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Sample Business ContractsHome: Sample Business Contracts:
BASIC LEASE PROVISIONS
----------------------
The following Basic Lease Provisions constitute a part of the
R&D Building Lease to which they are attached.
1. Landlord: Sorrento Tech Limited, a California limited
partnership.
2. Tenant: Biosym Technologies, Inc., a California corporation.
3. Premises:
(a) Rentable Area: Approximately 10,270 sq. ft. See
Definition of Rentable Area attached hereto as Exhibit
"A-3".
(b) Location: The ground floor of the west end of the
building located at the address specified in Item 3(c)
below (the "Building"), as shown on the Floor Plan of
the Premises attached hereto as Exhibit "A-1." The
Building is located in a certain real estate project
commonly known as the "Naiman Tech Center" (the
"Project"), as shown on the Site Plan of the Project
attached hereto as Exhibit "A-2."
(c) Address: 10065 Barnes Canyon Road, Suite A
San Diego, CA 92121
4. Lease Term:
(a) Initial Lease Term: Five (5) years.
(b) Option Term: Tenant shall have the option to renew and
extend the term of this Lease for one additional five
(5) year period on all the same terms and conditions of
this Lease.
5. Target Commencement Date: June 1, 1987. See Paragraph 3.1.
6. Rent:
(a) Initial Basic Annual Rent: $11,297 per month ($1.10 per
sq. ft.).
(b) Adjustments to Basic Annual Rent: The Basic Annual Rent shall be
increased annually at the rate of 5% per annum on each applicable
anniversary of the Rent Commencement Date (as defined below). The first
such increase shall occur on the first anniversary of the Rent
Commencement Date. See Paragraph 4.2(b).
(c) Additional Rent: See Article 5.
(i) Tenant's share of Building Operating Expenses:
55 .11%
(ii) Tenant's share of Project Operating Expenses: 1.70%.
(c) Rent Abatement Period: Tenant shall have a seven (7)
month Rent Abatement Period, commencing on the first day
of the first calendar month of the Lease term, and
terminating on the last day of the seventh month of the
Lease term. During this seven month period, Tenant shall
not be obligated to pay Basic Annual Rent, but shall pay
Additional Rent.
(i)
<PAGE>
(d) Rent Commencement Date:
(i) For Basic Annual Rent: February 1, 1988.
(ii) For Additional Rent: Commencement Date.
Additional Rent is defined in Article 5 as Tenant's pro
rata share of Building Operating Expenses and Project
operating Expenses.
7. Rent Deposit: $11,297, payable in cash upon execution of
this Lease and applicable to the first monthly installment of
Basic Annual Rent.
8. Security Deposit: $11,297.
9. Permitted Use: General office purposes and purposes
reasonably incidental thereto.
10. Insuring Party: Landlord.
11. Addresses for Notices:
(a) If to Landlord:
Sorrento Tech Limited
c/o The Naiman Company
9605 Scranton Road, Suite 300
San Diego, CA 92121
(b) If to Tenant:
(i) Before the Commencement Date:
Biosym Technologies, Inc.
9605 Scranton Road, Suite 101
San Diego, CA 92121
(ii) After the Commencement Date: The
Premises
12. Address for Payments to Landlord:
All payments payable to Landlord under this Lease shall
be sent to Landlord at the address specified in Item
11(a) above or such other address as Landlord may
designate from time to time.
13. Broker(s): None
Addenda: Article 21 consists of Paragraphs 21.1 through 21.3.
/s/TS /s/JN
--------- -----------
Tenant's Landlord's
Initials Initials
LAL:1618Y
022487
(ii)
<PAGE>
MEMORANDUM OF LEASE COMMENCEMENT
Whereas, Biosym Technologies, Tenant, entered into a certain lease dated
February 26, 1987 with Sorrento Tech Limited, Landlord, for the premises located
at 10065 Barnes Canyon Road.
Whereas, the parties desire to ratify the commencement date, additional rent
commencement date and basic annual rent commencement date of the term of the
said lease;
Now, THEREFORE, it is mutually agreed that:
1) The new commencement date of the lease is now
August 1, 1987 and the new expiration date shall be
July 31, 1992.
2) The new commencement date for additional rent shall be at
occupancy of the premises at 10065 Barnes Canyon Road, prior to
and until such time as Tenant takes occupancy of the 10065 Barnes
Canyon premises, Tenant shall pay all basic and additional rent
applicable to the premises which they currently occupy.
3) The new commencement date for basic annual rent shall
be April 11, 1988.
4) This instrument in no way alters, changes, modifies or
amends the lease but memorializes the agreed upon
commencement date, additional rent commencement date
and basic annual rent commencement date as pertaining
to the 10065 Barnes Canyon premises.
Dated this 29 day of June, 1987.
------
LANDLORD: TENANT:
SORRENTO TECH LTD. BIOSYM TECHNOLOGIES
By:/s/Jack Naiman By:/s/Todd Schmidt
-------------- ---------------
Jack Naiman
<PAGE>
R & D BUILDING LEASE
between
SORRENTO TECH LIMITED,
as Landlord
and
BIOSYM TECHNOLOGIES, INC.,
as Tenant
<PAGE>
R&D BUILDING LEASE
TABLE OF CONTENTS
Page
----
ARTICLE 1 Parties....................................... 1
ARTICLE 2 Premises...................................... 1
ARTICLE 3 Term.......................................... 1
ARTICLE 4 Basic Annual Rent............................. 2
ARTICLE 5 Additional Rent............................... 3
ARTICLE 6 Security Deposit.............................. 7
ARTICLE 7 Use........................................... 7
ARTICLE 8 Maintenance, Repairs and
Alterations................................ 8
ARTICLE 9 Insurance; Indemnity.......................... 10
ARTICLE 10 Damage or Destruction......................... 13
ARTICLE 11 Payment of Taxes.............................. 14
ARTICLE 12 Utilities..................................... 15
ARTICLE 13 Assignment and Subletting..................... 15
ARTICLE 14 Landlord's Access............................. 17
ARTICLE 15 Defaults; Remedies............................ 17
ARTICLE 16 Eminent Domain................................ 20
ARTICLE 17 Brokers....................................... 21
ARTICLE 18 Estoppel Certificate, Attornment
and Subordination............................ 21
ARTICLE 19 Landlord's Liability.......................... 22
ARTICLE 20 Miscellaneous Provisions...................... 23
ARTICLE 21 Addenda....................................... 25
EXHIBITS
"A-1" Floor Plan of the Premises....................
"A-2" Site Plan of the Project......................
"A-3" Definitions of Rentable Area..................
"B" Schedule of Construction Responsibilities.....
"C" Rules and Regulations.........................
"D" Estoppel Certificate..........................
"E" Parking Agreement.............................
LAL:1618Y
022487
<PAGE>
R & D BUILDING LEASE
--------------------
ARTICLE 1: PARTIES
This R & D BUILDIN1G LEASE (the "Lease"), dated for reference
purposes only as of the 26 day of February 1987, is made by and
between SORRENTO TECH LIMITED, a California limited partnership (the
"Landlord"), and BIOSYM TECHNOLOGIES, INC., a California corporation
(the "Tenant"), on the terms and conditions stated below in this
Lease and in the foregoing Basic Lease Provisions.
ARTICLE 2: PREMISES
Subject to all the terms and conditions of this Lease, Landlord
hereby leases and demises to Tenant and Tenant hires from Landlord
the "Premises" for the term and at the rental provided below in this
Lease. The Premises are more particularly described in Item 3 of
the Basic Lease Provisions. The Premises consist of the ground
floor of the west end of the Building. The Rentable Area of the
Premises shall, therefore, be computed pursuant to Paragraph l(a) of
Exhibit "A3" hereto.
ARTICLE 3: TERM
3.1 Commencement Date.
-----------------
(a) General. Subject to all the terms and conditions of
-------
this Article 3, the term of this Lease shall be as specified in Item
4(a) of the Basic Lease Provisions, unless earlier terminated or
extended as provided below in this Lease. The parties intend that
the Lease term shall commence on the Target Commencement Date
specified in Item 5 of the Basic Lease Provisions. The date on
which the Lease term actually commences is referred to as the
"Commencement Date." The Commencement Date shall be determined as
provided below in subparagraph (b).
(b) Definition. The term of this Lease shall commence on
----------
the first to occur of: (1) the date on which Landlord substantially
completes construction of the Tenant Improvements (as defined in the
Schedule of Construction Responsibilities attached hereto as Exhibit
"B"), or (2) the date on which Landlord would have substantially
completed construction of the Tenant Improvements but for delays
caused by Tenant. If Tenant takes possession of or commences use of
the Premises (or any portion thereof) for any purpose, including
construction, before the Commencement Date, the term of this Lease
shall not commence, but such occupancy shall be subject to all the
terms and conditions of this Lease and Tenant shall be obligated to
pay all items of rent under this Lease from the date Tenant takes
possession or commences use of the affected portion of the
Premises. If Tenant takes possession of or commences use of the
Premises before the Commencement Date, Tenant shall execute an Early
Entry Indemnity Agreement in form and substance reasonably
satisfactory to Landlord. Landlord shall be deemed to have
substantially completed construction of the Tenant Improvements when
Landlord has substantially completed construction of the Tenant
Improvements in accordance with the Schedule of Construction
Responsibilities (Exhibit "B") and a certificate of occupancy has
been issued for the Premises. Landlord shall give Tenant thirty
(30) days' prior written notice of the date on which Landlord
reasonably expects substantial completion of construction of the
Tenant improvements to occur.
(c) Tenant's Delay. If construction of the Tenant
--------------
Improvements is delayed or postponed by Tenant's Delay (as
hereinafter defined), the start of the term of this Lease shall be
adjusted to reflect the actual amount of Tenant's Delay. To
illustrate, if the total amount of Tenant's Delay were five days and
substantial completion of construction of the Tenant Improvements
were to occur on April 15, 1987, the Lease term would commence on
April 10, 1987. Tenant's Delay shall be the amount of delay or time
<PAGE>
lost as a result of Tenant's failure to adhere to the time table set
forth in the Schedule of Approvals contained in the Schedule of
Construction Responsibilities (Exhibit "B").
3.2 Effect of Delay in Commencement. Notwithstanding the
-------------------------------
Target Commencement Date, if for any reason the Commencement Date
occurs after the Target Commencement Date, Landlord shall not be
subject to any liability therefor, nor shall such failure affect the
validity of this Lease or the obligations of Tenant under this Lease
or extend the term of the Lease. Tenant's obligation to pay rent
shall be measured from the Commencement Date; provided, however,
that if the Commencement Date has not occurred within sixty (60)
days after the Target Commencement Date for reasons other than
Tenant's Delay, Tenant may, at Tenant's option, by written notice
sent to Landlord within ten (10) days after the end of said 60-day
period (or such longer period as the parties may mutually agree),
cancel this Lease. If Tenant so cancels this Lease, the parties
shall be discharged from all obligations hereunder.
3.3 Option to Extend or Renew.
-------------------------
(a) Grant of Option. Subject to all the terms and
---------------
conditions of this Lease, Tenant shall have the right (the "Option")
to extend the term of this Lease for the additional period specified
in Item 4(b) of the Basic Lease Provisions by sending written notice
to such effect to Landlord not later than one hundred eighty (180)
days before the expiration of the initial term. Failure to timely
send such notice shall constitute a waiver of all remaining rights
under the Option and Tenant shall have no right to exercise the
Option with respect to any future option term. Each renewal or
extension of the term of this Lease shall be on all the terms and
conditions of this Lease; provided, however, that the Basic Annual
Rent payable during each option term shall be determined as provided
in subparagraph (b) below. Notwithstanding anything in this
Paragraph 3.3 to the contrary, Tenant shall have no right to
exercise the Option if (1) Tenant is in default under this Lease
either at the time the Option is exercised or at the time any option
term is scheduled to commence; (2) Tenant is not in possession of at
least seventy-five percent (75.0%) of the Rentable Area of the
Premises either at the time the Option is exercised or the time any
option term is scheduled to commence; or (3) Tenant has assigned
this Lease in whole or in part or sublet more than twenty-five
percent (25.0%) of the Rentable Area of the Premises.
(b) Determination of New Basic Annual Rent. If Tenant
-------------------------------------
exercises the Option, the Basic Annual Rent payable during the
option term shall be increased at the same rate and with the same
frequency as during the initial term. The first increase in the
Basic Annual Rent shall take place on the first day of the first
year of the option term.
ARTICLE 4: BASIC ANNUAL RENT
4.1 Initial Basic Annual Rent. Subject to increase as
-------------------------
provided below, Tenant shall pay to Landlord as rental for the
Premises "Basic Annual Rent" in the amount specified in Item 6 of
the Basic Lease Provisions. The initial amount of the Basic Annual
Rent shall be as specified in Item 6(a) of the Basic Lease
Provisions. The Basic Annual Rent shall be payable in equal monthly
installments, in advance, without deduction or offset, on the first
day of each month during the term of this Lease, including any
extension or renewal thereof. The date on which the first
installment of Basic Annual Rent is due and payable is hereafter
referred to as the "Rent Commencement Date." Unless otherwise
specified, the Rent Commencement Date shall be the first day of the
first month following the Commencement Date. The first installment
of Basic Annual Rent shall include any Basic Annual Rent accrued
during any partial month between the Commencement Date and the Rent
Commencement Date.
-2-
<PAGE>
4.2 Increases in Basic Annual Rent.
------------------------------
(a) General. The Basic Annual Rent shall be increased at the times and in
-------
the amounts provided below in this Paragraph 4.2.
(b) Computation of Increase. The Basic Annual Rent shall
-----------------------
be adjusted at the times specified in Item 6(b) of the Basic Lease
Provisions. The date on which the Basic Annual Rent is adjusted is
hereafter referred to as the "Rental Adjustment Date." The rate of
the increase in the Basic Annual Rent (hereafter referred to as the
"Rental Adjustment Percentage") shall be as specified in Item 6(b)
of the Basic Lease Provisions. Each such increase in the Basic
Annual Rent shall take effect on the applicable Rental Adjustment
Date. The amount of each increase in the Basic Annual Rent shall be
equal to the Basic Annual Rent (the "Reference Rent") payable during
the twelve (12) month period immediately preceding the applicable
Rental Adjustment Date multiplied by the Rent Adjustment
Percentage. The new Basic Annual Rent shall be equal to the sum of
(1) the Reference Rent and (2) the amount of the increase in the
Basic Annual Rent computed as specified in the preceding sentence.
In no event shall the Basic Annual Rent payable during any 12-month
period be less than the Basic Annual Rent payable during the
immediately preceding 12-month period.
4.3 Miscellaneous. The Basic Annual Rent, the Additional Rent and all other
-------------
amounts required to be paid by Tenant under this Lease
are sometimes collectively referred to as, and shall constitute,
"rent." The Basic Annual Rent for any period during the term hereof
which is for less than one (1) month shall be a pro rata portion of
the monthly installment then due. The Basic Annual Rent shall be
payable in lawful money of the United States to Landlord at the
address stated below or to such other persons or at such other
places as Landlord may designate in writing.
ARTICLE 5: ADDITIONAL RENT
5.1 Definition of "Additional Rent." In addition to the Basic
------------------------------
Annual Rent specified in Article 4, Tenant shall pay to Landlord as
"Additional Rent" Tenant's pro rata share of Building Operating
Expenses (as hereafter defined) and Project Operating Expenses (as
hereafter defined). Tenant's share of Building Operating Expenses
shall be equal to the ratio of the Rentable Area of the Premises to
ninety-five percent (95.0%) of the total Rentable Area of the
Building. Tenant's share of Project Operating Expenses shall be
equal to the ratio of the Rentable Area of the Premises to
ninety-five percent (95.0%) of the total Rentable Area of the
Project. The Rentable Areas of the Building and the Project are
specified in Exhibit A-3. Initially, Tenant's share of Building
Operating Expenses and Project Operating Expenses shall be as
specified in Items 6(c)(i) and 6(c)(ii), respectively, of the Basic
Lease Provisions.
5.2 Definition of "Building Operating Expenses." The term
------------------------------------------
"Building Operating Expenses" as used herein shall include all costs
of operation and maintenance of the Building, as determined by
generally accepted accounting practices consistently applied, and
shall include the following costs by way of illustration but not limitation:
real property taxes (as defined below); Landlord's
personal property taxes; costs and expenses in contesting the amount
or validity of any property tax by appropriate proceedings; water
and sewer charges; insurance premiums; license, permit, and
inspection fees; heat; gas; light; power; water; steam; janitorial
and security services; labor; salaries; air conditioning;
landscaping; supplies; materials; equipment; tools; the cost of any
capital improvements made to the Building by Landlord that reduce
operating expenses or that are required under any governmental law
or regulation not applicable to the Building or not in effect at the
time it was constructed (such cost to be amortized over such
reasonable period as Landlord shall determine with a return on
capital at the rate paid by Landlord on funds borrowed for the
-3-
<PAGE>
purpose of constructing such capital improvements); property
management costs; and any increases in the amount of the interest
that Landlord is required to pay to its initial permanent lender in
accordance with the terms and provisions of the note evidencing Landlord's
initial permanent financing for the Building (or if
Landlord has not then closed its initial permanent financing for the
Building, then under the note evidencing Landlord's initial
permanent financing for the Building), in the event such note
contains provisions for variable interest rates (provided, however,
that in interpreting whether or not such note contains provisions
for variable interest rates, it is agreed that if the interest rate
is fixed but such lender is entitled to any participation in the
gross or net income, revenue or cash flow from the operation of the
Building, such participation shall cause the note to be construed to
be a variable interest rate note, and payments required of Landlord
to such lender due to the provisions of such participation agreement
shall be construed to be increased payments of interest).
Notwithstanding anything in this Paragraph 5.2 to the contrary, it
is agreed that the following items shall not be included as part of
Building Operating Expenses: the cost of any Tenant Improvements
constructed in the Building; brokerage commissions; leasing and
marketing costs; costs reimbursable by insurance or third parties;
executive salaries; depreciation on the Building or other capital
improvements; and, except as expressly provided above, depreciation
on equipment located in the Building.
5.3 Definition of "Project Operating Expenses" and Other
----------------------------------------------------
Terms.
-----
(a) Project Operating Expenses. The term "Project Operating Expenses"
--------------------------
shall include all costs of operation and maintenance of the Common Areas (as
hereafter defined), as
determined by generally accepted accounting practices consistently applied, and
shall include the following costs by way of
illustration but not limitation: general maintenance and repairs;
pest control; resurfacing, painting, restriping, cleaning and
sweeping of parking areas; trash removal; maintenance and repair of
sidewalks, curbs and signs in the Project which tenants and/or
occupants of the Project are not obligated to repair; irrigation
systems; landscaping; painting; electrical, water, gas and other
utilities; directional signs and other traffic markers and devices;
maintenance and repair of any fire protection systems for the
Project; lighting systems; storm drainage systems and any other
utility systems; real property taxes; Landlord's personal property
taxes; the cost and expense of contesting the amount or validity of
any real property tax by appropriate means; the cost of any capital
improvements made to the Common Areas by Landlord that reduce
operating expenses or that are required under any governmental law
or regulation not applicable to the Project or not in effect at the
time it was constructed (such cost to be amortized over such
reasonable period as Landlord shall determine with a return on
capital at the rate paid by Landlord on funds borrowed for the
purpose of constructing such capital improvements); any increases in
the amount of the interest that Landlord is required to pay to its
initial permanent lender in accordance with the terms and provisions
of the note evidencing Landlord's initial permanent financing for
the Common Areas of the Project (or if Landlord has not then closed
its initial permanent financing for the Common Areas of the Project,
then under the note evidencing Landlord's initial permanent
financing of the Common Areas of the Project) in the event such note
contains provisions for variable interest rates (provided, however,
that in interpreting whether or not such note contains provisions
for variable interest rates, it is agreed that if the interest rate
is fixed but such lender is entitled to any participation in the
gross or net income, revenue or cash flow from the operation of the
Common Areas of the Project, such participation shall cause the note
to be construed to be a variable interest rate note, and payments
required of Landlord to such lender due to the provisions of such
participation agreement shall be construed to be increased payments
of interest), regular and special assessments imposed by the
-4-
<PAGE>
Lusk/Mira Mesa industrial Park Association, a California non-profit
corporation; police and fire protection services; depreciation and
maintenance on operating machinery and equipment used in the
maintenance and repair of the Common Areas (if owned) and rental
paid for such machinery and equipment used in the maintenance and
repair of the Common Areas (if rented); rental for electric and
service rooms based upon the average rate in the Project; any
parking charges, surcharges or any other costs levied or assessed by
local, state or federal government agencies in connection with the
use of parking facilities; property management costs; the cost of
maintaining and operating the Common Area Facilities (as hereafter
defined), including without limitation all utility expenses and
salaries of all personnel employed by Landlord in the Common Area
Facilities. Such costs and expenses shall not include any allowance
for depreciation of the Common Area Facilities or other improvements
located in the Common Areas. Landlord may cause any or all of the
services described above to be provided by an independent contractor
or contractors.
(b) Common Area Facilities. The term "Common Area
----------------------
Facilities" sha11 include, without limitation, any swimming pools, spas, tennis
and racquetball courts, saunas, locker rooms, exercise rooms, restaurants and
other facilities available for general use by tenants/occupants of the Project.
(c) Common Areas. The term "Common Areas" shall include
------------
all areas within the Project outside the exterior boundaries of
buildings (other than the Common Area Facilities) now or hereafter
situated thereon, including, but not limited to, streets, driveways,
parking areas, parking structures, truckways, delivery passages,
loading docks, sidewalks, ramps, open and closed courts, landscaped
and planted areas, exterior stairways, bus stops, retaining and
decorative walls and planters, the Common Area Facilities, and other
areas provided by Landlord and/or other owners of portions of the
Project for the common use of Landlord, such other owners and/or the
occupants of the Project, their employees, customers and invitees.
Landlord reserves the right to make changes at any time and from
time to time in the size, shape, location, number and extent of the
Common Areas, or any of them, and no such change shall entitle the
Tenant to any abatement of rent.
5.4 Definition of Real Property Taxes.
---------------------------------
(a) General. As used in this Lease, the term "real property taxes" shall
-------
include any form of general or special assessment, license fee, commercial
rental tax, levy, penalty, or
tax (other than inheritance or estate taxes), unforeseen as well as
foreseen, imposed by any authority having the direct or indirect
power to tax, including any city, county, state or federal
government, or any school, agricultural, lighting, drainage or other
improvement district thereof, as against any legal or equitable
interest of Landlord in the Premises or in the Building and/or the
Project, as against Landlord's right to rent or other income
therefrom, or as against Landlord's business of leasing the Premises
or any tax imposed in substitution, partially or totally, of any tax
previously included within the definition of real property taxes, or
any additional tax the nature of which was previously included
within the definition of real property tax.
(b) Inclusions. The definition of "real property taxes"
----------
set forth in subparagraph (a) includes without limitation:
(1) Any tax on Landlord's "right" to rent or "right"
to other income from the Premises or as against Landlord's business
of leasing the Premises.
(2) Any assessment, tax, fee, levy or charge in
substitution, partially or totally, of any assessment, tax, fee,
levy or charge previously included within the definition of real
property taxes, it being acknowledged by Tenant and Landlord that
-5-
<PAGE>
Proposition 13 was adopted by the voters of the State of California
in the June 1978 Election and that assessments, taxes, fees, levies
and charges may be imposed by governmental agencies for such
services as fire protection, street, sidewalk and road maintenance,
refuse removal and for other public improvements, services or
benefits formerly provided without charge to property owners or
occupants. It is the intention of Tenant and Landlord that all such
new and increased assessments, taxes, fees, levies and charges be
included within the definition of "real property taxes" for the
purposes of this Lease.
(3) 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 gross income
tax or excise tax levied by the state, city or federal government,
or any political subdivision thereof, with respect to the
possession, leasing, operating, management, maintenance, alteration,
repair, use or occupancy by Tenant of the Premises, or any portion
thereof.
(4) 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.
(c) Exclusions. Notwithstanding any provision of this
----------
Paragraph 5.4 expressed or implied to the contrary, "real property
taxes" shall not include Landlord's federal or state income,
franchise, inheritance or estate taxes.
5.5 Payment of Additional Rent.
--------------------------
(a) Time of Payment. Tenant shall pay Additional Rent in
---------------
monthly installments, in advance, at the same time monthly
installments of Basic Annual Rent are payable. Tenant shall be
obligated to pay Additional Rent from the Commencement Date,
notwithstanding any delay in Tenant's obligation to start paying
Basic Annual Rent. Prior to the Commencement Date and the beginning
of each calendar year thereafter, Landlord shall give Tenant a
written estimate of Building and Project Operating Expenses for the
ensuing calendar year or portion thereof. If, during the course of
any calendar year, it appears that Landlord's estimate of Building
and Project Operating Expenses was too low, Landlord may revise its
written estimate. Tenant shall pay the then current estimated
amount to Landlord as Additional Rent, in equal monthly
installments, in advance. Within thirty (30) days after receipt of
the accountant's determination, referred to in Article 5.5(c), the
parties shall make any payment or allowance necessary to adjust
Tenant's estimated payment to Tenant's actual proportionate share as
shown by the accountant's determination. Any amount due Tenant
shall be credited against installments next coming due under this
Article 5.
(b) Adjustments for Direct Payments. Notwithstanding anything to the
-------------------------------
contrary contained in this Article 5, as to each specific category of expense
which one or more tenants of the Building or the Project either pays directly to
third parties or specifically reimburses to Landlord (for example, separately
metered utilities, separately contracted janitorial service, property taxes
directly reimbursed to Landlord, etc.) such tenant(s)' payments with respect
thereto shall not be included in Building Operating Expenses and/or Project
Operating Expenses, as the same may be, for purposes of this Article 5. Tenant's
share of each such category of expenses shall be adjusted by excluding from the
denominator thereof the Rentable Area of all such tenants paying such category
of expenses directly to third parties or reimbursing same directly to Landlord.
(c) Annual Determination. Annual and other determinations of Building
--------------------
and Project Operating Expenses shall be made reasonably and in good faith by
Landlord by reference to competitive market conditions as to the cost of the
items included as part of such expenses. Tenant shall have the right, after
-6-
<PAGE>
reasonable notice, to inspect Landlord's books and records relating
to such expenses at reasonable times at Landlord's principal place
of business. The annual determination of Building and Project
Operating Expenses shall be made and certified by an independent
certified public accountant designated by Landlord. A copy of the
determination shall be made available to Tenant upon request. The
independent accountant's determination shall be final and binding
upon Landlord and Tenant.
(d) On Termination. Even though the Lease term has
--------------
expired and Tenant has vacated the Premises, if Tenant has not paid
all Additional Rent payable by Tenant under this Lease attributable
to a period before the termination of this Lease, Tenant shall
immediately pay any amount due from Tenant upon receipt of written
notice from Landlord. In the event of a termination of this Lease
resulting in Tenant's overpayment of Additional Rent, Landlord shall
promptly reimburse Tenant the amount of any overpayment.
ARTICLE 6: SECURITY DEPOSIT
6.1 Purpose. In addition to the Rent Deposit specified in
-------
Item 7 of the Basic Lease Provisions, Tenant has deposited with
Landlord the sum specified in Item 8 of the Basic Lease Provisions,
receipt of which is hereby acknowledged, as security for the full
performance of the obligations of Tenant to Landlord under this
Lease. If Tenant shall be in default with respect to the payment of
any item of rent or any other covenant contained herein, Landlord
may use or retain all or any part of said security deposit for the
payment of any rent or any other sum in default, or for the payment
of any amount which Landlord may spend or may become obligated to
spend by reason of Tenant's default. If any portion of said
security deposit be applied or used, Tenant shall, within five (5)
days after written notice thereof, deposit an additional amount with
Landlord sufficient to restore said security deposit to its original
amount as specified in Item 8 of the Basic Lease Provisions and
Tenant's failure to do so shall constitute a material breach of this
Lease. If Tenant is not in default at the termination of this
Lease, Landlord shall return said security deposit to Tenant within
thirty (30) days after termination of this Lease, less any amounts
required to restore the Premises to good condition and repair,
including damage resulting from the removal by Tenant of its trade
fixtures or equipment.
6.2 Landlord's Obligations. Landlord's obligation with
----------------------
respect to any security deposit is that of a debtor and not as a
trustee, consequently such sums may be commingled with rental
receipts or dissipated and no interest shall accrue thereon. In the
event of the sale of the real property of which the Premises
constitute a part, Landlord or its agent shall pay over to
Landlord's successor in interest the sums held as security or
advance rent and notify Tenant in writing setting forth the details
of such transfer, including the successor's name and address. Upon
such written notification, Tenant shall have no further claim
against Landlord in that regard. In the event of foreclosure by any
mortgagee against Landlord's interest in the Premises or the Lease,
Landlord shall continue to be liable for any security deposit and
any such mortgagee shall have no liability or responsibility
therefor.
ARTICLE 7: USE
7.1 Permitted Use. The Premises shall be used and occupied
-------------
only for the purposes specified in Item 9 of the Basic Lease
Provisions, subject, however, to any recorded covenants, conditions
and restrictions for Lusk/Mira Mesa Industrial Park (the "C,C&R's")
and applicable governmental rules and regulations; provided,
however, that, in no event shall any use of the Premises involve any
hazardous or dangerous activity not covered by the forms of
insurance required to be maintained under this Lease.
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7.2 Compliance with Law.
-------------------
(a) Warranties by Landlord. Landlord warrants to Tenant
----------------------
that the Premises, in their existing state as of the date of this
Lease and at the Commencement Date, but without regard to the use
for which Tenant will use the Premises, do not violate any
applicable building code regulation or ordinance. Landlord also
warrants that the Premises shall be in good condition as of the
Commencement Date, improved in accordance with the agreement of the
parties with respect to the construction of Tenant Improvements, as
set forth in the Schedule of Construction Responsibilities (Exhibit
B). In the event that it is determined that this Warranty has been
violated, then it shall be the obligation of Landlord, after written
notice from Tenant, to promptly, at Landlord's sole cost and
expense, rectify any such violation in the event that Tenant does
not give to Landlord written notice of the violation of this
warranty within one (1) year after the Commencement Date, it shall
be conclusively deemed that, such violation did not exist and the
correction of the same shall be the obligation of Tenant; provided,
however, that as to latent defects which are not discoverable by
reasonable diligence on the part of Tenant during said one-year
period, it is agreed that Landlord shall be responsible for
correcting such undiscoverable latent defects during the one-year
period beginning on the date Tenant discovers or should have
reasonably discovered any such latent defect.
(b) Tenant's Duties. Tenant shall, at Tenant's expense,
---------------
comply promptly with all applicable statutes, ordinances, rules,
regulations, orders, restrictions of record, and requirements in
effect during the term or any part of the term of this Lease
regulating the use by Tenant of the Premises. Tenant shall not use
nor permit the use of the Premises in any manner that will create
waste or a nuisance. Tenant shall comply with the Rules and
Regulations attached hereto as Exhibit "C" and with the C,C&R's.
7.3 Condition of Premises. Tenant hereby accepts the
---------------------
Premises in their condition existing as of the date of the execution
hereof, subject to all applicable zoning, municipal, county and
state laws, ordinances and regulations governing and regulating the
use of the Premises, and accepts this Lease subject thereto and to
all matters disclosed thereby and by any exhibits attached hereto.
Tenant acknowledges that neither Landlord nor Landlord's agent has
made any representation or warranty as to the suitability of the
Premises for the conduct of Tenant's business. The taking of
possession of the Premises by Tenant shall conclusively establish
that the Premises were at such times in good and sanitary order,
condition and repair.
ARTICLE 8: MAINTENANCE, REPAIRS AND ALTERATIONS
8.1 Tenant's Obligations. Tenant shall, at Tenant's sole cost
--------------------
and expense, keep the Premises and every part thereof in good
condition and repair (except as provided in Paragraph 8.2 with
respect to Landlord's maintenance obligations), including without
limitation all decorating, remodeling, alteration and painting
required by Tenant during the term of this Lease. Tenant will pay
for any repairs to the Premises, the Building or the Project made
necessary by any negligence or carelessness of Tenant or its
assignees, subtenants, employees or their respective agents or other
persons permitted in the Building or the Project by Tenant, or any
of them, and will maintain the Premises in a safe, clean, neat and
sanitary condition. Notwithstanding anything in this Lease to the
contrary, Tenant shall be responsible for replacing any glass that
may be broken or removed at the direction of or by any negligence or
carelessness of Tenant or its assignees, subtenants, employees or
their respective agents or other persons permitted in the Building
or the Project by Tenant. Landlord is not liable to repair any
leaks in the roof of the Building or other damage to the Building
resulting from penetrations of the Building's roof made by or at the
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request of Tenant, unless such penetration is made by Landlord's
contractor before the Commencement Date.
8.2 Landlord's Obligations.
----------------------
(a) Scope of Responsibility. Subject to Paragraph 8.1,
------------------------
Landlord shall make all necessary repairs to the roof, exterior and
interior demising walls, exterior doors, windows (but not glass),
corridors and other common areas of the Building, the Common Area
Facilities and the Common Areas. Landlord shall keep the Building
and the Project in a safe, clean and neat condition, and use
reasonable efforts to keep all equipment in the Building, such as
elevators, plumbing, and heating, air conditioning and ventilation
("HVAC") equipment, in good condition and repair. Landlord shall also
maintain and repair all structural parts of the Building, which
structural parts include, without limitation, certain items listed
above in this subparagraph (a) and the foundations, subflooring,
unexposed electrical, plumbing and sewage systems, including those
portions of the said systems lying outside the Premises, and gutters
and downspouts on the Building. There shall be no abatement of rent and
no liability of Landlord by reason of any injury to or interference
with Tenant's business arising from the making of any repairs,
alterations or improvements in or to any portion of the Building (or
fixtures, appurtenances and equipment therein) or the Project. Tenant
specifically waives the right to make repairs at Landlord's expense
under Section 1942 of the California Civil Code or any other law,
statute or ordinance now or hereafter in effect, subject, however, to
subparagraph (b) below.
(b) Corrective Action by Tenant. Tenant shall promptly
---------------------------
notify Landlord in writing of any repairs which Landlord is
obligated to effect under subsection (a). Landlord shall promptly
effect such repairs, taking into account whether or not the nature
of the problem presents a hazard or emergency. If Landlord fails to
effect such repairs within thirty (30) days after written notice
from Tenant, Tenant may make the repairs itself in a commercially
reasonable manner. If Tenant does so, Landlord shall reimburse
Tenant for the cost of the repairs within fifteen (15) days after
receipt of a reasonably detailed invoice from Tenant. If Landlord
fails to reimburse Tenant within said 15-day period, interest shall
accrue on the unpaid balance at the rate of interest specified in
Paragraph 15.4(b) below from the date of disbursement by Tenant to
the date of reimbursement by Landlord; provided, however, that no
interest shall accrue on any disputed portion of an invoice from
Tenant if Landlord notifies Tenant of a good faith dispute about
such invoice within said 15-day period. Upon resolution of such
dispute, interest shall accrue on the amount ultimately determined
owing to Tenant in accordance with the above provisions.
8.3 Surrender. On the last day of the term hereof, or on any
---------
earlier termination, Tenant shall surrender the Premises to Landlord
in the same condition as when received, broom clean, ordinary wear
and tear excepted. Tenant shall repair any damage to the Premises
occasioned by the removal of Tenant's trade fixtures, furnishings
and equipment, which repair shall include the patching and filling
of holes in floors and walls and repair of structural damage.
8.4 Landlord's Rights. if Tenant fails to perform Tenant's
-----------------
obligations under this Article 8, Landlord may at its option (but
shall not be required to) enter upon the Premises, after reasonable
notice to Tenant under the circumstances, and put the same in good
order, condition and repair, and the cost thereof, together with
interest thereon at the rate specified below in Paragraph 15.4 (Late
Charges and Interest on Delinquent Payments) shall immediately
become due and payable as Additional Rent. Landlord shall have the
right, at any time, to change the arrangement and/or location of
entrances or passageways, doors and doorways, and corridors,
elevators, stairs, toilets, or other public parts of the Building
and the configuration of the Common Areas and, upon giving Tenant
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reasonable notice thereof, to change the name, number or designation
by which the Building and/or the Project is commonly known.
8.5 Alterations and Additions.
-------------------------
(a) Procedure for Making Alterations. After the
--------------------------------
Commencement Date Tenant shall not, without Landlord's prior written
consent, make or permit any alterations, improvements, additions, or
Utility Installations (as hereafter defined) in, on or about the
Premises, except for non-structural alterations, exceeding Five
Thousand Dollars ($5,000) in cost in each instance. As used in this
Paragraph 8.5, the term "Utility Installation" shall mean bus
ducting, power panels, wiring, fluorescent fixtures, space heaters,
conduits, air conditioning equipment and plumbing. Landlord may
require that Tenant remove any or all of said alterations,
improvements, additions, or Utility Installations at the expiration
of the Lease term, and restore the Premises to their prior
condition, ordinary wear and tear excepted. Landlord may also
require Tenant to provide Landlord, at Tenant's sole cost and
expense, a lien and completion bond, in an amount equal to one
hundred fifty percent (150%) of the estimated cost of such
improvements, to insure Landlord against any liability for
mechanics' and materialman's liens and to insure completion of the
work. Should Tenant make any alterations, improvements, additions
or Utility Installations without the prior approval of Landlord,
Landlord may require that Tenant remove any or all of the same.
(b) Conditions to Landlord's Approval. Any alterations,
---------------------------------
improvements, additions or Utility Installations in or about the
Premises that Tenant shall desire to make and which requires the
consent of Landlord shall be presented to Landlord in written form,
with detailed plans for the proposed work. If Landlord shall give
its consent thereto, the consent shall be deemed conditioned upon
Tenant's (1) acquiring a permit to do so from appropriate
governmental agencies, (2) furnishing of a copy thereof to Landlord
prior to the commencement of the work and (3) complying with all
conditions of said permit in a prompt and expeditious manner.
(c) Lien Free Construction. Tenant shall pay when due
----------------------
all claims for labor or materials furnished or alleged to have been
furnished to or for Tenant at or for use in the Premises, which
claims are or may be secured by any mechanics' or materialman's 1ien
against the Premises or any interest therein. Tenant shall give
Landlord not less than ten (10) days' prior written notice of the
commencement of any work in the Premises. Landlord shall have the
right to post notices of non-responsibility in or on the Premises as
provided by law. If Tenant shall, in good faith, contest the
validity of any such lien, claim or demand, then Tenant shall, at
its sole expense, defend itself and Landlord against the same and
shall pay and satisfy any such adverse judgment that may be rendered
thereon before the enforcement thereof against the Landlord or the
Premises, upon the condition that if Landlord shall require, Tenant
shall furnish Landlord with a surety bond satisfactory to Landlord
in an amount equal to such contested lien, claim or demand
indemnifying Landlord against liability for the same and holding the
Premises free from the effect of such lien or claim. In addition,
Landlord may require Tenant to pay Landlord's reasonable attorneys'
fees and costs incurred by Landlord in participating in such action.
(d) Ownership Upon Expiration of Lease. Unless Landlord
----------------------------------
requires their removal, all alterations, improvements, additions and
Utility Installations (whether or not such Utility Installations
constitute trade fixtures of Tenant) which may be made on the
Premises shall become the property of Landlord and remain upon and
be surrendered with the Premises at the expiration of the Lease term.
ARTICLE 9: INSURANCE; INDEMNITY
9.1 Insuring Party. As used in this Article 9, the term
--------------
"insuring party" shall mean the party designated in Item 10 of the
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<PAGE>
Basic Lease Provisions who has the obligation to obtain the Property
Insurance required hereunder. Whether the insuring party is
Landlord or Tenant, Tenant shall, as additional rent for the
Premises, pay the cost of all insurance required hereunder. If
Landlord is the insuring party, Tenant shall pay the cost of the
insurance so obtained by Landlord as Additional Rent.
9.2 Liability Insurance. Tenant shall, at Tenant's expense,
-------------------
obtain and keep in force during the term of this Lease a policy of
Combined Single Limit, Bodily Injury and Property Damage Insurance
insuring Landlord and Tenant against any liability arising out of
the ownership, use, occupancy or maintenance of the Premises and all
areas appurtenant thereto. Such insurance shall be a combined
single limit policy in an amount not less than Three Million Dollars
($3,000,000) for personal injury and Five Hundred Thousand Dollars
($500,000) property damage. The liability policy shall contain
cross liability endorsements and shall insure performance by Tenant
of the indemnity provisions of this Article 9. The limits of said
insurance shall not, however, limit the liability of Tenant
hereunder. If Tenant shall fail to procure and maintain said
insurance, Landlord may, but shall not be required to, procure and
maintain the same, but at the expense of Tenant. Not more
frequently than every three (3) years, if, in the reasonable opinion
of Landlord, the amount of liability insurance required hereunder is
not adequate, upon receipt from Landlord of a reasonably detailed
explanation of the rationale for increasing such liability insurance
coverage, Tenant shall increase said insurance coverage as required
by Landlord; provided, however, that in no event shall the amount of
the liability insurance increase be more than fifty percent (50%)
greater than the amount thereof during the preceding three (3) years
of the term of this Lease. However, the failure of Landlord to
require any additional insurance coverage shall not be deemed to
relieve Tenant from any obligations under this Lease.
9.3 Property Insurance.
------------------
(a) General Requirements. The insuring party shall
--------------------
obtain and keep in force during the term of this Lease a policy or
policies of insurance covering loss or damage to the Premises, in
the amount of the full replacement value thereof, as the same may
exist from time to time, against all perils included within the
classification of fire, extended coverage, vandalism, malicious
mischief, special extended perils (all risk), sprinkler leakage,
earthquake sprinkler leakage, with "inflation guard" or agreed
amount endorsement, and any other perils which Landlord deems
necessary. Said insurance shall provide for payment of loss
thereunder to Landlord or to the holders of any mortgages or deeds
of trust encumbering the Premises. Tenant shall also obtain and
keep in force during the term of this Lease a policy of business
interruption insurance in an amount equal to the Basic Annual Rent
and the Additional Rent for a period of at least twelve (12) months,
with loss payable to Landlord. If such insurance coverage has a
deductible clause, Tenant shall be liable for the deductible amount;
provided, however, that the amount of such deductible clause shall
not exceed One Thousand Dollars ($1,000). Tenant shall deliver to
Landlord a certificate of such business interruption insurance.
(b) Contents Insurance. Tenant shall be solely
------------------
responsible for insuring all contents of the Premises, including
Tenant's furniture, fixtures, and equipment and improvements
installed by Tenant.
(c) Increases in Coverage. Not more frequently than each
---------------------
three (3) years during the term of this Lease, if, in the opinion of
Landlord or the insuring party's insurance carrier, the amount of
property insurance required hereunder is not adequate, the insuring
party shall increase said insurance coverage. Such increase may,
however, be more frequent than each three (3) years if required by
the insurance carrier in order to maintain insurance for the full
replacement cost of the Premises.
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<PAGE>
9.4 Insurance Policies.
------------------
(a) Requirements. Insurance policies required under this
------------
Article 9 shall be issued by companies holding a "General
Policyholder's Rating" of B+ or better, as set forth in the most
current issue of Best's Insurance Guide. The insuring party shall
----------------------
deliver to the other party copies of the policies of such insurance or
certificates evidencing the existence and amounts of such insurance
with loss payable clauses satisfactory to Landlord. No such policy
shall be cancellable or subject to reduction of coverage or other
modification except after thirty (30) days' prior written notice to
Landlord. If Landlord is the insuring party, Landlord shall name
Tenant as an additional insured under the policies procured by
Landlord in its capacity as the insuring party. Any certificates of
insurance provided by Tenant shall add as additional insureds (but
---
not "named insureds") Landlord and each of its partners, affiliates,
--------------------
directors, agents and employees and shall expressly provide that the
interest of Landlord therein shall not be affected by any breach by
Tenant of any policy provision. Insurance maintained by Tenant
under this Article 9 shall be the primary insurance as respects
Landlord (and any other additional insureds designated by Landlord)
and not contributory with any other available insurance. Any
certificates of insurance procured by Tenant evidencing the
liability insurance coverage required under Paragraph 9.2 (Liability
Insurance) shall contain an endorsement providing, in substance,
that "such insurance as is afforded hereby for the benefit of
Landlord shall be primary and any insurance carried by Landlord
shall be excess and not contributory."
(b) Miscellaneous. If Tenant is the insuring party
-------------
Tenant shall, within ten (10) days prior to the expiration of such
policies, furnish Landlord with renewals or "binders" thereof, or
Landlord may order such insurance and charge the cost thereof to
Tenant, which amount shall be payable by Tenant upon demand. Tenant
shall not do or permit to be done anything which shall invalidate
the insurance policies required under Paragraph 9.3 (Property
Insurance). If Tenant does or permits to be done anything which
shall increase the cost of the insurance policies required under
Paragraph 9.3, then Tenant shall forthwith, upon Landlord's demand,
reimburse Landlord for any additional premiums attributable to any
act or omission or operation of Tenant causing such increase in the
cost of the insurance. If Landlord is the insuring party, and if
the insurance policies maintained hereunder cover other improvements
in addition to the Premises, Landlord shall deliver to Tenant a
written statement setting forth the amount of any such insurance
cost increase and showing in reasonable detail the manner in which
it has been computed.
9.5 Waiver of Subrogation. Tenant and Landlord each hereby
---------------------
waive any and all rights of recovery against the other, or against
the officers, employees, agents and representatives of the other,
for loss of or damage to such waiving party or its property or the
property of others under its control to the extent that such loss or
damage is insured against under any insurance policy in force at the
time of such loss or damages. The insuring party shall, upon
obtaining the policies of insurance required hereunder, give notice
to the insurance carrier or carriers that the foregoing mutual
waiver of subrogation is contained in this Lease.
9.6 Indemnity. Tenant shall indemnify and hold Landlord
---------
harmless from and against any and all claims arising from Tenant's
use of the Premises, or from the conduct of Tenant's business or
from any activity, work or things done, permitted or suffered by
Tenant in or about the Premises or elsewhere and shall further
indemnify and hold harmless Landlord from and against any and all
claims arising from any breach or default in the performance of any
obligation on Tenant's part to be performed under the terms of this
Lease, or arising from any negligence of Tenant, or any of Tenant's
agents, contractors, or employees, and from and against all costs,
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<PAGE>
attorneys' fees, expenses and liabilities incurred in the defense of
any such claim or any action or proceeding brought thereon; and in
case any action or proceeding be brought against Landlord by reason
of any such claim, Tenant upon notice from Landlord shall defend the
same at Tenant's expense by counsel satisfactory to Landlord.
Tenant, as a material part of the consideration to Landlord, hereby
assumes all risk of damage to property or injury to persons, in,
upon or about the Premises arising from any cause and Tenant hereby
waives all claims in respect thereof against Landlord; provided,
however, that nothing in this Lease shall relieve Landlord from
liability for (a) breach of this Lease by Landlord, (b) its
negligence or willful misconduct or omissions, or (c) the negligence
or willful misconduct or omissions of its employees and agents.
9.7 Exemption of Landlord from Liability. Tenant hereby
------------------------------------
agrees that Landlord shall not be liable for injury to Tenant's
business or any loss of income therefrom or for damage to the goods,
wares, merchandise or other property of Tenant, Tenant's employees,
invitees, customers, or any other person in or about the Premises,
nor shall Landlord be liable for injury to the person of Tenant,
Tenant's employees, agents or contractors, whether such damage or
injury is caused by or results from fire, steam, electricity, gas,
water or rain, or from the breakage, leakage, obstruction or other
defects of pipes, sprinklers, wires, appliances, plumbing, air
conditioning or lighting fixtures, or from any other cause, whether
the said damage or injury results from conditions arising upon the
Premises or upon other portions of the Buildings of which the
Premises are a part, or from other sources or places, and regardless
of whether the cause of such damage or injury or the means of
repairing the same is inaccessible to Tenant; provided, however,
that nothing in this Lease shall relieve Landlord from liability for
(a) breach of this Lease by Landlord, (b) its negligence or willful
misconduct or omissions or (c) the negligence or willful misconduct
or omissions of its employees and agents. Landlord shall not be
liable for any damages arising from any act or neglect of any other
tenant, if any, of the Building, the Project or of any subtenant of Tenant.
ARTICLE 10: DAMAGE OR DESTRUCTION
10.1 Reconstruction. If the Premises are damaged or destroyed
--------------
during the term of this Lease, Landlord shall, except as hereinafter
provided, diligently repair or rebuild them to substantially the
condition in which they existed immediately prior to such damage or
destruction; provided, however, that Tenant shall repair any damage
which is estimated in good faith by Landlord to be under Five
Thousand Dollars ($5,000). Landlord shall reimburse Tenant upon
demand for expenses incurred by Tenant in such repair work.
10.2 Rent Abatement. Basic Annual Rent, but not Additional
--------------
Rent, shall be abated proportionately; provided, however, that if
the damage or destruction is not caused by or the result of Tenant's
acts, omissions or willful misconduct (or that of its agents,
employees or invitees), all rent shall abate as of the date on which
payments under the policy of business interruption insurance
required to be maintained by Tenant under Paragraph 9.3(a) cease (or
in the event Tenant fails to procure such insurance, on the date
such payments would have ceased had Tenant obtained such
insurance). Such rent abatement shall be in proportion to the ratio
of the portion of the Premises rendered unusable to the total
Rentable Area of the Premises. Such abatement shall continue for
the period commencing with such damage or destruction and ending
with substantial completion by Landlord of the work or repair or
reconstruction which Landlord is obligated or undertakes to do. If
it is determined that continuation of Tenant's business is not
practical pending reconstruction, Basic Annual Rent due and payable
hereunder shall abate until reconstruction is substantially
completed or until business is totally or partially resumed,
whichever is the earlier.
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<PAGE>
10.3 Excessive Damage or Destruction. If the Premises are
-------------------------------
damaged or destroyed to the extent that Landlord determines that
they cannot, with reasonable diligence, be fully repaired or
restored by Landlord within one hundred eighty (180) days after the
date of the damage or destruction, either Landlord or Tenant shall
have the right to terminate this Lease. Landlord shall determine
whether the Premises can be fully repaired or restored within said
180 day period, and Landlord's determination shall be conclusive on
Tenant. Landlord shall send Tenant written notice of Landlord's
determination within thirty (30) days after the date of the damage
or destruction. If Landlord determines that the Premises can be
fully repaired or restored within said 180-day period, or if it is
determined that such repair or restoration cannot be made within
said period but neither party elects to terminate this Lease within
thirty (30) days after the date of said determination, this Lease
shall remain in full force and effect and Landlord shall diligently
repair and restore the damage as soon as reasonably possible.
10.4 Uninsured Casualty. Notwithstanding anything in this
------------------
Lease to the contrary, in the event of damage to or destruction of
all or any portion of the Premises which is not fully covered by the
insurance proceeds received by Landlord or which has not been
insured under the insurance policies required under Article 9,
Landlord may terminate this Lease by written notice to Tenant, given
within thirty (30) days after the date of notice to Landlord that
said damage or destruction is not so covered. If Landlord does not
elect to terminate this Lease, this Lease shall remain in full force
and effect and the Premises shall be repaired and rebuilt in
accordance with the provisions for repair set forth in Paragraph
10.1 (Reconstruction).
10.5 Waiver. With respect to any destruction which Landlord is
------
obligated to repair or may elect to repair under the terms of this
Article 10, Tenant hereby waives all right to terminate this Lease
pursuant to rights otherwise presently or hereafter accorded by law
to tenants, except as expressly otherwise provided herein.
10.6 Damage Near End of Term. If the Premises are destroyed or
-----------------------
damaged such that the reasonable cost of repair would exceed
Twenty-five Thousand Dollars ($25,000.00) during the last twelve
(12) months of the term of this Lease, Landlord may, at Landlord's
option, cancel and terminate this Lease as of the date of occurrence
of such damage by giving written notice to Tenant of Landlord's
election to do so within thirty (30) days after the date of
occurrence of such damage.
ARTICLE 11: TAXES ON TENANT'S PROPERTY
11.1 Tenant's Obligation. Tenant shall be liable for and shall
-------------------
pay ten (10) days before delinquency all taxes, levies and
assessments levied against any personal property or trade fixtures
placed by Tenant in or about the Premises. If any such taxes,
levies and assessments on Tenant's personal property or trade
fixtures are levied against Landlord or Landlord's property or if
the assessed value of the Building or the Project is increased by
the inclusion therein of a value placed upon such personal property
or trade fixtures of Tenant and if Landlord pays the taxes, levies
and assessments based upon such increased assessment, which Landlord
shall have the right to do regardless of validity thereof, but only
under proper protest if requested by Tenant, Tenant shall, upon
demand, repay to Landlord the taxes, levies and assessments so
levied against Landlord, or the proportion of such taxes, levies and
assessments resulting from such increase in the assessment; provided
that, in any such event Tenant shall have the right, in the name of
Landlord and with Landlord's full cooperation but without any cost
to Landlord, to bring suit in any court of competent jurisdiction to
recover the amount of any such taxes, levies and assessments so paid
under protest, any amount so recovered to belong to Tenant.
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<PAGE>
11.2 Additional Taxes Payable by Tenant. If the Tenant
----------------------------------
Improvements in the Premises, whether installed and/or paid for by
Landlord or Tenant and whether or not affixed to the real property
so as to become a part thereof, are assessed for real property tax
purposes at a valuation higher than the valuation at which tenant
improvements conforming to Landlord's "building standard" in other
space in the Building are assessed, then the real property taxes
levied against Landlord or the property by reason of such excess
assessed valuation shall be deemed to be taxes levied against
personal property of Tenant and shall be governed by the provisions
of Paragraph 11.1. If the records of the County Assessor are
available and sufficiently detailed to serve as a basis for
determining whether said Tenant Improvements are assessed at a
higher valuation than Landlord's "building standard," such records
shall be binding on both Landlord and Tenant; otherwise the actual
cost of construction shall be the basis for such determination.
ARTICLE 12: UTILITIES
Tenant shall be solely responsible for and shall promptly pay
for all water, gas, heat, light, power, telephone and other
utilities and services supplied to the Premises, together with any
taxes thereon. Landlord shall not be responsible for providing any
utilities or services to Tenant. If any such services are not
separately metered to Tenant, Tenant shall pay as Additional Rent,
its pro rata share thereof as provided above. Landlord shall not be
liable to Tenant for interruption in or curtailment of any utility
service, nor shall any such interruption or curtailment constitute a
constructive eviction or grounds for rental abatement in whole or in
part hereunder.
ARTICLE 13: ASSIGNMENT AND SUBLETTING
13.1 Landlord's Consent Required. Tenant shall not voluntarily
---------------------------
or involuntarily assign, sublet, mortgage, or otherwise encumber all
or any portion of its interest in this Lease or in the Premises
without obtaining the prior written consent of Landlord, which
consent shall not be unreasonably withheld, and any such attempted
assignment, subletting, mortgage or other encumbrance without such
consent shall be null and void and of no effect.
13.2 No Release of Tenant. No permitted assignment,
--------------------
subletting, mortgage or other encumbrance of Tenant's interest in
this Lease shall relieve Tenant of its obligation to pay the rent
and to perform all of the other obligations to be performed by
Tenant hereunder. The acceptance of rent by Landlord from any other
person shall not be deemed to be a waiver by Landlord of any
provision of this Lease or to be a consent to any subletting,
assignment, mortgage or other encumbrance. Consent to one sublease,
assignment, mortgage or other encumbrance shall not be deemed to
constitute consent to any subsequent subletting, assignment,
mortgage or other encumbrance.
13.3 Notice to Landlord. If Tenant desires at any time to
------------------
assign this Lease or to sublet the Premises or any portion thereof,
it shall first notify Landlord of its desire to do so and shall send
Landlord a written notice (the "Transfer Notice"), specifying (a)
the name of the proposed subtenant or assignee; (b) the nature of
the proposed subtenant's or assignee's business to be carried on in
the Premises; (c) all the terms and provisions of the proposed
sublease or assignment; and (d) such financial information as
Landlord may reasonably request concerning the proposed subtenant or
assignee.
13.4 Landlord's Option. At any time within thirty (30) days
-----------------
after Landlord's receipt of the Transfer Notice, Landlord may by
written notice to tenant elect (a) to sublease the Premises or the
portion thereof so proposed to be subleased by Tenant, or to take an
assignment of Tenant's leasehold estate hereunder, or such part
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thereof as shall be specified in said notice, on the same terms
stated in this Lease and in turn sublease or assign to the proposed
subtenant or assignee on the same terms as those offered by Tenant
to the proposed subtenant or assignee, as the case may be; or (b) to
terminate this Lease as to the portion (including all) of the
Premises so proposed to be subleased or assigned, with a
proportionate abatement in the rent payable hereunder. If Landlord
does not exercise any option set forth in this Paragraph 13.4 within
said thirty (30) day period, Tenant may thereafter within ninety
days (90) after the expiration of said 30-day period enter into a
valid assignment or sublease of the Premises or portion thereof,
upon the terms and conditions set forth in the Transfer Notice. If
Tenant does not do so within ninety (90) days after the date of the
Transfer Notice, any assignment or sublease shall be deemed a new
transaction and will require a new Transfer Notice in compliance
with Paragraph 13.3 (Notice to Landlord).
13.5 Involuntary Transfers. If this Lease is assigned to any
---------------------
person or entity pursuant to the provisions of the Bankruptcy Code,
11 U.S.C. (S)101 et seq. (the "Bankruptcy Code"), any and all monies
-- ---
or other consideration payable or otherwise to be delivered in
connection with such assignment shall be paid or delivered to
Landlord, shall be the exclusive property of Landlord and shall not
constitute property of Tenant or of the estate of Tenant within the
meaning of the Bankruptcy Code. Any and all monies or other
consideration constituting Landlord's property under the preceding
sentence not paid or delivered to Landlord shall be held in trust
for the benefit of Landlord and be promptly paid or delivered to
Landlord. Any person or entity to which this Lease is assigned
pursuant to the provisions of the Bankruptcy Code shall be deemed
without further act or deed to have assumed all of the obligations
arising under this Lease on and after the date of such assignment.
Any such assignee shall upon demand execute and deliver to Landlord
an instrument confirming such assumption.
13.6 Related Matters.
---------------
(a) No Merger. The voluntary or other surrender of this
---------
Lease by Tenant or a mutual cancellation hereof shall not work a
merger, and shall at the option of Landlord, terminate all or any
existing subleases or subtenancies or shall operate as an assignment
to Landlord of such subleases or subtenancies.
(b) Transfer of Stock. If Tenant is a corporation which,
-----------------
under the then current guidelines published by the Commissioner of
Corporations of the State of California, is not deemed a public
corporation, or is an unincorporated association or partnership, the
transfer, assignment or hypothecation of any stock or interest in
such corporation, association or partnership in the aggregate in
excess of twenty-five percent (25%) shall be deemed an assignment
within the meaning and provisions of this Article 13.
(c) Reimbursement of Costs. Tenant agrees to pay
----------------------
Landlord Three Hundred Dollars ($300.00) to reimburse Landlord for
Landlord's reasonable costs and attorneys' fees incurred in
conjunction with the processing and documentation of any such
requested assignment, subletting, transfer, change of ownership or
hypothecation of this Lease or Tenant's interest in and to the
Premises.
(d) Excess Rent. In the event that an assignment or
-----------
sublease, which is otherwise permitted under the terms of this
Lease, results in the payment of rent by the occupant in excess of
the Basic Annual Rent imposed on Tenant hereunder, then fifty
percent (50.0%) of such excess rent shall be paid to Landlord as
rent hereunder. Tenant shall furnish Landlord with whatever
information Landlord may reasonably require to determine whether
such excess rent may be payable.
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ARTICLE 14: LANDLORD'S ACCESS
Landlord and Landlord's agents shall have the right to enter the
Premises at reasonable times, upon twenty-four (24) hours notice
(except in the case of an emergency or the performance of routine
maintenance or repair work), for the purpose of inspecting the same,
showing the same to prospective purchasers, or lenders, or lessees,
and making such alterations, repairs, improvements or additions to
the Premises or to the Building of which they are a part as Landlord
may deem necessary or desirable. Landlord may at any time place on
or about the Premises any ordinary "For Sale" signs and Landlord may
at any time during the last one hundred twenty (120) days of the
term hereof place on or about the Premises any ordinary "For Lease"
signs. Notwithstanding anything in this Lease, including the Rules
and Regulations (Exhibit C), to the contrary, it is agreed that
Tenant may install its own locks on the computer equipment room in
the Premises and that Landlord shall have no right to access to such
computer equipment room, except in an emergency. Tenant agrees that
Landlord shall not be liable for any damages or injury resulting
from Landlord's being denied access to such computer equipment room.
ARTICLE 15: DEFAULTS; REMEDIES
15.1 Events of Defaults. The occurrence of any one or more of
------------------
the following events shall constitute a material default and breach
of this Lease by Tenant:
(a) Vacation or Abandonment. The vacating or abandonment
-----------------------
of the Premises by Tenant.
(b) Late Payment. The failure by Tenant to make any
------------
payment of rent or any other payment required to be made by Tenant
hereunder, as and when due, where such failure shall continue for a
period of five (5) days after said payment is due.
(c) Non-Performance. The failure by Tenant to observe or
---------------
perform any of the covenants, conditions or provisions of this Lease
to be observed or performed by Tenant (other than those involving
payment of money), where such failure shall continue for a period of
thirty (30) days after written notice from Landlord to Tenant;
provided, however, that if the nature of Tenant's default is such
that more than thirty (30) days are reasonably required for its
cure, then Tenant shall not be deemed to be in default if Tenant
commenced such cure within said thirty (30) day period and
thereafter diligently pursues such cure to completion.
(d) Insolvency. The occurrence of any of the following
----------
events of insolvency:
(1) Assignment. The making by Tenant of any general
----------
assignment, or general arrangement for the benefit of creditors;
(2) Bankruptcy. The filing by or against Tenant of
----------
a petition to have Tenant adjudged a bankrupt or a petition for
reorganization or arrangement under any law relating to bankruptcy
(unless, in the case of an involuntary petition filed against
Tenant, the same is dismissed within thirty (30) days);
(3) Receivership. The appointment of a trustee or
------------
receiver to take possession of substantially all of Tenant's assets
located at the Premises or of Tenant's interest in this Lease, where
possession is not restored to Tenant within thirty (30) days; or
(4) Attachment. The attachment, execution or other
----------
judicial seizure of substantially all of Tenant's assets located at
the Premises or of Tenant's interest in this Lease, where such
seizure is not discharged within thirty (30) days.
(e) Misrepresentation. The discovery by Landlord that
-----------------
any financial statement given to Landlord by Tenant, any assignee of
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Tenant, any subtenant of Tenant, any successor in interest of Tenant
or any guarantor of Tenant's obligations hereunder, and any of them, was
materially false.
15.2 Remedies. In the event of any default or breach by Tenant
--------
under this Lease within the meaning of Paragraph 15.1 (Events of
Default) Landlord may at any time thereafter, with or without notice
or demand and without limiting Landlord in the exercise of any right
or remedy which Landlord may have by reason of such default or
breach, exercise the remedies listed below in this Paragraph 15.2
and such other remedies Landlord may have at law or in equity. If
Tenant causes or threatens to cause a breach of any of the
covenants, agreements, terms or conditions contained in this Lease,
Landlord shall be entitled to obtain all sums held by Tenant, by any
trustee or in any account provided for herein, to enjoin such breach
or threatened breach, and to invoke any right and remedy allowed at
law or in equity or by statute or otherwise as though re-entry,
summary proceedings and other remedies were not provided for in this
Lease.
(a) Termination by Landlord. Landlord shall have the right to
-----------------------
terminate Tenant's right to possession of the Premises by any lawful means,
in which case this Lease shall terminate and Tenant shall immediately
surrender possession of the Premises to Landlord. In the event that
Landlord shall elect to so terminate the Lease, then Landlord may recover
from Tenant:
(1) The worth at the time of award of any unpaid rent
which had been earned at the time of such termination; plus
(2) The worth at the time of award of the amount by
which the unpaid rent which would have been earned after
termination until the time of award exceeds the amount of such
rental loss Tenant proves reasonably could have been reasonably
avoided; plus
(3) The worth at the time of award of the amount by
which the unpaid rent for the balance of the term after the time
of award exceeds the amount of such rental loss that Tenant
proves could be reasonably avoided; plus
(4) Any other amount necessary to compensate Landlord
for all the detriment proximately caused by Tenant's failure to
perform his obligations under this Lease or which in the ordinary
course of things would be likely to result therefrom; and
(5) At Landlord's election, such other amounts in
addition to or in lieu of the foregoing as may be permitted from
time to time by applicable California law.
(b) Definitions. As used in subparagraphs (a)(1) and
-----------
(a)(2) above, the "worth at the time of award" is computed by
allowing interest at the maximum rate permitted under applicable
law. As used in subparagraph (a)(iii) above, the "worth at the time
of award" is computed by discounting such amount at the discount
rate of the Federal Reserve Bank of San Francisco at the time of
award plus one percent (1%).
(c) Re-Entry. In the event of any such default by
--------
Tenant, Landlord shall also have the right, with or without
terminating this Lease, to re-enter the Premises and remove all
persons and property from the Premises; such property may be removed
and stored in a public warehouse or elsewhere at the cost of and for
the account of Tenant.
(d) Reletting Premises. In the event of the vacation or
------------------
abandonment of the Premises by Tenant or in the event that Landlord
shall elect to re-enter as provided above or shall take possession
of the Premises pursuant to legal proceeding or pursuant to any
notice provided by law, then if Landlord does not elect to terminate
this Lease as provided in this Paragraph 15.2, Landlord may from
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time to time, without terminating this Lease, either recover all
rental as it becomes due or relet the Premises or any part thereof
for such term or terms and at such rental or rentals and upon such
other terms and conditions as Landlord in its sole discretion may
deem advisable with the right to make alterations and repairs to the
Premises.
(e) Application of Proceeds of Reletting. In the event
------------------------------------
that Landlord shall elect to so relet, then rentals received by
Landlord from such reletting shall be applied: first, to the payment
of any indebtedness other than rent due hereunder from Tenant to
Landlord, second, to the payment of any cost of such reletting;
third, to the payment of the cost of any alterations and repairs to
the Premises; fourth, to the payment of rent due and unpaid
hereunder; and the residue, if any, shall be held by Landlord and
applied to payment of future rent hereunder. If upon any reletting
Landlord should receive less rent than the amount due from Tenant
under this Lease, then Tenant shall pay any deficiency to Landlord
immediately upon demand therefor by Landlord. Such deficiency shall
be calculated and paid monthly. Tenant shall also pay to Landlord
as soon as ascertained, any costs and expenses incurred by Landlord
in such reletting or in making such alterations and repairs not
covered by the rentals received from such reletting.
(f) Conditions for Termination. No re-entry or taking
--------------------------
possession of the Premises by Landlord pursuant to this Paragraph
15.2 shall be construed as an election to terminate this Lease
unless a written notice of such intention be given to Tenant or
unless the termination thereof be decreed by a court of competent
jurisdiction. Notwithstanding any reletting without termination by
Landlord because of any default by Tenant, Landlord may at any time
after such reletting elect to terminate this Lease for any such
default.
(g) Cumulative Remedies. Each right and remedy of
-------------------
Landlord provided for in this Lease shall be cumulative and shall be
in addition to every other right or remedy provided for in this
Lease or now or hereafter existing at law or in equity or by statute
or otherwise. The exercise or beginning of the exercise by Landlord
of any one or more of the rights or remedies provided for in this
Lease, or now or hereafter existing at law or in equity or by
statute or otherwise, shall not preclude the simultaneous or later
exercise by Landlord of any or all other rights or remedies provided
for in this Lease or now or hereafter existing at law or in equity
or by statute or otherwise.
(h) No Waiver. No failure by Landlord to insist upon the
---------
strict performance of any term hereof or to exercise any right or
remedy consequent upon a breach thereof, and no acceptance of full
or partial payment of rent during the continuance of any such
breach, shall constitute a waiver of any such breach or of any such
term. Efforts by Landlord to mitigate the damages caused by
Tenant's breach of this Lease shall not be construed to be a waiver
of Landlord's right to recover damages under this Paragraph 15.2.
Nothing in this Paragraph 15.2 affects the right of Landlord to
indemnification by Tenant in accordance with Paragraph 9.6 for
liability arising prior to the termination of this Lease for
personal injuries or property damage.
15.3 Default by Landlord. Landlord shall not be in default
-------------------
under this Lease unless Landlord fails to perform obligations
required of Landlord within a reasonable time, but in no event later
than thirty (30) days after written notice by Tenant to Landlord and
to the holder of any first mortgage or deed of trust covering the
Premises whose name and address shall have theretofore been
furnished to Tenant in writing, specifying in reasonable detail how
Landlord has failed to perform such obligations; provided, however,
that if the nature of Landlord's obligation is such that more than
thirty (30) days are required for performance then Landlord shall
not be in default if Landlord commences performance within such
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thirty (30) day period and thereafter diligently prosecutes the same
to completion.
15.4 Late Charges and Interest on Delinquent Payments.
-------------------------------------------------
(a) Late Charges. Tenant hereby acknowledges that late
------------
payment by Tenant to Landlord of rent and other sums due hereunder
will cause Landlord to incur costs not contemplated by this Lease,
the exact amount of which will be extremely difficult to ascertain.
Such costs include, but are not limited to, processing and
accounting charges, and late charges which may be imposed on
Landlord by the terms of any mortgage or trust deed covering the
Premises. Accordingly, if any installment of rent or any other sum
due from Tenant shall not be received by Landlord or Landlord's
designee within ten (10) days after such amount shall be due, Tenant
shall pay to Landlord a late charge equal to six percent (6.0%) of
such overdue amount; provided, however, that in no event shall the
amount of such late charge exceed Two Hundred Fifty Dollars ($250).
The parties hereby agree that such late charge represents a fair and
reasonable estimate of the costs Landlord will incur by reason of
late payment by Tenant. Acceptance of such late charge by Landlord
shall in no event constitute a waiver of Tenant's default with
respect to such overdue amount, nor prevent Landlord from exercising
any of the other rights and remedies granted hereunder.
(b) Interest on Past-Due Obligations. Except as
--------------------------------
expressly herein provided, any amount due Landlord not paid within
ten (10) business days after written notice shall bear interest at
the maximum rate permitted under applicable law. Payment of such
interest shall not excuse or cure any default by Tenant under this
Lease; provided, however, that interest shall not be payable on late
charges incurred by Tenant. The parties agree that the payment of
late charges and the payment of interest provided for in this
Paragraph 15.4 are distinct and separate from one another in that
the payment of interest is to compensate Landlord for the use of
Landlord's money by Tenant, while the payment of late charges is to
compensate Landlord for the additional administrative expense
incurred by Landlord in handling and processing delinquent payments.
ARTICLE 16: EMINENT DOMAIN
16.1 Total Condemnation. If the whole of the Premises is
------------------
acquired or condemned by eminent domain, inversely condemned or sold
in lieu of condemnation, for any public or quasi-public use or
purpose ("condemned"), then the Lease term shall terminate as of the
date of title vesting in such proceeding and the rent shall be
adjusted to the date of termination. Tenant shall immediately
notify Landlord of any such occurrence.
16.2 Partial Condemnation. If any part of the Premises is
--------------------
partially condemned, and such partial condemnation renders the
Premises unusable for the business of the Tenant, then the term of
this Lease shall terminate as of the date of title vesting in such
proceeding and Rent shall be adjusted to the date of termination.
If such condemnation is not extensive enough to render the Premises
unusable for the business of Tenant, then Landlord shall promptly
restore the Premises to a condition comparable to its condition
immediately prior to such condemnation proceeds recovered by
Landlord less the portion thereof lost in such condemnation, and
this Lease shall continue in full force and effect except that after
the date of such title vesting the Basic Annual Rent shall be
reduced in proportion that the floor area taken bears to the total
Rentable Area of the Premises. If any parking areas are condemned,
Landlord has the option, but not the obligation, to supply Tenant
with alternative parking.
16.3 Landlord's Award. If the Premises are wholly or partially
----------------
condemned, then, subject to the provisions of Paragraph 16.4
(Tenant's Award), Landlord shall be entitled to the entire award
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paid for such condemnation, and Tenant waives any right or claim in
any part thereof from the Landlord or the condemning authority.
16.4 Tenant's Award. Tenant shall have the right to claim and
--------------
recover from the condemning authority, but not from Landlord, such
compensation as may be separately awarded or recoverable by Tenant's
own right on account of any and all costs or loss (including loss of
business) to which Tenant might be put in removing Tenant's
merchandise, furniture, fixtures, leasehold improvements and
equipment to a new location.
16.5 Temporary Condemnation. If the whole or any part of the
----------------------
Premises shall be condemned for any temporary public or quasi-public
use or purpose, this Lease shall remain in effect and Tenant shall
be entitled to receive for itself such portion or portions of any
award made for such use with respect to the period of the taking
which is within the term. If a temporary condemnation remains in
force at the expiration or earlier termination of this Lease, Tenant
shall pay to Landlord a sum equal to the reasonable cost of
performing any obligations required of Tenant by this Lease with
respect to the surrender of the Premises, including, without
limitation, repairs and maintenance required, and upon such payment
Tenant shall be excused from any such obligations. If a temporary
condemnation is for an established period which extends beyond the
term, this Lease shall terminate as of the date of occupancy by the
condemning authority, and the damages shall be as provided in
Paragraphs 16.3 and 16.4 and Basic Annual Rent shall be adjusted to
the date of occupancy.
16.6 Notice and Execution. Landlord shall, immediately upon
--------------------
service of process in connection with any condemnation or potential
condemnation, give Tenant notice in writing thereof. Tenant shall
immediately execute and deliver to the Landlord all instruments that
may be required to effect the provisions of this Article 16.
ARTICLE 17: BROKERS
Tenant warrants that it has had no dealings with any real estate
broker or agents in connection with the negotiation of this Lease
and the Sublease, excepting only the broker identified in Item 13 of
the Basic Lease Provisions, and it knows no other real estate broker
or agent who is entitled to a commission in connection with this
Lease. Landlord shall pay any commission due such broker.
ARTICLE 18: ESTOPPEL CERTIFICATE,
ATTORNMENT AND SUBORDINATION
18.1 Estoppel Certificate. Tenant shall at any time upon not
--------------------
less than ten (10) business days' prior written notice from Landlord
execute, acknowledge and deliver to Landlord an Estoppel Certificate
substantially in the form attached hereto as Exhibit "D." Any
Estoppel Certificate executed by Tenant may be conclusively relied
upon by any prospective purchaser or encumbrancer of the Premises.
Tenant's failure to deliver such Estoppel Certificate within such
time shall conclusively establish that (a) this Lease is in full
force and effect, without modification except as may be represented
by Landlord; (b) there are no uncured defaults in Landlord's
performance, and (c) not more than one month's rent has been paid in
advance. Such failure by Tenant, if willful, may, at Landlord's
option, be treated by Landlord as a material default by Tenant under
this Lease. If Landlord desires to finance or refinance the
Premises, or any part thereof, Tenant hereby agrees to deliver to
any lender designated by Landlord such financial statements of
Tenant and such other information about Tenant as may be reasonably
required by such lender. Such statements shall include the past
three (3) years' financial statements of Tenant. All such financial
statements shall be received in confidence and shall be used only
for the purposes herein set forth.
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18.2 Subordination
-------------
(a) Priority of Lease. This Lease, at Landlord's option,
-----------------
shall be subordinate to any ground lease, mortgage, deed of trust,
or any other hypothecation for security now or hereafter placed upon
the real property of which the Premises are a part and to any and
all advances made on the security thereof and to all renewals,
modifications, consolidations, replacements and extensions thereof.
Notwithstanding such subordination, Tenant's right to quiet
possession of the Premises shall not be disturbed if Tenant is not
in default and so long as Tenant shall pay the rent and observe and
perform all of the provisions of this Lease, unless this Lease is
otherwise terminated pursuant to its terms. If any mortgagee,
trustee or ground lessor shall elect to have this Lease prior to the
lien of its mortgage, deed of trust or ground lease, and shall give
written notice thereof to Tenant, this Lease shall be deemed prior
to such mortgage, deed of trust, or ground lease, whether this Lease
is dated prior or subsequent to the date of said mortgage, deed of
trust or ground lease or the date of recording thereof.
(b) Execution of Documents. Tenant agrees to execute any
----------------------
documents required to effectuate such subordination or to make this
Lease prior to the lien of any mortgage, deed of trust or ground
lease, as the case may be, and failing to do so within ten (10) days
after written demand, does hereby make, constitute and irrevocably
appoint Landlord as Tenant's attorney in fact and in Tenant's name,
place and stead, to do so.
18.3 Attornment. Tenant shall, in the event any proceedings
----------
are brought for the foreclosure of, or in the event of exercise of
the power of sale under, any mortgage or deed of trust made by the
Landlord, its successors or assigns, encumbering the Premises, or
any part thereof, if any, and if so requested, attorn to the
purchaser upon such foreclosure or sale or upon any grant of a deed
in lieu of foreclosure and recognize such purchaser as the Landlord
under this Lease.
ARTICLE 19: LANDLORD'S LIABILITY
19.1 Scope of Liability. If Landlord is a limited partnership,
------------------
it is understood and agreed that any claims by Tenant shall be
limited to the assets of such limited partnership. Tenant also
expressly waives any and all rights to proceed against the
individual partners or the officers, directors or shareholders of
any corporate partner in such limited partnership, except to the
extent of such partners' interests in such limited partnership.
19.2 Transfer by Landlord; Landlord's Liability.
------------------------------------------
(a) Landlord shall have the right to assign, hypothecate
or otherwise transfer this Lease and Landlord's interest hereunder
at any time at Landlord's option.
(b) The term "Landlord" as used herein shall mean only the
owner or owners at the time in question of the fee title or a
Tenant's interest in a ground lease of the Premises, and except as
expressly provided in Article 15, in the event of any transfer of
such title or interest, Landlord herein named (and in case of any
subsequent transfers the then grantor) shall be relieved from and
after the date of such transfer of all liability as respects
Landlord's obligations thereafter to be performed, provided that any,
funds in the hands of Landlord or the then grantor at the time of
such transfer, in which Tenant has an interest, shall be delivered
to the grantee. The obligations contained in this Lease to be
performed by Landlord shall, subject as aforesaid, be binding on
Landlord's successors and assigns, only during their respective
periods of ownership.
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ARTICLE 20: MISCELLANEOUS PROVISIONS
20.1 Use of Common Areas; Parking. Tenant shall have the
----------------------------
non-exclusive right, in common with others, to the use of the Common
Areas and common entrances, lobbies, elevators, ramps, drives,
stairs, and similar access and serviceways, parking areas and the
other common facilities in and adjacent to the Building and the
Project, subject to such nondiscriminatory rules and regulations as
may be adopted by the Landlord. Tenant shall have the right to
designate thirty-five (35) reserved parking spaces in the parking
areas for its exclusive use, and will do so in writing to Landlord
within 120 days of the execution of this Lease.
20.2 Severability. The invalidity of any provision of this
------------
Lease as determined by a court of competent jurisdiction, shall in
no way affect the validity of any other provision hereof.
20.3 Time of Essence. Time is of the essence of each and every
---------------
provision of this Lease.
20.4 Captions. Article and paragraph captions are used for
--------
convenience of reference and are not a part of this Lease.
20.5 Incorporation of Prior Agreements; Amendments. This Lease
---------------------------------------------
contains all agreements of the parties with respect to any matter
mentioned herein. No prior agreement or understanding pertaining to
any such matter shall be effective. This Lease may be modified in
writing only, signed by the parties in interest at the time of the
modification. Except as otherwise stated in this Lease, Tenant
hereby acknowledges that neither any real estate broker listed in
Item 13 of the Basic Lease Provisions hereof nor any cooperating
broker on this transaction nor the Landlord or any employees or
agents of any of said persons has made any oral or written
warranties or representations to Tenant relative to the condition or
use by Tenant of the Premises. Tenant acknowledges that Tenant
assumes all responsibility regarding the effect of and the necessity
of complying with (a) the Occupational Safety Health Act and all
similar or successor state and federal statutes and (b) all other
applicable laws and regulations in force during the term of this
Lease, except as otherwise specifically stated in this Lease.
20.6 Notices. Any notice required or permitted to be given
-------
under this Lease shall be in writing and may be given by personal
delivery or by certified mail, and if given personally or by mail,
shall be deemed sufficiently given if addressed to Tenant or to
Landlord at the addresses specified in Item 11 of the Basic Lease
Provisions. Either party may by notice to the other specify a
different address for notice purposes except that upon Tenant's
taking possession of the Premises, the Premises shall constitute
Tenant's address for notice purposes. A copy of all notices
required or permitted to be given to Landlord hereunder shall be
concurrently transmitted to such party or parties at such addresses
as Landlord may from time to time hereafter designate by notice to
Tenant.
20.7 Waivers. No waiver by one party of any provision hereof
-------
shall be deemed a waiver of any other provision hereof or of any
subsequent breach by the other party of the same or any other
provision. A party's consent to or approval of any act shall not be
deemed to render unnecessary the obtaining of that party's consent
to or approval of any subsequent act by the other party. The
acceptance of rent hereunder by Landlord shall not be a waiver of
any preceding breach by Tenant of any provision hereof, other than
the failure of Tenant to pay the particular rent so accepted,
regardless of Landlord's knowledge of such preceding breach at the
time of acceptance of such rent.
20.8 Recording. Tenant shall not record this Lease or a short
---------
form memorandum thereof without Landlord's prior written consent,
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and such recordation shall, at the option of Landlord, constitute a
non-curable default by Tenant under this Lease.
20.9 Holding Over. If Tenant remains in possession of the
------------
Premises or any part thereof after the expiration of the term hereof
without the express written consent of Landlord, such occupancy
shall be a tenancy from month to month at a rental in an amount
equal to one hundred twenty-five percent (125.0%) of the Basic
Annual Rent then payable, plus all other charges payable hereunder,
and upon all the terms hereof applicable to a month-to-month tenancy.
20.10 Cumulative Remedies. No remedy or election hereunder
-------------------
shall be deemed exclusive but shall, wherever possible, be
cumulative with all other remedies at law or in equity.
20.11 Covenants and Conditions. Each provision of this Lease
------------------------
to be performed by Tenant shall be deemed both a covenant and a
condition.
20.12 Binding Effect; Choice of Law. Subject to any provisions
-----------------------------
hereof restricting assignment or subletting by Tenant and subject to
Article 19 (Landlord's Liability), this Lease shall bind the
parties, their personal representatives, successors and assigns.
This Lease shall be governed by and construed in accordance with the
laws of the State of California.
20.13 Attorneys' Fees. If either party brings an action to
---------------
enforce the terms hereof or declare rights hereunder, the prevailing
party in any such action, on trial or appeal, shall be entitled to
its reasonable attorneys' fees to be paid by the losing party as
fixed by the court.
20.14 Signs and Auctions. Tenant shall not place any sign upon
------------------
the Premises or conduct any auction thereon without Landlord's prior
written consent.
20.15 Corporate Authority. If Tenant is a corporation, each
-------------------
individual executing this Lease on behalf of said corporation
represents and warrants that he is duly authorized to execute and
deliver this Lease on behalf of said corporation, in accordance with
a duly adopted resolution of the Board of Directors of said
corporation or in accordance with the Bylaws of said corporation,
and that this Lease is binding upon said corporation in accordance
with its terms. If Tenant is a corporation Tenant shall within
thirty (30) days after execution of this Lease, deliver to Landlord
a certified copy of a resolution of the Board of Directors of said
corporation authorizing or ratifying the execution of this Lease.
20.16 Consents. Wherever in this Lease the consent of one
--------
party is required to an act of the other party, such consent shall
not be unreasonably withheld.
20.17 Guarantor. In the event that there is a guarantor of
---------
this Lease, said guarantor shall have the same obligations as Tenant
under Paragraph 18.1 (Estoppel Certificate) and 20.15 (Consents) of
this Lease.
20.18 Quiet Possession. Subject to Tenant's paying the Basic
----------------
Annual Rent and other items of rent reserved hereunder and observing
and performing all of the covenants, conditions and provisions on
Tenant's part to be observed and performed hereunder, Tenant shall
have quiet possession of the Premises for the entire term hereof
subject to all of the provisions of this Lease.
20.19 Force Majeure.
-------------
(a) Events of Force Majeure. Notwithstanding anything to
-----------------------
the contrary contained in this Lease, each party shall be excused
from performing any obligation or undertaking provided in this
Lease, and any delay in the performance of any obligation under this
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Lease shall be excused, so long as the performance of such
obligation is prevented, delayed, retarded, hindered or prohibited
by any act of God, such as earthquake, flood, inclement weather or
other action of the elements; fire; explosion; war; invasion; civil
insurrection; riot; mob violence; sabotage; malicious mischief;
inability to procure or unavailability of or general shortage of
labor, equipment, facilities, materials or supplies in the open
market; general inability to obtain transportation; moratorium on
the payment of financial obligations; lockouts (by persons other
than the party invoking the benefits of this provision); strike or
other action of labor unions or trade organizations; condemnation;
pending litigation or appeal thereof or therefrom; laws or orders of
any governmental authority whatever, whether civil, military, naval,
environmental, municipal, state or federal authority; or any other
cause (financial inability excepted), whether similar or dissimilar
to the foregoing, which is not reasonably within the control of the
party invoking the benefits of this Paragraph (hereafter, "event of
force majeure").
(b) Notices. Any Party (the "affected party") whose
-------
performance under this Lease is prevented or delayed by the
occurrence of any event of force majeure shall notify the other
party (the "other party") in writing of the occurrence of the event
of force majeure and the cessation of the same within fifteen (15)
days after such occurrence or cessation. The failure to so notify
the other party shall be deemed to constitute a waiver of the
benefits of this Paragraph. Each day of delay due to the occurrence
of an event of force majeure shall result in one day's extension of
the time for performance by the affected party. If such an
extension of time is granted to the affected party, the time for
performance by the other party shall be extended to the same extent.
(c) Excessive Delay. Notwithstanding anything in this
---------------
Paragraph to the contrary, if the cumulative amount of any delay(s)
permitted or excused by reason of the occurrence(s) of an event of
force majeure exceeds six (6) months, the other party shall have the
right to cancel and terminate this Lease without penalty at any time
by sending the affected party written notice to such effect.
ARTICLE 21: ADDENDA
21.1 Effect of Addenda. The provisions of this Article 21, if
-----------------
any, shall supersede and override any other provision in this Lease
to the extent the same are inconsistent. This Article 21 shall
consist of this Paragraph 21.1 and the following paragraphs which
are also identified in Item 14 of the Basic Lease Provisions as
being part of this Article 21.
21.2 Expansion Space. One year after the Rent Commencement
---------------
Date, provided Tenant is not in default under any of the terms or
conditions of this Lease, Landlord agrees that Tenant shall have the
right to relocate to other space in the Project or other space
located in the City of San Diego which is owned by Landlord or The
Naiman Company (the "New Space") on the following terms and
conditions:
(1) The New Space shall be at least fifty percent (50.0%)
larger than the Premises;
(2) Tenant provides Landlord with a sixty (60) day written
notice of Tenant's desire to relocate to the New Space;
(3) Any and all costs of both Landlord and Tenant, including
without limitation legal fees incurred by Landlord in drafting a new
lease for the New Space (which legal fees shall not exceed $1,000),
all of Tenant's moving and relocation expenses and any brokerage
commissions that may become payable to third parties by reason of
Tenant's relocation shall be paid solely by Tenant;
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(4) Tenant continues to make payment of all items of rent, both
Basic Annual Rent and Additional Rent, and any other payment
required to be made under the Lease until Tenant is released from
liability under this Lease;
(5) The rent for the New Space shall be equal to the greater of
(i) the Basic Annual Rent then payable under this Lease or (ii) the
then current rental rate for the building or project in which the
New Space is located as published in Landlord's schedule of rental
rates;
(6) Tenant executes a new lease on terms and conditions
reasonably acceptable to Landlord; and
(7) Effective as of the commencement date of the lease for the
New Space, Tenant shall be released from liability under this Lease,
except for liabilities or obligations arising from or relating to
events or circumstances occurring prior to such date.
21.3 Right of First Refusal. If, during the term of the Lease
----------------------
Landlord decides to lease additional space in the Building to a
third party, Landlord shall send written notice to such effect to
Tenant. Tenant shall have the right of first refusal to lease the
space described in such notice on the same terms and conditions
offered to the third party. Tenant shall exercise its right of
first refusal within two business days of receipt of such notice.
Failure to timely exercise such right of first refusal shall
constitute a waiver of the right of first refusal under this Lease.
IN WITNESS WHEREOF, the parties hereto have executed this R&D
Building Lease at the place and on the date specified immediately
adjacent to their respective signatures below.
LANDLORD:
Executed at San Diego, California on February __, 1987.
SORRENTO TECH LIMITED, a
California limited partnership
By:/s/Jack Naiman
--------------------
Jack Naiman,
Title: General Partner
TENANT:
Executed at San Diego, California on February 26, 1987.
BIOSYM TECHNOLOGIES, INC., a
California corporation
By: /s/Todd Schmidt
-----------------------------
Title: /s/
--------------------------
By: /s/ Arnie Hagler
-----------------------------
Title: CEO
--------------------------
LAL: 1618Y
022487
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FLOOR PLAN OF THE PREMISES
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