project after the date hereof
by Landlord or any other tenant of the Project or by anyone other than Tenant
or Tenant Parties.
If Landlord is not
furnishing any particular work or service (the cost of which, if performed by
Landlord, would be included in Operating Expenses) to a tenant who has
undertaken to perform such work or service in lieu of the performance
thereof by Landlord,
14
Operating Expenses shall be deemed to be increased by an amount equal
to the additional Operating Expenses which would reasonably have been incurred
during such period by Landlord if it had at its own expense furnished such work
or service to such tenant.
4.2.5
Taxes
.
4.2.5.1
Tax Expenses
shall mean, without
duplication, all federal, state, county, or local governmental or municipal
taxes, fees, charges or other impositions of every kind and nature, whether
general, special, ordinary or extraordinary, (including, without limitation,
real estate taxes, general and special assessments, transit taxes, leasehold
taxes or taxes based upon the receipt of rent, including gross receipts or
sales taxes applicable to the receipt of rent, unless required to be paid by
Tenant, personal property taxes imposed upon the fixtures, machinery,
equipment, apparatus, systems and equipment, appurtenances, furniture and other
personal property used in connection with the Project, or any portion thereof),
which shall be paid or accrued during any Expense Year (without regard to any
different fiscal year used by such governmental or municipal authority) because
of or in connection with the ownership, leasing and operation of the Project,
or any portion thereof.
4.2.5.2
Tax Expenses
shall include, without limitation: (i) Any
tax on the rent, right to rent or other income from the Project, or any portion
thereof, or as against the business of leasing the Project, or any portion
thereof; (ii) Any assessment, tax, fee, levy or charge in addition to, or
in substitution, partially or totally, of any assessment, tax, fee, levy or
charge previously included within the definition of real property tax, it being
acknowledged by Tenant and Landlord that Proposition 13 was adopted by the
voters of the State of California in the June 1978 election (
Proposition 13
) and that assessments, taxes, fees, levies
and charges may be imposed by governmental agencies for such services as
fire protection, street, sidewalk and road maintenance, refuse removal and for
other governmental services formerly provided without charge to property owners
or occupants, and, in further recognition of the decrease in the level and
quality of governmental services and amenities as a result of Proposition 13,
Tax Expenses shall also include any governmental or private assessments or the
Projects contribution towards a governmental or private cost-sharing agreement
for the purpose of augmenting or improving the quality of services and
amenities normally provided by governmental agencies; (iii) Any
assessment, tax, fee, levy, or charge allocable to or measured by the area of
the Premises or the Rent payable hereunder, including, without limitation, any
business or gross income tax or excise tax with respect to the receipt of such
rent, or upon or with respect to the possession, leasing, operating,
management, maintenance, alteration, repair, use or occupancy by Tenant of the
Premises, or any portion thereof; and (iv) Any assessment, tax, fee, levy
or charge, upon this transaction or any document to which Tenant is a party,
creating or transferring an interest or an estate in the Premises.
All
assessments which can be paid by Landlord in installments, shall be paid by
Landlord in the maximum number of installments permitted by law (except to the
extent inconsistent with the general practice of landlords of the Comparable
Buildings) and shall be included as Tax Expenses in the year in which the
installment is actually paid.
4.2.5.3
Any costs and
expenses (including, without limitation, reasonable attorneys fees) incurred
in attempting to protest, reduce or minimize Tax Expenses shall be included in
Tax Expenses in the Expense Year such expenses are paid. Except as set forth in
15
Section 4.2.5.4
, below,
refunds of Tax Expenses shall be credited against Tax Expenses and refunded to
Tenant regardless of when received, based on the Expense Year to which the
refund is applicable, provided that in no event shall the amount to be refunded
to Tenant for any such Expense Year exceed the total amount paid by Tenant as
Additional Rent under this
Article 4
for such Expense Year. If Tax
Expenses for any period during the Lease Term or any extension thereof are
increased after payment thereof for any reason, including, without limitation,
error or reassessment by applicable governmental or municipal authorities,
Tenant shall pay Landlord upon demand Tenants Share of any such increased Tax
Expenses included by Landlord as Building Tax Expenses pursuant to the TCCs of
this Lease. Notwithstanding anything to the contrary contained in this
Section 4.2.8
(except as set forth in
Section 4.2.8.1
, above), there shall be
excluded from Tax Expenses (i) all excess profits taxes, franchise taxes,
gift taxes, capital stock taxes, inheritance and succession taxes, estate
taxes, federal and state income taxes, and other taxes to the extent applicable
to Landlords general or net income (as opposed to rents, receipts or income
attributable to operations at the Project), (ii) any items included as
Operating Expenses, and (iii) any items paid by Tenant under
Section 4.5
of this Lease.
4.2.6
Tenants Share
shall mean the percentage
set forth in
Section 6
of the Summary.
4.3
Intentionally Omitted
.
4.4
Calculation and Payment of Additional Rent
. Tenant
shall pay to Landlord, in the manner set forth in
Section 4.4.1
,
below, and as Additional Rent, Tenants Share of Direct Expenses for each
Expense Year; provided, however, notwithstanding anything to the contrary set
forth in this
Article 4
, during the period commencing on May 1,
2006 and ending on April 30, 2007 (the
Direct
Expense Cap Period
), in no event shall Tenants Share of Direct
Expenses exceed Three and 60/100 Dollars ($3.60) per Rentable Square Foot of
the entire Premises (
i.e.
, $0.30
per Rentable Square Foot per month).
4.4.1
Statement
of Actual Building Direct Expenses and Payment by Tenant
.
Landlord shall give to Tenant following the end of each Expense
Year, a statement (the
Statement
)
which shall state in general major categories the Building Direct Expenses
incurred or accrued for such preceding Expense Year, and which shall indicate
the amount of Tenants Share of Direct Expenses. Landlord shall use
commercially reasonable efforts to deliver such Statement to Tenant on or
before May 1 following the end of the Expense Year to which such Statement
relates. Upon receipt of the Statement for each Expense Year commencing or
ending during the Lease Term, Tenant shall pay, within thirty (30) days after
receipt of the Statement, the full amount of Tenants Share of Direct Expenses
for such Expense Year, less the amounts, if any, paid during such Expense Year
as Estimated Direct Expenses, as that term is defined in
Section 4.4.2
,
below, and if Tenant paid more as Estimated Direct Expenses than the actual
Tenants Share of Direct Expenses (an
Excess
),
Tenant shall receive a credit in the amount of such Excess against Rent next
due under this Lease. The failure of Landlord to timely furnish the Statement
for any Expense Year shall not prejudice Landlord or Tenant from enforcing its
rights under this
Article 4
. Even though the Lease Term has expired
and Tenant has vacated the Premises, when the final determination is made of
Tenants Share of Direct Expenses for the Expense Year in which this Lease
terminates, if Tenants Share of Direct Expenses is greater than the amount of
Estimated Direct Expenses previously paid by Tenant to
16
Landlord,
Tenant shall, within thirty (30) days after receipt of the Statement, pay to
Landlord such amount, and if Tenant paid more as Estimated Direct Expenses than
the actual Tenants Share of Direct Expenses (again, an Excess), Landlord
shall, within thirty (30) days, deliver a check payable to Tenant in the amount
of such Excess. The provisions of this
Section 4.4.1
shall survive
the expiration or earlier termination of the Lease Term. Notwithstanding the
immediately preceding sentence, Tenant shall not be responsible for Tenants
Share of any Building Direct Expenses attributable to any Expense Year which
are first billed to Tenant more than two (2) calendar years after the
Lease Expiration Date, provided that in any event Tenant shall be responsible
for Tenants Share of Direct Expenses levied by any governmental authority or
by any public utility companies at any time following the Lease Expiration Date
which are attributable to any Expense Year.
4.4.2
Statement
of Estimated Building Direct Expenses
.
In addition, Landlord shall give Tenant a yearly expense
estimate statement (the
Estimate Statement
)
which shall set forth in general major categories Landlords reasonable
estimate (the
Estimate
) of what the total
amount of Direct Expenses for the then-current Expense Year shall be and the
estimated Tenants Share of Direct Expenses (the
Estimated
Direct Expenses
). Landlord shall use commercially reasonable
efforts to deliver such Estimate Statement to Tenant on or before May 1
following the end of the Expense Year to which such Estimate Statement relates.
The failure of Landlord to timely furnish the Estimate Statement for any
Expense Year shall not preclude Landlord from enforcing its rights to collect
any Estimated Direct Expenses under this
Article 4
, nor shall
Landlord be prohibited from revising any Estimate Statement or Estimated Direct
Expenses theretofore delivered to the extent necessary. Thereafter, Tenant
shall pay, within thirty (30) days after receipt of the Estimate Statement, a
fraction of the Estimated Direct Expenses for the then-current Expense Year
(reduced by any amounts paid pursuant to the second to last sentence of this
Section 4.4.2
).
Such fraction shall have as its numerator the number of months which have
elapsed in such current Expense Year, including the month of such payment, and
twelve (12) as its denominator. Until a new Estimate Statement is furnished
(which Landlord shall have the right to deliver to Tenant at any time), Tenant
shall pay monthly, with the monthly Base Rent installments, an amount equal to
one-twelfth (1/12) of the total Estimated Direct Expenses set forth in the
previous Estimate Statement delivered by Landlord to Tenant. Throughout the
Lease Term Landlord shall maintain books and records with respect to Building
Direct Expenses in accordance with generally accepted real estate accounting
and management practices, consistently applied.
4.5
Taxes and Other Charges for Which Tenant Is Directly
Responsible
.
4.5.1
Tenant shall
be liable for and shall pay ten (10) days before delinquency, taxes levied
against Tenants equipment, furniture, fixtures and any other personal property
located in or about the Premises. If any such taxes on Tenants equipment,
furniture, fixtures and any other personal property are levied against Landlord
or Landlords property or if the assessed value of Landlords property is
increased by the inclusion therein of a value placed upon such equipment,
furniture, fixtures or any other personal property and if Landlord pays the
taxes based upon such increased assessment, which Landlord shall have the right
to do regardless of the validity thereof but only under proper protest if
requested by Tenant, Tenant shall upon demand repay to Landlord the taxes so
levied against Landlord or the proportion of such taxes resulting from such
increase in the assessment, as the case may be.
17
4.5.2
Notwithstanding
any contrary provision herein, Tenant shall pay prior to delinquency any (i) rent
tax or sales tax, service tax, transfer tax or value added tax, or any other
applicable tax on the rent or services herein or otherwise respecting this
Lease, (ii) taxes assessed upon or with respect to the possession,
leasing, operation, management, maintenance, alteration, repair, use or
occupancy by Tenant of the Premises or any portion of the Project, including
the Project parking facility; or (iii) taxes assessed upon this
transaction or any document to which Tenant is a party creating or transferring
an interest or an estate in the Premises.
4.6
Landlords Books and Records
. Upon
Tenants written request given not more than thirteen (13) months after Tenants
receipt of a Statement for a particular Expense Year, and provided that no
Event of Default is then existing, Landlord shall furnish Tenant with such
reasonable supporting documentation in connection with said Building Direct
Expenses as Tenant may reasonably request. Landlord shall provide said
information to Tenant within sixty (60) days after Tenants written request
therefor. Within sixty (60) days following Tenants receipt of the requested information
from Landlord (the
Review Period
),
if Tenant disputes the amount of Additional Rent set forth in the Statement, an
independent certified public accountant (which accountant (A) is a member
of a nationally or regionally recognized accounting firm, and (B) is not
working on a contingency fee basis), designated and paid for by Tenant, may,
after reasonable notice to Landlord and at reasonable times, inspect Landlords
records with respect to the Statement at Landlords offices, provided that no Event
of Default is then occurring and Tenant has paid all amounts required to be
paid under the applicable Estimate Statement and Statement, as the case may be.
In connection with such inspection, Tenant and Tenants agents must agree in
advance to follow Landlords reasonable rules and procedures regarding
inspections of Landlords records, and shall execute a commercially reasonable
confidentiality agreement regarding such inspection. Tenants failure to
dispute the amount of Additional Rent set forth in any Statement within the
Review Period shall be deemed to be Tenants approval of such Statement and
Tenant, thereafter, waives the right or ability to dispute the amounts set
forth in such Statement. If after such inspection, Tenant still disputes such
Additional Rent, a determination as to the proper amount shall be made, at
Tenants expense, by an independent certified public accountant (the
Accountant
) selected by Landlord and subject to Tenants
reasonable approval; provided that if such determination by the Accountant
proves that Direct Expenses were overstated by more than five percent (5%),
then the cost of the Accountant and the cost of such determination shall be
paid for by Landlord. Tenant hereby acknowledges that Tenants sole right to
inspect Landlords books and records and to contest the amount of Direct
Expenses payable by Tenant shall be as set forth in this
Section 4.6
,
and Tenant hereby waives any and all other rights pursuant to applicable law to
inspect such books and records and/or to contest the amount of Direct Expenses
payable by Tenant. To the extent
a determination is made, pursuant to the TCCs of this Section 4.6,
that Tenant paid more as Estimated Direct Expenses than the actual Tenants
Share of Direct Expenses (again, an
Excess
),
Tenant shall receive a credit in the amount of such Excess against Rent next
due under this Lease; provided, however, to the extent the Lease Term is then
expired, Landlord shall, within thirty (30) days of such determination, deliver
a check payable to Tenant in the amount of such Excess.
18
ARTICLE 5
USE OF PREMISES
5.1
Permitted Use
. Tenant
shall use the Premises solely for the Permitted Use set forth in
Section 7
of the Summary and Tenant shall not use or permit the Premises or the Project
to be used for any other purpose or purposes whatsoever without the prior
written consent of Landlord, which may be withheld in Landlords sole
discretion.
5.2
Prohibited Uses
. The uses
prohibited under this Lease shall include, without limitation, use of the
Premises or a portion thereof for (i) offices of any agency or bureau of
the United States or any state or political subdivision thereof; (ii) offices
or agencies of any foreign governmental or political subdivision thereof; (iii) medical
offices of any health care professionals or service organization; (iv) schools
or other training facilities which are not ancillary to corporate, executive or
professional office use; (v) retail or restaurant uses; or (vi) communications
firms such as radio and/or television stations. Tenant further covenants and
agrees that Tenant shall not use, or suffer or permit any person or persons to
use, the Premises or any part thereof for any use or purpose contrary to
the provisions of the Rules and Regulations set forth in
Exhibit D
, attached hereto, or
in violation of the laws of the United States of America, the State of
California, or the ordinances, regulations or requirements of the local
municipal or county governing body or other lawful authorities having
jurisdiction over the Project) including, without limitation, any such laws,
ordinances, regulations or requirements relating to hazardous materials or
substances, as those terms are defined by applicable laws now or hereafter in
effect
; provided, however, Landlord shall not enforce,
change or modify the Rules and Regulations in a discriminatory manner and
Landlord agrees that the Rules and Regulations shall not be modified or
enforced in a manner which will unreasonably interfere with the normal and
customary conduct of Tenants business
. Tenant shall not do or permit anything to be done in
or about the Premises which will in any way damage the reputation of the
Project or obstruct or interfere with the rights of other tenants or occupants
of the Building, or injure or annoy them or use or allow the Premises to be
used for any improper, unlawful or objectionable purpose, nor shall Tenant
cause, maintain or permit any nuisance in, on or about the Premises. Tenant
shall comply with all recorded covenants, conditions, and restrictions now or
hereafter affecting the Project.
5.3
CC&Rs
. Tenant shall comply with all
recorded covenants, conditions, and restrictions currently affecting the
Project (the
Current CC&Rs
).
Additionally, Tenant acknowledges that the Project may be subject to any
future covenants, conditions, and restrictions, including amendments to the
Current CC&Rs (collectively with the Current CC&Rs, the
CC&Rs
) which Landlord, in Landlords discretion, deems
reasonably necessary or desirable, and Tenant agrees that this Lease shall be
subject and subordinate to such CC&Rs. Landlord shall have the right to
require Tenant to execute and acknowledge, within fifteen (15) business days of
a request by Landlord, a Recognition of Covenants, Conditions, and
Restriction, in a form substantially similar to that attached hereto as
Exhibit F
, agreeing to and
acknowledging the CC&Rs; provided, however,
to the extent any
CC&Rs
relate to Project specific programs and are
within Landlords control (
i.e.
,
Landlord has the ability, either directly or indirectly, to cause the
disapproval of such
covenant, condition, and restriction, or amendment
thereto
), then (i) such
specific programs shall be subject to Tenants reasonable review and prior
19
approval, and (ii)
no
such future CC&Rs shall be permitted which materially diminish Tenants
beneficial use or enjoyment or access, or materially increase Tenants
obligation, hereunder
.
ARTICLE 6
SERVICES AND UTILITIES
6.1
Standard Tenant Services
.
Landlord
shall maintain and operate the Building in a manner consistent with the
Comparable Buildings, and shall keep the Building Structure in condition and
repair consistent with the Comparable Buildings.
In addition, Landlord shall provide,
as part of the Building Structure, (i) adequate electrical wiring to
subpanel facilities for the Building for Tenants connection with a minimum
capacity of 3000 Amps at 277/480 Volts (three (3)-phase, four (4) wire), (ii) city
water and sewer stubbed to the Premises, and (iii) elevator services.
Notwithstanding
the foregoing, Tenant shall directly pay for all utilities (including without
limitation, electricity, gas, sewer and water) attributable to its use of the
entire Premises and shall also provide its own janitorial and security services
for the Building. Such utility use shall include electricity, water, and gas
use for lighting, incidental use and HVAC, as that term is defined below. In
addition to the foregoing, Tenant shall provide, at Tenants sole cost and
expense, pest control services to the Building in a manner consistent with or
greater than the Comparable Buildings. All such utility, janitorial and
security payments shall be excluded from Operating Expenses and shall be paid
directly by Tenant prior to the date on which the same are due to the utility
provider, janitorial company, pest control company and/or security company, as
applicable. The parties hereby acknowledge and agree that the Premises is
separately metered for all utilities.
Landlord
shall
not be required to provide any services other than
with regard to its maintenance and repair obligation relating to the Building
Structure and the Common Areas
.
6.2
Tenant Maintained Building Systems; HVAC
. Tenant
shall, at Tenants sole cost and expense, (i) maintain the
Buildings
mechanical, electrical, life safety, plumbing, fire-sprinkler systems (except
to the extent Landlord retains repair and maintenance responsibility for the
portion of such fire-sprinkler system contained in the Building Structure), (ii) s
ubject to
limitations imposed by all governmental rules, regulations and guidelines
applicable thereto, maintain (itself or through a service provider) heating and
air conditioning to the Premises (
HVAC
)
(items
identified in (i) and (ii) collectively, the
Building Systems
)
, and (iii) maintain the
remaining portions of the Premises which are not part of the Building
Structure, as that term is set forth in
Article 7
of this Lease to
the extent such Building Structure is to be maintained and repaired by Landlord
.
6.3
Tenant Maintained Services.
6.3.1
Security Services
. Tenant
hereby acknowledges that Landlord shall have no obligation to provide guard
service or other security measures for the benefit of the Premises, the
Building or the Project. Any security measures desired by Tenant for the
benefit of the Premises, the Building or the Project shall be provided by
Tenant, at Tenants sole cost and
20
expense.
Tenant hereby assumes all responsibility for the protection of Tenant and its
agents, employees, contractors, invitees and guests, and the property thereof,
from acts of third parties, including keeping doors locked and other means of
entry to the Premises closed.
6.3.2
Janitorial Services
. Tenant
shall, at Tenants sole cost and expense, provide (or directly contract for)
janitorial services in and about the Premises in a manner reasonably consistent
with the Comparable Buildings.
6.4
Tenant Maintenance Standards
.
All
Tenant maintained Building Systems, including HVAC, shall be maintained in
accordance with manufacturer specifications by Tenant in a commercially
reasonable condition. In addition, Tenant shall provide to Landlord copies of
any service contracts and records of Tenants maintenance of such Building
Systems.
6.5
Landlords Assumption Of Maintenance
. Landlord
shall have the reasonable right, after twenty-four (24) hours notice to Tenant,
to inspect the Building, Building Systems, and/or Tenants maintenance records,
in order to ensure compliance with this
Article 6
. In the event
Tenant fails, in the reasonable judgment of Landlord, to provide the
maintenance services (or cause the same to be provided) in accordance with the
obligations set forth in this
Article 6
, Landlord shall deliver a
written notice (a
Maintenance Failure Notice
)
to Tenant stating with particularity the nature of such failure (such failure
by Tenant to be known as a
Tenant
Maintenance Failure
). If such Tenant Maintenance Failure continues
at the end of the fifth (5
th
) business day following the date of
delivery of such Maintenance Failure Notice, then Landlord shall have the right
to provide such maintenance and Tenant shall pay Landlord the cost thereof
promptly upon being billed for same (including a percentage of the cost thereof
sufficient to reimburse Landlord for all overhead, general conditions, fees and
other costs or expenses arising from Landlords involvement with such
maintenance); provided, however, in the event of an emergency, Landlord may take
such remedial action immediately following the delivery of the Maintenance
Failure Notice. In the event more than two (2) Tenant Maintenance Failures
occur during any calendar year during the Lease Term, Landlord may, but need
not, assume such repair and maintenance obligations on behalf of Tenant for the
remainder of the Lease Term, in which case (i) Tenant shall pay Landlord
the cost thereof promptly upon being billed for same, and (ii) Landlords
management fee for the Project shall, notwithstanding the management fee set
forth in
Section 4.2.4(vi)
, be increased to five percent (5%). Tenant
shall at all times maintain written records of maintenance and repairs and
shall provide Landlord, within ten (10) business days following any
request by Landlord therefor (which requests shall not occur more often than
once per calendar quarter), a copy of all such maintenance and repair records
and/or reports. In addition, to the extent Tenant contracts with third parties
to perform such maintenance (a
Service
Contract
), Tenant
shall deliver full and complete copies of all such Service Contracts entered
into by Tenant for the Building Systems to Landlord within thirty (30) days
after the effective date of such Service Contract. Any such cost or expense
paid by Tenant pursuant to a Landlord approved Service Contract shall not be
included in Operating Expenses.
6.6
Interruption
of Use
.
Except as otherwise
expressly provided in
Section 6.7
or elsewhere in this Lease,
Tenant agrees that Landlord shall not be liable for damages, by abatement of
Rent or otherwise, for failure to furnish or delay in furnishing any service
(including telephone and telecommunication services), or for any diminution in
the quality or
21
quantity
thereof, when such failure or delay or diminution is occasioned, in whole or in
part, by breakage, repairs, replacements, or improvements, by any strike,
lockout or other labor trouble, by inability to secure electricity, gas, water,
or other fuel at the Building or Project after reasonable effort to do so, by
any riot or other dangerous condition, emergency, accident or casualty
whatsoever, by act or default of Tenant or other parties, or by any other cause
beyond Landlords reasonable control; and such failures or delays or diminution
shall never be deemed to constitute an eviction or disturbance of Tenants use
and possession of the Premises or relieve Tenant from paying Rent or performing
any of its obligations under this Lease, except as otherwise expressly provided
in
Section 6.4
or elsewhere in this Lease.
6.7
Rent
Abatement
. If (i) Landlord fails to perform the
obligations required of Landlord under the TCCs of this Lease (whether or not
such failure relates to the negligence or willful misconduct of Landlord, its
employees, agents, or contractors), (ii) such failure causes all or a
portion of the Premises to be untenantable by Tenant, and (iii) such
failure relates to (A) the nonfunctioning of the heat, ventilation, and
air conditioning system in the Premises, the nonfunctioning of electricity in
the Premises, the nonfunctioning of the elevator service to the Premises, the
nonfunctioning of the fire sprinkler-system, or (B) a failure to provide
access to the Premises, Tenant shall give Landlord notice (the
Initial Notice
), specifying such failure to perform by
Landlord (the
Abatement Event
). If Landlord has
not cured such Abatement Event within three (3) business days after the
receipt of the Initial Notice (the
Eligibility Period
),
Tenant may deliver an additional notice to Landlord (the
Additional Notice
), specifying such Abatement Event and
Tenants intention to abate the payment of Rent under this Lease. If Landlord
does not cure such Abatement Event within two (2) business days of receipt
of the Additional Notice, Tenant may, upon written notice to Landlord,
immediately abate Rent payable under this Lease for that portion of the
Premises rendered untenantable and not used by Tenant, for the period beginning
on the date three (3) business days after the Initial Notice to the
earlier of the date Landlord cures such Abatement Event or the date Tenant
recommences the use of such portion of the Premises. Such right to abate Rent
shall be Tenants sole and exclusive remedy at law or in equity for an
Abatement Event. Except as provided in this
Section 6.7
, nothing
contained herein shall be interpreted to mean that Tenant is excused from
paying Rent due hereunder.
ARTICLE 7
REPAIRS
Landlord shall maintain
in first-class condition and operating order and keep in good repair and
condition the structural portions of the Building, including without limitation
the foundation, floor/ceiling slabs, roof structure (as opposed to roof
membrane), curtain wall, exterior glass and mullions, columns, beams, shafts
(including elevator shafts), stairs, parking areas, landscaping, exterior
Project signage, stairwells, and all common and public areas (collectively,
Building Structure
) and the base
first-sprinkler systems which were not constructed by Tenant Parties and the
Common Areas; provided, however, that to the extent such fire-sprinkler system
(as existing as of the date of this Lease) is altered by Tenant, Tenant shall
thereafter be responsible therefor (at which time any warranties relating to such
system shall be transferred to Tenant); provided further, however, that until
such time as Tenant becomes responsible for the base fire-sprinkler systems
pursuant to the foregoing clause, all references to
22
Building Structure
shall be deemed to include such base fire-sprinkler system. Notwithstanding
anything in this Lease to the contrary, Tenant shall be required to repair the
Building Structure to the extent caused due to Tenants use of the Premises for
other than normal and customary implementation of the business operations
contemplated under Tenants Permitted Use (as expressly in
Sections 6(i)-(iii)
of
the Summary), unless and to the extent such damage is covered by insurance
carries or required to be carried by Landlord pursuant to
Article 10
and to which the waiver of subrogation is applicable (such obligation to the
extent applicable to Tenant as qualified and conditioned will hereinafter be
defined as the
BS
Exception
). Tenant shall, at Tenants own expense, pursuant to the
TCCs of this Lease (including, without limitation,
Article 8
hereof) keep the Premises, including all improvements, fixtures and furnishings
therein, the roof membrane, and the floors of the Building on which the
Premises are located, in good order, repair and condition at all times during
the Lease Term (but such obligation shall not extend to the Building Structure,
except pursuant to the BS Exception). In addition, Tenant shall, at Tenants
own expense, but under the supervision and subject to the prior approval of
Landlord, and within any reasonable period of time specified by Landlord,
promptly and adequately repair all damage to the Premises and replace or repair
all damaged, broken, or worn fixtures and appurtenances (but such obligation
shall not extend to the Building Structure, except pursuant to the BS
Exception), except for damage caused by ordinary wear and tear or beyond the
reasonable control of Tenant; provided
however, that, at Landlords option, or if Tenant fails to make such repairs,
Landlord may, after written notice to Tenant and Tenants failure to repair
within five (5) days thereafter, but need not, make such repairs and
replacements, and Tenant shall pay Landlord the cost thereof, including a
percentage of the cost thereof (to be uniformly established for the Building
and/or the Project) sufficient to reimburse Landlord for all overhead, general
conditions, fees and other costs or expenses arising from Landlords
involvement with such repairs and replacements forthwith upon being billed for
same. Landlord may, but shall not be required to, enter the Premises at all
reasonable times to make such repairs, alterations, improvements or additions
to the Premises or to the Project or to any equipment located in the Project as
Landlord shall desire or deem necessary or as Landlord may be required to
do by governmental or quasi-governmental authority or court order or decree;
provided, however, except for (i) emergencies, (ii) repairs,
alterations, improvements or additions required by governmental or
quasi-governmental authorities or court order or decree, or (iii) repairs
which are the obligation of Tenant hereunder, any such entry into the Premises
by Landlord shall be performed in a manner so as not to materially interfere
with Tenants use of, or access to, the Premises; provided that, with respect
to items (ii) and (iii) above, Landlord shall use commercially
reasonable efforts to not materially interfere with Tenants use of, or access
to, the Premises. Tenant hereby waives any and all rights under and benefits of
subsection 1 of Section 1932 and Sections 1941 and 1942 of the
California Civil Code or under any similar law, statute, or ordinance now or
hereafter in effect.
ARTICLE 8
ADDITIONS AND ALTERATIONS
8.1
Landlords
Consent to Alterations
.
Tenant
may not make any improvements, alterations, additions or changes to the
Premises or any mechanical, plumbing or HVAC facilities or systems pertaining
to the Premises (collectively, the
Alterations
)
without first procuring the prior written consent of Landlord to such
Alterations, which consent shall be
23
requested
by Tenant not less than fifteen (15) business days prior to the commencement
thereof, and which consent shall not be unreasonably withheld by Landlord,
provided it shall be deemed reasonable for Landlord to withhold its consent to
any Alteration which adversely affects the structural portions or the systems
or equipment of the Building or is visible from the exterior of the Building. Notwithstanding
the foregoing, Tenant shall be permitted to make Alterations following ten (10) business
days notice to Landlord, but without Landlords prior consent, to the extent
that such Alterations do not (i) involve the expenditure of more than
Twenty-Five Thousand and No/100 Dollars ($25,000) for any particular
Alterations, or more than One Hundred Fifty Thousand and No/100 Dollars
($150,000.00) in the aggregate in any Lease Year, (ii) adversely affect
the systems and equipment of the Building or the Building Structure, or (iii) adversely
affect the exterior appearance of the Building (the
Cosmetic
Alterations
). The construction of the initial improvements to the
Premises shall be governed by the terms of the Work Letter Agreements and not
the terms of this
Article 8
.
8.2
Manner of
Construction
.
Landlord
may impose, as a condition of its consent to any and all Alterations or
repairs of the Premises or about the Premises, such requirements as Landlord in
its reasonable discretion may deem desirable; provided, however, such
requirement shall at a minimum include, but not be limited to, the
following: (i) the requirement that
Tenant utilize for such purposes only contractors reasonably approved by
Landlord, (ii) the requirement that upon Landlords timely request (as
more particularly set forth in
Section 8.5, below
), Tenant shall,
at Tenants expense, remove such Alterations upon the expiration or any early
termination of the Lease Term and return the affected portion of the Premises
to the Warm Shell condition as more particularly identified in
Section 2.3
of the Work Letter Agreement attached as
Exhibit B
to this Lease, (iii) the requirement that a copy of Tenants contract(s)
with its contractors be delivered to Landlord prior to the commencement of any
such construction (which contracts shall state that all change orders must be
approved, in writing, by Landlord prior to implementation); (iv) Landlords
review and approval of the final budget (contractors cost proposal) for such
Alterations or repairs; and (v) the requirement that Tenant shall meet
with Landlord, prior to the commencement of any construction, to discuss
Landlords design parameters and code compliance issues. Tenant shall construct
such Alterations and perform such repairs in a good and workmanlike
manner, in conformance with any and all applicable federal, state, county or
municipal laws, rules and regulations and pursuant to a valid building
permit, issued by the City of San Diego, all in conformance with Landlords
construction rules and regulations. In the event Tenant performs any
Alterations in the Premises which require or give rise to governmentally
required changes to the Base Building, as that term is defined below, then
Landlord shall, at Tenants expense, make such changes to the Base Building. The
Base Building
shall consist of the
Building Structure. In performing the work of any such Alterations, Tenant
shall have the work performed in such manner so as not to obstruct access to the
Project or any portion thereof, by any other tenant of the Project, and so as
not to obstruct the business of Landlord or other tenants in the Project. Tenant shall use commercially
reasonable efforts to use contractors, services, workmen, labor, materials or
equipment in a manner that minimizes any material disturbance to labor harmony
with the workforce or trades engaged in performing other work, labor or
services in or about the Project. In addition to Tenants obligations under
Article 9
of this Lease, upon completion of any Alterations, Tenant agrees to cause a
Notice of Completion to be recorded in the office of the Recorder of the County
of San Diego in accordance with Section 3093 of the Civil Code of the
State of California or any successor statute, and Tenant shall deliver to the
Project construction manager a reproducible
24
copy
of the as built drawings of the Alterations, to the extent applicable, as
well as all permits, approvals and other documents issued by any governmental
agency in connection with the Alterations.
8.3
Payment
for Improvements
.
If
payment is made directly to contractors, Tenant shall (i) comply with
Landlords requirements for final lien releases and waivers in connection with
Tenants payment for work to contractors, and (ii) sign Landlords
standard contractors rules and regulations, if any. If Tenant orders any
work directly from Landlord, Tenant shall pay to Landlord an amount equal to
five percent of the cost of such work to compensate Landlord for all overhead,
general conditions, fees and other costs and expenses arising from Landlords
involvement with such work. If Tenant does not order any work directly from
Landlord, Tenant shall reimburse Landlord for Landlords reasonable, actual, out-of-pocket costs and
expenses actually incurred in connection with Landlords review of such work.
8.4
Construction
Insurance
.
In addition to the
requirements of
Article 10
of this Lease, in the event that Tenant
makes any Alterations, prior to the commencement of such Alterations, Tenant
shall provide Landlord with evidence that Tenant carries Builders All Risk
insurance in an amount reasonably approved by Landlord covering the
construction of such Alterations, and such other insurance as Landlord may reasonably
require, it being understood and agreed that all of such Alterations shall be
insured by Tenant pursuant to
Article 10
of this Lease immediately
upon completion thereof. In addition, Landlord may, in its reasonable discretion,
require Tenant to obtain a lien and completion bond or some alternate form of
security satisfactory to Landlord in an amount sufficient to ensure the
lien-free completion of such Alterations and naming Landlord as a co-obligee.
8.5
Landlords Property
. Landlord
and Tenant hereby acknowledge and agree that (i) all Alterations,
improvements, fixtures, equipment and/or appurtenances which may be
installed or placed in or about the Premises, from time to time, shall be at
the sole cost of Tenant and shall be and become the property of Landlord, and (ii) the
Improvements to be constructed in the Premises pursuant to the TCCs of the Work
Letters shall, upon completion of the same, be and become a part of the
Premises and the property of Landlord. Furthermore, Landlord may, by written
notice to Tenant prior to the end of the Lease Term, or given following any
earlier termination of this Lease, require Tenant, at Tenants expense, to (i) remove
any Alterations or improvements in the Premises, and/or (ii) remove any Non-Conforming
Improvements, as that term is defined in
Section 2.4
of the Work
Letter Agreement, to the extent timely identified for removal by Landlord
pursuant to such
Section 2.4
of the Work Letter Agreements, and
return the affected portions of the Premises to the Warm Shell condition
;
provided, however, if, in connection with its notice to Landlord with respect
to any such Alterations or Cosmetic Alterations, (
x
) Tenant
requests Landlords decision with regard to the removal of such Alterations or
Cosmetic Alterations, and (
y
) Landlord
thereafter agrees in writing to waive the removal requirement with regard to
such Alterations or Cosmetic Alterations, then Tenant shall not be required to
so remove such Alterations or Cosmetic Alterations; provided further, however,
that if Tenant requests such a determination from Landlord and Landlord, within
ten (10) business days following Landlords receipt of such request from
Tenant with respect to Alterations or Cosmetic Alterations, fails to address the
removal requirement with regard to such Alterations or Cosmetic Alterations,
Landlord shall be deemed to have agreed to waive the removal requirement with
regard to such Alterations or Cosmetic Alterations
. If Tenant fails to
25
complete
such removal and/or to repair any damage caused by the removal of any
Alterations or improvements in the Premises, and returns the affected portion
of the Premises to the Warm Shell condition, then at Landlords option,
either (A) Tenant shall be deemed to be holding over in the Premises and
Rent shall continue to accrue in accordance with the terms of
Article 16
,
below, until such work shall be completed, or (B) Landlord may do so
and may charge the cost thereof to Tenant. Tenant hereby protects,
defends, indemnifies and holds Landlord harmless from any liability, cost,
obligation, expense or claim of lien in any manner relating to the
installation, placement, removal or financing of any such Alterations,
improvements, fixtures and/or equipment in, on or about the Premises, which
obligations of Tenant shall survive the expiration or earlier termination of
this Lease.
ARTICLE 9
COVENANT AGAINST LIENS
Tenant shall keep the
Project and Premises free from any liens or encumbrances arising out of the
work performed, materials furnished or obligations incurred by or on behalf of
Tenant, and shall protect, defend, indemnify and hold Landlord harmless from
and against any claims, liabilities, judgments or costs (including, without
limitation, reasonable attorneys fees and costs) arising out of same or in
connection therewith. Tenant shall give Landlord notice at least twenty (20)
days prior to the commencement of any such work on the Premises (or such
additional time as may be necessary under applicable laws) to afford
Landlord the opportunity of posting and recording appropriate notices of
non-responsibility. Tenant shall remove any such lien or encumbrance by bond or
otherwise within five (5) business days after notice by Landlord, and if
Tenant shall fail to do so, Landlord may pay the amount necessary to
remove such lien or encumbrance, without being responsible for investigating
the validity thereof. The amount so paid shall be deemed Additional Rent under
this Lease payable upon demand, without limitation as to other remedies
available to Landlord under this Lease. Nothing contained in this Lease shall
authorize Tenant to do any act which shall subject Landlords title to the
Building or Premises to any liens or encumbrances whether claimed by operation
of law or express or implied contract. Any claim to a lien or encumbrance upon
the Building or Premises arising in connection with any such work or respecting
the Premises not performed by or at the request of Landlord shall be null and
void, or at Landlords option shall attach only against Tenants interest in
the Premises and shall in all respects be subordinate to Landlords title to
the Project, Building and Premises.
ARTICLE 10
INSURANCE
10.1
Indemnification and Waiver
.
Except
to the extent (i) otherwise expressly set forth in this Lease to the
contrary, or (ii) caused by the negligence or willful misconduct of the Landlord
Parties, as that term is defined in this
Section 10.1
,
Tenant hereby
assumes all risk of damage to property or injury to persons in, upon or about
the Premises from any cause whatsoever and agrees that Landlord, its partners,
subpartners and their respective officers, agents, servants, employees, and
independent contractors (collectively,
Landlord Parties
)
shall not be liable for, and are hereby released from any responsibility for,
any damage either to
26
person
or property or resulting from the loss of use thereof, which damage is
sustained by Tenant or by other persons claiming through Tenant. Tenant shall
indemnify, defend, protect, and hold harmless the Landlord Parties from any and
all loss, cost, damage, expense and liability (including without limitation
court costs and reasonable attorneys fees) incurred in connection with or
arising from any cause in, on or about the Premises, any acts, omissions or
negligence of Tenant or of any person claiming by, through or under Tenant, or
of the contractors, agents, servants, employees, invitees, guests or licensees
of Tenant or any such person, in, on or about the Project or any breach of the
TCCs of this Lease, either prior to, during, or after the expiration of the
Lease Term, provided that the terms of the foregoing indemnity shall not apply
to the extent (
w
) otherwise expressly set
forth in this Lease to the contrary, or (
x
) caused
by the negligence or willful misconduct of the Landlord Parties. Should
Landlord be named as a defendant in any suit brought against Tenant and to the
extent covered by the indemnity of Tenant set forth in this
Section 10.1
,
Tenant shall pay to Landlord its reasonable costs and expenses incurred in such
suit, including without limitation, its actual professional fees such as
appraisers, accountants and attorneys fees. Further, Tenants agreement to
indemnify Landlord pursuant to this
Section 10.1
is not intended
and shall not relieve any insurance carrier of its obligations under policies
required to be carried by Tenant pursuant to the provisions of this Lease, to
the extent such policies cover the matters subject to Tenants indemnification
obligations; nor shall they supersede any inconsistent agreement of the parties
set forth in any other provision of this Lease. The provisions of this
Section 10.1
shall survive the expiration or sooner termination of this Lease with respect
to any claims or liability arising in connection with any event occurring prior
to such expiration or termination.
Notwithstanding
anything to the contrary contained in this Lease, nothing in this Lease shall
impose any obligations on Tenant or Landlord to be responsible or liable for,
and each hereby releases the other from all liability for, consequential
damages other than those consequential damages incurred by Landlord in
connection with a holdover of the Premises by Tenant after the expiration or
earlier termination of this Lease or incurred by Landlord in connection with
any repair, physical construction or improvement work performed by or on behalf
of Tenant in the Project.
10.2
Landlords
Fire, Casualty and Liability Insurance
.
10.2.1
Landlord
shall maintain Commercial/Comprehensive General Liability Insurance with
respect to the Building during the Lease Term covering claims for bodily
injury, personal injury and property damage in the Project Common Areas and
with respect to Landlords activities in the Premises.
10.2.2
Landlord
shall insure the Building and Landlords remaining interest in the Improvements
and Alterations with a policy of Physical Damage Insurance including building
ordinance coverage, written on a standard Causes of Loss Special Form basis
(against loss or damage due to fire and other casualties covered within the
classification of fire and extended coverage, vandalism, and malicious
mischief, sprinkler leakage, water damage and special extended coverage),
covering the full replacement cost of the Base Building, Premises and other
improvements (including coverages for enforcement of Applicable Laws requiring
the upgrading, demolition, reconstruction and/or replacement of any portion of
the Building as a result of a covered loss) without deduction for depreciation.
27
10.2.3
Landlord
shall maintain Boiler and Machinery/Equipment Breakdown Insurance covering the
Building against risks commonly insured against by a Boiler &
Machinery/Equipment Breakdown policy and such policy shall cover the full
replacement costs, without deduction for depreciation.
10.2.4
The foregoing
coverages shall contain commercially reasonable deductible amounts from such
companies, and on such other terms and conditions, as Landlord may from
time to time reasonably determine.
10.2.5
Additionally,
at the option of Landlord, such insurance coverage may include the risk of
(i) earthquake, (ii) flood damage and additional hazards, (iii) a
rental loss endorsement for a period of up to two (2) years, (iv) one
or more loss payee endorsements in favor of holders of any mortgages or deeds
of trust encumbering the interest of Landlord in the Building, or any portion
thereof.
10.2.6
In addition
to the insurance coverage identified in
Section 10.2.5
, Landlord
may, at the option of Landlord, maintain Pollution Legal Liability
Environmental Insurance, as that term is set forth below. For purposes of this
Lease, the
Pollution Legal Liability
Environmental Insurance
(aka an Owners Policy of environmental
insurance) shall mean insurance (1) from an insurance carrier with a
credit rating of no less than AX in Bests Insurance Guide, it being
acknowledged and agreed by Landlord that, as of the date of this Lease, AIG,
Chubb, Zurich and the XL Insurance Company currently satisfy such credit
rating, and (2) providing, at a minimum, the following: (a) an initial three (3)-year policy
term (with successive 1-year terms renewable on a rolling annual basis, until
such time as the policy term equals or exceeds the Lease Expiration Date), (b) $2,000,000
coverage per incident or occurrence, (c) $2,000,000 aggregate coverage, (d) a
deductible or self-insured retention of no more than $100,000, and (e) coverage
for: (A) unknown pre-existing conditions; (B) unknown and later
discovered conditions; (C) on-site and off-site third-party claims for
bodily injury or property damage; and (D) legal defense expenses. Furthermore,
the policy of insurance must include an automatic extended reporting period
that provides the Insured a period of no less than sixty (60) days following
the effective date of termination of coverage in which to provide written
notice to the insurance carrier of claims first made and reported within the
automatic extended reporting period. All other terms, coverage, exclusions, or
conditions of the policy shall be at Landlords sole and complete discretion. Notwithstanding
the foregoing, to the extent no Event of Default is then occurring, Tenant
shall have the option, upon sixty (60) days written notice to Landlord, to
itself carry such Pollution Legal Liability Environmental Insurance in lieu of
Landlord carrying such insurance; provided further, however, to the extent
Tenant so elects to carry such Pollution Legal Liability Environmental
Insurance pursuant to the foregoing clause, Tenant shall comply with the
express coverage requirements set forth hereinabove, and such coverage shall
otherwise comply with the TCCs of
Section 10.4
, below.
10.2.7
In connection
with the foregoing provisions of this
Section 10.2
, the coverage
and amounts of insurance carried by Landlord in connection with the Building
and Project shall, at a minimum, be comparable to the coverage and amounts of
insurance which are carried by reasonably prudent landlords of Comparable
Buildings, and Workers Compensation and Employers Liability coverage as
required by applicable law. Tenant shall, at Tenants expense, comply with all
insurance company requirements pertaining to the use of the Premises.
28
If
Tenants conduct or use of the Premises causes any increase in the premium for
such insurance policies then Tenant shall reimburse Landlord for any such
increase. Tenant, at Tenants expense, shall comply with all rules, orders,
regulations or requirements of the American Insurance Association (formerly the
National Board of Fire Underwriters) and with any similar body.
10.3
Tenants Insurance
. Tenant
shall maintain the following coverages in the following amounts.
10.3.1
Commercial
General Liability Insurance covering the insured against claims of bodily
injury, personal injury and property damage (including loss of use thereof)
arising out of Tenants operations, and contractual liabilities (covering the
performance by Tenant of its indemnity agreements) including a Broad Form contractual
liability endorsement covering the insuring provisions of this Lease. Landlord
shall be named as an additional insured as their interests may appear
using form CG2011 or a comparable form approved by Landlord. An
endorsement showing that Tenants coverage is primary and any insurance carried
by Landlord shall be excess and noncontributing. Such insurance shall (i) name
Landlord, and any other party the Landlord so specifies that has a material
financial interest in the Project as an additional insured, including Landlords
managing agent, if any, and (ii) specifically cover the liability assumed
by Tenant under this Lease, including, but not limited to, Tenants obligations
under
Section 10.1
of this Lease. Liability limits shall not be
less than:
Bodily Injury and
|
|
$4,000,000 each occurrence
|
Property Damage Liability
|
|
$5,000,000 annual aggregate, or
any combination of primary
insurance and excess insurance
|
|
|
|
Personal Injury Liability
|
|
$4,000,000 each occurrence
|
|
|
$5,000,000 annual aggregate, or
any combination of primary
insurance and excess insurance
|
|
|
0% Insureds participation
|
10.3.2
Property
Insurance covering (i) all office furniture, business and trade fixtures,
office equipment, free-standing cabinet work, movable partitions, merchandise
and all other items of Tenants property on the Premises installed by, for, or
at the expense of Tenant, (ii) the Improvements and any other improvements
which exist in the Premises as of the Lease Commencement Date (excluding the
Base Building (the
Original Improvements
),
and (iii) all other improvements, alterations and additions to the
Premises. Such insurance shall be written on an all risks of physical loss or
damage basis, for the full replacement cost value (subject to reasonable
deductible amounts) new without deduction for depreciation of the covered items
and in amounts that meet any co-insurance clauses of the policies of insurance
and shall include coverage for damage or other loss caused by fire or other
peril including, but not limited to, vandalism and malicious mischief, theft,
water damage of any type, including sprinkler leakage, bursting or stoppage of
pipes, and explosion.
10.3.3
Workers
Compensation or other similar insurance pursuant to all applicable state and
local statutes and regulations, and Employers Liability Insurance or other
29
similar
insurance pursuant to all applicable state and local statutes and regulations,
with minimum limits of One Million and No/100 Dollars ($1,000,000.00) per
employee and One Million and No/100 Dollars ($1,000,000.00) per occurrence.
10.3.4
Commercial Automobile
Liability Insurance covering all owned, hired, or non-owned vehicles with the
following limits of liability: One
Million Dollars ($1,000,000.00) combined single limit for bodily injury and
property damage.
10.3.5
Business
Interruption, loss of income and extra expense insurance in such amounts as
will reimburse Tenant for actual direct or indirect loss of earnings for up to
one (1) year attributable to the risks outlined in
Section 10.3.2
,
above.
10.4
Form of
Policies
.
The minimum limits
of policies of insurance required of Tenant under this Lease shall in no event
limit the liability of Tenant under this Lease. Such insurance shall (i) name
Landlord, and any other party the Landlord so specifies that has a material
financial interest in the Project, as an additional insured, including Landlords
managing agent, if any; (ii) specifically cover the liability assumed by
Tenant under this Lease, including, but not limited to, Tenants obligations
under
Section 10.1
of this Lease; (iii) be issued by an
insurance company having a rating of not less than A-X in Bests Insurance
Guide or which is otherwise acceptable to Landlord and licensed to do business
in the State of California; (iv) be primary insurance as to all claims
thereunder and provide that any insurance carried by Landlord is excess and is
non-contributing with any insurance requirement of Tenant; (v) be in form and
content reasonably acceptable to Landlord; and (vi) provide that said
insurance shall not be canceled or coverage changed unless thirty (30) days
prior written notice shall have been given to Landlord and any mortgagee of
Landlord, the identity of whom has been provided to Tenant in writing. Tenant
shall deliver said policy or policies or certificates thereof to Landlord on or
before the Lease Commencement Date and at least thirty (30) days before the
expiration dates thereof. In the event Tenant shall fail to procure such
insurance, or to deliver such policies or certificate, Landlord may, at its
option, after written notice to Tenant and Tenants failure to obtain such
insurance within five (5) days thereafter, procure such policies for the
account of Tenant, and the cost thereof shall be paid to Landlord within thirty
(30) days after delivery to Tenant of bills therefor.
10.5
Subrogation
. Landlord
and Tenant intend that their respective property loss risks shall be borne by
reasonable insurance carriers to the extent above provided, and Landlord and
Tenant hereby agree to look solely to, and seek recovery only from, their
respective insurance carriers in the event of a property loss to the extent
that such coverage is agreed to be provided hereunder. The parties each hereby
waive all rights and claims against each other for such losses, and waive all
rights of subrogation of their respective insurers, provided such waiver of
subrogation shall not affect the right to the insured to recover thereunder. The
parties agree that their respective insurance policies are now, or shall be,
endorsed such that the waiver of subrogation shall not affect the right of the
insured to recover thereunder, so long as no material additional premium is
charged therefor.
10.6
Additional
Insurance Obligations
.
Tenant
shall carry and maintain during the entire Lease Term, at Tenants sole cost
and expense, increased amounts of the insurance required to be carried by
Tenant pursuant to this
Article 10
and such other reasonable types
of
30
insurance
coverage and in such reasonable amounts covering the Premises and Tenants
operations therein, as may be reasonably requested by Landlord. Notwithstanding
the foregoing, Landlords request shall only be considered reasonable if such
increased coverage amounts and/or such new types of insurance are consistent
with the requirements of a majority of Comparable Buildings, and Landlord shall
not so increase the coverage amounts or require additional types of insurance
during the first five (5) years of the Lease Term and thereafter no more
often than one time in any five (5) year period.
ARTICLE 11
DAMAGE AND DESTRUCTION
11.1
Repair of
Damage to Premises by Landlord
.
Tenant shall promptly notify Landlord of any material damage to
the Premises resulting from fire or any other casualty. If the Premises or any
Common Areas serving or providing access to the Premises shall be damaged by
fire or other casualty, Landlord shall promptly and diligently, subject to
reasonable delays for insurance adjustment or other matters beyond Landlords
reasonable control, and subject to all other terms of this
Article 11
,
restore the Base Building and such Common Areas. Such restoration shall be to
substantially the same condition of the Base Building and the Common Areas
prior to the casualty, except for modifications required by zoning and building
codes and other laws or by the holder of a mortgage on the Building or Project
or any other modifications to the Common Areas deemed desirable by Landlord,
which are consistent with the character of the Project, provided that access to
the Premises and any common restrooms serving the Premises shall not be
materially impaired. Upon the occurrence of any damage to the Premises, upon
notice (the
Landlord Repair Notice
) to Tenant
from Landlord, Tenant shall assign to Landlord (or to any party designated by
Landlord) all insurance proceeds payable to Tenant under Tenants insurance
required under
Section 10.3(ii) and (iii)
of this Lease,
and Landlord shall repair any injury or damage to the Improvements and the
Original Improvements installed in the Premises and shall return such
Improvements and Original Improvements to their original condition; provided
that if the cost of such repair by Landlord exceeds the amount of insurance
proceeds received by Landlord from Tenants insurance carrier, as assigned by
Tenant, the cost of such repairs shall be paid by Tenant to Landlord prior to
Landlords commencement of repair of the damage. In the event that Landlord
does not deliver the Landlord Repair Notice within sixty (60) days following
the date the casualty becomes known to Landlord, Tenant shall, at its sole cost
and expense, repair any injury or damage to the Improvements and the Original
Improvements installed in the Premises and shall return such Improvements and
Original Improvements to their original condition. Whether or not Landlord
delivers a Landlord Repair Notice, prior to the commencement of construction,
Tenant shall submit to Landlord, for Landlords review and approval, all plans,
specifications and working drawings relating thereto, and Landlord shall select
the contractors to perform such improvement work. Landlord shall not be
liable for any inconvenience or annoyance to Tenant or its visitors, or injury
to Tenants business resulting in any way from such damage or the repair
thereof; provided however, that if such fire or other casualty shall have
damaged the Premises or Common Areas necessary to Tenants occupancy, and the
Premises are not occupied by Tenant as a result thereof, then during the time
and to the extent the Premises are unfit for occupancy, the Rent shall be
abated in proportion to the ratio that the amount of rentable square feet of
31
the
Premises which is unfit for occupancy for the purposes permitted under this
Lease bears to the total rentable square feet of the Premises. In the event
that Landlord shall not deliver the Landlord Repair Notice, Tenants right to
rent abatement pursuant to the preceding sentence shall terminate as of the
date which is reasonably determined by Landlord to be the date Tenant should
have completed repairs to the Premises assuming Tenant used reasonable due
diligence in connection therewith.
11.2
Landlords
Option to Repair
.
Within
forty-five (45) days after the date of discovery of the damage, Landlord shall
provide Tenant with written notice setting forth a determination, in Landlords
reasonable judgment, when repairs are anticipated to be completed the
Damage Determination Notice
); provided,
however, Landlord shall nevertheless use commercially reasonable efforts to
provide such Damage Determination Notice as early as reasonably practicable. To
the extent Landlord fails to timely deliver the Damage Determination Notice,
Tenant may notify Landlord in writing of such failure and if, within ten (10) business
days thereafter, Landlords failure to deliver the Damage Determination Notice
continues, then Landlord shall be deemed to have concluded that, in Landlords
reasonable judgment, the repairs cannot reasonably be completed within one
hundred eighty (180) days after the discover of the damage (when such repairs
are made without the payment of overtime or other premiums), and Tenant shall
have the resulting right to terminate this Lease as more particularly set forth
herein below. Notwithstanding the terms of
Section 11.1
of this
Lease, Landlord may elect not to rebuild and/or restore the Premises,
Building and/or Project, and instead terminate this Lease, by notifying Tenant
in writing of such termination within sixty (60) days after the date of
discovery of the damage, such notice to include a termination date giving
Tenant sixty (60) days to vacate the Premises, but Landlord may so elect
only if the Building or Project shall be damaged by fire or other casualty or
cause, whether or not the Premises are affected, and one or more of the
following conditions is present: (i) in Landlords reasonable judgment,
repairs cannot reasonably be completed within one hundred eighty (180) days
after the date of discovery of the damage (when such repairs are made without
the payment of overtime or other premiums); (ii) the holder of any
mortgage on the Building or Project or ground lessor with respect to the
Building or Project shall require that the insurance proceeds or any portion
thereof be used to retire the mortgage debt, or shall terminate the ground
lease, as the case may be; (iii) the damage is not fully covered by
Landlords insurance policies; (iv) Landlord decides to rebuild the
Building or Common Areas so that they will be substantially different structurally
or architecturally; (v) the damage occurs during the last twelve (12)
months of the Lease Term; or (vi) any owner of any other portion of the
Project, other than Landlord, does not intend to repair the damage to such
portion of the Project; provided, however, that if Landlord (A) timely
delivered the Damage Determination Notice (following the notice and cure period
identified in this
Section 11.2
, above), or (B) does not elect
to terminate this Lease pursuant to Landlords termination right as provided
above, and the repairs cannot, in the reasonable opinion of Landlord (as
expressly identified in such Damage Determination Notice), be completed within
one hundred eighty (180) days after the date of discovery of the damage (when
such repairs are made without the payment of overtime or other premiums),
Tenant may elect, no earlier than the date of its receipt (or deemed
receipt) of the Damage Determination Notice and not later than ninety (90) days
after the date of such damage, to terminate this Lease by written notice to
Landlord effective as of the date specified in the notice, which date shall not
be less than thirty (30) days nor more than sixty (60) days after the date such
notice is given by Tenant; provided further, however, to the extent that, as a
result of changes in zoning, building codes or other Applicable Laws which
become applicable to the Building as a result of, and following, material
damage to the Building and subsequent implementation of the repairs pursuant to
this Article 11, Tenant will be unable,
32
following
such repairs, to maintain its use of, and operations in, the Building in a
manner materially consistent with its use of, and operations in, the Building
prior to such material damage, then Tenant may elect to terminate this
Lease by no less than thirty (30) days advance written notice to Landlord,
which termination notice shall be delivered no earlier than the date of its
receipt (or deemed receipt) of the Damage Determination Notice and not later
than ninety (90) days after the date of such damage. Furthermore, if neither
Landlord nor Tenant has terminated this Lease, and the repairs are not actually
completed on or before the later to occur of (
x
) the
date which is one hundred eighty (180) days after the date of discovery of the
damage, and (
y
) the last day of the
longer, estimated period of repair specified in Landlords Damage Determination
Notice, Tenant shall have the right to terminate this Lease during the first
five (5) business days of each calendar month following the end of such
period until such time as the repairs are complete, by notice to Landlord (the
Damage Termination Notice
), effective as of a date set
forth in the Damage Termination Notice (the
Damage Termination
Date
), which Damage Termination Date shall not be less than ten (10) business
days following the end of each such month. Notwithstanding the foregoing, if
Tenant delivers a Damage Termination Notice to Landlord, then Landlord shall
have the right to suspend the occurrence of the Damage Termination Date for a
period ending thirty (30) days after the Damage Termination Date set forth in
the Damage Termination Notice by delivering to Tenant, within five (5) business
days of Landlords receipt of the Damage Termination Notice, a certificate of
Landlords contractor responsible for the repair of the damage certifying that
it is such contractors good faith judgment that the repairs shall be
substantially completed within thirty (30) days after the Damage Termination
Date. If repairs shall be substantially completed prior to the expiration of
such thirty-day period, then the Damage Termination Notice shall be of no force
or effect, but if the repairs shall not be substantially completed within such
thirty-day period, then this Lease shall terminate upon the expiration of such
thirty-day period. At any time, from time to time, after the date occurring
sixty (60) days after the date of the damage, Tenant may request that
Landlord inform Tenant of Landlords reasonable opinion of the date of
completion of the repairs and Landlord shall respond to such request within
five (5) business days. Notwithstanding the provisions of this
Section 11.2
,
Tenant shall have the right to terminate this Lease under this
Section 11.2
only if each of the following conditions is satisfied: (a) the damage to
the Project by fire or other casualty was not caused by the gross negligence or
intentional act of Tenant or its partners or subpartners and their respective
officers, agents, servants, employees, and independent contractors; and (b) as
a result of the damage, Tenant cannot reasonably conduct business from the
Premises; and, (d) as a result of the damage to the Project, Tenant does
not occupy or use more than twenty percent (20%) of the then-existing Premises.
In the event this Lease is terminated in accordance with
the terms of this
Section 11.2
, Tenant shall assign to Landlord (or
to any party designated by Landlord) all insurance proceeds payable to Tenant
under Tenants insurance required under items (ii) and (iii) of
Section 10.3.2
of this Lease; provided, however, in no event shall Tenant be obligated to
assign any such proceeds to the extent they exceed the then-remaining,
unamortized portion of the Improvement Allowances disbursed by Landlord
pursuant to the TCCs of the Work Letter Agreements, provided the foregoing
amortization
determination shall be calculated as of the termination date based upon the
initial Lease Term, with interest at the Interest Rate
.
11.3
Waiver of Statutory Provisions
. The
provisions of this Lease, including this
Article 11
, constitute an
express agreement between Landlord and Tenant with respect to any and all
damage to, or destruction of, all or any part of the Premises, the
Building or the Project,
33
and
any statute or regulation of the State of California, including, without
limitation, Sections 1932(2) and 1933(4) of the California Civil
Code, with respect to any rights or obligations concerning damage or
destruction in the absence of an express agreement between the parties, and any
other statute or regulation, now or hereafter in effect, shall have no
application to this Lease or any damage or destruction to all or any part of
the Premises, the Building or the Project.
ARTICLE 12
NONWAIVER
No provision of this
Lease shall be deemed waived by either party hereto unless expressly waived in
a writing signed thereby. The waiver by either party hereto of any breach of
any term, covenant or condition herein contained shall not be deemed to be a
waiver of any subsequent breach of same or any other term, covenant or
condition herein contained. The subsequent acceptance of Rent hereunder by
Landlord shall not be deemed to be a waiver of any preceding breach by Tenant
of any term, covenant or condition of this Lease, other than the failure of
Tenant to pay the particular Rent so accepted, regardless of Landlords
knowledge of such preceding breach at the time of acceptance of such Rent. No
acceptance of a lesser amount than the Rent herein stipulated shall be deemed a
waiver of Landlords right to receive the full amount due, nor shall any
endorsement or statement on any check or payment or any letter accompanying
such check or payment be deemed an accord and satisfaction, and Landlord may accept
such check or payment without prejudice to Landlords right to recover the full
amount due. No receipt of monies by Landlord from Tenant after the termination
of this Lease shall in any way alter the length of the Lease Term or of Tenants
right of possession hereunder, or after the giving of any notice shall
reinstate, continue or extend the Lease Term or affect any notice given Tenant
prior to the receipt of such monies, it being agreed that after the service of
notice or the commencement of a suit, or after final judgment for possession of
the Premises, Landlord may receive and collect any Rent due, and the
payment of said Rent shall not waive or affect said notice, suit or judgment.
ARTICLE 13
CONDEMNATION
If the whole or any part of
the Premises, Building or Project shall be taken by power of eminent domain or
condemned by any competent authority for any public or quasi-public use or
purpose, or if any adjacent property or street shall be so taken or condemned,
or reconfigured or vacated by such authority in such manner as to require the
use, reconstruction or remodeling of any part of the Premises, Building or
Project, or if Landlord shall grant a deed or other instrument in lieu of such
taking by eminent domain or condemnation, Landlord shall have the option to
terminate this Lease effective as of the date possession is required to be
surrendered to the authority. If more than twenty-five percent (25%) of the
rentable square feet of the Premises is taken, or if access to the Premises is
substantially impaired, in each case for a period in excess of one hundred
eighty (180) days, Tenant shall have the option to terminate this Lease
effective as of the date possession is required to be surrendered to the authority.
Tenant shall not because of such taking assert any claim against Landlord or
the authority for any compensation because
34
of such taking and
Landlord shall be entitled to the entire award or payment in connection
therewith, except that Tenant shall have the right to file any separate claim
available to Tenant for any taking of Tenants personal property and fixtures
belonging to Tenant and removable by Tenant upon expiration of the Lease Term
pursuant to the terms of this Lease, and for moving expenses, so long as such
claims do not diminish the award available to Landlord, its ground lessor with
respect to the Building or Project or its mortgagee, and such claim is payable
separately to Tenant. All Rent shall be apportioned as of the date of such
termination. If any part of the Premises shall be taken, and this Lease
shall not be so terminated, the Rent
shall be proportionately abated. Tenant hereby waives any and all rights it
might otherwise have pursuant to Section 1265.130 of The California Code
of Civil Procedure. Notwithstanding anything to the contrary contained in this
Article 13
,
in the event of a temporary taking of all or any portion of the Premises for a
period of one hundred and eighty (180) days or less, then this Lease shall not
terminate but the Base Rent and the Additional Rent shall be abated for the
period of such taking in proportion to the ratio that the amount of rentable
square feet of the Premises taken bears to the total rentable square feet of
the Premises. Landlord shall be entitled to receive the entire award made in
connection with any such temporary taking.
ARTICLE 14
ASSIGNMENT AND SUBLETTING
14.1
Transfers
. Subject to the TCCs of
Section 14.8
,
below, Tenant shall not, without the prior written consent of Landlord, assign,
mortgage, pledge, hypothecate, encumber, or permit any lien to attach to, or
otherwise transfer, this Lease or any interest hereunder, permit any
assignment, or other transfer of this Lease or any interest hereunder by
operation of law, sublet the Premises or any part thereof, or enter into
any license or concession agreements or otherwise permit the occupancy or use
of the Premises or any part thereof by any persons other than Tenant and
its employees and contractors (all of the foregoing are hereinafter sometimes
referred to collectively as
Transfers
and
any person to whom any Transfer is made or sought to be made is hereinafter
sometimes referred to as a
Transferee
). If
Tenant desires Landlords consent to any Transfer, Tenant shall notify Landlord
in writing, which notice (the
Transfer Notice
)
shall include (i) the proposed effective date of the Transfer, which shall
not be less than thirty (30) days nor more than one hundred eighty (180) days
after the date of delivery of the Transfer Notice, (ii) a description of
the portion of the Premises to be transferred (the
Subject
Space
), (iii) all of the terms of the proposed Transfer and
the consideration therefor, including calculation of the
Transfer Premium
, as that term is defined
in
Section 14.3
below, in connection with such Transfer, the name
and address of the proposed Transferee, and a copy of all existing executed
and/or proposed documentation pertaining to the proposed Transfer, including all
existing operative documents to be executed to evidence such Transfer or the
agreements incidental or related to such Transfer, provided that Landlord shall
have the right to require Tenant to utilize Landlords standard Transfer
documents in connection with the documentation of such Transfer, (iv) current
financial statements of the proposed Transferee certified by an officer,
partner or owner thereof, business credit and personal references and history
of the proposed Transferee and any other information required by Landlord which
will enable Landlord to determine the financial responsibility, character, and
reputation of the proposed Transferee, nature of such Transferees business and
proposed use of the Subject Space and (v) an executed estoppel certificate
from Tenant in the form attached hereto as
Exhibit E
.
35
Any Transfer made without Landlords prior written consent
shall, at Landlords option, be null, void and of no effect, and shall, at
Landlords option, constitute a default by Tenant under this Lease. Whether or
not Landlord consents to any proposed Transfer, Tenant shall pay Landlords
review and processing fees, as well as any reasonable professional fees
(including, without limitation, attorneys, accountants, architects,
engineers and consultants fees) incurred by Landlord, within thirty (30) days
after written request by Landlord.
14.2
Landlords Consent
. Landlord
shall not unreasonably withhold its consent to any proposed Transfer of the
Subject Space to the Transferee on the terms specified in the Transfer Notice. Without
limitation as to other reasonable grounds for withholding consent, the parties
hereby agree that it shall be reasonable under this Lease and under any
applicable law for Landlord to withhold consent to any proposed Transfer where
one or more of the following apply:
14.2.1
The
Transferee is of a character or reputation or engaged in a business which is
not consistent with the quality of the Building or the Project;
14.2.2
The
Transferee intends to use the Subject Space for purposes which are not
permitted under this Lease;
14.2.3
The
Transferee is either a governmental agency or instrumentality thereof;
14.2.4
The
Transferee is not a party of reasonable financial worth and/or financial
stability in light of the responsibilities to be undertaken in connection with
the Transfer on the date consent is requested;
14.2.5
The proposed
Transfer would cause a violation of another lease for space in the Project, or
would give an occupant of the Project a right to cancel its lease; provided,
however, Landlord and Tenant hereby acknowledge and agree that the TCCs of this
Section 14.2.5
shall only apply to the extent that (i) Landlord
recaptures a portion of the Premises pursuant to the express TCCs of
Section 14.4
of this Lease, below, (ii) Landlord subsequently leases such recaptured
space to a third-party tenant, and (iii) such third-party would have a
right to cancel its lease as a result of the proposed Transfer.
14.2.6
The terms of
the proposed Transfer will allow the Transferee to exercise a right of renewal,
right of expansion, right of first offer, or other similar right held by Tenant
(or will allow the Transferee to occupy space leased by Tenant pursuant to any
such right) in violation of the express provisions of
Section 2.2
and/or any other express provisions of this Lease; or
14.2.7
Either the
proposed Transferee, or any person or entity which directly or indirectly,
controls, is controlled by, or is under common control with, the proposed
Transferee, (i) occupies space in the Project at the time of the request
for consent, or (ii) is negotiating with Landlord to lease space in the
vicinity of the Project at such time, or (iii) has negotiated with
Landlord during the twelve (12)-month period immediately preceding the Transfer
Notice; or
If Landlord consents to
any Transfer pursuant to the terms of this
Section 14.2
(and does
not exercise any recapture rights Landlord may have under
Section 14.4
of this Lease), Tenant
36
may within
six (6) months after Landlords consent, but not later than the expiration
of said six-month period, enter into such Transfer of the Premises or portion
thereof, upon substantially the same terms and conditions as are set forth in
the Transfer Notice furnished by Tenant to Landlord pursuant to
Section 14.1
of this Lease, provided that if there are any changes in the terms and
conditions from those specified in the Transfer Notice (i) such that
Landlord would initially have been entitled to refuse its consent to such
Transfer under this
Section 14.2
, or (ii) which would cause
the proposed Transfer to be more favorable to the Transferee than the terms set
forth in Tenants original Transfer Notice, Tenant shall again submit the
Transfer to Landlord for its approval and other action under this
Article 14
(including Landlords right of recapture, if any, under
Section 14.4
of this Lease). Notwithstanding anything to the contrary in this Lease, if Tenant
or any proposed Transferee claims that Landlord has unreasonably withheld or
delayed its consent under
Section 14.2
or otherwise has breached or
acted unreasonably under this
Article 14
, their sole remedies shall
be (
x
) a declaratory judgment and an
injunction for the relief sought without any monetary damages, and (
y
) any attorneys fees and costs that may be
awarded by the court in connection therewith, as provided in
Section 29.21
,
below, Tenant hereby waives all other remedies, including, without limitation,
any right at law or equity to terminate this Lease, on its own behalf and, to
the extent permitted under all applicable laws, on behalf of the proposed
Transferee.
14.3
Transfer Premium
. If Landlord
consents to a Transfer, as a condition thereto which the parties hereby agree
is reasonable, Tenant shall pay to Landlord fifty percent (50%) of any Transfer
Premium, as that term is defined in this
Section 14.3
, received by
Tenant from such Transferee.
Transfer Premium
shall mean all rent, additional rent or other consideration payable by such
Transferee in connection with the Transfer in excess of the Rent and Additional
Rent payable by Tenant under this Lease during the term of the Transfer on a
per rentable square foot basis if less than all of the Premises is transferred,
after deducting the reasonable expenses incurred by Tenant for (i) any
changes, alterations and improvements to the Premises in connection with the
Transfer, (ii) any free base rent or other economic concessions reasonably
provided to the Transferee, and (iii) any brokerage commissions in
connection with the Transfer. Transfer Premium shall also include, but not be
limited to, key money, bonus money or other cash consideration paid by
Transferee to Tenant in connection with such Transfer, and to the extent any
such payment is in excess of fair market value, for (A) services rendered
by Tenant to Transferee, or (B) assets, fixtures, inventory, equipment, or
furniture transferred by Tenant to Transferee in connection with such Transfer.
In the calculations of the Rent (as it relates to the Transfer Premium
calculated under this
Section 14.3
), and the Transferees Rent and
Quoted Rent under
Section 14.2
of this Lease, the Rent paid during
each annual period for the Subject Space, and the Transferees Rent and the
Quoted Rent, shall be computed after adjusting such rent to the actual
effective rent to be paid, taking into
consideration any and all leasehold concessions granted in connection
therewith, including, but not limited to, any rent credit and any improvement
allowance. For purposes of calculating any such effective rent all such
concessions shall be amortized on a straight-line basis over the relevant term.
14.4
Landlords Option as to Subject Space
.
In
the event that a proposed Transfer, if consented to, would cause more
seventy-five percent (75%) of the Premises, cumulatively, to be subleased or
licensed to a party (or parties) other than Original Tenant or a Permitted
Transferee, then n
otwithstanding anything to the contrary contained in
this
Article 14
, Landlord shall have the option, by giving written
notice to Tenant within thirty (30) days after receipt of any Transfer
37
Notice,
to recapture the Subject Space. Such recapture notice shall cancel and
terminate this Lease with respect to the Subject Space as of the date stated in
the Transfer Notice as the effective date of the proposed Transfer until the
last day of the term of the Transfer as set forth in the Transfer Notice (or at
Landlords option, shall cause the Transfer to be made to Landlord or its
agent, in which case the parties shall execute the Transfer documentation
promptly thereafter). In the event of a recapture by Landlord, if this Lease
shall be canceled with respect to less than the entire Premises, the Rent
reserved herein shall be prorated on the basis of the number of rentable square
feet retained by Tenant in proportion to the number of rentable square feet
contained in the Premises, and this Lease as so amended shall continue
thereafter in full force and effect, and upon request of either party, the
parties shall execute written confirmation of the same. However, if Landlord
delivers a recapture notice to Tenant, Tenant may, within ten (10) business
days after Tenants receipt of such recapture notice, deliver written notice to
Landlord indicating that Tenant is rescinding its request for consent to the
proposed transfer, in which case such Transfer shall not be consummated and
this Lease shall remain in full force and effect as to the portion of the
Premises that was the subject of the proposed Transfer. If Landlord declines,
or fails to elect in a timely manner to recapture the Subject Space under this
Section 14.4
,
then, provided Landlord has consented to the proposed Transfer, Tenant shall be
entitled to proceed to transfer the Subject Space to the proposed Transferee,
subject to provisions of this
Article 14
.
14.5
Effect of Transfer
. If Landlord
consents to a Transfer, (i) the TCCs of this Lease shall in no way be
deemed to have been waived or modified, (ii) such consent shall not be
deemed consent to any further Transfer by either Tenant or a Transferee, (iii) Tenant
shall deliver to Landlord, promptly after execution, an original executed copy of
all documentation pertaining to the Transfer in form reasonably acceptable
to Landlord, (iv) Tenant shall furnish upon Landlords request a complete
statement, certified by an independent certified public accountant, or Tenants
chief financial officer, setting forth in detail the computation of any
Transfer Premium Tenant has derived and shall derive from such Transfer, and (v) no
Transfer relating to this Lease or agreement entered into with respect thereto,
whether with or without Landlords consent, shall relieve Tenant or any
guarantor of the Lease from any liability under this Lease, including, without
limitation, in connection with the Subject Space. Landlord or its authorized
representatives shall have the right at all reasonable times to audit the
books, records and papers of Tenant relating to any Transfer, and shall have
the right to make copies thereof. If the Transfer Premium respecting any
Transfer shall be found understated, Tenant shall, within thirty (30) days
after demand, pay the deficiency, and if understated by more than two percent
(2%), Tenant shall pay Landlords costs of such audit.
14.6
Additional Transfers
. For
purposes of this Lease, the term
Transfer
shall
also include (i) if Tenant is a partnership, the withdrawal or change,
voluntary, involuntary or by operation of law, of fifty percent (50%) or more
of the partners, or transfer of fifty percent (50%) or more of partnership
interests, within a twelve (12)-month period, or the dissolution of the
partnership without immediate reconstitution thereof, and (ii) if Tenant
is a closely held corporation (
i.e.
, whose
stock is not publicly held and not traded through an exchange or over the
counter), (A) the dissolution, merger, consolidation or other
reorganization of Tenant or (B) the sale or other transfer of an aggregate
of fifty percent (50%) or more of the voting shares of Tenant (other than (1) to
immediate family members by reason of gift or death, or (2) to family
controlled affiliates or other Affiliates), within a twelve (12)-month period,
or (C) the sale,
38
mortgage,
hypothecation or pledge of an aggregate of fifty percent (50%) or more of the
value of the unencumbered assets of Tenant within a twelve (12)-month period.
14.7
Occurrence of Default
. Any
Transfer hereunder shall be subordinate and subject to the provisions of this
Lease, and if this Lease shall be terminated during the term of any Transfer,
Landlord shall have the right to: (i) treat
such Transfer as cancelled and repossess the Subject Space by any lawful means,
or (ii) require that such Transferee attorn to and recognize Landlord as
its landlord under any such Transfer. If an Event of Default is then occurring
under this Lease, Landlord is hereby irrevocably authorized, as Tenants agent
and attorney-in-fact, to direct any Transferee to make all payments under or in
connection with the Transfer directly to Landlord (which Landlord shall apply
towards Tenants obligations under this Lease) until such Event of Default is
cured. Such Transferee shall rely on any representation by Landlord that an
Event of Default is then occurring under this Lease, without any need for
confirmation thereof by Tenant. Upon any assignment, the assignee shall assume
in writing all obligations and covenants of Tenant thereafter to be performed
or observed under this Lease. No collection or acceptance of rent by Landlord
from any Transferee shall be deemed a waiver of any provision of this
Article 14
or the approval of any Transferee or a release of Tenant from any obligation
under this Lease, whether theretofore or thereafter accruing. In no event shall
Landlords enforcement of any provision of this Lease against any Transferee be
deemed a waiver of Landlords right to enforce any term of this Lease against
Tenant or any other person. If Tenants obligations hereunder have been
guaranteed, Landlords consent to any Transfer shall not be effective unless
the guarantor also consents to such Transfer.
14.8
Non-Transfers
.
Notwithstanding anything to the contrary contained in this
Article 14
,
(i) an assignment or subletting of all or a portion of the Premises to an
affiliate of Tenant (an entity which is controlled by, controls, or is under
common control with, Tenant), (ii) an assignment of the Premises to an
entity which acquires all or substantially all of the assets or interests
(partnership, stock or other) of Tenant, or (iii) an assignment of the
Premises to an entity which is the resulting entity of a merger or
consolidation of Tenant, shall not be deemed a Transfer under this
Article 14
,
provided that Tenant notifies Landlord of any such assignment or sublease and
promptly supplies Landlord with any documents or information requested by
Landlord regarding such assignment or sublease or such affiliate, and further
provided that such assignment or sublease is not a subterfuge by Tenant to
avoid its obligations under this Lease or otherwise effectuate any release by
Tenant of such obligations. The transferee under a transfer specified in items (i),
(ii) or (iii) above shall be referred to as a
Permitted
Transferee
.
Control
, as used in this
Section 14.8
, shall
mean the ownership, directly or indirectly, of more than fifty percent (50%) of
the voting securities of, or possession of the right to vote, in the ordinary
direction of its affairs, of more than fifty percent (50%) of the voting
interest in, any person or entity.
ARTICLE 15
SURRENDER OF PREMISES; OWNERSHIP AND
REMOVAL OF TRADE FIXTURES
15.1
Surrender of Premises
. No act or
thing done by Landlord or any agent or employee of Landlord during the Lease
Term shall be deemed to constitute an acceptance by
39
Landlord
of a surrender of the Premises unless such intent is specifically acknowledged
in writing by Landlord. The delivery of keys to the Premises to Landlord or any
agent or employee of Landlord shall not constitute a surrender of the Premises
or effect a termination of this Lease, whether or not the keys are thereafter
retained by Landlord, and notwithstanding such delivery Tenant shall be
entitled to the return of such keys at any reasonable time upon request until
this Lease shall have been properly terminated. The voluntary or other
surrender of this Lease by Tenant, whether accepted by Landlord or not, or a
mutual termination hereof, shall not work a merger, and at the option of
Landlord shall operate as an assignment to Landlord of all subleases or
subtenancies affecting the Premises or terminate any or all such sublessees or
subtenancies.
15.2
Removal of Tenant Property by Tenant
. Upon the
expiration of the Lease Term, or upon any earlier termination of this Lease,
Tenant shall, subject to the provisions of this
Article 15
, quit
and surrender possession of the Premises to Landlord in as good order and
condition as when Tenant took possession and as thereafter improved by Landlord
and/or Tenant, reasonable wear and tear and repairs which are specifically made
the responsibility of Landlord hereunder excepted. Upon such expiration or
termination, Tenant shall, without expense to Landlord, remove or cause to be
removed from the Premises all debris and rubbish, and such items of furniture,
equipment, business and trade fixtures, free-standing cabinet work, movable
partitions and other articles of personal property owned by Tenant or installed
or placed by Tenant at its expense in the Premises, and such similar articles
of any other persons claiming under Tenant, as Landlord may, in its sole
discretion, require to be removed, and Tenant shall repair at its own expense
all damage to the Premises and Building resulting from such removal.
ARTICLE 16
HOLDING OVER
If Tenant holds over
after the expiration of the Lease Term or earlier termination thereof, with or
without the express or implied consent of Landlord, such tenancy shall be from
month-to-month only, and shall not constitute a renewal hereof or an extension
for any further term, and in such case Rent shall be payable at a monthly rate
equal to the product of (i) the Rent applicable during the last rental
period of the Lease Term under this Lease, and (ii) a percentage equal to
one hundred fifty percent (150%). Such month-to-month tenancy shall be subject
to every other applicable term, covenant and agreement contained herein. Nothing
contained in this
Article 16
shall be construed as consent by
Landlord to any holding over by Tenant, and Landlord expressly reserves the
right to require Tenant to surrender possession of the Premises to Landlord as
provided in this Lease upon the expiration or other termination of this Lease. The
provisions of this
Article 16
shall not be deemed to limit or
constitute a waiver of any other rights or remedies of Landlord provided herein
or at law. If Tenant fails to surrender the Premises upon the termination or
expiration of this Lease, in addition to any other liabilities to Landlord
accruing therefrom, Tenant shall protect, defend, indemnify and hold Landlord
harmless from all loss, costs (including reasonable attorneys fees) and
liability resulting from such failure, including, without limiting the
generality of the foregoing, any claims made by any succeeding tenant founded
upon such failure to surrender and any lost profits to Landlord resulting
therefrom.
40
ARTICLE 17
ESTOPPEL CERTIFICATES
Within ten (10) business
days following a request in writing by Landlord, Tenant shall execute,
acknowledge and deliver to Landlord an estoppel certificate, which, as
submitted by Landlord, shall be substantially in the form of
Exhibit E
, attached hereto (or
such other form as may be required by any prospective mortgagee or
purchaser of the Project, or any portion thereof), indicating therein any
exceptions thereto that may exist at that time, and shall also contain any
other information reasonably requested by Landlord or Landlords mortgagee or
prospective mortgagee. Any such certificate may be relied upon by any
prospective mortgagee or purchaser of all or any portion of the Project. Tenant
shall execute and deliver whatever other instruments may be reasonably
required for such purposes. At any time during the Lease Term, Landlord may require
Tenant to provide Landlord with a current financial statement and financial
statements of the two (2) years prior to the current financial statement
year. Such statements shall be prepared in accordance with generally accepted
accounting principles and, if such is the normal practice of Tenant, shall be
audited by an independent certified public accountant. Failure of Tenant to
timely execute, acknowledge and deliver such estoppel certificate or other
instruments shall constitute an acceptance of the Premises and an
acknowledgment by Tenant that statements included in the estoppel certificate
are true and correct, without exception. Landlord hereby agrees to provide to
Tenant an estoppel certificate signed by Landlord, containing the same types of
information, and within the same periods of time, as set forth above, with such
changes as are reasonably necessary to reflect that the estoppel certificate is
being granted and signed by Landlord to Tenant, or the party designated by
Tenant in writing to Landlord, rather than from Tenant to Landlord or a lender.
Landlord hereby agrees to provide to Tenant an estoppel certificate signed by
Landlord, containing the same types of information, and within the same periods
of time and with the same conditions as to frequency, all as set forth
hereinabove, with such changes as are reasonably necessary to reflect that the
estoppel certificate is being granted and signed by Landlord to Tenant, rather
than from Tenant to Landlord or a lender.
ARTICLE 18
SUBORDINATION
Subject to Tenants
receipt of an appropriate non-disturbance agreement(s) as set forth below, this
Lease shall be subject and subordinate to all present and future ground or
underlying leases of the Building or Project and to the lien of any mortgage,
trust deed or other encumbrances now or hereafter in force against the Building
or Project or any part thereof, if any, and to all renewals, extensions,
modifications, consolidations and replacements thereof, and to all advances
made or hereafter to be made upon the security of such mortgages or trust
deeds, unless the holders of such mortgages, trust deeds or other encumbrances,
or the lessors under such ground lease or underlying leases, require in writing
that this Lease be superior thereto. Landlords delivery to Tenant of
commercially reasonable non-disturbance agreement(s) (the
Nondisturbance Agreement
) in favor of Tenant
from any ground lessor, mortgage holders or lien holders of Landlord who later
come into existence at any time prior to the expiration of the Lease Term shall
be in consideration of, and a condition precedent to, Tenants agreement to be
41
bound by the terms
and conditions of this
Article 18
. Tenant covenants and agrees in
the event any proceedings are brought for the foreclosure of any such mortgage
or deed in lieu thereof (or if any ground lease is terminated), to attorn,
without any deductions or set-offs whatsoever, to the lienholder or purchaser
or any successors thereto upon any such foreclosure sale or deed in lieu
thereof (or to the ground lessor), if so requested to do so by such purchaser
or lienholder or ground lessor, and to recognize such purchaser or lienholder
or ground lessor as the lessor under this Lease, provided such lienholder or
purchaser or ground lessor shall agree to accept this Lease and not disturb
Tenants occupancy, so long as Tenant timely pays the rent and observes and
performs the TCCs of this Lease to be observed and performed by Tenant. Landlords
interest herein may be assigned as security at any time to any lienholder.
Tenant shall, within ten (10) business days of request by Landlord,
execute such further instruments or assurances as Landlord may reasonably
deem necessary to evidence or confirm the subordination or superiority of this
Lease to any such mortgages, trust deeds, ground leases or underlying leases. Tenant
waives the provisions of any current or future statute, rule or law which may give
or purport to give Tenant any right or election to terminate or otherwise
adversely affect this Lease and the obligations of the Tenant hereunder in the
event of any foreclosure proceeding or sale.
ARTICLE 19
DEFAULTS; REMEDIES
19.1
Events of Default
. The
occurrence of any of the following shall constitute an
Event of Default
of this Lease by Tenant:
19.1.1
Any failure
by Tenant to pay any Rent or any other charge required to be paid under this
Lease, or any part thereof, within five (5) business days of Tenants
receipt of written notice that the same was not paid when due; or
19.1.2
Except where
a specific time period is otherwise set forth for Tenants performance in this
Lease, in which event the failure to perform by Tenant within such time
period shall be a default by Tenant under this
Section 19.1.2
, any
failure by Tenant to observe or perform any other provision, covenant or
condition of this Lease to be observed or performed by Tenant where such
failure continues for thirty (30) days after written notice thereof from
Landlord to Tenant; provided that if the nature of such default is such that
the same cannot reasonably be cured within a thirty (30) day period, Tenant
shall not be deemed to be in default if it diligently commences such cure
within such period and thereafter diligently proceeds to rectify and cure such
default, but in no event exceeding a period of time in excess of sixty (60)
days after written notice thereof from Landlord to Tenant; or
19.1.3
To the extent
permitted by law, a general assignment by Tenant or any guarantor of this Lease
for the benefit of creditors, or the taking of any corporate action in
furtherance of bankruptcy or dissolution whether or not there exists any
proceeding under an insolvency or bankruptcy law, or the filing by or against
Tenant or any guarantor of any proceeding under an insolvency or bankruptcy
law, unless in the case of a proceeding filed against Tenant or any guarantor
the same is dismissed within sixty (60) days, or the appointment of a trustee
or receiver to take possession of all or substantially all of the assets of
Tenant or any guarantor, unless possession is restored to Tenant or such guarantor
within thirty (30) days, or
42
any
execution or other judicially authorized seizure of all or substantially all of
Tenants assets located upon the Premises or of Tenants interest in this
Lease, unless such seizure is discharged within thirty (30) days; or
19.1.4
Abandonment
of the Premises pursuant to California Civil Code Section 1951.3; or
19.1.5
The failure
by Tenant to observe or perform according to the provisions of
Articles 5, 14, 17 or 18
of this Lease where such failure continues for more than two (2) business
days after notice from Landlord; or
The notice periods
provided herein are in lieu of, and not in addition to, any notice periods
provided by law.
19.2
Remedies Upon Default
. Upon the
occurrence of any Event of Default by Tenant, Landlord shall have, in addition
to any other remedies available to Landlord at law or in equity (all of which
remedies shall be distinct, separate and cumulative), the option to pursue any
one or more of the following remedies, each and all of which shall be
cumulative and nonexclusive, without any notice or demand whatsoever.
19.2.1
Terminate
this Lease, in which event Tenant shall immediately surrender the Premises to
Landlord, and if Tenant fails to do so, Landlord may, without prejudice to any
other remedy which it may have for possession or arrearages in rent, enter
upon and take possession of the Premises and expel or remove Tenant and any
other person who may be occupying the Premises or any part thereof,
without being liable for prosecution or any claim or damages therefor; and
Landlord may recover from Tenant the following:
(a)
The worth at
the time of award of any unpaid rent which has been earned at the time of such
termination; plus
(b)
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 Tenant proves could have been reasonably avoided; plus
(c)
The worth at
the time of award of the amount by which the unpaid rent for the balance of the
Lease Term after the time of award exceeds the amount of such rental loss that
Tenant proves could have been reasonably avoided; plus
(d)
Any other
amount necessary to compensate Landlord for all the detriment proximately
caused by Tenants failure to perform its obligations under this Lease or
which in the ordinary course of things would be likely to result therefrom,
specifically including but not limited to, brokerage commissions and
advertising expenses incurred, expenses of remodeling the Premises or any
portion thereof for a new tenant, whether for the same or a different use, and
any special concessions made to obtain a new tenant; and
(e)
At Landlords
election, such other amounts in addition to or in lieu of the foregoing as may be
permitted from time to time by applicable law.
43
The term
rent
as used in this
Section 19.2
shall be deemed to be and to mean all sums of every nature required to be paid
by Tenant pursuant to the terms of this Lease, whether to Landlord or to others.
As used in
Sections 19.2.1(a) and (b)
, above, the worth
at the time of award shall be computed by allowing interest at the Interest
Rate. As used in
Section 19.2.1(c)
, above, the worth at the time
of award shall be computed by discounting such amount at the discount rate of
the Federal Reserve Bank of San Francisco at the time of award plus one percent
(1%).
19.2.2
Landlord
shall have the remedy described in California Civil Code Section 1951.4
(lessor may continue lease in effect after lessees breach and abandonment
and recover rent as it becomes due, if lessee has the right to sublet or
assign, subject only to reasonable limitations). Accordingly, if Landlord does
not elect to terminate this Lease on account of any Event of Default, Landlord
may, from time to time, without terminating this Lease, enforce all of its
rights and remedies under this Lease, including the right to recover all rent
as it becomes due.
19.2.3
Landlord
shall at all times have the rights and remedies (which shall be cumulative with
each other and cumulative and in addition to those rights and remedies
available under
Sections 19.2.1 and 19.2.2
, above, or any law
or other provision of this Lease), without prior demand or notice except as
required by applicable law, to seek any declaratory, injunctive or other
equitable relief, and specifically enforce this Lease, or restrain or enjoin a
violation or breach of any provision hereof.
19.3
Subleases of Tenant
. Whether or
not Landlord elects to terminate this Lease on account of any Event of Default,
as set forth in this
Article 19
, Landlord shall have the right to
terminate any and all subleases, licenses, concessions or other consensual
arrangements for possession entered into by Tenant and affecting the Premises
or may, in Landlords sole discretion, succeed to Tenants interest in such
subleases, licenses, concessions or arrangements. In the event of Landlords
election to succeed to Tenants interest in any such subleases, licenses,
concessions or arrangements, Tenant shall, as of the date of notice by Landlord
of such election, have no further right to or interest in the rent or other
consideration receivable thereunder.
19.4
Form of Payment After Default
. Following
the occurrence of an Event of Default, Landlord shall have the right to require
that any or all subsequent amounts paid by Tenant to Landlord hereunder,
whether to cure the applicable Event of Default or otherwise, be paid in the form of
cash, money order, cashiers or certified check drawn on an institution
acceptable to Landlord, or by other means approved by Landlord, notwithstanding
any prior practice of accepting payments in any different form.
19.5
Efforts to Relet
. No re-entry
or repossession, repairs, maintenance, changes, alterations and additions,
reletting, appointment of a receiver to protect Landlords interests hereunder,
or any other action or omission by Landlord shall be construed as an election
by Landlord to terminate this Lease or Tenants right to possession, or to
accept a surrender of the Premises, nor shall same operate to release Tenant in
whole or in part from any of Tenants obligations hereunder, unless
express written notice of such intention is sent by Landlord to Tenant. Tenant
hereby irrevocably waives any right otherwise available under any law to redeem
or reinstate this Lease.
44
19.6
Landlord Default
. Notwithstanding
anything to the contrary set forth in this Lease, Landlord shall be in default
in the performance of any material obligation required to be performed by
Landlord pursuant to this Lease if Landlord fails to substantially perform such
material obligation within thirty (30) days after the receipt of notice from
Tenant specifying in detail Landlords failure to perform; provided, however,
if the nature of Landlords obligation is such that more than thirty (30) days
are required for its performance, then Landlord shall not be in default under
this Lease if it shall commence such performance within such thirty (30) day
period and thereafter diligently pursues the same to completion. Upon any such
default by Landlord under this Lease, Tenant may, except as otherwise
specifically provided in this Lease to the contrary, exercise any of its rights
provided at law or in equity. Any award from a court or arbitrator in favor of
Tenant requiring payment by Landlord which is not paid by Landlord within the
time period directed by such award, may be offset by Tenant from Rent next
due and payable under this Lease
; provided, however,
Tenant may not deduct the amount of the award against more than fifty
percent (50%) of Base Rent next due and owing (until such time as the entire
amount of such judgment is deducted) to the extent following a foreclosure or a
deed-in-lieu of foreclosure
.
ARTICLE 20
COVENANT OF QUIET ENJOYMENT
Landlord covenants that
Tenant, on paying the Rent, charges for services and other payments herein
reserved and on keeping, observing and performing all the other TCCs,
provisions and agreements herein contained on the part of Tenant to be
kept, observed and performed, shall, during the Lease Term, peaceably and
quietly have, hold and enjoy the Premises subject to the TCCs, provisions and
agreements hereof without interference by any persons lawfully claiming by or
through Landlord. The foregoing covenant is in lieu of any other covenant
express or implied.
ARTICLE 21
SECURITY DEPOSIT
Concurrent with Tenants execution of this Lease,
Tenant shall deposit with Landlord a security deposit (the
Security Deposit
) in the amount set forth in
Section 7
of the Summary, as security for the faithful performance by Tenant of all of
its obligations under this Lease. If an Event of Default is then occurring
under this Lease, including, but not limited to, the provisions relating to the
payment of Rent, the removal of property and the repair of resultant damage,
Landlord may, without notice to Tenant, but shall not be required to apply all
or any part of the Security Deposit for the payment of any Rent or any
other sum in default and Tenant shall, upon demand therefor, restore the
Security Deposit to its original amount. Any unapplied portion of the Security
Deposit shall be returned to Tenant, or, at Landlords option, to the last
assignee of Tenants interest hereunder, within sixty (60) days following the
expiration of the Lease Term. Tenant shall not be entitled to any interest on
the Security Deposit. Tenant hereby waives the provisions of Section 1950.7
of the California Civil Code, or any successor statute.
45
ARTICLE 22
LETTER OF CREDIT
22.1
Delivery of Letter of Credit
. Tenant shall deliver to Landlord, concurrently
with the mutual execution of this Lease, an unconditional, clean, irrevocable
letter of credit (the
L-C
) in
the amount (the
L-C Amount
)
set
forth in
Section 8
of the Summary
, which L-C shall be issued by a
money-center bank (a bank which accepts deposits, maintains accounts, has a
local, Southern California office which will negotiate a letter of credit, and
whose deposits are insured by the FDIC) reasonably acceptable to Landlord, and
which L-C shall be in the form of
Exhibit G
,
attached hereto. Tenant shall pay all expenses, points and/or fees incurred by
Tenant in obtaining the L-C.
22.2
Application of Letter of Credit
.
Landlord shall have the
immediate right to draw upon the L-C, in whole or in part and without
prior notice to Tenant, other than that required under the Lease, at any time
and from time to time: (i) if an
Event of Default is then occurring, or (ii) Tenant either files a voluntary
petition, or an involuntary petition is filed against Tenant by an entity other
than Landlord, under any chapter of the Federal Bankruptcy Code or Tenant
executes an assignment for the benefit of creditors. No condition or term of
this Lease shall be deemed to render the L-C conditional, thereby justifying
the issuer of the L-C in failing to honor a drawing upon such L-C in a timely
manner. The L-C and its proceeds shall constitute Landlords sole and separate
property (and not Tenants property or, in the event of a bankruptcy filing by
Tenant, property of Tenants bankruptcy estate) and Landlord may immediately
upon any draw (and without notice to Tenant) apply or offset the proceeds of
the L-C: (A) against any amounts payable by Tenant under this Lease that
are not paid when due, after the expiration of any applicable notice and cure
period; (B) against all losses and damages that Landlord has suffered or may reasonably
estimate that it may suffer as a result of any Event of Default under this
Lease, including any damages arising under Section 1951.2 of the
California Civil Code for rent due following termination of this Lease; (C) against
any costs incurred by Landlord in connection with this Lease (including
attorneys fees); and (D) against any other amount that Landlord may spend
or become obligated to spend by reason of any Event of Default under this Lease
but in no event in excess of amounts to which the Landlord would be entitled
under the law. To the extent to Event of Default is ongoing, Landlord agrees to
pay to Tenant within thirty (30) days after the Lease Expiration Date the
amount of any proceeds of the L-C received by Landlord and not applied as
allowed above, and return the L-C to Tenant within the foregoing thirty (30)
day period; provided that if prior to the Lease Expiration Date a voluntary
petition is filed by Tenant, or an involuntary petition is filed against Tenant
by any of Tenants creditors other than Landlord, under the Federal Bankruptcy
Code, or Tenant executes an assignment for the benefit of creditors, then
Landlord shall not be obligated to return the L-C or any proceeds of the L-C
until all statutes of limitations for any preference avoidance statutes
applicable to such bankruptcy or assignment for the benefit of creditors have
elapsed or the bankruptcy court or assignee, whichever is applicable, has
executed a binding release releasing the Landlord of any and all liability for
preferential transfers relating to payments made under this Lease, and Landlord
may retain and offset against any remaining L-C proceeds the full amount
Landlord is required to pay to any third party on account of preferential
transfers relating to this Lease. If Landlord draws on the L-C as permitted in
this
Section 21.2
, then, upon demand of Landlord, Tenant shall
restore the amount available under the L-C to the amount set forth in
46
Section 21.1
, above, by
providing Landlord with an amendment to the L-C evidencing that the amount
available under the L-C has been restored to the amount set forth in
Section 21.1
,
above. In the alternative, Tenant may provide Landlord with cash, to be
held by Landlord in accordance with this
Section 21.2
in an amount
equal to the restoration amount required under this
Section 21.2
. Tenant
shall pay all expenses, points and fees incurred by Tenant or Landlord in
renewing, replacing, drawing or transferring the L-C. Landlord and Tenant (1) acknowledge
and agree that in no event or circumstance shall the L-C or any renewal thereof
or substitute therefor or any proceeds thereof be deemed to be or treated as a security
deposit under any law applicable to security deposits in the commercial
context,
including, but not limited
to, Section 1950.7 of the California Civil Code, as such Section now
exists or as it may be hereafter amended or succeeded
(the
Security Deposit Laws
), (2) acknowledge and agree that the L-C
(including any renewal thereof or substitute therefor or any proceeds thereof)
is not intended to serve as a security deposit, and the Security Deposit Laws
shall have no applicability or relevancy thereto, and (c) waive any and
all rights, duties and obligations that any such party may now, or in the
future will, have relating to or arising from the Security Deposit Laws.
Tenant hereby waives the provisions of Section 1950.7
of the California Civil Code and all other provisions of law, now or hereafter
in effect, which (x) establish the time frame by which a landlord must
refund a security deposit under a lease, and/or (y) provide that a
landlord may claim from a security deposit only those sums reasonably
necessary to remedy defaults in the payment of rent, to repair damage caused by
a tenant or to clean the premises, it being agreed that Landlord may, in addition,
claim those sums specified in this
Section 21.2
and/or those sums reasonably necessary to
compensate Landlord for any loss or damage caused by Tenants breach of this
Lease, including any damages Landlord suffers following termination of this
Lease.
ARTICLE 23
SIGNS
23.1
Generally
. Subject to Landlords prior written approval
(which approval shall not be unreasonably withheld, conditioned or delayed),
Tenant and its Permitted Transferees may install identification signage
anywhere in the Premises (including in the elevator lobby of the Premises)..
23.2
Intentionally Omitted
.
23.3
Prohibited Signage and Other Items
. Any signs, notices, logos, pictures, names or
advertisements which are installed without Landlords consent pursuant to
Section 23.1
or
Section 23.2
may be removed without notice by Landlord at
the sole expense of Tenant. Except as permitted under
Section 23.4
below, Tenant may not install any signs on the exterior or roof of the
Project or the Common Areas. Any signs, window coverings, or blinds (even if
the same are located behind the Landlord-approved window coverings for the
Buildings), or other items visible from the exterior of the Premises or
Buildings, shall be subject to the prior approval of Landlord, in its sole
discretion.
23.4
Tenants Signage
. The Original Tenant and its Permitted
Transferee
shall be entitled to install the following
signage in connection with Tenants lease of the Premises (collectively, the
Tenants Signage
):
47
(i)
Exclusive
Building-top signage consisting of one (1) building-top sign (maximum size
per building-top sign is 100 square feet pursuant to the signage guidelines for
the Project) identifying Tenants name or logo located at the top of the Building
(on the Sequence Drive-facing elevation) in one (1) location; and
(ii)
A
monument sign to be located adjacent to the entrance of the Building in a
location, in a design, and with materials and other reasonable parameters to be
approved by Landlord in accordance with the TCCs of
Section 23.4.1
,
below (the
Building Monument Sign
),
with exclusive signage thereon. Tenant hereby acknowledges and agrees that
Landlord may, at Landlords sole cost and expense, place a standard owned and
managed sign on such Building Monument Sign, provided that such owned and
managed sign shall not be larger than Tenants signage.
23.4.1
Specifications
and Permits
. Tenants
Signage shall set forth Tenants name and logo as determined by Tenant in its
sole discretion; provided, however, in no event shall Tenants Signage include
an Objectionable Name, as that term is defined in
Section 23.4.2
,
of this Lease. The graphics, materials, color, design, lettering, lighting,
size, illumination, specifications and exact location of Tenants Signage
(collectively, the
Sign Specifications
)
shall be subject to the prior written approval of Landlord, which approval
shall not be unreasonably withheld, conditioned or delayed, and shall be
consistent and compatible with the quality and nature of the Project and
Landlords
Building standard signage program
. For purposes of this
Section 23.4.1
,
the reference to name shall mean name and/or logo. In addition, Tenants
Signage shall be subject to Tenants receipt of all required governmental
permits and approvals and shall be subject to all Applicable Law and to any
covenants, conditions and restrictions affecting the Project. Landlord shall
use commercially reasonable efforts to assist Tenant in obtaining all necessary
governmental permits and approvals for Tenants Signage. Tenant hereby
acknowledges that, notwithstanding Landlords approval of Tenants Signage,
Landlord has made no representation or warranty to Tenant with respect to the
probability of obtaining all necessary governmental approvals and permits for
Tenants Signage. In the event Tenant does not receive the necessary
governmental approvals and permits for Tenants Signage, Tenants and Landlords
rights and obligations under the remaining TCCs of this Lease shall be unaffected.
23.4.2
Objectionable Name
.
To the extent Original Tenant desires to
change the name and/or logo set forth on Tenants Signage, such name and/or
logo shall not have a name which relates to an entity which is of a character
or reputation, or is associated with a political faction or orientation, which
is inconsistent with the quality of the Project, or which would otherwise
reasonably offend a landlord of the Comparable Buildings (an
Objectionable Name
). The parties hereby agree that the
names DexCom, Inc. or any reasonable derivation thereof, shall not be
deemed an Objectionable Name.
23.4.3
Termination
of Right to Tenants Signage
. The rights contained in this
Section 23.4
shall be personal to the Original Tenant, its Affiliates and any Permitted
Assignee, and may only be exercised by the Original Tenant, its Affiliates
or a
Permitted Assignee
(and not
48
any other assignee, sublessee or other transferee of the Original
Tenants interest in this Lease) if the Original Tenant and its
Permitted
Transferee
are in occupancy
of no less than seventy-five percent
(75%) of the then-existing Premises
.
23.4.4
Cost and Maintenance
. The costs of the actual signs comprising
Tenants Signage and the installation, design, construction, and any and all
other costs associated with Tenants Signage, including, without limitation,
utility charges and hook-up fees, permits, and maintenance and repairs, shall
be the sole responsibility of Tenant; provided that the costs and fees
associated with the initial installation, design, and construction of such
Tenants Signage may, at Tenants option, be deemed a Improvement Allowance
Item, as that term is set forth in
Section 2.2
of the Work Letter
Agreements; provided further that Landlord shall construct and install the
Building Monument Sign(s) (including, but not limited to, running sufficient
power and utilities to the site of the Building Monument Sign), at Tenants
sole cost and expense, and Tenant shall be responsible for the cost of Tenants
sign on the Building Monument Sign(s), but Landlord shall maintain all monument
signs set forth in this
Article 23
in good condition and repair,
the cost of which in connection with the Building Monument Sign(s) shall be included
in Operating Expenses. Should Tenants Signage require repairs and/or
maintenance, as determined in Landlords reasonable judgment, Landlord shall
have the right to provide Notice thereof to Tenant and Tenant (except as set
forth above) shall cause such repairs and/or maintenance to be performed within
thirty (30) days after receipt of such Notice from Landlord, at Tenants sole
cost and expense; provided, however, if such repairs and/or maintenance are
reasonably expected to require longer than thirty (30) days to perform, Tenant
shall commence such repairs and/or maintenance within such thirty (30) day
period and shall diligently prosecute such repairs and maintenance to
completion. Should Tenant fail to perform such repairs and/or maintenance
within the periods described in the immediately preceding sentence, Landlord
shall, upon the delivery of an additional five (5) business days prior
written notice, have the right to cause such work to be performed and to charge
Tenant as Additional Rent for the Actual Cost of such work. Upon the expiration
or earlier termination of this Lease, Tenant shall, at Tenants sole cost and
expense, cause Tenants Signage to be removed and shall cause the areas in
which such Tenants Signage was located to be restored to the condition
existing immediately prior to the placement of such Tenants Signage (excepting
normal wear and tear caused by the sun, rain and other elements to which such
Tenants Signage is exposed). If Tenant fails to timely remove such Tenants
Signage or to restore the areas in which such Tenants Signage was located, as
provided in the immediately preceding sentence, then Landlord may perform such
work, and all Actual Costs incurred by Landlord in so performing shall be
reimbursed by Tenant to Landlord within thirty (30) days after Tenants receipt
of an invoice therefor. The TCCs of this
Section 23.3.4
shall
survive the expiration or earlier termination of this Lease.
ARTICLE 24
COMPLIANCE WITH LAW
Tenant shall not
do anything or suffer anything to be done in or about the Premises or the
Project which will in any way conflict with any law, statute, ordinance or
other governmental rule, regulation or requirement now in force or which may hereafter
be enacted or promulgated (collectively,
Applicable Laws
).
At its sole cost and expense, Tenant shall promptly comply with all such
Applicable Laws which relate to (i) Tenants use of the Premises for uses
49
inconsistent with a normal and customary implementation of the business
operations contemplated under Tenants Permitted Use (as expressly in
Sections 6(i)-(iii)
of
the Summary), (ii) the Alterations or Improvements in the Premises, or (iii) the
Base Building, but, as to the Base Building, only to the extent such
obligations are triggered by Tenants Alterations, the Improvements, or a use
of the Premises which is inconsistent with a normal and customary
implementation of the business operations contemplated under Tenants Permitted
Use (as expressly in
Sections 6(i)-(iii)
of the Summary). Should
any standard or regulation now or hereafter be imposed on Landlord or Tenant by
a state, federal or local governmental body charged with the establishment,
regulation and enforcement of occupational, health or safety standards for
employers, employees, landlords or tenants, then Tenant agrees, subject to
Article 7
of this Lease, at its sole cost and expense, to comply promptly with such
standards or regulations. The judgment of any court of competent jurisdiction
or the admission of Tenant in any judicial action, regardless of whether
Landlord is a party thereto, that Tenant has violated any of said governmental
measures, shall be conclusive of that fact as between Landlord and Tenant. Landlord
shall comply with all Applicable Laws relating to the Base Building, provided
that compliance with such Applicable Laws is not the responsibility of Tenant
under this Lease, and provided further that Landlords failure to comply
therewith would prohibit Tenant from obtaining or maintaining a certificate of
occupancy for the Premises, or would unreasonably and materially affect the
safety of Tenants employees or create a significant health hazard for Tenants
employees. Landlord shall be permitted to include in Operating Expenses any
costs or expenses incurred by Landlord under this
Article 24
to the
extent consistent with the terms of
Section 4.2.4
, above.
ARTICLE 25
LATE CHARGES
If any installment
of Rent or any other sum due from Tenant shall not be received by Landlord or
Landlords designee when due, then Tenant shall pay to Landlord a late charge
equal to five percent (5%) of the overdue amount plus any attorneys fees
incurred by Landlord by reason of Tenants failure to pay Rent and/or other
charges when due hereunder; provided, however, with regard to the first such
failure in any twelve (12) month period, Landlord will waive such late charge
to the extent Tenant
cures such failure within five (5) business days
following Tenants receipt of written notice from Landlord that the same was
not received when due
. The late charge shall be deemed
Additional Rent and the right to require it shall be in addition to all of
Landlords other rights and remedies hereunder or at law and shall not be
construed as liquidated damages or as limiting Landlords remedies in any
manner. In addition to the late charge described above, any Rent or other
amounts owing hereunder which are not paid within ten (10) days after the
date they are due shall bear interest from the date when due until paid at the Interest
Rate. For purposes of this Lease, the
Interest Rate
shall be an annual rate
equal to the lesser of (i) the annual
Bank
Prime Loan
rate cited in the Federal Reserve Statistical Release
Publication G.13(415), published on the first Tuesday of each calendar month
(or such other comparable index as Landlord and Tenant shall reasonably agree
upon if such rate ceases to be published), plus four (4) percentage
points, and (ii) the highest rate permitted by applicable law.
50
ARTICLE 26
LANDLORDS RIGHT TO CURE DEFAULT; PAYMENTS BY TENANT
26.1
Landlords Cure
. All covenants and agreements to be kept or
performed by Tenant under this Lease shall be performed by Tenant at Tenants
sole cost and expense and without any reduction of Rent, except to the extent,
if any, otherwise expressly provided herein. If Tenant shall fail to perform any
obligation under this Lease, and such failure shall continue in excess of the
time allowed under
Section 19.1.2
, above, unless a specific time
period is otherwise stated in this Lease, Landlord may, but shall not be
obligated to, make any such payment or perform any such act on Tenants part without
waiving its rights based upon any Event of Default and without releasing Tenant
from any obligations hereunder.
26.2
Tenants Reimbursement
. Except as may be specifically provided to
the contrary in this Lease, Tenant shall pay to Landlord, upon delivery by
Landlord to Tenant of statements therefor:
(i) sums equal to expenditures reasonably made and obligations
incurred by Landlord in connection with the remedying by Landlord of any Event
of Default under this Lease pursuant to the provisions of
Section 26.1
;
(ii) sums equal to all losses, costs, liabilities, damages and expenses
referred to in
Article 10
of this Lease; and (iii) sums equal
to all expenditures made and obligations incurred by Landlord in collecting or
attempting to collect the Rent or in enforcing or attempting to enforce any
rights of Landlord under this Lease or pursuant to law, including, without
limitation, all legal fees and other amounts so expended. Tenants obligations
under this
Section 26.2
shall survive the expiration or sooner
termination of the Lease Term.
ARTICLE 27
ENTRY BY LANDLORD
Landlord reserves
the right at all reasonable times (during Building Hours with respect to items (i) and
(ii) below) and upon at least twenty-four (24) hours prior notice to
Tenant (except in the case of an emergency) to enter the Premises to (i) inspect
them; (ii) show the Premises to prospective purchasers, or to current or
prospective mortgagees, ground or underlying lessors or insurers, or during the
last twelve (12) months of the Lease Term, to prospective tenants; (iii) post
notices of nonresponsibility; or (iv) alter, improve or repair the
Premises or the Building, or for structural alterations, repairs or
improvements to the Building or the Buildings systems and equipment. Notwithstanding
anything to the contrary contained in this
Article 27
, Landlord may enter
the Premises at any time to (A) perform services required of
Landlord, including janitorial service; (B) take possession due to any
breach of this Lease in the manner provided herein; and (C) perform any
covenants of Tenant which Tenant fails to perform. Landlord may make any
such entries without the abatement of Rent, except as otherwise provided in
this Lease, and may take such reasonable steps as required to accomplish
the stated purposes; provided, however, except for (i) emergencies, (ii) repairs,
alterations, improvements or additions required by governmental or
quasi-governmental authorities or court order or decree, or (iii) repairs
which are the obligation of Tenant hereunder, any such entry shall be performed
in a manner so as not to unreasonably interfere with Tenants use of the
Premises and shall be performed after normal business hours if reasonably
practical. With respect to items
51
(ii) and (iii) above, Landlord shall use commercially
reasonable efforts to not materially interfere with Tenants use of, or access
to, the Premises. Except as otherwise expressly set forth in
Section 6.7
or elsewhere in this Lease, Tenant hereby waives any claims for damages or for
any injuries or inconvenience to or interference with Tenants business, lost
profits, any loss of occupancy or quiet enjoyment of the Premises, and any
other loss occasioned thereby. For each of the above purposes, Landlord shall
at all times have a key with which to unlock all the doors in the Premises,
excluding Tenants vaults, safes and special security areas designated in
advance by Tenant. In an emergency, Landlord shall have the right to use any
means that Landlord may deem proper to open the doors in and to the
Premises. Any entry into the Premises by Landlord in the manner hereinbefore
described shall not be deemed to be a forcible or unlawful entry into, or a
detainer of, the Premises, or an actual or constructive eviction of Tenant from
any portion of the Premises. No provision of this Lease shall be construed as
obligating Landlord to perform any repairs, alterations or decorations
except as otherwise expressly agreed to be performed by Landlord herein.
ARTICLE 28
TENANT PARKING
As set forth in
Section 9
of the Summary, Tenant shall be entitled to utilize, without charge, commencing
on the Lease Commencement Date, two hundred forty-three (243) parking spaces on
a monthly basis throughout the initial Lease Term, one hundred seventy three
(173) of which parking spaces shall be located adjacent to the Building and
seventy (70) of which parking spaces shall be located adjacent to the Project (
i.e.
, at 6260 Sequence Drive), all as more
particularly identified on
Exhibit A
attached to this Lease. Notwithstanding the foregoing, Tenant shall be
responsible for the full amount of any taxes imposed by any governmental
authority in connection with the renting of such parking spaces by Tenant or
the use of the parking facility by Tenant. Tenants continued right to use the
parking spaces is conditioned upon Tenant abiding by all rules and
regulations which are prescribed from time to time for the orderly operation
and use of the parking facility where the parking spaces are located, including
any sticker or other identification system established by Landlord, Tenants
cooperation in seeing that Tenants employees and visitors also comply with
such rules and regulations. To the extent reasonably necessary to ensure
Tenants parking rights hereunder are readily available to Tenant and its
employees, Landlord shall establish a sticker or other identification system
for the Project; provided, however, to the extent the foregoing measures prove
insufficient, Landlord shall additionally implement, at Tenants sole cost and
expense, reasonable access control with regard to such Project parking
facilities. Landlord specifically reserves the right to change the size,
configuration, design, layout and all other aspects of the Project parking
facility at any time and Tenant acknowledges and agrees that Landlord may,
without incurring any liability to Tenant and without any abatement of Rent
under this Lease, from time to time, close-off or restrict access to the
Project parking facility for purposes of permitting or facilitating any such
construction, alteration or improvements. Landlord may delegate its
responsibilities hereunder to a parking operator in which case such parking
operator shall have all the rights of control attributed hereby to the Landlord.
The parking spaces rented by Tenant pursuant to this
Article 28
are
provided to Tenant solely for use by Tenants own personnel and such spaces may not
be transferred, assigned, subleased or otherwise alienated by Tenant without
Landlords prior
52
approval. Tenant may validate visitor parking by such method or
methods as the Landlord may establish, at the validation rate from time to
time generally applicable to visitor parking.
ARTICLE 29
MISCELLANEOUS PROVISIONS
29.1
Terms; Captions
. The words Landlord and Tenant as used
herein shall include the plural as well as the singular. The necessary
grammatical changes required to make the provisions hereof apply either to
corporations or partnerships or individuals, men or women, as the case may require,
shall in all cases be assumed as though in each case fully expressed. The
captions of Articles and Sections are for convenience only and shall not be
deemed to limit, construe, affect or alter the meaning of such Articles and
Sections.
29.2
Binding Effect
. Subject to all other provisions of this Lease,
each of the covenants, conditions and provisions of this Lease shall extend to
and shall, as the case may require, bind or inure to the benefit not only
of Landlord and of Tenant, but also of their respective heirs, personal
representatives, successors or assigns, provided this clause shall not permit
any assignment by Tenant contrary to the provisions of
Article 14
of this Lease.
29.3
No Air Rights
. No rights to any view or to light or air over
any property, whether belonging to Landlord or any other person, are granted to
Tenant by this Lease. If at any time any windows of the Premises are
temporarily darkened or the light or view therefrom is obstructed by reason of
any repairs, improvements, maintenance or cleaning in or about the Project, the
same shall be without liability to Landlord and without any reduction or
diminution of Tenants obligations under this Lease.
29.4
Modification of Lease
. Should any current or prospective mortgagee or
ground lessor for the Building or Project require a modification of this Lease,
which modification will not cause an increased cost or expense to Tenant or in
any other way materially and adversely change the rights and obligations of
Tenant hereunder, then and in such event, Tenant agrees that this Lease may be
so modified and agrees to execute whatever documents are reasonably required
therefor and to deliver the same to Landlord within ten (10) business days
following a request therefor. At the request of Landlord or any mortgagee or
ground lessor, Tenant agrees to execute a short form of Lease and deliver
the same to Landlord within ten (10) business days following the request
therefor.
29.5
Transfer of Landlords Interest
. Tenant acknowledges that Landlord has the
right to transfer all or any portion of its interest in the Project or Building
and in this Lease, and Tenant agrees that in the event of any such transfer,
Landlord shall automatically be released from all liability under this Lease
and Tenant agrees to look solely to such transferee for the performance of
Landlords obligations hereunder after the date of transfer and such transferee
shall be deemed to have fully assumed and be liable for all obligations of this
Lease to be performed by Landlord, including the return of any Security
Deposit, and Tenant shall attorn to such transferee. Tenant further
acknowledges that Landlord may assign its interest in this Lease to a
mortgage lender as additional security and agrees that such an assignment shall
not release
53
Landlord
from its obligations hereunder and that Tenant shall continue to look to
Landlord for the performance of its obligations hereunder.
29.6
Prohibition Against Recording
. Except as provided in
Section 29.4
of this Lease, neither this Lease, nor any memorandum, affidavit or other
writing with respect thereto, shall be recorded by Tenant or by anyone acting
through, under or on behalf of Tenant.
29.7
Landlords Title
. Landlords title is and always shall be
paramount to the title of Tenant. Nothing herein contained shall empower Tenant
to do any act which can, shall or may encumber the title of Landlord.
29.8
Relationship of Parties
. Nothing contained in this Lease shall be
deemed or construed by the parties hereto or by any third party to create the
relationship of principal and agent, partnership, joint venturer or any
association between Landlord and Tenant.
29.9
Application of Payments
. Landlord shall have the right to apply
payments received from Tenant pursuant to this Lease, regardless of Tenants
designation of such payments, to satisfy any obligations of Tenant hereunder,
in such order and amounts as Landlord, in its sole discretion, may elect.
29.10
Time of Essence
. Time is of the essence with respect to the
performance of every provision of this Lease in which time of performance is a
factor.
29.11
Partial Invalidity
. If any term, provision or condition contained
in this Lease shall, to any extent, be invalid or unenforceable, the remainder
of this Lease, or the application of such term, provision or condition to
persons or circumstances other than those with respect to which it is invalid
or unenforceable, shall not be affected thereby, and each and every other term,
provision and condition of this Lease shall be valid and enforceable to the
fullest extent possible permitted by law.
29.12
No Warranty
. In executing and delivering this Lease, Tenant
has not relied on any representations, including, but not limited to, any
representation as to the amount of any item comprising Additional Rent or the
amount of the Additional Rent in the aggregate or that Landlord is furnishing
the same services to other tenants, at all, on the same level or on the same
basis, or any warranty or any statement of Landlord which is not set forth
herein or in one or more of the exhibits attached hereto.
29.13
Landlord Exculpation
. Except for (i) Tenants rights of rent
abatement and offset expressly set forth in this Lease, and (ii) Tenants
retained ability to bring an action against Landlord for claims which are not
breach of Landlords obligations under the TCCs of this Lease (
e.g.
, claims based upon tortuous acts,
etc.), the liability of Landlord or the Landlord Parties to Tenant for any
default by Landlord under this Lease or arising in connection herewith or with
Landlords operation, management, leasing, repair, renovation, alteration or
any other matter relating to the Project or the Premises shall be limited
solely and exclusively to an amount equal the net interest of Landlord
(following payment of any outstanding liens and/or mortgages, whether
attributable to sales or insurance proceeds or otherwise) in the Project,
including any rents, profits and insurance proceeds received by Landlord or the
Landlord Parties in connection with the Project. Neither Landlord, nor any of
the Landlord Parties shall have any
54
personal
liability therefor, and Tenant hereby expressly waives and releases such
personal liability on behalf of itself and all persons claiming by, through or
under Tenant. The limitations of liability contained in this
Section 29.13
shall inure to the benefit of Landlords and the Landlord Parties present and future
partners, beneficiaries, officers, directors, trustees, shareholders, agents
and employees, and their respective partners, heirs, successors and assigns. Under
no circumstances shall any present or future partner of Landlord (if Landlord
is a partnership), or trustee or beneficiary (if Landlord or any partner of
Landlord is a trust), have any liability for the performance of Landlords
obligations under this Lease. Notwithstanding any contrary provision herein,
neither Landlord nor the Landlord Parties shall be liable under any
circumstances for injury or damage to, or interference with, Tenants business,
including but not limited to, loss of profits, loss of rents or other revenues,
loss of business opportunity, loss of goodwill or loss of use, in each case,
however occurring.
29.14
Entire Agreement
. It is understood and acknowledged that there
are no oral agreements between the parties hereto affecting this Lease and this
Lease (including all exhibits attached hereto) constitutes the parties entire
agreement with respect to the leasing of the Premises and supersedes and
cancels any and all previous negotiations, arrangements, brochures, agreements
and understandings, if any, between the parties hereto or displayed by Landlord
to Tenant with respect to the subject matter thereof, and none thereof shall be
used to interpret or construe this Lease. None of the terms, covenants,
conditions or provisions of this Lease can be modified, deleted or added to
except in writing signed by the parties hereto.
29.15
Right to Lease
. Landlord reserves the absolute right to effect
such other tenancies in the Project as Landlord in the exercise of its sole
business judgment shall determine to best promote the interests of the Building
or Project. Tenant does not rely on the fact, nor does Landlord represent, that
any specific tenant or type or number of tenants shall, during the Lease Term,
occupy any space in the Building or Project.
29.16
Force Majeure
. Any prevention, delay or stoppage due to
strikes, lockouts, labor disputes, acts of God, inability to obtain services,
labor, or materials or reasonable substitutes therefor, governmental actions,
civil commotions, fire or other casualty, and other causes beyond the
reasonable control of the party obligated to perform, except with respect to
the obligations imposed with regard to Rent and other charges to be paid by
Tenant pursuant to this Lease and except as to Tenants obligations under
Articles 5 and 24
of this Lease (collectively, a
Force Majeure
),
notwithstanding anything to the contrary contained in this Lease, shall excuse
the performance of such party for a period equal to any such prevention, delay
or stoppage and, therefore, if this Lease specifies a time period for
performance of an obligation of either party, that time period shall be
extended by the period of any delay in such partys performance caused by a
Force Majeure.
29.17
Waiver of Redemption by Tenant
. Tenant hereby waives, for Tenant and for all
those claiming under Tenant, any and all rights now or hereafter existing to
redeem by order or judgment of any court or by any legal process or writ,
Tenants right of occupancy of the Premises after any termination of this
Lease.
29.18
Notices
. All notices, demands, statements,
designations, approvals or other communications (collectively,
Notices
) given or required to be given by either party to
the
55
other
hereunder or by law shall be in writing, shall be (A) sent by United
States certified or registered mail, postage prepaid, return receipt requested
(
Mail
), (B) transmitted by
facsimile, if such facsimile is promptly followed by a Notice sent by Mail, (C) delivered
by a nationally recognized overnight courier, or (D) delivered personally.
Any Notice shall be sent, transmitted, or delivered, as the case may be,
to Tenant at the appropriate address set forth in
Section 10
of the
Summary, or to such other place as Tenant may from time to time designate
in a Notice to Landlord, or to Landlord at the addresses set forth below, or to
such other places as Landlord may from time to time designate in a Notice
to Tenant. Any Notice will be deemed given (i) three (3) days after
the date it is posted if sent by Mail, (ii) the date the telecopy is
transmitted, (iii) the date the overnight courier delivery is made, or (iv) the
date personal delivery is made or attempted to be made. If Tenant is notified
of the identity and address of Landlords mortgagee or ground or underlying
lessor, Tenant shall give to such mortgagee or ground or underlying lessor
written notice of any default by Landlord under the terms of this Lease by
registered or certified mail, and such mortgagee or ground or underlying lessor
shall be given a reasonable opportunity to cure such default prior to Tenants
exercising any remedy available to Tenant. As of the date of this Lease, any
Notices to Landlord must be sent, transmitted, or delivered, as the case may be,
to the following addresses:
Kilroy Realty Corporation
12200 West Olympic Boulevard
Suite 200
Los Angeles, California 90064
Attention: Legal Department
with copies to:
Kilroy Realty Corporation
3611 Valley Centre Drive, Suite 550
San Diego, California 92130
Attention: Mr. Brian Galligan
and
Allen Matkins Leck
Gamble Mallory & Natsis LLP
1901 Avenue of the
Stars, Suite 1800
Los Angeles,
California 90067
Attention: Anton N. Natsis, Esq.
29.19
Joint and Several
. If there is more than one Tenant, the
obligations imposed upon Tenant under this Lease shall be joint and several.
29.20
Authority
. If Tenant is a corporation, trust or
partnership, each individual executing this Lease on behalf of Tenant hereby
represents and warrants on behalf of Tenant that Tenant is a duly formed and
existing entity qualified to do business in California and that Tenant has full
right and authority to execute and deliver this Lease and that each person
signing on behalf of Tenant is authorized to do so. In such event, Tenant
shall, within ten (10) days after execution of this Lease, deliver to Landlord
satisfactory evidence of such authority and, if a
56
corporation,
upon demand by Landlord, also deliver to Landlord satisfactory evidence of (i) good
standing in Tenants state of incorporation and (ii) qualification to do
business in California.
29.21
Attorneys Fees
. In the event that either Landlord or Tenant
should bring suit for the possession of the Premises, for the recovery of any
sum due under this Lease, or because of the breach of any provision of this
Lease or for any other relief against the other, then all costs and expenses,
including reasonable attorneys fees, incurred by the prevailing party therein
shall be paid by the other party, which obligation on the part of the
other party shall be deemed to have accrued on the date of the commencement of
such action and shall be enforceable whether or not the action is prosecuted to
judgment.
29.22
Governing Law; WAIVER OF TRIAL BY JURY
. This Lease shall be construed and enforced in
accordance with the laws of the State of California. IN ANY ACTION OR
PROCEEDING ARISING HEREFROM, LANDLORD AND TENANT HEREBY CONSENT TO (I) THE
JURISDICTION OF ANY COMPETENT COURT WITHIN THE STATE OF CALIFORNIA,
(II) SERVICE OF PROCESS BY ANY MEANS AUTHORIZED BY CALIFORNIA LAW, AND
(III) IN THE INTEREST OF SAVING TIME AND EXPENSE, TRIAL WITHOUT A JURY IN
ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER OF THE PARTIES HERETO
AGAINST THE OTHER OR THEIR SUCCESSORS IN RESPECT OF ANY MATTER ARISING OUT OF
OR IN CONNECTION WITH THIS LEASE, THE RELATIONSHIP OF LANDLORD AND TENANT,
TENANTS USE OR OCCUPANCY OF THE PREMISES, AND/OR ANY CLAIM FOR INJURY OR
DAMAGE, OR ANY EMERGENCY OR STATUTORY REMEDY. IN THE EVENT LANDLORD COMMENCES
ANY SUMMARY PROCEEDINGS OR ACTION FOR NONPAYMENT OF BASE RENT OR ADDITIONAL
RENT, TENANT SHALL NOT INTERPOSE ANY COUNTERCLAIM OF ANY NATURE OR DESCRIPTION
(UNLESS SUCH COUNTERCLAIM SHALL BE MANDATORY) IN ANY SUCH PROCEEDING OR ACTION,
BUT SHALL BE RELEGATED TO AN INDEPENDENT ACTION AT LAW.
29.23
Submission of Lease
. Submission of this instrument for examination
or signature by Tenant does not constitute a reservation of, option for or
option to lease, and it is not effective as a lease or otherwise until
execution and delivery by both Landlord and Tenant.
29.24
Brokers
. Landlord and Tenant hereby warrant to each
other that they have had no dealings with any real estate broker or agent in
connection with the negotiation of this Lease, excepting only the real estate
brokers or agents specified in
Section 12
of the Summary (the
Brokers
), and that they know of no other real estate broker
or agent who is entitled to a commission in connection with this Lease. Landlord
shall pay the Brokers pursuant to the terms of separate commission agreements. Each
party agrees to indemnify and defend the other party against and hold the other
party harmless from any and all claims, demands, losses, liabilities, lawsuits,
judgments, costs and expenses (including without limitation reasonable
attorneys fees) with respect to any leasing commission or equivalent
compensation alleged to be owing on account of any dealings with any real
estate broker or agent, other than the Brokers, occurring by, through, or under
the indemnifying party.
29.25
Independent Covenants
. This Lease shall be construed as though the
covenants herein between Landlord and Tenant are independent and not dependent
and Tenant hereby
57
expressly
waives the benefit of any statute to the contrary and agrees that if Landlord
fails to perform its obligations set forth herein, Tenant shall not be
entitled to make any repairs or perform any acts hereunder at Landlords
expense or to any setoff of the Rent or other amounts owing hereunder against
Landlord.
29.26
Project or Building Name and Signage
. Landlord shall have the right at any time to
change the name of the Project or Building and to install, affix and maintain
any and all signs on the exterior and on the interior of the Project or Building
as Landlord may, in Landlords sole discretion, desire. Tenant shall not use
the name of the Project or Building or use pictures or illustrations of the
Project or Building in advertising or other publicity or for any purpose other
than as the address of the business to be conducted by Tenant in the Premises,
without the prior written consent of Landlord.
29.27
Counterparts
. This Lease may be executed in
counterparts with the same effect as if both parties hereto had executed the
same document. Both counterparts shall be construed together and shall
constitute a single lease.
29.28
Confidentiality
. Tenant acknowledges that the content of this
Lease and any related documents are confidential information. Tenant shall keep
such confidential information strictly confidential and shall not disclose such
confidential information to any person or entity other than Tenants financial,
legal, and space planning consultants.
29.29
Transportation Management
. Tenant shall fully comply with all present or
future programs intended to manage parking, transportation or traffic in and
around the Building, and in connection therewith, Tenant shall take responsible
action for the transportation planning and management of all employees located
at the Premises by working directly with Landlord, any governmental
transportation management organization or any other transportation-related
committees or entities.
29.30
Building Renovations
. It is specifically understood and agreed that
Landlord has made no representation or warranty to Tenant and has no obligation
and has made no promises to alter, remodel, improve, renovate, repair or
decorate the Premises, Building, or any part thereof and that no
representations respecting the condition of the Premises or the Building have
been made by Landlord to Tenant except as specifically set forth herein or in
the Work Letter Agreements. However, Tenant hereby acknowledges that Landlord
is currently renovating or may during the Lease Term renovate, improve,
alter, or modify (collectively, the
Renovations
)
the Project, the Building and/or the Premises including without limitation the
parking structure, common areas, systems and equipment, roof, and structural
portions of the same, which Renovations may include, without limitation, (i) installing
sprinklers in the Building common areas and tenant spaces, (ii) modifying
the common areas and tenant spaces to comply with applicable laws and
regulations, including regulations relating to the physically disabled, seismic
conditions, and building safety and security, and (iii) installing new
floor covering, lighting, and wall coverings in the Building common areas, and
in connection with any Renovations, Landlord may, among other things, erect
scaffolding or other necessary structures in the Building, limit or eliminate
access to portions of the Project, including portions of the common areas, or
perform work in the Building, which work may create noise, dust or
leave debris in the Building. Except as otherwise provided in the Lease, Tenant
hereby agrees that such Renovations and Landlords
58
actions
in connection with such Renovations shall in no way constitute a constructive
eviction of Tenant nor entitle Tenant to any abatement of Rent. Except as
otherwise provided in the Lease, Landlord shall have no responsibility or for
any reason be liable to Tenant for any direct or indirect injury to or
interference with Tenants business arising from the Renovations, nor shall
Tenant be entitled to any compensation or damages from Landlord for loss of the
use of the whole or any part of the Premises or of Tenants personal
property or improvements resulting from the Renovations or Landlords actions
in connection with such Renovations, or for any inconvenience or annoyance
occasioned by such Renovations or Landlords actions. Landlord shall use
commercially reasonable efforts to have all such work performed in a manner
which will minimize any unreasonable interference with the operations of Tenants
business in the Premises.
29.31
No Violation
. Tenant and Landlord each hereby warrant and
represent to the other that neither its execution of nor performance under this
Lease shall cause such party to be in violation of any agreement, instrument,
contract, law, rule or regulation by which such party is bound, and Tenant
and Landlord shall each protect, defend, indemnify and hold the other harmless
against any claims, demands, losses, damages, liabilities, costs and expenses,
including, without limitation, reasonable attorneys fees and costs, arising
from such partys breach of this warranty and representation.
29.32
Communications and Computer Lines
. Tenant may install, maintain, replace,
remove or use any communications or computer wires and cables (collectively,
the
Lines
) at the Project in or serving
the Premises, provided that (i) the provisions of Article 8
applicable to Cosmetic Alterations shall apply to the installation of such
Lines, (ii) an acceptable number of spare Lines and space for additional
Lines shall be maintained for existing and future occupants of the Project, as
determined in Landlords reasonable opinion, (iii) the Lines therefor
(including riser cables) shall be (x) appropriately insulated to prevent
excessive electromagnetic fields or radiation, (y) surrounded by a
then-customary protective conduit,
and (z) identified in accordance with the Identification
Requirements, as that term is set forth hereinbelow,
(iv) any
new or existing Lines servicing the Premises shall comply with all applicable
governmental laws and regulations, and (v) Tenant shall pay all costs in
connection therewith.
All Lines shall be clearly marked with adhesive plastic labels (or
plastic tags attached to such Lines with wire) to show Tenants name, suite number,
telephone number and the name of the person to contact in the case of an
emergency (A) every four feet (4) outside the Premises (specifically
including, but not limited to, the electrical room risers and other Common
Areas), and (B) at the Lines termination point(s) (collectively, the
Identification Requirements
).
Landlord
reserves the right to require that Tenant remove any Lines located in or
serving the Premises which are installed in violation of these provisions, or
which are at any time
(1) are
in violation of any Applicable Laws,
(2) are inconsistent with then-existing
industry standards (such as the standards promulgated by the National Fire
Protection Association (e.g., such organizations 2002 National Electrical
Code)), or (3) otherwise
represent a dangerous or potentially dangerous
condition.
29.33
Hazardous Substances
.
29.33.1
Definitions
.
For purposes of this Lease, the
following definitions shall apply:
Hazardous Material(s)
shall mean any solid, liquid or
gaseous substance or material
59
that is described or characterized as a toxic or hazardous substance,
waste, material, pollutant, contaminant or infectious waste, or any matter that
in certain specified quantities would be injurious to the public health or
welfare, or words of similar import, in any of the Environmental Laws, as
that term is defined below, or any other words which are intended to define,
list or classify substances by reason of deleterious properties such as
ignitability, corrosivity, reactivity, carcinogenicity, toxicity or
reproductive toxicity, which Hazardous Material(s) shall include, without
limitation, asbestos, petroleum (including crude oil or any fraction thereof,
natural gas, natural gas liquids, liquefied natural gas, or synthetic gas
usable for fuel, or any mixture thereof), petroleum products, polychlorinated
biphenyls, urea formaldehyde, radon gas, nuclear or radioactive matter, medical
waste, soot, vapors, fumes, acids, alkalis, chemicals, microbial matters (such
as molds, fungi or other bacterial matters), biological agents and chemicals
which may cause adverse health effects, including but not limited to,
cancers and /or toxicity.
Environmental Laws
shall mean any and all federal, state, local or quasi-governmental laws
(whether under common law, statute or otherwise), ordinances, decrees, codes,
rulings, awards, rules, regulations or guidance or policy documents now or
hereafter enacted or promulgated and as amended from time to time, in any way
relating to (i) the protection of the environment, the health and safety
of persons (including employees), property or the public welfare from actual or
potential release, discharge, escape or emission (whether past or present) of
any Hazardous Materials or (ii) the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of any Hazardous
Materials.
29.33.2
Compliance
with Environmental Laws
. Tenant
covenants that during the Lease Term, Tenant shall comply with all
Environmental Laws in accordance with, and as required by, the TCCs of
Article 24
of this Lease. Tenant shall not sell, use, or store in or around the Premises
any Hazardous Materials, except if stored, properly packaged and labeled,
disposed of and/or used in accordance with applicable Environmental Laws. In
addition, Tenant agrees that it: (i) shall
not cause or suffer to occur, the release, discharge, escape or emission of any
Hazardous Materials at, upon, under or within the Premises or any contiguous or
adjacent premises that were brought there by Tenant or any of its agents; (ii) shall
not engage in activities regarding Hazardous Materials that were brought there
by Tenant or any of its agents at the Premises that could result in, give rise
to, or lead to the imposition of liability upon Tenant or Landlord or the
creation of a lien upon the building or land upon which the Premises is
located; (iii) shall notify Landlord promptly following receipt of any
knowledge with respect to any actual release, discharge, escape or emission
(whether past or present) of any Hazardous Materials at, upon, under or within
the Premises; (iv) shall promptly forward to Landlord copies of all
orders, notices, permits, applications and other communications and reports in
connection with any release, discharge, escape or emission of any Hazardous
Materials at, upon, under or within the Premises or any contiguous or adjacent
premises, and (v) in connection with Tenants surrender of the Premises
upon the expiration or earlier termination of this Lease, and with regard to
Hazardous Materials brought upon the Premises by Tenant or any of its agents
(the
Tenant Haz Mat
), Tenant
shall deliver the Premises free of Hazardous Materials brought upon, kept or
used in or about the Premises (solely regarding Tenant Haz Mat), and shall
obtain and provide (solely with regard to Tenant Haz Mat) to Landlord (A) all
Hazardous Materials Clearances regarding such Tenant Haz Mat, (B) evidence
from the applicable governmental entities of closure of all permits regarding
Tenant Haz Mat which had been required for Tenants use of the Premises,
together with no further action letters from such applicable governmental
entities and a no further action letter for unrestricted future use of the Premises
60
solely with regard to Tenant Haz Mat, and (C) a Phase I report
(and, if reasonably required, a Phase II report) with regard to the Premises
(specifically including, but not limited to, the Premises ceiling tiles,
mechanical duct work, air-filters and all related Building Systems, as well as
the soils and groundwater under and about the Premises). Such Phase I report
(and, if applicable, such Phase II report) shall be (
x
) performed
by an environmental assessment or engineering firm and on a scope of work
acceptable to Landlord in its sole discretion, (
y
) shall
identify Landlord as a beneficiary of such report, and (
z
) completed
no earlier than six (6) months prior to the expiration of this Lease and
no later than the Lease Expiration Date; provided, however, in the event this
Lease is terminated early for any reason, Tenant shall complete such Phase I
report within a commercially reasonable time immediately following such early
termination of this Lease. Such Phase I report shall either (1) indicate
that the property shows no evidence of reasonably possible hazardous materials
contamination of the building, soil or groundwater by reason of Tenant Haz Mat;
or (2) recommend further investigation of the site, in which event, if
such further investigation relates to Tenant Haz Mat, then it shall be
performed by an environmental assessment or engineering firm and on a scope of
work acceptable to Landlord in its sole discretion and at the Tenants sole expense.
Such additional investigation, if any, shall be completed within sixty (60)
days of such recommendation.
29.33.3
List
of Documents and Operations
. As a material inducement to Landlord to allow
Tenant to use Hazardous Materials in connection with its business, Tenant
agrees to deliver to Landlord, prior to the Lease Commencement Date, a list
identifying each type of Hazardous Materials 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 Materials on the Premises (the
Hazardous Materials List
). Tenant shall
deliver to Landlord an updated Hazardous Materials List at least once a year
and shall also deliver an updated list before any new Hazardous Material(s) is
brought onto to the Premises by Tenant or any of its agents. Tenant shall
deliver to Landlord true and correct copies of the following documents (the
Haz Mat Documents
) related to the
handling, use, storage, disposal and emission of Hazardous Materials prior to
the Lease Commencement Date, or if unavailable at that time, concurrent with
the receipt from, or submission to, a governmental agency: permits; approvals; reports and
correspondences; storage and manufacturing 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 Landlord has given Tenant its written consent to do so, which
consent may be withheld in Landlords reasonable 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. Tenant is not
required, however, to provide Landlord with any portion(s) of the Haz Mat
Documents containing information of a proprietary nature which, in and of
themselves, do not contain a reference to any Hazardous Materials or hazardous
activities. It is not the intent of this
Section 29.33.3
to provide
Landlord with information which could be detrimental to Tenants business
should such information become possessed by Tenants competitors. In connection
with the foregoing, Tenant hereby represents and warrants to Landlord that
neither Tenant, or any of its legal predecessors, have been required by any
prior landlord, lender or governmental authority at any time during the
immediately preceding thirty-six (36) months to take remedial action in
connection with Hazardous Materials contaminating a property which
contamination was permitted by Tenant or resulting from Tenants action or use
of the property in question, and Tenant is not subject to any enforcement order
issued by any
61
governmental authority in connection with the use, disposal or storage
of a Hazardous Materials. If Landlord determines that this representation and
warranty was not true as of the date of this Lease, Landlord shall have the
right to terminate this Lease in Landlords sole and absolute discretion.
29.33.4
Landlords
Right of Environmental Audit
. Landlord may, upon reasonable notice to
Tenant, be granted access to and enter the Premises no more than once annually
to perform or cause to have performed an environmental inspection, site
assessment or audit. Such environmental inspector or auditor may be chosen
by Landlord, in its sole discretion, and be performed at Landlords sole
expense. To the extent that the report prepared upon such inspection,
assessment or audit, indicates the presence of Tenant Haz Mat in violation of
Environmental Laws, or provides recommendations or suggestions to prohibit the
release, discharge, escape or emission of any Tenant Haz Mat at, upon, under or
within the Premises, or to comply with any Environmental Laws, Tenant shall
promptly, at Tenants sole expense, comply with such recommendations or
suggestions, including, but not limited to performing such additional
investigative or subsurface investigations or remediation(s) as recommended by
such inspector or auditor (taking into account all legal requirements and
applicable governmental agency recommendations). Notwithstanding the above, if
at any time, Landlord has actual notice or reasonable cause to believe that
Tenant has violated, or permitted any violations of any Environmental Law, then
Landlord will be entitled to perform its environmental inspection,
assessment or audit at any time, notwithstanding the above mentioned annual limitation,
and Tenant must reimburse Landlord for the cost or fees incurred for such as
Additional Rent.
29.33.5
Indemnifications
.
Except to the extent attributable to the
negligence or willful misconduct of Tenant or any Tenant Parties, Landlord
agrees to indemnify, defend, protect and hold harmless the Tenant Parties from
and against any liability, obligation, damage or costs, including without
limitation, attorneys fees and costs, resulting directly or indirectly from
any use, presence, removal or disposal of any Hazardous Materials that was not
Tenant Haz Mat. Except to the extent attributable to the negligence or willful
misconduct of Landlord or any Landlord Parties, Tenant agrees to indemnify,
defend, protect and hold harmless the Landlord Parties from and against any
liability, obligation, damage or costs, including without limitation, attorneys
fees and costs, resulting directly or indirectly from any use, presence,
removal or disposal of any Tenant Haz Mat. The foregoing reciprocal
environmental indemnities shall survive any expiration or termination of this
Lease, and are not affected by any claims of breach of any other provisions of
this Lease.
29.33.6
Ongoing
Obligations
. All
obligations of Tenant hereunder not fully performed as of the termination of
the Lease Term, including the obligations of Tenant pursuant to this
Section 29.33
,
shall survive the expiration or earlier termination of the Lease, including,
without limitation, indemnity obligations, payment obligations with respect to
Rent and obligations concerning the condition and repair of the Premises.
29.34
No Discrimination
. Tenant covenants by and for itself, its heirs,
executors, administrators and assigns, and all persons claiming under or
through Tenant, and this Lease is made and accepted upon and subject to the
following conditions: that there shall
be no discrimination against or segregation of any person or group of persons,
on account of race, color, creed, sex, religion, marital status, ancestry or
national origin in the leasing, subleasing,
62
transferring,
use, or enjoyment of the Premises, nor shall Tenant itself, or any person
claiming under or through Tenant, establish or permit such practice or
practices of discrimination or segregation with reference to the selection,
location, number, use or occupancy, of tenants, lessees, sublessees, subtenants
or vendees in the Premises.
[
signature page immediately follows
]
63
IN WITNESS
WHEREOF, Landlord and Tenant have caused this Lease to be executed the day and
date first above written.
LANDLORD:
|
TENANT:
|
|
|
KILROY
REALTY, L.P.,
|
DEXCOM, INC.,
|
a
Delaware limited partnership
|
a
Delaware corporation
|
|
|
By:
|
Kilroy
Realty Corporation,
|
By:
|
/s/
Steven J. Kemper
|
|
|
a
Maryland corporation,
|
|
|
General
Partner
|
|
Its:
|
Chief
Financial Officer
|
|
|
|
|
|
By:
|
/s/
Jeffrey C. Hansen
|
|
By:
|
|
|
|
|
|
|
|
|
Its:
|
Executive
Vice President
|
|
|
Its:
|
|
|
|
|
|
By:
|
/s/
John T. Fucci
|
|
|
|
|
|
|
|
|
Its:
|
Sr.
Vice President
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
64
EXHIBIT A
6340 SEQUENCE DRIVE
OUTLINE OF PREMISES, BUILDING AND TENANT PARKING AREAS
[
ATTACHED
]
1
EXHIBIT B
6340 SEQUENCE DRIVE
WORK LETTER AGREEMENT
(INITIAL PREMISES)
This Work Letter
Agreement shall set forth the terms and conditions relating to the construction
of the improvements in the Initial Premises. This Work Letter Agreement is
essentially organized chronologically and addresses the issues of the
construction of the Premises, in sequence, as such issues will arise during the
actual construction of the Premises. All references in this Work Letter
Agreement to Articles or Sections of this Lease shall mean the relevant
portion of
Articles 1 through 29
of the Office Lease to which
this Work Letter Agreement is attached as
Exhibit B
and of which this Work Letter Agreement forms a part, and all references in
this Work Letter Agreement to Sections of this Work Letter Agreement shall mean
the relevant portion of
Sections 1 through 5
of this Work
Letter Agreement. Capitalized terms used in this Work Letter Agreement shall
have the same meaning as those terms are used and defined in the Lease, unless
such terms are otherwise defined in this Work Letter Agreement.
SECTION 1
LANDLORDS
INITIAL CONSTRUCTION IN THE PREMISES
1.1
Base Building as Constructed by Landlord
.
Upon the full execution and delivery of
this Lease by Landlord and Tenant, Landlord shall deliver the Premises and Base
Building, as that term is defined below, to Tenant, and Tenant shall accept
the Premises and Base Building from Landlord in their presently existing, as-is
condition. The
Base Building
shall consist of those portions of the Premises which were in existence prior
to the construction of any improvements in the Premises for the prior tenant of
the Premises.
1.2
HVAC, Plumbing and Electrical Systems
. Notwithstanding anything to the contrary set
forth in the Lease or
Section 1.1
of this Work Letter Agreement,
above, and subject to the TCCs of the last sentence of
Section 1.1.1
of the Lease, Landlord shall, upon its delivery of the Premises to Tenant,
cause the Base Buildings HVAC, plumbing and electrical systems to be in good
working order.
SECTION 2
IMPROVEMENTS
2.1
Improvement Allowance
. Tenant shall be entitled to a one-time
improvement allowance (the
Initial Premises
Improvement Allowance
) in the amount of $383,810.00 (which amount
was calculated based upon $10.00 per Rentable Square Foot for each of the
38,381 Rentable Square Feet of space in the Initial Premises) for the costs
relating to the initial design and construction of the improvements which are
permanently affixed to the Initial Premises portion of the Premises or as
otherwise allowed pursuant to the express terms of the
1
Lease or this Work Letter Agreement (the
Improvements
). Except as otherwise expressly set forth
herein, in no event shall Landlord be obligated to make disbursements pursuant
to this Work Letter Agreement in a total amount which exceeds the Initial
Premises Improvement Allowance. All Improvements for which the Initial Premises
Improvement Allowance has been made available shall, as more particularly
identified in
Section 8.5
of the Lease, be and become the property
of Landlord.
2.2
Disbursement of the Improvement Allowance
.
Landlord shall pay to Tenant the full
amount of the Initial Premises Improvement Allowance within five (5) business
days following the later to occur of (i) September 1, 2006, and (ii) the
completion of construction of the Initial Premises; provided, however, such
completion of construction shall not be deemed to have occurred unless and
until (
x
) Tenant delivers to Landlord
properly executed mechanics lien releases in compliance with both California
Civil Code Section 3262(d)(2) and either Section 3262(d)(3) or
Section 3262(d)(4), (
y
) Landlord
has determined that no substandard work exists which adversely effects the
mechanical, electrical, plumbing, heating, ventilating and air conditioning,
life-safety or other systems of the Building, the curtain wall of the Building,
or the structure or exterior appearance of the Building, and (
z
) Architect delivers to Landlord a certificate, in a form reasonably
acceptable to Landlord, certifying that the construction of the Improvements in
the Initial Premises has been substantially completed.
2.3
Building Standards for Improvements; Warm Shell
Condition
. Tenant
acknowledges that Landlord has established minimum specifications (the
Building Standards for Improvements
) for
the Building standard components to be used in the construction of the
Improvements in the Initial Premises, which Building Standards for Improvements
are set forth on
Schedule 1
attached hereto. Except for Building-standard doors, door hardware and lock
sets, as well as all other items expressly identified on
Schedule 1
as not changeable,
Landlord and Tenant hereby acknowledge and agree that Tenant is not required to
use any of the specific items set forth in
Schedule 1
in the construction of the Improvements, but that such
Schedule 1
establishes the minimum
quality and quantity of items listed thereon that are required with regard to
the construction of the PA Improvements. In connection with such Building
Standards for Improvements, Landlord has
also established certain
Warm Shell
condition specifications, which
Warm Shell condition specifications are set forth on
Schedule 2
, attached hereto
.
2.4
Removal of Non-Conforming Improvements
.
To the extent any particular
Improvements do not conform to the Building Standards for Improvements
(collectively, the
Non-Conforming
Improvements
), and the same are identified for removal by Landlord
at the time of Landlords approval of the Construction Drawings, then Tenant,
at its sole cost and expense, shall (A) remove from the Premises any such
Non-Conforming Improvements so identified for removal, (B) repair any
damage caused by such removal, and (C)
and return the affected portion of
the Premises to the Warm Shell condition.
Unless Landlord,
in its sole and absolute discretion, rescinds such
removal/repair/reconfiguration requirement in writing at least sixty (60)
days prior to the end of the Lease Term, such removal and replacement of
Non-Conforming Improvements shall be performed promptly and shall be completed
by Tenant on or before the end of the Lease Term.
2
SECTION 3
CONSTRUCTION
DRAWINGS
3.1
Selection of Architect/Construction Drawings
.
Subject to Landlords approval, which
approval shall not be unreasonably withheld, delayed, or conditioned, Tenant
shall select and retain an architect/space planner (the
Architect
) to prepare the Construction
Drawings, as that term is defined in this
Section 3.1
; provided,
however, Landlord hereby pre-approves Tony Mansour. Tenant shall retain (A) the
structural, mechanical and electrical engineering consultants designated by
Landlord, and (B) subject to Landlords approval (which approval shall not
be unreasonably withheld, delayed, or conditioned), all other engineering
consultants designated by Tenant (the
Engineers
)
to prepare all plans and engineering working drawings relating to the
structural, mechanical, electrical, plumbing, HVAC, lifesafety, and sprinkler
work in the Premises, which work is not part of the Base Building. The
plans and drawings to be prepared by Architect and the Engineers hereunder
shall be known collectively as the
Construction
Drawings
. All Construction
Drawings shall comply with the drawing format and specifications reasonably
determined by Landlord, and shall be subject to Landlords approval; provided,
however, Landlord shall only disapprove any such Construction Drawing to the
extent of a Design Problem, as that term is defined below. Tenant and
Architect shall verify, in the field, the dimensions and conditions as shown on
the relevant portions of the base building plans, and Tenant and Architect
shall be solely responsible for the same, and Landlord shall have no responsibility
in connection therewith. Landlords review of the Construction Drawings as set
forth in this
Section 3
, shall be for its sole purpose and shall
not imply Landlords review of the same, or obligate Landlord to review the
same, for quality, design, Code compliance or other like matters. Accordingly,
notwithstanding that any Construction Drawings are reviewed by Landlord or its
space planner, architect, engineers and consultants, and notwithstanding any
advice or assistance which may be rendered to Tenant by Landlord or
Landlords space planner, architect, engineers, and consultants, Landlord shall
have no liability whatsoever in connection therewith and shall not be
responsible for any omissions or errors contained in the Construction Drawings,
and Tenants waiver and indemnity set forth in this Lease shall specifically
apply to the Construction Drawings. A
Design
Problem
is defined as, and shall be deemed to exist if there could
be (i) an effect on the exterior appearance of the Building, (ii) an
adverse effect on the Base Building (including without limitation the Building
Structure), (iii) an adverse effect on the Building Systems or the
operation and maintenance thereof, or (iv) any failure to comply with
Applicable Laws or Code. Notwithstanding anything to the contrary contained
herein, Landlord acknowledges that Tenants security systems are fundamental to
its business operations in the Premises, and Landlord shall reasonably
cooperate with Tenant, at no material extra cost to Landlord, to permit such
security systems to be installed in the Premises in accordance with Tenants
reasonable security requirements. Landlord further acknowledges that the
Improvements may include data center, cafeteria and exercise facilities,
and that Landlord shall reasonably cooperate with Tenant, at no material extra
cost to Landlord, in Tenants design of such facilities.
3.2
Final Space Plan
. Tenant shall supply Landlord with four (4) copies
signed by Tenant of its final space plan for the Premises before any
architectural working drawings or engineering drawings have been commenced. The
final space plan (the
Final Space Plan
)
shall include a layout and designation of all offices, rooms and other
partitioning, their intended
3
use, and equipment to be contained therein. Landlord may request
clarification or more specific drawings for special use items not included in
the Final Space Plan. Landlord shall advise Tenant within five (5) business
days after Landlords receipt of the Final Space Plan for the Premises if the
same is unsatisfactory or incomplete in any respect; provided, however,
Landlord shall only disapprove such Final Space Plans to the extent of a Design
Problem. Landlord shall advise Tenant within five (5) business days after
Landlords receipt of the Final Space Plan for the Premises if the same is
unsatisfactory or incomplete in any respect. Landlord shall set forth with
reasonable specificity in what respect the Final Space Plan is unsatisfactory
or incomplete (based upon a commercially reasonable standard). If Tenant is so
advised, Tenant shall promptly direct the Architect to cause the Final Space
Plan to be revised to correct any deficiencies or other matters Landlord may reasonably
require, and immediately thereafter Architect shall promptly re-submit the
Final Space Plan to Landlord for its approval. Such procedure shall continue
until the Final Space Plan is approved by Landlord.
3.3
Final Working Drawings
. After the Final Space Plan has been approved
by Landlord, Tenant shall supply the Engineers with a complete listing of
standard and non-standard equipment and specifications, including, without
limitation, B.T.U. calculations, electrical requirements and special electrical
receptacle requirements for the Premises, to enable the Engineers and the
Architect to complete the Final Working Drawings (as that term is defined
below) in the manner as set forth below. Upon the approval of the Final Space
Plan by Landlord and Tenant, Tenant shall promptly cause the Architect and the
Engineers to complete the architectural and engineering drawings for the
Premises, and Architect shall compile a fully coordinated set of architectural,
structural, mechanical, electrical and plumbing working drawings in a form which
is complete to allow subcontractors to bid on the work and to obtain all
applicable permits (collectively, the
Final
Working Drawings
) and shall submit the same to Landlord for
Landlords approval. Tenant shall supply Landlord with four (4) copies
signed by Tenant of such Final Working Drawings. Landlord shall, within five (5) business
days after Landlords receipt of all of the Final Working Drawings, either (i) approve
the Final Working Drawings, (ii) approve the Final Working Drawings subject
to specified conditions, which conditions must be stated in a reasonably clear
and complete manner, and shall only be conditions reasonably intended to
address a potential Design Problem, or (iii) disapprove and return the
Construction Drawings to Tenant with requested revisions; provided, however,
Landlord shall only disapprove such Final Working Drawings to the extent of a
Design Problem. If Landlord disapproves the Final Working Drawings, Tenant may resubmit
the Final Working Drawings to Landlord at any time, and Landlord shall approve
or disapprove the resubmitted Final Working Drawings, based upon the criteria
set forth in this
Section 3.3
, within three (3) business days
after Landlord receives such resubmitted Final Working Drawings. Such procedure
shall be repeated until the Final Working Drawings are approved.
3.4
Approved Working Drawings
. The Final Working Drawings shall be approved
by Landlord (the
Approved Working Drawings
)
prior to the commencement of construction of the Premises by Tenant. After
approval by Landlord of the Final Working Drawings, Tenant shall submit the
same to the appropriate municipal authorities for all applicable building
permits. Tenant hereby agrees that neither Landlord nor Landlords consultants
shall be responsible for obtaining any building permit or certificate of
occupancy for the Premises and that obtaining the same shall be Tenants
responsibility; provided, however, that Landlord shall cooperate with Tenant in
executing permit applications and performing other ministerial acts reasonably
4
necessary to enable Tenant to obtain any such permit or certificate of
occupancy. No changes, modifications or alterations in the Approved Working
Drawings may be made without the prior written consent of Landlord,
provided, however, that Landlord may only disapprove of any such change to
the extent the necessary to eliminate a Design Problem (as requested and
approved, a
Tenant Change
).
SECTION 4
CONSTRUCTION
OF THE IMPROVEMENTS
4.1
Tenants Selection of Contractors
.
4.1.1
The Contractor
. A general contractor shall be retained by
Tenant to construct the Improvements in the Initial Premises. Such general
contractor (
Contractor
) shall be
Good & Roberts or otherwise selected by Tenant from a list of approved
general contractors mutually and reasonably agreed upon by Landlord and Tenant,
and Tenant shall deliver to Landlord notice of its selection of the Contractor
upon such selection.
4.1.2
Tenants Agents
. All subcontractors, laborers, materialmen, and
suppliers used by Tenant (such subcontractors, laborers, materialmen, and
suppliers, and the Contractor to be known collectively as
Tenants Agents
) must be approved in
writing by Landlord, which approval shall not be unreasonably withheld or
delayed. If Landlord does not approve any of Tenants proposed subcontractors,
laborers, materialmen or suppliers, Tenant shall submit other proposed
subcontractors, laborers, materialmen or suppliers for Landlords written approval.
4.2
Construction of Improvements by Tenants Agents
.
4.2.1
Construction Contract; Final Costs
. Prior to Tenants execution of the
construction contract and general conditions with Contractor (the
Contract
), Tenant shall submit the
Contract to Landlord for its approval, which approval shall not be unreasonably
withheld or delayed. Prior to the commencement of the construction of the
Improvements, and after Tenant has accepted all bids for the Improvements,
Tenant shall provide Landlord with a detailed breakdown, by trade, of the final
costs to be incurred or which have been incurred, as set forth more
particularly in
Sections 2.2.1.1 through 2.2.1.9
, above, in
connection with the design and construction of the Improvements to be performed
by or at the direction of Tenant or the Contractor, which costs form a
basis for the amount of the Contract (the
Final
Costs
). In the event that, after the Final Costs have been
delivered by Tenant to Landlord, the costs relating to the design and
construction of the Improvements shall change, any additional costs that arise
in connection with the construction of the Improvements shall be paid by Tenant.
During its construction of the Improvements, Tenant shall make monthly progress
payments to the Contractor pursuant to
Section 4.4
of this Work
Letter Agreement.
4.2.2
Tenants Agents
.
4.2.2.1
Landlords General Conditions for Tenants Agents and
Improvement Work
. Tenants
and Tenants Agents construction of the Improvements shall comply with the
following: (i) the Improvements
shall be constructed in strict accordance with
5
the Approved Working Drawings; (ii) Tenants Agents shall submit
schedules of all work relating to the Tenants Improvements to Contractor and
Contractor shall, within five (5) business days of receipt thereof, inform Tenants
Agents of any changes which are necessary thereto, and Tenants Agents shall
adhere to such corrected schedule; and (iii) Tenant shall abide by all rules made
by Landlords Building manager with respect to the use of freight, loading dock
and service elevators, storage of materials, coordination of work with the
contractors of other tenants, and any other matter in connection with this Work
Letter Agreement, including, without limitation, the construction of the
Improvements. Tenant shall pay a logistical coordination fee (the
Coordination Fee
) to Landlord in an amount
equal to the product of (A) two percent (2.0%) and (B) an amount
equal to the hard costs incurred for the actual construction of the Tenant
Improvements; provided, however, in no event shall the amount of such hard
costs be deemed to exceed the amount of the Initial Premises Improvement
Allowance; provided further, however, Landlord and Tenant hereby acknowledge
that such Coordination Fee shall be for services relating to the coordination
of the construction of the Improvements.
4.2.2.2
Indemnity
. Tenants indemnity of Landlord as set forth in
this Lease shall also apply with respect to any and all costs, losses, damages,
injuries and liabilities related in any way to any act or omission of Tenant or
Tenants Agents, or anyone directly or indirectly employed by any of them, or
in connection with Tenants non-payment of any amount arising out of the Improvements
and/or Tenants disapproval of all or any portion of any request for payment. Such
indemnity by Tenant, as set forth in this Lease, shall also apply with respect
to any and all costs, losses, damages, injuries and liabilities related in any
way to Landlords performance of any ministerial acts reasonably necessary (i) to
permit Tenant to complete the Improvements, and (ii) to enable Tenant to
obtain any building permit or certificate of occupancy for the Premises.
4.2.2.3
Requirements of Tenants Agents
. Each of Tenants Agents shall guarantee to
Tenant and for the benefit of Landlord that the portion of the Improvements for
which it is responsible shall be free from any defects in workmanship and
materials for a period of not less than one (1) year from the date of
completion thereof. Each of Tenants Agents shall be responsible for the
replacement or repair, without additional charge, of all work done or furnished
in accordance with its contract that shall become defective within one (1) year
after the later to occur of (i) completion of the work performed by such
contractor or subcontractors and (ii) the Lease Commencement Date. The
correction of such work shall include, without additional charge, all
additional expenses and damages incurred in connection with such removal or
replacement of all or any part of the Improvements, and/or the Building
and/or common areas that may be damaged or disturbed thereby. All such
warranties or guarantees as to materials or workmanship of or with respect to
the Improvements shall be contained in the Contract or subcontract and shall be
written such that such guarantees or warranties shall inure to the benefit of
both Landlord and Tenant, as their respective interests may appear, and
can be directly enforced by either. Tenant covenants to give to Landlord any
assignment or other assurances which may be necessary to effect such right
of direct enforcement.
4.2.2.4
Insurance Requirements
.
4.2.2.4.1
General
Coverages
. All of Tenants Agents
shall carry workers compensation insurance covering all of their respective
employees, and shall also carry
6
public liability insurance, including property damage,
all with limits, in form and with companies as are required to be carried
by Tenant as set forth in this Lease.
4.2.2.4.2
Special Coverages
. Tenant
shall carry Builders All Risk insurance in an amount approved by Landlord
covering the construction of the Improvements, and such other insurance as
Landlord may require, it being understood and agreed that the Improvements
shall be insured by Tenant pursuant to this Lease immediately upon completion
thereof; provided, however, to the extent such insurance is not available on a
commercially reasonable basis, then Tenant shall not be required to carry such
insurance. Such insurance shall be in amounts and shall include such extended
coverage endorsements as may be reasonably required by Landlord including,
but not limited to, the requirement that all of Tenants Agents shall carry
excess liability and Products and Completed Operation Coverage insurance, each
in amounts not less than $500,000 per incident, $1,000,000 in aggregate, and in
form and with companies as are required to be carried by Tenant as set
forth in this Lease.
4.2.2.4.3
General Terms
. Certificates
for all insurance carried pursuant to this
Section 4.2.2.4
shall be
delivered to Landlord before the commencement of construction of the
Improvements and before the Contractors equipment is moved onto the site. All
such policies of insurance must contain a provision that the company writing
said policy will give Landlord thirty (30) days prior written notice of any
cancellation or lapse of the effective date or any reduction in the amounts of
such insurance. In the event that the Improvements are damaged by any cause
during the course of the construction thereof, Tenant shall immediately repair
the same at Tenants sole cost and expense. Tenants Agents shall maintain all
of the foregoing insurance coverage in force until the Improvements are fully
completed and accepted by Landlord, except for any Products and Completed
Operation Coverage insurance required by Landlord, which is to be maintained
for ten (10) years following completion of the work and acceptance by
Landlord and Tenant. All policies carried under this
Section 4.2.2.4
shall insure Landlord and Tenant, as their interests may appear, as well
as Contractor and Tenants Agents. All insurance, except Workers Compensation,
maintained by Tenants Agents shall preclude subrogation claims by the insurer
against anyone insured thereunder. Such insurance shall provide that it is
primary insurance as respects the owner and that any other insurance maintained
by owner is excess and noncontributing with the insurance required hereunder. The
requirements for the foregoing insurance shall not derogate from the provisions
for indemnification of Landlord by Tenant under
Section 4.2.2.2
of
this Work Letter Agreement. Landlord may, in its reasonable discretion, require
Tenant to obtain a lien and completion bond or some alternate form of
security satisfactory to Landlord in an amount sufficient to ensure the
lien-free completion of the Improvements and naming Landlord as a co-obligee.
4.2.3
Governmental Compliance
. The
Improvements shall comply in all material respects with the following: (i) the Code and other state, federal,
city or quasi-governmental laws, codes, ordinances and regulations, as each may apply
according to the rulings of the controlling public official, agent or other
person; (ii) applicable standards of the American Insurance Association
(formerly, the National Board of Fire Underwriters) and the National Electrical
Code; and (iii) building material manufacturers specifications.
4.2.4
Inspection by Landlord
. Landlord shall
have the reasonable right to inspect the Improvements at all times, provided
however, that Landlords failure to inspect the
7
Improvements shall
in no event constitute a waiver of any of Landlords rights hereunder nor shall
Landlords inspection of the Improvements constitute Landlords approval of the
same. Should Landlord disapprove any portion of the Improvements, Landlord
shall notify Tenant in writing of such disapproval and shall specify the items
disapproved. Any defects or deviations in, and/or disapproval by Landlord of,
the Improvements shall be rectified by Tenant at no expense to Landlord,
provided however, that in the event Landlord determines that a defect or
deviation exists or disapproves of any matter in connection with any portion of
the Improvements and such defect, deviation or matter might adversely effect
the mechanical, electrical, plumbing, heating, ventilating and air conditioning
or life-safety systems of the Building, the structure or exterior appearance of
the Building or any other tenants use of such other tenants leased premises,
Landlord may, take such action as Landlord deems necessary, at Tenants expense
and without incurring any liability on Landlords part, to correct any such
defect, deviation and/or matter, including, without limitation, causing the
cessation of performance of the construction of the Improvements until such
time as the defect, deviation and/or matter is corrected to Landlords
satisfaction.
4.2.5
Meetings
. Tenant and Landlord shall
hold regular meetings at reasonable times (but in no event to be required more
often than weekly), with the Architect and the Contractor regarding the
progress of the preparation of Construction Drawings and the construction of
the Improvements, which meetings shall be held at a location and at times
mutually and reasonably agreed upon by Landlord and Tenant, and Landlord and/or
its agents shall receive prior notice of, and shall have the right to attend,
all such meetings, and, upon Landlords request, certain of Tenants Agents
shall attend such meetings. In addition, minutes shall be taken at all such
meetings, a copy of which minutes shall be promptly delivered to Landlord. One
such meeting each month shall include the review of Contractors current
request for payment.
4.3
Notice of Completion; Copy of Record Set of Plans
.
Within ten (10) days after completion of construction of the Improvements,
Tenant shall cause a Notice of Completion to be recorded in the office of the
Recorder of the county in which the Building is located in accordance with Section 3093
of the Civil Code of the State of California or any successor statute, and
shall furnish a copy thereof to Landlord upon such recordation. If Tenant fails
to do so, Landlord may execute and file the same on behalf of Tenant as
Tenants agent for such purpose, at Tenants sole cost and expense. At the
conclusion of construction, (i) Tenant shall cause the Architect and
Contractor (A) to update the Approved Working Drawings as necessary to
reflect all changes made to the Approved Working Drawings during the course of
construction, (B) to certify to the best of their knowledge that the record-set
of as-built drawings are true and correct, which certification shall survive
the expiration or termination of this Lease, and (C) to deliver to
Landlord two (2) sets of copies of such record set of drawings within
ninety (90) days following issuance of a certificate of occupancy for the
Premises, and (ii) Tenant shall deliver to Landlord a copy of all
warranties, guaranties, and operating manuals and information relating to the
improvements, equipment, and systems in the Premises.
4.4
Monthly Disbursements
. On or before a
designated day of each calendar month during the construction of the
Improvements, Tenant shall pay the Contractor, on a progress-payment basis,
pursuant to the terms of the Contract; provided, however, at least five (5) business
days prior to making such monthly disbursements, Tenant shall have delivered to
8
Landlord: (i) a construction schedule showing,
by trade, the percentage of completion of the Improvements in the Initial
Premises, detailing the portion of the work completed and the portion not
completed; (ii) copies of invoices from all of Tenants Agents for labor
rendered and materials delivered to the Premises; (iii) executed mechanics
lien releases from all of Tenants Agents which shall comply with the
appropriate provisions, as reasonably determined by Landlord, of California
Civil Code Section 3262(d); and (iv) all other information reasonably
requested by Landlord (collectively, the
Payment
Package
). Tenants submission of each Payment Package to Landlord
and corresponding payment to Contractor shall be deemed Tenants acceptance and
approval of the work furnished and/or the materials supplied as set forth in
such Payment Package.
SECTION 5
MISCELLANEOUS
5.1
Tenants Representative
. Tenant has
designated Mr. Mark Brister as its sole representative with respect to the
matters set forth in this Work Letter Agreement, who shall have full authority
and responsibility to act on behalf of the Tenant as required in this Work
Letter Agreement.
5.2
Landlords Representative
. Landlord has
designated Mr. Rick Mount as its sole representatives with respect to the
matters set forth in this Work Letter Agreement, who, until further notice to
Tenant, shall have full authority and responsibility to act on behalf of the
Landlord as required in this Work Letter Agreement.
5.3
Time of the Essence in This Work Letter Agreement
.
Unless otherwise indicated, all references herein to a number of days shall
mean and refer to calendar days. If any item requiring approval is timely
disapproved by Landlord, the procedure for preparation of the document and
approval thereof shall be repeated until the document is approved by Landlord.
9
SCHEDULE 1 TO EXHIBIT B
BUILDING STANDARDS FOR IMPROVEMENTS
[
ATTACHED
]
1
SCHEDULE 2 TO EXHIBIT B
WARM
SHELL CONDITION SPECIFICATIONS
[
ATTACHED
]
1
EXHIBIT B-1
6340 SEQUENCE DRIVE
WORK LETTER AGREEMENT
(MUST-TAKE SPACE)
This Work Letter
Agreement shall set forth the terms and conditions relating to the construction
of the improvements in the Must-Take Space. This Work Letter Agreement is
essentially organized chronologically and addresses the issues of the
construction of the Premises, in sequence, as such issues will arise during the
actual construction of the Premises. All references in this Work Letter
Agreement to Articles or Sections of this Lease shall mean the relevant
portion of
Articles 1 through 29
of the Office Lease to which
this Work Letter Agreement is attached as
Exhibit B
and of which this Work Letter Agreement forms a part, and all references in
this Work Letter Agreement to Sections of this Work Letter Agreement shall
mean the relevant portion of
Sections 1 through 5
of this Work
Letter Agreement. Capitalized terms used in this Work Letter Agreement shall
have the same meaning as those terms are used and defined in the Lease, unless
such terms are otherwise defined in this Work Letter Agreement.
SECTION 1
LANDLORDS INITIAL CONSTRUCTION IN
THE PREMISES
1.1
Base Building as Constructed by Landlord
.
Upon the full execution and delivery of this Lease by Landlord and Tenant,
Landlord shall deliver the Premises and Base Building, as that term is
defined below, to Tenant, and Tenant shall accept the Premises and Base
Building from Landlord in their presently existing, as-is condition. The
Base Building
shall consist of those
portions of the Premises which were in existence prior to the construction of
any improvements in the Premises for the prior tenant of the Premises.
1.2
HVAC, Plumbing and Electrical Systems
. Notwithstanding
anything to the contrary set forth in the Lease or
Section 1.1
of
this Work Letter Agreement, above, and subject to the TCCs of the last sentence
of
Section 1.1.1
of the Lease, Landlord shall, upon its delivery of
the Premises to Tenant, cause the Base Buildings HVAC, plumbing and electrical
systems to be in good working order.
SECTION 2
IMPROVEMENTS
2.1
Improvement Allowance
. Tenant shall be
entitled to a one-time improvement allowance (the
Must-Take Space Improvement Allowance
) in the amount of $280,190.00
(which amount was calculated based upon $10.00 per Rentable Square Foot for
each of the 28,019 Rentable Square Feet of space in the Must-Take Space) for
the costs relating to the initial design and construction of the improvements
which are permanently affixed to the Must-Take Space portion of the Premises or
as otherwise allowed pursuant to the express terms of the Lease
1
or this Work
Letter Agreement (the
Improvements
).
Except as otherwise expressly set forth herein, in no event shall Landlord be
obligated to make disbursements pursuant to this Work Letter Agreement in a
total amount which exceeds the Must-Take Space Improvement Allowance. All
Improvements for which the Must-Take Space Improvement Allowance has been made
available shall, as more particularly identified in
Section 8.5
of
the Lease, be and become the property of Landlord.
2.2
Disbursement of the Improvement Allowance
.
Landlord shall pay to Tenant the full amount of the Must-Take Space Improvement
Allowance within five (5) business days following the later to occur of (
w
) the expiration of the MTS Rent
Abatement Period, (
x
) the
date Tenant delivers to Landlord properly executed mechanics lien releases in
compliance with both California Civil Code Section 3262(d)(2) and
either Section 3262(d)(3) or Section 3262(d)(4), (
y
) the Landlord has determined that
no substandard work exists which adversely effects the mechanical, electrical,
plumbing, heating, ventilating and air conditioning, life-safety or other
systems of the Building, the curtain wall of the Building, or the structure or
exterior appearance of the Building, and (
z
) the
date Architect delivers to Landlord a certificate, in a form reasonably
acceptable to Landlord, certifying that the construction of the Improvements in
the Must-Take Space has been substantially completed.
2.3
Building Standards for Improvements; Warm Shell
Condition
. Tenant acknowledges that Landlord has established the
Building Standards for Improvements and Warm Shell condition specifications, as
more particularly set forth in
Exhibit B
to this Lease and in
Schedules 1 and
2
to such
Exhibit B
.
2.4
Removal of Non-Conforming Improvements
.
To the extent any particular Improvements do not conform to the Building
Standards for Improvements (collectively, the
Non-Conforming Improvements
), and the same are identified for
removal by Landlord at the time of Landlords approval of the Construction
Drawings, then Tenant, at its sole cost and expense, shall (A) remove from
the Premises any such Non-Conforming Improvements so identified for removal, (B) repair
any damage caused by such removal, and (C)
and return the affected portion of
the Premises to the Warm Shell condition.
Unless Landlord,
in its sole and absolute discretion, rescinds such
removal/repair/reconfiguration requirement in writing at least sixty (60)
days prior to the end of the Lease Term, such removal and replacement of
Non-Conforming Improvements shall be performed promptly and shall be completed
by Tenant on or before the end of the Lease Term.
SECTION 3
CONSTRUCTION DRAWINGS
3.1
Selection of Architect/Construction Drawings
.
Subject to Landlords approval, which approval shall not be unreasonably
withheld, delayed, or conditioned, Tenant shall select and retain an
architect/space planner (the
Architect
)
to prepare the Construction Drawings, as that term is defined in this
Section 3.1
;
provided, however, Landlord hereby pre-approves Tony Mansour. Tenant shall
retain (A) the structural, mechanical and electrical engineering
consultants designated by Landlord, and (B) subject to Landlords approval
(which approval shall not be unreasonably withheld, delayed, or conditioned),
all other engineering consultants
2
designated by
Tenant (the
Engineers
) to
prepare all plans and engineering working drawings relating to the structural,
mechanical, electrical, plumbing, HVAC, lifesafety, and sprinkler work in the
Premises, which work is not part of the Base Building. The plans and
drawings to be prepared by Architect and the Engineers hereunder shall be known
collectively as the
Construction Drawings
. All Construction Drawings shall comply with
the drawing format and specifications reasonably determined by Landlord, and
shall be subject to Landlords approval; provided, however, Landlord shall only
disapprove any such Construction Drawing to the extent of a Design Problem,
as that term is defined below. Tenant and Architect shall verify, in the field,
the dimensions and conditions as shown on the relevant portions of the base
building plans, and Tenant and Architect shall be solely responsible for the
same, and Landlord shall have no responsibility in connection therewith. Landlords
review of the Construction Drawings as set forth in this
Section 3
,
shall be for its sole purpose and shall not imply Landlords review of the
same, or obligate Landlord to review the same, for quality, design, Code
compliance or other like matters. Accordingly, notwithstanding that any
Construction Drawings are reviewed by Landlord or its space planner, architect,
engineers and consultants, and notwithstanding any advice or assistance which may be
rendered to Tenant by Landlord or Landlords space planner, architect, engineers,
and consultants, Landlord shall have no liability whatsoever in connection
therewith and shall not be responsible for any omissions or errors contained in
the Construction Drawings, and Tenants waiver and indemnity set forth in this
Lease shall specifically apply to the Construction Drawings. A
Design Problem
is defined as, and shall be
deemed to exist if there could be (i) an effect on the exterior appearance
of the Building, (ii) an adverse effect on the Base Building (including
without limitation the Building Structure), (iii) an adverse effect on the
Building Systems or the operation and maintenance thereof, or (iv) any
failure to comply with Applicable Laws or Code. Notwithstanding anything to the
contrary contained herein, Landlord acknowledges that Tenants security systems
are fundamental to its business operations in the Premises, and Landlord shall
reasonably cooperate with Tenant, at no material extra cost to Landlord, to
permit such security systems to be installed in the Premises in accordance with
Tenants reasonable security requirements. Landlord further acknowledges that
the Improvements may include data center, cafeteria and exercise
facilities, and that Landlord shall reasonably cooperate with Tenant, at no
material extra cost to Landlord, in Tenants design of such facilities.
3.2
Final Space Plan
. Tenant shall supply
Landlord with four (4) copies signed by Tenant of its final space plan for
the Premises before any architectural working drawings or engineering drawings
have been commenced. The final space plan (the
Final Space Plan
) shall include a layout and designation of
all offices, rooms and other partitioning, their intended use, and equipment to
be contained therein. Landlord may request clarification or more specific
drawings for special use items not included in the Final Space Plan. Landlord
shall advise Tenant within five (5) business days after Landlords receipt
of the Final Space Plan for the Premises if the same is unsatisfactory or
incomplete in any respect; provided, however, Landlord shall only disapprove
such Final Space Plans to the extent of a Design Problem. Landlord shall advise
Tenant within five (5) business days after Landlords receipt of the Final
Space Plan for the Premises if the same is unsatisfactory or incomplete in any
respect. Landlord shall set forth with reasonable specificity in what respect
the Final Space Plan is unsatisfactory or incomplete (based upon a commercially
reasonable standard). If Tenant is so advised, Tenant shall promptly direct the
Architect to cause the Final Space Plan to be revised to correct any
deficiencies or other matters Landlord may reasonably require, and
immediately thereafter Architect shall
3
promptly re-submit
the Final Space Plan to Landlord for its approval. Such procedure shall
continue until the Final Space Plan is approved by Landlord.
3.3
Final Working Drawings
. After the Final
Space Plan has been approved by Landlord, Tenant shall supply the Engineers
with a complete listing of standard and non-standard equipment and
specifications, including, without limitation, B.T.U. calculations, electrical
requirements and special electrical receptacle requirements for the Premises,
to enable the Engineers and the Architect to complete the Final Working
Drawings (as that term is defined below) in the manner as set forth below. Upon
the approval of the Final Space Plan by Landlord and Tenant, Tenant shall
promptly cause the Architect and the Engineers to complete the architectural
and engineering drawings for the Premises, and Architect shall compile a fully
coordinated set of architectural, structural, mechanical, electrical and
plumbing working drawings in a form which is complete to allow
subcontractors to bid on the work and to obtain all applicable permits
(collectively, the
Final Working Drawings
)
and shall submit the same to Landlord for Landlords approval. Tenant shall
supply Landlord with four (4) copies signed by Tenant of such Final
Working Drawings. Landlord shall, within five (5) business days after
Landlords receipt of all of the Final Working Drawings, either (i) approve
the Final Working Drawings, (ii) approve the Final Working Drawings
subject to specified conditions, which conditions must be stated in a
reasonably clear and complete manner, and shall only be conditions reasonably
intended to address a potential Design Problem, or (iii) disapprove and
return the Construction Drawings to Tenant with requested revisions; provided,
however, Landlord shall only disapprove such Final Working Drawings to the
extent of a Design Problem. If Landlord disapproves the Final Working Drawings,
Tenant may resubmit the Final Working Drawings to Landlord at any time,
and Landlord shall approve or disapprove the resubmitted Final Working
Drawings, based upon the criteria set forth in this
Section 3.3
,
within three (3) business days after Landlord receives such resubmitted
Final Working Drawings. Such procedure shall be repeated until the Final
Working Drawings are approved.
3.4
Approved Working Drawings
. The Final
Working Drawings shall be approved by Landlord (the
Approved Working Drawings
) prior to the commencement of
construction of the Premises by Tenant. After approval by Landlord of the Final
Working Drawings, Tenant shall submit the same to the appropriate municipal
authorities for all applicable building permits. Tenant hereby agrees that
neither Landlord nor Landlords consultants shall be responsible for obtaining
any building permit or certificate of occupancy for the Premises and that
obtaining the same shall be Tenants responsibility; provided, however, that
Landlord shall cooperate with Tenant in executing permit applications and
performing other ministerial acts reasonably necessary to enable Tenant to
obtain any such permit or certificate of occupancy. No changes, modifications
or alterations in the Approved Working Drawings may be made without the
prior written consent of Landlord, provided, however, that Landlord may only
disapprove of any such change to the extent the necessary to eliminate a Design
Problem (as requested and approved, a
Tenant
Change
).
4
SECTION 4
CONSTRUCTION OF THE IMPROVEMENTS
4.1
Tenants Selection of Contractors
.
4.1.1
The Contractor
. A general contractor
shall be retained by Tenant to construct the Improvements in the Must-Take
Space. Such general contractor (
Contractor
)
shall be Good & Roberts or otherwise selected by Tenant from a list of
approved general contractors mutually and reasonably agreed upon by Landlord
and Tenant, and Tenant shall deliver to Landlord notice of its selection of the
Contractor upon such selection.
4.1.2
Tenants Agents
. All subcontractors,
laborers, materialmen, and suppliers used by Tenant (such subcontractors,
laborers, materialmen, and suppliers, and the Contractor to be known
collectively as
Tenants Agents
)
must be approved in writing by Landlord, which approval shall not be
unreasonably withheld or delayed. If Landlord does not approve any of Tenants
proposed subcontractors, laborers, materialmen or suppliers, Tenant shall
submit other proposed subcontractors, laborers, materialmen or suppliers for
Landlords written approval.
4.2
Construction of Improvements by Tenants Agents
.
4.2.1
Construction Contract; Final Costs
. Prior
to Tenants execution of the construction contract and general conditions with
Contractor (the
Contract
),
Tenant shall submit the Contract to Landlord for its approval, which approval
shall not be unreasonably withheld or delayed. Prior to the commencement of the
construction of the Improvements, and after Tenant has accepted all bids for
the Improvements, Tenant shall provide Landlord with a detailed breakdown, by
trade, of the final costs to be incurred or which have been incurred, as set
forth more particularly in
Sections 2.2.1.1 through 2.2.1.9
,
above, in connection with the design and construction of the Improvements to be
performed by or at the direction of Tenant or the Contractor, which costs form a
basis for the amount of the Contract (the
Final
Costs
). In the event that, after the Final Costs have been
delivered by Tenant to Landlord, the costs relating to the design and
construction of the Improvements shall change, any additional costs that arise
in connection with the construction of the Improvements shall be paid by Tenant.
During its construction of the Improvements, Tenant shall make monthly progress
payments to the Contractor pursuant to
Section 4.4
of this Work
Letter Agreement.
4.2.2
Tenants Agents
.
4.2.2.1
Landlords General Conditions for Tenants Agents and
Improvement Work
. Tenants and Tenants Agents construction of
the Improvements shall comply with the following: (i) the Improvements shall be
constructed in strict accordance with the Approved Working Drawings; (ii) Tenants
Agents shall submit schedules of all work relating to the Tenants Improvements
to Contractor and Contractor shall, within five (5) business days of
receipt thereof, inform Tenants Agents of any changes which are necessary
thereto, and Tenants Agents shall adhere to such corrected schedule; and (iii) Tenant
shall abide by all rules made by Landlords Building manager with respect
to the use of freight, loading dock
5
and service
elevators, storage of materials, coordination of work with the contractors of
other tenants, and any other matter in connection with this Work Letter
Agreement, including, without limitation, the construction of the Improvements.
Tenant shall pay a logistical coordination fee (the
Coordination Fee
) to Landlord in an amount equal to the
product of (A) two percent (2.0%) and (B) an amount equal to the hard
costs incurred for the actual construction of the Tenant Improvements;
provided, however, in no event shall the amount of such hard costs be deemed
to exceed the amount of the Must-Take Space Improvement Allowance; provided
further, however, Landlord and Tenant hereby acknowledge that such Coordination
Fee shall be for services relating to the coordination of the construction of
the Improvements.
4.2.2.2
Indemnity
. Tenants indemnity of
Landlord as set forth in this Lease shall also apply with respect to any and
all costs, losses, damages, injuries and liabilities related in any way to any
act or omission of Tenant or Tenants Agents, or anyone directly or indirectly
employed by any of them, or in connection with Tenants non-payment of any
amount arising out of the Improvements and/or Tenants disapproval of all or
any portion of any request for payment. Such indemnity by Tenant, as set forth
in this Lease, shall also apply with respect to any and all costs, losses,
damages, injuries and liabilities related in any way to Landlords performance
of any ministerial acts reasonably necessary (i) to permit Tenant to
complete the Improvements, and (ii) to enable Tenant to obtain any
building permit or certificate of occupancy for the Premises.
4.2.2.3
Requirements of Tenants Agents
. Each
of Tenants Agents shall guarantee to Tenant and for the benefit of Landlord
that the portion of the Improvements for which it is responsible shall be free
from any defects in workmanship and materials for a period of not less than one
(1) year from the date of completion thereof. Each of Tenants Agents
shall be responsible for the replacement or repair, without additional charge,
of all work done or furnished in accordance with its contract that shall become
defective within one (1) year after the later to occur of (i) completion
of the work performed by such contractor or subcontractors and (ii) the
Lease Commencement Date. The correction of such work shall include, without
additional charge, all additional expenses and damages incurred in connection
with such removal or replacement of all or any part of the Improvements,
and/or the Building and/or common areas that may be damaged or disturbed
thereby. All such warranties or guarantees as to materials or workmanship of or
with respect to the Improvements shall be contained in the Contract or
subcontract and shall be written such that such guarantees or warranties shall
inure to the benefit of both Landlord and Tenant, as their respective interests
may appear, and can be directly enforced by either. Tenant covenants to
give to Landlord any assignment or other assurances which may be necessary
to effect such right of direct enforcement.
4.2.2.4
Insurance Requirements
.
4.2.2.4.1
General Coverages
. All of
Tenants Agents shall carry workers compensation insurance covering all of
their respective employees, and shall also carry public liability insurance,
including property damage, all with limits, in form and with companies as
are required to be carried by Tenant as set forth in this Lease.
4.2.2.4.2
Special Coverages
. Tenant
shall carry Builders All Risk insurance in an amount approved by Landlord
covering the construction of the
6
Improvements, and such other insurance as Landlord may require,
it being understood and agreed that the Improvements shall be insured by Tenant
pursuant to this Lease immediately upon completion thereof; provided, however,
to the extent such insurance is not available on a commercially reasonable
basis, then Tenant shall not be required to carry such insurance. Such
insurance shall be in amounts and shall include such extended coverage
endorsements as may be reasonably required by Landlord including, but not
limited to, the requirement that all of Tenants Agents shall carry excess
liability and Products and Completed Operation Coverage insurance, each in
amounts not less than $500,000 per incident, $1,000,000 in aggregate, and in form and
with companies as are required to be carried by Tenant as set forth in this
Lease.
4.2.2.4.3
General Terms
. Certificates
for all insurance carried pursuant to this
Section 4.2.2.4
shall be
delivered to Landlord before the commencement of construction of the
Improvements and before the Contractors equipment is moved onto the site. All
such policies of insurance must contain a provision that the company writing
said policy will give Landlord thirty (30) days prior written notice of any
cancellation or lapse of the effective date or any reduction in the amounts of
such insurance. In the event that the Improvements are damaged by any cause
during the course of the construction thereof, Tenant shall immediately repair
the same at Tenants sole cost and expense. Tenants Agents shall maintain all
of the foregoing insurance coverage in force until the Improvements are fully
completed and accepted by Landlord, except for any Products and Completed
Operation Coverage insurance required by Landlord, which is to be maintained
for ten (10) years following completion of the work and acceptance by
Landlord and Tenant. All policies carried under this
Section 4.2.2.4
shall insure Landlord and Tenant, as their interests may appear, as well
as Contractor and Tenants Agents. All insurance, except Workers Compensation,
maintained by Tenants Agents shall preclude subrogation claims by the insurer
against anyone insured thereunder. Such insurance shall provide that it is
primary insurance as respects the owner and that any other insurance maintained
by owner is excess and noncontributing with the insurance required hereunder. The
requirements for the foregoing insurance shall not derogate from the provisions
for indemnification of Landlord by Tenant under
Section 4.2.2.2
of
this Work Letter Agreement. Landlord may, in its reasonable discretion, require
Tenant to obtain a lien and completion bond or some alternate form of
security satisfactory to Landlord in an amount sufficient to ensure the
lien-free completion of the Improvements and naming Landlord as a co-obligee.
4.2.3
Governmental Compliance
. The
Improvements shall comply in all material respects with the following: (i) the Code and other state, federal,
city or quasi-governmental laws, codes, ordinances and regulations, as each may apply
according to the rulings of the controlling public official, agent or other
person; (ii) applicable standards of the American Insurance Association
(formerly, the National Board of Fire Underwriters) and the National Electrical
Code; and (iii) building material manufacturers specifications.
4.2.4
Inspection by Landlord
. Landlord shall
have the reasonable right to inspect the Improvements at all times, provided
however, that Landlords failure to inspect the Improvements shall in no event
constitute a waiver of any of Landlords rights hereunder nor shall Landlords
inspection of the Improvements constitute Landlords approval of the same. Should
Landlord disapprove any portion of the Improvements, Landlord shall notify
Tenant in writing of such disapproval and shall specify the items disapproved. Any
defects or deviations in, and/or disapproval by Landlord of, the Improvements
shall be rectified by Tenant at no
7
expense to
Landlord, provided however, that in the event Landlord determines that a defect
or deviation exists or disapproves of any matter in connection with any portion
of the Improvements and such defect, deviation or matter might adversely effect
the mechanical, electrical, plumbing, heating, ventilating and air conditioning
or life-safety systems of the Building, the structure or exterior appearance of
the Building or any other tenants use of such other tenants leased premises,
Landlord may, take such action as Landlord deems necessary, at Tenants expense
and without incurring any liability on Landlords part, to correct any such
defect, deviation and/or matter, including, without limitation, causing the
cessation of performance of the construction of the Improvements until such
time as the defect, deviation and/or matter is corrected to Landlords
satisfaction.
4.2.5
Meetings
. Tenant and Landlord shall
hold regular meetings at reasonable times (but in no event to be required more
often than weekly), with the Architect and the Contractor regarding the
progress of the preparation of Construction Drawings and the construction of
the Improvements, which meetings shall be held at a location and at times
mutually and reasonably agreed upon by Landlord and Tenant, and Landlord and/or
its agents shall receive prior notice of, and shall have the right to attend,
all such meetings, and, upon Landlords request, certain of Tenants Agents
shall attend such meetings. In addition, minutes shall be taken at all such
meetings, a copy of which minutes shall be promptly delivered to Landlord. One
such meeting each month shall include the review of Contractors current
request for payment.
4.3
Notice of Completion; Copy of Record Set of Plans
.
Within ten (10) days after completion of construction of the Improvements,
Tenant shall cause a Notice of Completion to be recorded in the office of the
Recorder of the county in which the Building is located in accordance with Section 3093
of the Civil Code of the State of California or any successor statute, and
shall furnish a copy thereof to Landlord upon such recordation. If Tenant fails
to do so, Landlord may execute and file the same on behalf of Tenant as
Tenants agent for such purpose, at Tenants sole cost and expense. At the
conclusion of construction, (i) Tenant shall cause the Architect and
Contractor (A) to update the Approved Working Drawings as necessary to
reflect all changes made to the Approved Working Drawings during the course of
construction, (B) to certify to the best of their knowledge that the record-set
of as-built drawings are true and correct, which certification shall survive
the expiration or termination of this Lease, and (C) to deliver to
Landlord two (2) sets of copies of such record set of drawings within
ninety (90) days following issuance of a certificate of occupancy for the
Premises, and (ii) Tenant shall deliver to Landlord a copy of all
warranties, guaranties, and operating manuals and information relating to the
improvements, equipment, and systems in the Premises.
4.4
Monthly Disbursements
. On or before a
designated day of each calendar month during the construction of the
Improvements, Tenant shall pay the Contractor, on a progress-payment basis,
pursuant to the terms of the Contract; provided, however, at least five (5) business
days prior to making such monthly disbursements, Tenant shall have delivered to
Landlord: (i) a construction schedule showing,
by trade, the percentage of completion of the Improvements in the Must-Take
Space, detailing the portion of the work completed and the portion not
completed; (ii) copies of invoices from all of Tenants Agents for labor
rendered and materials delivered to the Premises; (iii) executed mechanics
lien releases from all of Tenants Agents which shall comply with the
appropriate provisions, as reasonably determined by
8
Landlord, of
California Civil Code Section 3262(d); and (iv) all other information
reasonably requested by Landlord (collectively, the
Payment Package
). Tenants submission of each Payment Package
to Landlord and corresponding payment to Contractor shall be deemed Tenants
acceptance and approval of the work furnished and/or the materials supplied as
set forth in such Payment Package.
SECTION 5
MISCELLANEOUS
5.1
Tenants Representative
. Tenant has
designated Mr. Mark Brister as its sole representative with respect to the
matters set forth in this Work Letter Agreement, who shall have full authority
and responsibility to act on behalf of the Tenant as required in this Work
Letter Agreement.
5.2
Landlords Representative
. Landlord has
designated Mr. Rick Mount as its sole representatives with respect to the
matters set forth in this Work Letter Agreement, who, until further notice to
Tenant, shall have full authority and responsibility to act on behalf of the
Landlord as required in this Work Letter Agreement.
5.3
Time of the Essence in This Work Letter Agreement
.
Unless otherwise indicated, all references herein to a number of days shall
mean and refer to calendar days. If any item requiring approval is timely
disapproved by Landlord, the procedure for preparation of the document and
approval thereof shall be repeated until the document is approved by Landlord.
9
EXHIBIT C
6340 SEQUENCE DRIVE
NOTICE OF LEASE TERM DATES
To:
Re:
Office
Lease dated ,
200 between ,
a
(Landlord), and ,
a
(Tenant) concerning Suite
on floor(s)
of the office building located at ,
,
California.
Gentlemen:
In accordance with the
Office Lease (the Lease), we wish to advise you and/or confirm as follows:
1.
The
Lease Term shall commence on or has commenced on
for a term of
ending on .
2.
Rent
commenced to accrue on ,
in the amount of .
3.
If
the Lease Commencement Date is other than the first day of the month, the first
billing will contain a pro rata adjustment. Each billing thereafter, with the
exception of the final billing, shall be for the full amount of the monthly
installment as provided for in the Lease.
4.
Your
rent checks should be made payable to
at .
5.
The
exact number of rentable/usable square feet within the Premises is
square feet.
1
6.
Tenants
Share as adjusted based upon the exact number of usable square feet within the
Premises is
%.
Agreed to and Accepted
as of
,
200 .
|
|
Tenant:
|
|
|
|
a
|
|
|
|
By:
|
|
|
Its:
|
|
|
|
|
|
|
|
2
EXHIBIT D
6340 SEQUENCE DRIVE
RULES AND REGULATIONS
Tenant shall faithfully
observe and comply with the following Rules and Regulations. Landlord
shall not be responsible to Tenant for the nonperformance of any of said Rules and
Regulations by or otherwise with respect to the acts or omissions of any other
tenants or occupants of the Project; provided, however, in no event shall
Landlord enforce such Rules and Regulations in a discriminatory manner to
the detriment of Tenant. In the event of any conflict between the Rules and
Regulations and the other provisions of this Lease, the latter shall control.
1.
Safes
and other heavy objects shall, if reasonably considered necessary by Landlord,
stand on supports of such thickness as is necessary to properly distribute the
weight. Landlord will not be responsible for loss of or damage to any such safe
or property in any case. Any damage to any part of the Building, its
contents, occupants or visitors by moving or maintaining any such safe or other
property shall be the sole responsibility and expense of Tenant.
2.
The
requirements of Tenant will be attended to only upon application at Landlords
management office or at such office location designated by Landlord. Employees
of Landlord shall not perform any work or do anything outside their
regular duties unless under special instructions from Landlord.
3.
No
outdoor advertisement, notice or handbill (or any interior advertisement,
notice or handbill to the extent clearly visible from the exterior of the
Building) shall be exhibited, distributed, painted or affixed by Tenant on any part of
the Project without the prior written consent of the Landlord. Tenant shall not
disturb, solicit, peddle, or canvass any occupant of the Project and shall
cooperate with Landlord and its agents of Landlord to prevent same.
4.
Tenant
shall not overload the floor of the Premises.
5.
Tenant
shall not use or keep in or on the Premises, the Building, or the Project any
kerosene, gasoline, explosive material, corrosive material, material capable of
emitting toxic fumes, or other inflammable or combustible fluid chemical,
substitute or material, except in compliance with applicable law. Tenant shall
maintain material safety data sheets for any Hazardous Material used or kept on
the Premises.
6.
Tenant
shall not use, keep or permit to be used or kept, any foul or noxious gas or
substance in or on the Premises to the extent the same is noticeable in the
Common Areas of the Pacific Corporate Center or which affects other tenants of
the Pacific Corporate Center. Tenant shall not throw anything out of doors,
windows or skylights.
7.
No
cooking shall be done or permitted on the Premises (unless Tenant receives
Landlords prior written approval to install a cafeteria for its employees in
the Premises), nor
1
shall the Premises
be used for lodging. Notwithstanding the foregoing, Underwriters
laboratory-approved equipment and microwave ovens may be used in the
Premises for heating food and brewing coffee, tea, hot chocolate and similar
beverages for employees and visitors, provided that such use is in accordance
with all applicable federal, state, county and city laws, codes, ordinances, rules and
regulations.
8.
Tenant
shall store all its trash and garbage within the interior of the Premises or in
the appropriate external trash area(s) for the Building. No material shall be
placed in the trash boxes or receptacles if such material is of such nature
that it may not be disposed of in the ordinary and customary manner of
removing and disposing of trash and garbage in San Diego, California without
violation of any law or ordinance governing such disposal; provided, however,
Tenant may maintain separate trash enclosures for the storage of
non-conforming disposal items to the extent Tenant satisfies and complies with
any applicable laws or other governmental regulations relating to the storage
and disposal thereof. If the Premises is or becomes infested with vermin as a
result of the use or any misuse or neglect of the Premises by Tenant, its
agents, servants, employees, contractors, visitors or licensees, Tenant shall
forthwith, at Tenants expense, cause the Premises to be exterminated from time
to time to the satisfaction of Landlord and shall employ such licensed
exterminators as shall be approved in writing in advance by Landlord.
9.
Tenant
shall comply with all safety, fire protection and evacuation procedures and
regulations established by any governmental agency.
10.
Neither
the interior nor exterior of any windows shall be coated or otherwise
sunscreened without the prior written consent of Landlord. Tenant shall be
responsible for any damage to the window film on the exterior windows of the
Premises and shall promptly repair any such damage at Tenants sole cost and
expense.
11.
Tenant
must comply with requests by the Landlord concerning the informing of their
employees of items of reasonable importance to the Landlord vis-à-vis the
operation of the Project and the Pacific Corporate Center.
12.
Tenant
must comply with any applicable
NO-SMOKING
Ordinances. If Tenant is required under the ordinance to adopt a written
smoking policy, a copy of said policy shall be on file in the office of the
Building. Additionally, Tenant must provide at least one area within the
Premises in which its employees, invitees and visitors may smoke, to the
extent such area is required by law.
13.
Tenant
hereby acknowledges that Landlord shall have no obligation to provide guard
service or other security measures for the benefit of the Premises, the
Building or the Project. Tenant hereby assumes all responsibility for the
protection of Tenant and its agents, employees, contractors, invitees and
guests, and the property thereof, from acts of third parties, including keeping
doors locked and other means of entry to the Premises closed, whether or not
Landlord, at its option, elects to provide security protection for the Project
or any portion thereof. Tenant further assumes the risk that any safety and
security devices, services and programs which Landlord elects, in its sole
discretion, to provide may not be effective, or may malfunction or be
circumvented by an unauthorized third party, and Tenant shall, in addition to
its other
2
insurance
obligations under this Lease, obtain its own insurance coverage to the extent
Tenant desires protection against losses related to such occurrences. Tenant
shall cooperate in any reasonable safety or security program developed by
Landlord or required by law.
14.
No
auction, liquidation, fire sale, going-out-of-business or bankruptcy sale shall
be conducted in the Premises without the prior written consent of Landlord.
15.
No
tenant shall use or permit the use of any portion of the Premises for living
quarters, sleeping apartments or lodging rooms.
Landlord reserves the
right at any time to change or rescind any one or more of these Rules and
Regulations, or to make such other and further reasonable, non-discriminatory Rules and
Regulations as in Landlords judgment may from time to time be necessary
(relative to a building occupied solely by one tenant) for the management,
safety, care and cleanliness of the Premises, Building, the Common Areas and
the Project, and for the preservation of good order therein, as well as for the
convenience of other occupants and tenants therein. Landlord may waive any
one or more of these Rules and Regulations for the benefit of any
particular tenants, but no such waiver by Landlord shall be construed as a
waiver of such Rules and Regulations in favor of any other tenant, nor
prevent Landlord from thereafter enforcing any such Rules or Regulations
against any or all tenants of the Project; provided, however, in no event shall
Landlord enforce such Rules and Regulations in a discriminatory manner to
the detriment of Tenant. Tenant shall be deemed to have read these Rules and
Regulations and to have agreed to abide by them as a condition of its occupancy
of the Premises.
3
EXHIBIT E
6340 SEQUENCE DRIVE
FORM OF TENANTS ESTOPPEL CERTIFICATE
The undersigned as Tenant
under that certain Office Lease (the Lease) made and entered into as of
,
200 by and between
as Landlord, and the undersigned as Tenant, for Premises on the
floor(s) of the office building located at ,
,
California ,
certifies as follows:
1.
Attached
hereto as
Exhibit A
is a true and correct copy of the Lease and all
amendments and modifications thereto. The documents contained in
Exhibit A
represent the entire agreement between the parties as to the Premises.
2.
The
undersigned currently occupies the Premises described in the Lease, the Lease
Term commenced on ,
and the Lease Term expires on ,
and the undersigned has no option to terminate or cancel the Lease or to
purchase all or any part of the Premises, the Building and/or the Project.
3.
Base
Rent became payable on .
4.
The
Lease is in full force and effect and has not been modified, supplemented or
amended in any way except as provided in
Exhibit A
.
5.
Tenant
has not transferred, assigned, or sublet any portion of the Premises nor
entered into any license or concession agreements with respect thereto except
as follows:
6.
Tenant
shall not modify the documents contained in
Exhibit A
without the
prior written consent of Landlords mortgagee.
7.
All
monthly installments of Base Rent, all Additional Rent and all monthly
installments of estimated Additional Rent have been paid when due through .
The current monthly installment of Base Rent is $ .
8.
All
conditions of the Lease to be performed by Landlord necessary to the
enforceability of the Lease have been satisfied and Landlord is not in default
thereunder. In addition, the undersigned has not delivered any notice to
Landlord regarding a default by Landlord thereunder.
9.
No
rental has been paid more than thirty (30) days in advance and no security has
been deposited with Landlord except as provided in the Lease.
1
10.
As
of the date hereof, there are no existing defenses or offsets, or, to the
undersigneds knowledge, claims or any basis for a claim, that the undersigned
has against Landlord.
11.
If
Tenant is a corporation or partnership, each individual executing this Estoppel
Certificate on behalf of Tenant hereby represents and warrants that Tenant is a
duly formed and existing entity qualified to do business in California and that
Tenant has full right and authority to execute and deliver this Estoppel
Certificate and that each person signing on behalf of Tenant is authorized to
do so.
12.
There
are no actions pending against the undersigned under the bankruptcy or similar
laws of the United States or any state.
13.
Other
than in compliance with all applicable laws and incidental to the ordinary
course of the use of the Premises, the undersigned has not used or stored any
hazardous substances in the Premises.
14.
To
the undersigneds knowledge, all improvement work to be performed by Landlord
under the Lease has been completed in accordance with the Lease and has been
accepted by the undersigned and all reimbursements and allowances due to the
undersigned under the Lease in connection with any improvement work have been
paid in full.
The undersigned
acknowledges that this Estoppel Certificate may be delivered to Landlord
or to a prospective mortgagee or prospective purchaser, and acknowledges that
said prospective mortgagee or prospective purchaser will be relying upon the
statements contained herein in making the loan or acquiring the property of
which the Premises are a part and that receipt by it of this certificate
is a condition of making such loan or acquiring such property.
Executed at
on the day of ,
200 .
Tenant:
|
|
,
|
|
a
|
|
|
|
By:
|
|
|
Its:
|
|
|
By:
|
|
|
Its:
|
|
|
|
|
|
|
|
2
EXHIBIT F
6340 SEQUENCE DRIVE
RECORDING
REQUESTED BY
AND
WHEN RECORDED RETURN TO:
ALLEN
MATKINS LECK GAMBLE
&
MALLORY LLP
1901
Avenue of the Stars, 18th Floor
Los
Angeles, California 90067
Attention: Anton N. Natsis, Esq.
RECOGNITION OF COVENANTS,
CONDITIONS, AND
RESTRICTIONS
This Recognition of
Covenants, Conditions, and Restrictions (this
Agreement
) is entered into as of the day
of , 200 , by and
between
(Landlord), and
(Tenant), with reference to the following facts:
A.
Landlord
and Tenant entered into that certain Office Lease Agreement dated ,
200 (the Lease). Pursuant to the Lease, Landlord leased to Tenant
and Tenant leased from Landlord space (the
Premises
)
located in an office building on certain real property described in
Exhibit A
attached hereto and
incorporated herein by this reference (the
Property
).
B.
The
Premises are located in an office building located on real property which is part of
an area owned by Landlord containing approximately ( )
acres of real property located in the City of ,
California (the
Project
), as
more particularly described in
Exhibit B
attached hereto and incorporated herein by this reference.
C.
Landlord,
as declarant, has previously recorded, or proposes to record concurrently with
the recordation of this Agreement, a Declaration of Covenants, Conditions, and
Restrictions (the
Declaration
),
dated ,
200 , in connection with the Project.
D.
Tenant
is agreeing to recognize and be bound by the terms of the Declaration, and the
parties hereto desire to set forth their agreements concerning the same.
NOW, THEREFORE, in
consideration of (a) the foregoing recitals and the mutual agreements
hereinafter set forth, and (b) for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto agree as follows,
1.
Tenants
Recognition of Declaration
. Notwithstanding that the Lease has been
executed prior to the recordation of the Declaration, Tenant agrees to
recognize and by bound by all of the terms and conditions of the Declaration.
1
2.
Miscellaneous
.
2.1
This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective heirs, estates, personal representatives, successors, and
assigns.
2.2
This
Agreement is made in, and shall be governed, enforced and construed under the
laws of, the State of California.
2.3
This
Agreement constitutes the entire understanding and agreements of the parties
with respect to the subject matter hereof, and shall supersede and replace all
prior understandings and agreements, whether verbal or in writing. The parties
confirm and acknowledge that there are no other promises, covenants,
understandings, agreements, representations, or warranties with respect to the
subject matter of this Agreement except as expressly set forth herein.
2.4
This
Agreement is not to be modified, terminated, or amended in any respect, except
pursuant to any instrument in writing duly executed by both of the parties
hereto.
2.5
In
the event that either party hereto shall bring any legal action or other
proceeding with respect to the breach, interpretation, or enforcement of this
Agreement, or with respect to any dispute relating to any transaction covered
by this Agreement, the losing party in such action or proceeding shall
reimburse the prevailing party therein for all reasonable costs of litigation,
including reasonable attorneys fees, in such amount as may be determined
by the court or other tribunal having jurisdiction, including matters on
appeal.
2.6
All
captions and heading herein are for convenience and ease of reference only, and
shall not be used or referred to in any way in connection with the
interpretation or enforcement of this Agreement.
2.7
If
any provision of this Agreement, as applied to any party or to any
circumstance, shall be adjudged by a court of competent jurisdictions to be
void or unenforceable for any reason, the same shall not affect any other
provision of this Agreement, the application of such provision under
circumstances different form those adjudged by the court, or the validity
or enforceability of this Agreement as a whole.
2.8
Time
is of the essence of this Agreement.
2.9
The
Parties agree to execute any further documents, and take any further actions,
as may be reasonable and appropriate in order to carry out the purpose and
intent of this Agreement.
2.10
As
used herein, the masculine, feminine or neuter gender, and the singular and
plural numbers, shall each be deemed to include the others whenever and
whatever the context so indicates.
2
SIGNATURE PAGE OF RECOGNITION OF
COVENANTS, CONDITIONS AND RESTRICTIONS
IN WITNESS WHEREOF, the
parties hereto have duly executed this Agreement as of the day and year first
above written.
Tenant:
|
|
,
|
|
a
|
|
|
|
By:
|
|
|
Its:
|
|
|
By:
|
|
|
Its:
|
|
|
|
|
|
|
|
3
EXHIBIT G
6340 SEQUENCE DRIVE
FORM OF LETTER OF CREDIT
(Letterhead of a money center bank
acceptable to the Landlord)
,
200
Gentlemen:
We hereby establish our
Irrevocable Letter of Credit and authorize you to draw on us at sight for the
account of ,
a ,
the aggregate amount of
($ ).
Funds under this Letter
of Credit are available to the beneficiary hereof as follows:
Any or all of the sums
hereunder may be drawn down at any time and from time to time from and
after the date hereof by a representative of
(Beneficiary) when accompanied by this Letter of Credit and a written
statement signed by a representative of Beneficiary, certifying that such
moneys are due and owing to Beneficiary.
This Letter of Credit is
transferable in its entirety at no cost to Beneficiary. Should a transfer be
desired, such transfer will be subject to the return to us of this advice,
together with written instructions.
The amount of each draft
must be endorsed on the reverse hereof by the negotiating bank. We hereby agree
that this Letter of Credit shall be duly honored upon presentation and delivery
of the certification specified above.
This Letter of Credit
shall expire on .
Notwithstanding the above
expiration date of this Letter of Credit, the term of this Letter of Credit
shall be automatically renewed for successive, additional one (1) year
periods unless, at least thirty (30) days prior to any such date of expiration,
the undersigned shall give written notice to Beneficiary, by certified mail,
return receipt requested and at the address set forth above or at such other
address as may be given to the undersigned by Beneficiary, that this Letter
of Credit will not be renewed.
1
This Letter of Credit is
governed by the Uniform Customs and Practice for Documentary Credits (1993
Revision), International Chamber of Commerce Publication 500.
Very
truly yours,
(Name
of Issuing Bank)
|
|
By:
|
|
2