California-Concord-2525 Stanwell Drive Lease - Shamrock Development Co. and Steritech Inc.
INDUSTRIAL REAL ESTATE LEASE (MULTI-TENANT FACILITY)
ARTICLE ONE: BASIC TERMS
This Article One contains the Basic Terms of this Lease between the
Landlord and Tenant named below. Other Articles, Sections and Paragraphs of the
Lease referred to in this Article One explain and define the Basic Terms and
are to be read in conjunction with the Basic Terms.
Section 1.01. DATE OF LEASE: October 1, 1992
Section 1.02. LANDLORD (INCLUDE LEGAL ENTITY): Shamrock Development
Company, a California Corporation
Address of Landlord: 1333 Willow Pass Road, Suite 211, Concord, CA 94520
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Section 1.03. TENANT (INCLUDE LEGAL ENTITY): Steritech, Inc., a
California Corporation
Address of Tenant: 2525 Stanwell Drive, Suite 500, Concord, California 94520
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Section 1.04. PROPERTY: The Property is part of Landlord's
multi-tenant real property development known as Buchanan Oaks IV (the
"Project"). The Project includes the land, the buildings and all other
improvements located on the land, and the common areas described in Paragraph
4.05(a). The Property is (include street address, approximate square footage
and description) Located at 2525 Stanwell Drive, Suite 500, Concord, CA,
consisting of approximately 9.131 rentable square feet of office, laboratory,
warehouse space.
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Section 1.05. LEASE TERM: five (5) years zero (0) months beginning on
February 1, 1993 or such other date as is specified in this Lease, and ending
on January 31, 1998
Section 1.06. PERMITTED USES: (SEE ARTICLE FIVE) General office and
the operation of a laboratory facility; and any other legally permitted use
approved in advance by Landlord**
Section 1.07. TENANT'S GUARANTOR: (If none, so state) None
Section 1.08. BROKERS: (SEE ARTICLE FOURTEEN) (If none, so state)
Landlord's Broker: TRI Commercial Real Estate Services (Mike Hurd)
Tenant's Broker: LCB Associates (Steve Banker)
Section 1.09. COMMISSION PAYABLE TO LANDLORD'S BROKER: (SEE ARTICLE
FOURTEEN) $ Per separate agreement
Section 1.10. INITIAL SECURITY DEPOSIT: (SEE SECTION 3.03) $9,922.00
Section 1.11. VEHICLE PARKING SPACES ALLOCATED TO TENANT: (SEE SECTION
4.05) *(see below)
Section 1.12. RENT AND OTHER CHARGES PAYABLE BY TENANT:
(a) BASE RENT: Nine thousand nine hundred Twenty-Two & no/100 dollars
($9,922.00) per month, for the first twenty-four months, as provided in Section
3.01, and shall be increased on the first day of the 25th, 37th and 49th
month(s) after the Commencement Date, either (i) as provided in Section 3.02,
or (ii) however base rent shall not increase more than five percent (5%) in any
single annual adjustment period for during years 1-3 and ten percent (10%) in
years 4 & 5. (If (ii) is completed, then (i) and Section 3.02 are inapplicable.)
(b) OTHER PERIODIC PAYMENTS: (i) Real Property Taxes above the "Base
Real Property Taxes" (See Section 4.02); (ii) Utilities (See Section 4.03);
(iii) Increased Insurance Premiums above "Base Premiums" (See Section 4.04);
(iv) Tenant's Initial Pro Rata Share of Common Area Expenses 34.1% (See Section
4.05); (v) Impounds for Tenant's Share of Insurance Premiums and Property Taxes
(See Section 4.08); (vi) Maintenance, Repairs and Alterations (See Article Six).
Section 1.13. COSTS AND CHARGES PAYABLE BY LANDLORD: (a) Base Real
Property Taxes (See Section 4.02); (b) Base Insurance Premiums (See Section
4.04(c)); (c) Maintenance and Repair (See Article Six).
Section 1.14. LANDLORD'S SHARE OF PROFIT ON ASSIGNMENT OR SUBLEASE:
(See Section 9.05) thirty percent (30%) of the Profit (the "Landlord's Share").
Section 1.15. RIDERS: The following Riders are attached to and made a
part of this Lease: (If none, so state) See Lease Rider and Exhibits A, B and C
attached and made a part hereof.
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*Twenty-four (24) non-exclusive on-site parking spaces and 12 non-exclusive
spaces in the exclusive parking easement across the street.
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** which approval shall not unreasonably be withheld.
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ARTICLE TWO: LEASE TERM
SECTION 2.01. Lease of Property For Lease Term. Landlord leases the
Property to Tenant and Tenant leases the Property from Landlord for the Lease
Term. The Lease Term is for the period stated in Section 1.05 above and shall
begin and end on the dates specified in Section 1.05 above, unless the
beginning or end of the Lease Term is changed under any provision of this
Lease. The "Commencement Date" shall be the date specified in Section 1.05
above for the beginning of the Lease Term, unless advanced or delayed under any
provision of this Lease.
SECTION 2.03. Early Occupancy. If Tenant occupies the Property prior to
the Commencement Date, Tenant's occupancy of the Property shall be subject to
all of the provisions of this Lease. Early occupancy of the Property shall not
advance the expiration date of this Lease. Tenant shall pay Base Rent and all
other charges specified in this Lease for the early occupancy period.
SECTION 2.04. Holding Over. Tenant shall vacate the Property upon the
expiration or earlier termination of this Lease. Tenant shall reimburse
Landlord for and indemnify Landlord against all damages which Landlord incurs
from Tenant's delay in vacating the Property. If Tenant does not vacate the
Property upon the expiration or earlier termination of the Lease and Landlord
thereafter accepts rent from Tenant, Tenant's occupancy of the Property shall
be a "month-to-month" tenancy, subject to all of the terms of this Lease
applicable to a month-to-month tenancy, except that the Base Rent then in
effect shall be increased by twenty-five percent (25%).
ARTICLE THREE: BASE RENT
SECTION 3.01. Time and Manner of Payment. Upon execution of this Lease,
Tenant shall pay Landlord the Base Rent in the amount stated in Paragraph
1.12(a) above for the first month of the Lease Term. On the first day of the
second month of the Lease Term and each month thereafter, Tenant shall pay
Landlord the Base Rent, in advance, without offset, deduction or prior demand.
The Base Rent shall be payable at Landlord's address or at such other place as
Landlord may designate in writing.
SECTION 3.02. Cost of Living Increases. The Base Rent shall be
increased on each date (the "Rental Adjustment Date") stated in Paragraph
1.12(a) above in accordance with the increase in the United States Department of
Labor, Bureau of Labor Statistics. Consumer Price Index for All Urban Consumers
(all items for the geographical Statistical Area in which the Property is
located on the basis of 1982-1984 = 100) (the "Index") as follows:
(a) The Base Rent (the "Comparison Base Rent") in effect immediately
before each Rental Adjustment Date shall be increased by the percentage that
the Index has increased from the date (the "Comparison Date") on which payment
of the Comparison Base Rent began through the month in which the applicable
Rental Adjustment Date occurs. The Base Rent shall not be reduced by reason of
such computation. Landlord shall notify Tenant of each increase by a written
statement which shall include the Index for the applicable Comparison Date, the
Index for the applicable Rental Adjustment Date, the percentage increase
between those two indices, and the new Base Rent. Any increase in the Base Rent
provided for in this Section 3.02 shall be subject to any minimum or maximum
increase, if provided for in Paragraph 1.12(a).
(b) Tenant shall pay the new Base Rent from the applicable Rental
Adjustment Date until the next Rental Adjustment Date. Landlord's notice may be
given after the applicable Rental Adjustment Date of the increase, and Tenant
shall pay Landlord the accrued rental adjustment for the months elapsed between
the effective date of the increase and Landlord's notice of such increase
within ten (10) days after Landlord's notice. If the format or components of
the Index are materially changed after the Commencement Date, Landlord shall
substitute an index which is published by the Bureau of Labor Statistics or
similar agency and which is most nearly equivalent to the Index in effect on
the Commencement Date. The substitute index shall be used to calculate the
increase in the Base Rent unless Tenant objects to such index in writing within
fifteen (15) days after receipt of Landlord's notice. If Tenant objects,
Landlord and Tenant shall submit the selection of the substitute index for
binding arbitration in accordance with the rules and regulations of the
American Arbitration Association at its office closest to the Property. The
costs of arbitration shall be borne equally by Landlord and Tenant.
SECTION 3.03. Security Deposit; Increases:
(a) Upon the execution of this Lease, Tenant shall deposit with
Landlord a cash Security Deposit in the amount set forth in Section 1.10 above.
Landlord may apply all or part of the Security Deposit to any unpaid rent or
other charges due from Tenant or to cure any other defaults of Tenant. If
Landlord uses any part of the Security Deposit, Tenant shall restore the
Security Deposit to its full amount within ten (10) days after Landlord's
written request. Tenant's failure to do so shall be a material default under
this Lease. No interest shall be paid on the Security Deposit. Landlord shall
not be required to keep the Security Deposit separate from its other accounts
and no trust relationship is created with respect to the Security Deposit.
(b) Each Time the Base Rent is increased, Tenant shall deposit
additional funds with Landlord sufficient to increase the Security Deposit to
an amount which bears the same relationship to the adjusted Base Rent as the
Initial Security Deposit bore to the Initial Base Rent. However as long as
Tenant has not been in default of its Lease over the first two (2) years of its
tenancy this Section 3.03 (b) shall not apply.
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Section 3.04 TERMINATION: ADVANCE PAYMENTS. Upon termination of this
Lease under Article Seven (Damage or Destruction), Article Eight (Condemnation)
or any other termination not resulting from Tenant's default, and after Tenant
has vacated the Property in the manner required by this Lease, Landlord shall
refund or credit to Tenant (or Tenant's successor) the unused portion of the
Security Deposit, any advance rent or other advance payments made by Tenant to
Landlord and any amounts paid for real property taxes and other reserves which
apply to any time periods after termination of the Lease.
ARTICLE FOUR: OTHER CHARGES PAYABLE BY TENANT
Section 4.01 ADDITIONAL RENT. All charges payable by Tenant other than
Base Rent are called "Additional Rent". Unless this Lease provides otherwise,
Tenant shall pay all Additional Rent then due with the next monthly installment
of Base Rent. The term "rent" shall mean Base Rent and Additional Rent.
Section 4.02 PROPERTY TAXES.
(a) REAL PROPERTY TAXES. Landlord shall pay the "Base Real Property
Taxes" on the Property during the Lease Term. Base Real Property Taxes are real
property taxes applicable to the Property as shown on the tax bill for the most
recent tax fiscal year ending prior to the Commencement Date. However, if the
structures on the Property are not completed by the tax lien date of such tax
fiscal year, the Base Real Property Taxes are the taxes shown on the first tax
bill showing the full assessed value of the Property after completion of the
structures. Tenant shall pay Landlord the amount, if any, by which the real
property taxes during the Lease Term exceed the Base Real Property Taxes.
Subject to Paragraph 4.02(c), Tenant shall make such payments within fifteen
(15) days after receipt of Landlord's statement showing the amount and
computation of such increase. Landlord shall reimburse Tenant for any real
property taxes paid by Tenant covering any period of time prior to or after the
Lease Term.
(b) DEFINITION OF "REAL PROPERTY TAX." "Real property tax" means: (i)
any fee, license fee, license tax, business license fee, commercial rental tax,
levy, charge, assessment, penalty or tax imposed by any taxing authority
against the Property; (ii) any tax on the Landlord's right to receive, or the
receipt of, rent or income from the Property or against Landlord's business of
leasing the Property; (iii) any tax or charge for fire protection, streets,
sidewalks, road maintenance, refuse or other services provided to the Property
by any governmental agency; (iv) any tax imposed upon this transaction or based
upon a reassessment of the Property due to a change of ownership, as defined by
applicable law, or other transfer of all or part of Landlord's interest in the
Property; and (v) any charge or fee replacing any tax previously included
within the definition of real property tax. "Real property tax" does not,
however, include Landlord's federal or state income, franchise, inheritance or
estate taxes. There shall be no increase in Tenant's liability for taxes due to
a sale of the Project during the first three (3) years of Tenant's occupancy.
(c) JOINT ASSESSMENT. If the Property is not separately assessed,
Landlord shall reasonably determine Tenant's share of the real property tax
payable by Tenant under Paragraph 4.02(a) from the assessor's worksheets or
other reasonably available information. Tenant shall pay such share to Landlord
within fifteen (15) days after receipt of Landlord's written statement.
(d) PERSONAL PROPERTY TAXES.
(i) Tenant shall pay all taxes charged against trade fixtures,
furnishings, equipment or any other personal property belonging to Tenant.
Tenant shall try to have personal property taxed separately from the Property.
(ii) If any of Tenant's personal property is taxed with the
Property, Tenant shall pay Landlord the taxes for the personal property within
fifteen (15) days after Tenant receives a written statement from Landlord for
such personal property taxes.
(e) *
Section 4.03. UTILITIES. Tenant shall pay, directly to the appropriate
supplier, the cost of all natural gas, heat, light, power, sewer service,
telephone, water, refuse disposal and other utilities and services supplied to
the Property. However, if any services or utilities are jointly metered with
other property, Landlord shall make a reasonable determination of Tenant's
proportionate share of the cost of such utilities and services and Tenant shall
pay such share to Landlord within fifteen (15) days after receipt of Landlord's
written statement.
Section 4.04. INSURANCE POLICIES.
(a) LIABILITY INSURANCE. During the Lease Term, Tenant shall maintain a
policy of commercial general liability insurance (sometimes known as broad form
comprehensive general liability insurance) insuring Tenant against liability
for bodily injury, property damage (including loss of use of property) and
personal injury arising out of the operation, use or occupancy of the Property.
Tenant shall name Landlord as an additional insured under such policy. The
initial amount of such insurance shall be One Million Dollars ($1,000,000) per
occurrence and shall be subject to periodic increase based upon inflation,
increased liability awards, recommendation of Landlord's professional insurance
advisers and other relevant factors. The liability insurance obtained by Tenant
under this Paragraph 4.04(a) shall (i) be primary and non-contributing; (ii)
contain cross-liability endorsements; and (iii) insure Landlord against
Tenant's performance under Section 5.05, if the matters giving rise to the
indemnity under Section 5.05 result from the negligence of Tenant. The amount
and coverage of such insurance shall not limit Tenant's liability nor relieve
Tenant of any other obligation under this Lease. Landlord may also obtain
comprehensive public liability insurance in an amount and with coverage
determined by Landlord insuring Landlord against liability arising out of
ownership, operation, use or occupancy of the Property. The policy obtained by
Landlord shall not be contributory and shall not provide primary insurance.
(b) PROPERTY AND RENTAL INCOME INSURANCE. During the Lease Term,
Landlord shall maintain policies of insurance covering loss of or damage to the
Property in the full amount of its replacement value. Such policy shall contain
an inflation Guard Endorsement and shall provide protection against all perils
included within the classification of fire, extended coverage, vandalism,
malicious mischief, special extended perils (all risk), sprinkler leakage and
any other perils which landlord deems reasonably necessary. Landlord shall have
the right to obtain flood and earthquake insurance if required by any lender
holding a security interest in the Property. Landlord shall not obtain insurance
for Tenant's fixtures or equipment or building improvements installed by Tenant
on the Property. During the Lease Term, Landlord shall also maintain a rental
income insurance policy, with loss payable to Landlord, in an amount equal to
one year's Base Rent, plus estimated real property taxes and insurance premiums.
Tenant shall be liable for the payment of any deductible amount under Landlord's
or Tenant's insurance policies maintained pursuant to this Section 4.04 in an
amount not to exceed Ten Thousand Dollars ($10,000). Tenant shall not do or
permit anything to be done which invalidates any such insurance policies.
* In the event Real Property Taxes are increased because of Tenant's Tenant
Improvements, Tenant shall be responsible for that increased amount which is in
excess of the portion attributable to Landlord's contribution of $106,310.00
toward such improvements.
Tenant
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(c) PAYMENT OF PREMIUMS.
(i) Landlord shall pay the "Base Premiums" for the insurance
policies maintained by Landlord under Paragraph 4.04(b) if the Property
has been previously fully occupied, the "Base Premiums" are the
insurance premiums paid during or applicable to the last twelve (12)
months of such prior occupancy. If the Property has not been previously
fully occupied or has been occupied for less than twelve (12) months,
the Base Premiums are the lowest annual premiums reasonably obtainable
for the required insurance for the Property as of the Commencement Date.
(ii) Tenant shall pay Landlord the amount, if any, by which
the insurance premiums for all policies maintained by Landlord under
Paragraph 4.04(b) have increased over the Base Premiums, whether such
increases result from the nature of Tenant's occupancy, any act or
omission of Tenant, the requirement of any lender referred to in Article
Eleven (Protection of Lenders), the increased value of the Property or
general rate increases. However, if Landlord substantially increases the
amount of insurance carried or the percentage of insured value after the
period during which the Base Premiums were calculated, Tenant shall only
pay Landlord the amount of increased premiums which would have been
charged by the insurance carrier if the amount of insurance or
percentage of insured value had not been substantially increased by
Landlord. This adjustment in the amount due from Tenant shall be made
only once during the Lease Term. Thereafter, Tenant shall be obligated
to pay the full amount of any additional increases in the insurance
premiums, including increases resulting from any further increases in
the amount of insurance or percentage of insured value. Subject to
Section 4.05, Tenant shall pay Landlord the increases over the Base
Premiums within fifteen (15) days after receipt by Tenant of a copy of
the premium statement or other evidence of the amount due. If the
insurance policies maintained by Landlord cover improvements or real
property other than the Property, Landlord shall also deliver to Tenant
a statement of the amount of the premiums applicable to the Property
showing, in reasonable detail, how such amount was computed. If the
Lease Term expires before the expiration of the insurance period,
Tenant's liability shall be pro rated on an annual basis.
(d) GENERAL INSURANCE PROVISIONS.
(i) Any insurance which Tenant is required to maintain under
this Lease shall include a provision which requires the insurance
carrier to give Landlord not less than thirty (30) days' written notice
prior to any cancellation or modification of such coverage.
(ii) If Tenant fails to deliver any policy, certificate or
renewal to Landlord required under this Lease within the prescribed time
period or if any such policy is cancelled or modified during the Lease
Term without Landlord's consent, Landlord may obtain such insurance, in
which case Tenant shall reimburse Landlord for the cost of such
insurance within fifteen (15) days after receipt of a statement that
indicates the cost of such insurance.
(iii) Tenant shall maintain all insurance required under this
Lease with companies holding a "General Policy Rating" of A-12 or
better, as set forth in the most current issue of "Best Key Rating
Guide". Landlord and Tenant acknowledge the insurance markets are
rapidly changing and that insurance in the form and amounts described in
this Section 4.04 may not be available in the future. Tenant
acknowledges that the insurance described in this Section 4.04 is for
the primary benefit of Landlord. If at any time during the Lease Term,
Tenant is unable to maintain the insurance required under the Lease,
Tenant shall nevertheless maintain insurance coverage which is customary
and commercially reasonable in the insurance industry for Tenant's type
of business, as that coverage may change from time to time. Landlord
makes no representation as to the adequacy of such insurance to protect
Landlord's or Tenant's interests. Therefore, Tenant shall obtain any
such additional property or liability insurance which Tenant deems
necessary to protect Landlord and Tenant.
(iv) Unless prohibited under any applicable insurance
policies maintained, Landlord and Tenant each hereby waive any and all
rights of recovery against the other, or against the officers,
employees, agents or representatives of the other, for loss of or damage
to its property or the property of others under its control, if such
loss or damage is covered by any insurance policy in force (whether or
not described in this Lease) at the time of such loss or damage. Upon
obtaining the required policies of insurance, Landlord and Tenant shall
give notice to the insurance carriers of this mutual waiver of
subrogation.
Section 4.05. COMMON AREAS; USE, MAINTENANCE AND COSTS.
(a) COMMON AREAS. As used in this Lease, "Common Areas" shall mean
all areas within the Project which are available for the common use of tenants
of the Project and which are not leased or held for the exclusive use of Tenant
or other tenants, including, but not limited to, parking areas, driveways,
sidewalks, loading areas, access roads, corridors, landscaping and planted
areas. Landlord, from time to time, may change the size, location, nature and
use of any of the Common Areas, convert Common Areas into leaseable areas,
construct additional parking facilities (including parking structures) in the
Common Areas, and increase or decrease Common Area land and/or facilities.
Tenant acknowledges that such activities may result in inconvenience to Tenant.
Such activities and changes are permitted if they do not materially affect
Tenant's use of the Property.
(b) USE OF COMMON AREAS. Tenant shall have the nonexclusive right
(in common with other tenants and all others to whom Landlord has granted or
may grant such rights) to use the Common Areas for the purposes intended,
subject to such reasonable rules and regulations as Landlord may establish from
time to time. Tenant shall abide by such rules and regulations and shall use
its best effort to cause others who use the Common Areas with Tenant's express
or implied permission to abide by Landlord's rules and regulations. At any
time, Landlord may close any Common Areas to perform any acts in the Common
Areas as, in Landlord's judgment, are desirable to improve the Project. Tenant
shall not interfere with the rights of Landlord, other tenants or any other
person entitled to use the Common Areas.
(c) SPECIFIC PROVISION RE: VEHICLE PARKING. Tenant shall be
entitled to use the number of vehicle parking spaces in the Project allocated
to Tenant in Section 1.11 of the Lease without paying any additional rent.
Tenant's parking shall not be reserved and shall be limited to vehicles no
larger than standard size automobiles or pickup utility vehicles. Tenant shall
not cause large trucks or other large vehicles to be parked within the Project
or on the adjacent public streets. Temporary parking of large delivery vehicles
in the Project may be permitted by the rules and regulations established by
Landlord. Vehicles shall be parked only in striped parking spaces and not in
driveways, loading areas or other locations not specifically designated for
parking. Handicapped spaces shall only be used by those legally permitted to
use them. If Tenant parks more vehicles in
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the parking area than the number set forth in Section 1.11 of this Lease, such
conduct shall be a material breach of this Lease in addition to Landlord's
other remedies under the Lease. Tenant shall pay a daily charge determined by
Landlord for each such additional vehicle.
(d) [ See Lease Rider.] MAINTENANCE OF COMMON AREAS. *Which increase
above the 1993 Base Year expenses for the Project.
(e) TENANT'S SHARE AND PAYMENT. Tenant shall pay Tenant's annual pro
rata share of all Common Area costs (prorated for any fractional month) upon
written notice from Landlord that such costs are due and payable, and in any
event prior to delinquency. Tenant's pro rata share shall be calculated by
dividing the square foot area of the Property, as set forth in Section 1.04 of
the Lease, by the aggregate square foot area of the Project which is leased or
held for lease by tenants, as of the date on which the computation is made. Any
changes in the Common Area costs and/or the aggregate area of the Project
leased or held for lease during the Lease Term shall be effective on the first
day of the month after such change occurs. Landlord may, at Landlord's
election, estimate in advance and charge to Tenant as Common Area costs, all
real property taxes for which Tenant is liable under Section 4.02 of the Lease,
all insurance premiums for which Tenant is liable under Section 4.04 of the
Lease, all maintenance and repair costs for which Tenant is liable under
Section 6.04 of the Lease, and all other Common Area costs payable by Tenant
hereunder. At Landlord's election, such statements of estimated Common Area
costs shall be delivered monthly, quarterly or at any other periodic intervals
to be designated by Landlord. Landlord may adjust such estimates at any time
based upon Landlord's experience and reasonable anticipation of costs. Such
adjustments shall be effective as of the next rent payment date after notice to
Tenant. Within sixty (60) days after the end of each calendar year of the Lease
Term, Landlord shall deliver to Tenant a statement prepared in accordance with
generally accepted accounting principles setting forth, in reasonable detail,
the Common Area costs paid or incurred by Landlord during the preceding
calendar year and Tenant's pro rata share. Upon receipt of such statement,
there shall be an adjustment between Landlord and Tenant, with payment to or
credit given by Landlord (as the case may be) so that Landlord shall receive
the entire amount of Tenant's share of such costs and expenses for such period.
Section 4.06. LATE CHARGES. Tenant's failure to pay rent promptly may
cause Landlord to incur unanticipated costs. The exact amount of such costs are
impractical or extremely difficult to ascertain. Such costs may include, but
are not limited to, processing and accounting charges and late charges which
may be imposed on Landlord by any ground lease, mortgage or trust deed
encumbering the Property. Therefore, if Landlord does not receive any rent
payment within ten (10) days after it becomes due. Tenant shall pay Landlord a
late charge equal to ten percent (10%) of the overdue amount. The parties agree
that such late charge represents a fair and reasonable estimate of the costs
Landlord will incur by reason of such late payment.
Section 4.07. INTEREST ON PAST DUE OBLIGATIONS. Any amount owed by
Tenant to Landlord which is not paid when due shall bear interest at the rate
of fifteen percent (15%) per annum from the due date of such amount. However,
interest shall not be payable on late charges to be paid by Tenant under this
Lease. The payment of interest on such amounts shall not excuse or cure any
default by Tenant under this Lease. If the interest rate specified in this
Lease is higher than the rate permitted by law, the interest rate is hereby
decreased to the maximum legal interest rate permitted by law.
ARTICLE FIVE: USE OF PROPERTY
Section 5.01. PERMITTED USES. Tenant may use the Property only for
the Permitted Uses set forth in Section 1.06 above.
Section 5.01. MANNER OF USE. Tenant shall not cause or permit the
Property to be used in any way which constitutes a violation of any law,
ordinance, or governmental regulation or order, which annoys or interferes with
the rights of tenants of the Project, or which constitutes a nuisance or
waste. Tenant shall obtain and pay for all permits, including a Certificate of
the Project, or which constitutes a nuisance or waste. Tenant shall obtain any
pay for all permits, including a Certificate of Occupancy, required for
Tenant's occupancy of the Property and shall promptly take all actions
necessary to comply with all applicable statutes, ordinances, rules,
regulations, orders and requirements regulating the use by Tenant of the
Property, including the Occupational Safety and Health Act.
Section 5.03. HAZARDOUS MATERIALS. As used in this Lease, the term
"Hazardous Material" means any flammable items, explosives, radioactive
materials, hazardous or toxic substances, material or waste or related
materials, including any substances defined as or included in the definition of
"hazardous substances", "hazardous wastes", "hazardous materials" or "toxic
substances" now or subsequently regulated under any applicable federal, state
or local laws or regulations, including without limitation petroleum-based
products, paints, solvents, lead, cyanide, DDT, printing inks, acids,
pesticides, ammonia
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See Lease Rider for revised text.
Section 5.04 SIGNS AND AUCTIONS. Tenant shall not place any signs on
the Property without Landlord's prior written consent. Tenant shall not conduct
or permit any auctions or sheriff's sales at the Property.
Section 5.05 INDEMNITY. Trust shall indemnify Landlord against and hold
Landlord harmless from any and all costs, claims or liability arising from: (a)
Tenant's use of the Property; (b) the conduct of Tenant's business or anything
else done or permitted by Tenant to be done in or about the Property, including
any contamination of the Property or any other property resulting from the
presence or use of Hazardous Material caused or permitted by Tenant; (c) any
breach or default in the performance of Tenant's obligations under this Lease;
(d) any misrepresentation or breach of warranty by Tenant under this Lease; or
(e) other acts or omissions of Tenant shall defend Landlord against any such
cost, claim or liability at Tenant's expense with counsel reasonably acceptable
to Landlord or, at Landlord's election. Tenant shall reimburse Landlord for any
legal fees or costs incurred by Landlord in connection with any such claim. As a
material part of the consideration to Landlord, Tenant assumes all risk of
damage to property or injury to persons in or about the Property arising from
any cause, and Tenant hereby waives all claims in respect thereof against
Landlord, except for any claim arising out of Landlord's gross negligence or
willful misconduct. As used in this Section, the term "Tenant" shall include
Tenant's employees, agents, contractors and invitees, if applicable.
Section 5.06 LANDLORD'S ACCESS. Landlord or its agents may enter the
Property with 24 hours advance notice excepting the last seven (7) months of the
Lease term when advance telephone notice will suffice to show the Property to
potential buyers, investors or tenants or other parties; to do any other act or
to inspect and conduct tests in order to monitor Tenant's compliance with all
applicable environmental laws and all laws governing the presence and use of
Hazardous Material; or for any other purpose Landlord deems necessary. Landlord
shall give Tenant prior notice of such entry, except in the case of an
emergency. Landlord may place customary "For Sale" or "For Lease" signs on the
Property.
Section 5.07 QUIET POSSESSION. If Tenant pays the rent and complies
with all other terms of this Lease, Tenant may occupy and enjoy the Property for
the full Lease Term, subject to the provisions of this Lease.
ARTICLE SIX: CONDITION OF PROPERTY; MAINTENANCE, REPAIRS AND ALTERATIONS
Section 6.01 EXISTING CONDITIONS. See Lease Rider
Section 6.02 EXEMPTION OF LANDLORD FROM LIABILITY. Landlord shall not
be liable for any damage or injury to the person, business (or any loss of
income therefrom), goods, wares, merchandise or other property of Tenant,
Tenant's employees, invitees, customers or any other person in or about the
Property, whether such damage or injury is caused by or results from: (a) fire,
steam, electricity, water, gas or rain; (b) the breakage, leakage, obstruction
or other defects of pipes, sprinklers, wires, appliances, plumbing, air
conditioning or lighting fixtures or any other cause; (c) conditions arising in
or about the Property or upon other portions of the Project, or from other
sources or places; or (d) any act or omission of any other tenant of the
Project. Landlord shall not be liable for any such damage or injury even though
the cause of or the means of repairing such damage or injury are not accessible
to Tenant. The provisions of this Section 6.02 shall not, however, exempt
Landlord from liability for Landlord's gross negligence or willful misconduct.
Section 6.03 LANDLORD'S OBLIGATIONS. Subject to the provisions of
Article Seven (Damage or Destruction) and Article Eight (Condemnation), and
except for damage caused by any act or omission of Tenant, or Tenant's
employees, agents, contractors or invitees, Landlord shall keep the foundation,
roof and structural portions of exterior walls of the improvements on the
Property and the Project plumbing and electrical systems in good order,
condition and repair. However, Landlord shall not be obligated to maintain or
repair windows, doors, plate glass or the surfaces of walls. Landlord shall not
be obligated to make any repairs under this Section 6.03 until a reasonable time
after receipt of a written notice from Tenant of the need for such repairs.
Tenant waives the benefit of any present or future law which might give Tenant
the right to repair the Property at Landlord's expense or to terminate the Lease
because of the condition of the Property.
Section 6.04 TENANT'S OBLIGATIONS.
(a) Except as provided in Section 6.03. Article Seven (Damage or
Destruction) and Article Eight (Condemnation), Tenant shall keep all portions of
the Property (including structural, nonstructural, interior, systems and
equipment) in good order, condition and repair (including interior repainting
and refinishing, as needed). If any portion of the Property or any system or
equipment in the Property which Tenant is obligated to repair cannot be fully
repaired or restored. Tenant shall promptly replace such portion of the Property
or system or equipment in the Property, regardless of whether the benefit of
such replacement extends beyond the Lease Term; but if the benefit or useful
life of such replacement extends beyond the Lease Term (as such term may be
extended by exercise of any options), the useful life of such replacement shall
be prorated over the remaining portion of the Lease Term (as extended), and
Tenant shall be liable only for that portion of the cost which is applicable to
the Lease Term (as extended). Tenant shall maintain a preventive maintenance
contract providing for the regular inspection and maintenance of the heating and
air conditioning system by a licensed heating and air conditioning contractor.
Landlord shall have the right, upon written notice to Tenant, to undertake the
responsibility for preventive maintenance of the heating and air conditioning
system at Tenant's expense. In addition, Tenant shall, at Tenant's expense,
repair any damage to the roof, foundation or structural portions of walls caused
by Tenant's acts or omissions. It is the intention of Landlord and Tenant that,
at all times during the Lease Term. Tenant shall maintain the Property in an
attractive, first-class and fully operative condition.
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*Provided Tenant maintains its HVAC maintenance contract and keeps the doors to
its Premises closed when said system is operational. Landlord shall repair or
replace any HVAC equipment needing such repair or replacement not covered by
such maintenance contract.
(b) Tenant shall fulfill all of Tenant's obligations under this Section 6.04
at Tenant's sole expense. If Tenant fails to maintain, repair or replace the
Property as required by this Section 6.04, Landlord may, upon ten (10) days'
prior notice to Tenant (except that no notice shall be required in the case of
an emergency), enter the Property and perform such maintenance or repair
(including replacement, as needed), on behalf of Tenant. In such case, Tenant
shall reimburse Landlord for all costs incurred in performing such maintenance
or repair immediately upon demand.*
Section 6.05. ALTERATIONS, ADDITIONS, AND IMPROVEMENTS.
(a) Tenant shall not make any alterations, additions, or improvements to the
Property without Landlord's prior written consent, except for non-structural
alterations which do not exceed Twenty-five Thousand Dollars ($25,000) in cost
cumulatively over the Lease Term and which are not visible from the outside of
any building of which the Property is part. Landlord may require Tenant to
provide demolition and/or lien and completion bonds in form and amount
satisfactory to Landlord. Tenant shall promptly remove any alterations,
additions, or improvements constructed in violation of this Paragraph 6.05(a)
upon Landlord's written request. All alterations, additions, and improvements
shall be done in a good and workmanlike manner, in conformity with all
applicable laws and regulations, and by a contractor approved by Landlord. Upon
completion of any such work, Tenant shall provide Landlord with "as built"
plans, copies of all construction contracts, and proof of payment for all labor
and materials. See Lease Rider.
(b) Tenant shall pay when due all claims for labor and material furnished to
the Property. Tenant shall give Landlord at least twenty (20) days prior
written notice of the commencement of any work on the Property, regardless of
whether Landlord's consent to such work is required. Landlord may elect to
record and post notices of non-responsibility on the Property.
Section 6.06. CONDITION UPON TERMINATION. Upon the termination of the Lease,
Tenant shall surrender the Property to Landlord, broom clean and in the same
condition as received except for ordinary wear and tear which Tenant was not
otherwise obligated to remedy under any provision of this Lease. However,
Tenant shall not be obligated to repair any damage which Landlord is required
to repair under Article Seven (Damage or Destruction). In addition, Landlord
may require Tenant to remove any alterations, additions or improvements
(whether or not made with Landlord's consent) prior to the expiration of the
Lease and to restore the Property to its prior condition, all at Tenant's
expense. All alterations, additions and improvements which Landlord has not
required Tenant to remove shall become Landlord's property and shall be
surrendered to Landlord upon the expiration or earlier termination of the
Lease, except that Tenant may remove any of Tenant's machinery or equipment
which can be removed without material damage to the Property. Tenant shall
repair, at Tenant's expense, any damage to the Property caused by the removal
of any such machinery or equipment, in no event, however, shall Tenant remove
any of the following materials or equipment (which shall be deemed Landlord's
property) without Landlord's prior written consent: any power wiring or power
panels; lighting or lighting fixtures; wall coverings; drapes, blinds ow other
window coverings; carpets or other floor coverings; heaters, air conditioners
or any other heating or air conditioning equipment; fencing or security gats;
or other similar building equipment and decorations. Tenant may, however,
subject to its obligation to repair damage caused by removal, remove those
items described on Exhibit C.
ARTICLE SEVEN: DAMAGE OR DESTRUCTION
Section 7.01. PARTIAL DAMAGE TO PROPERTY.
(a) Tenant shall notify Landlord in writing immediately upon the occurrence
of any damage to the Property. If the Property is only partially damaged (i.e.,
less than fifty percent (50%) of the Property is untenantable as a result of
such damage or less than fifty percent (50%) of Tenant's operations are
materially impaired) and if the proceeds received by Landlord from the
insurance policies described in Paragraph 4.04(b) are sufficient to pay for the
necessary repairs, this Lease shall remain in effect and Landlord shall repair
the damage as soon as reasonably possible. Landlord may elect (but is not
required) to repair any damage to Tenant's fixtures, equipment, or improvements.
(b) If the insurance proceeds received by Landlord are not sufficient to pay
the entire cost of repair, or if the cause of the damage is not covered by the
insurance policies which Landlord maintains under Paragraph 4.04(b), Landlord
may elect either to (i) repair the damage as soon as reasonably possible, in
which case this Lease shall remain in full force and effect, or (ii) terminate
this Lease as of the date the damage occurred. Landlord shall notify Tenant
within thirty (30) days after receipt of notice of the occurrence of the damage
whether Landlord elects to repair the damage or terminate the Lease. If
Landlord elects to repair the damage, Tenant shall pay Landlord the "deductible
amount" (if any) under the Landlord's insurance policies and, if the damage was
due to an act or omission of Tenant, or Tenant's employees, agents, contractors
or invitees, the difference between the actual cost of repair and any insurance
proceeds received by Landlord. If Landlord elects to terminate the Lease,
Tenant may elect to continue this Lease in full force and effect, in which case
Tenant shall repair any damage to the Property and any building in which the
Property is located, Tenant shall pay the cost of such repairs, except that
upon satisfactory completion of such repairs, Landlord shall deliver to Tenant
any insurance proceeds received by Landlord for the damage repaired by Tenant.
Tenant shall give Landlord written notice of such election within ten (10) days
after receiving Landlord's termination notice.
(c) If the damage to the Property occurs during the last six (6) months of
the Lease Term and such damage will require more than thirty (30) days to
repair, either Landlord or Tenant may elect to terminate this Lease as of the
date the damage occurred, regardless of the sufficiency of any insurance
proceeds. The party electing to terminate this Lease shall given written
notification to the other party of such election within thirty (30) days after
Tenant's notice to Landlord of the occurrence of the damage.
Section 7.02. SUBSTANTIAL OR TOTAL DESTRUCTION. If the Property is
substantially or totally destroyed by any cause whatsoever (i.e., the damage to
the Property is greater than partial damage described in Section 7.01), and
regardless of whether Landlord receives any insurance proceeds, this Lease
shall terminate as of the date the destruction occurred. Notwithstanding the
preceding sentence, if the Property can be rebuilt within six (6) months after
the date of destruction, Landlord may elect to rebuild the Property at
Landlord's own expense, in which case this Lease shall remain in full force and
effect. Landlord shall notify Tenant of such election within thirty (30) days
after Tenant's notice of the occurrence of total or substantial destruction. If
Landlord so elects, Landlord shall rebuild the Property at Landlord's sole
expense, except that if the destruction was caused by an act or omission of
Tenant, Tenant shall pay Landlord the difference between actual cost of
rebuilding and any insurance proceeds received by Landlord.
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Section 7.03. TEMPORARY REDUCTION OF RENT. If the Property is
destroyed or damaged and Landlord or Tenant repairs or restores the Property
pursuant to the provisions of this Article Seven, any rent payable during the
period of such damage, repair and/or restoration shall be reduced according to
the degree, if any, to which Tenant's use of the Property is impaired. However,
the reduction shall not exceed the sum of one year's payment of Base Rent,
insurance premiums and real property taxes. Except for such possible reduction
in Base Rent, insurance premiums and real property taxes, Tenant shall not be
entitled to any compensation, reduction, or reimbursement from Landlord as a
result of any damage, destruction, repair or restoration of or to the Property.
Section 7.04. WAIVER. Tenant waives the protection of any statute,
code or judicial decision which grants a tenant the right to terminate a lease
in the event of the substantial or total destruction of the leased property.
Tenant agrees that the provisions of Section 7.02 above shall govern the rights
and obligations of Landlord and Tenant in the event of any substantial or total
destruction to the Property.
ARTICLE EIGHT: CONDEMNATION
If all or any portion of the Property is taken under the power of
eminent domain or sold under the threat of that power (all of which are called
"Condemnation"), this Lease shall terminate as to the part taken or sold on the
date of the condemning authority takes title or possession, whichever occurs
first, if more than twenty percent (20%) of the floor area of the building in
which the Property is located, or which is located on the Property, is taken,
either Landlord or Tenant may terminate this Lease as of the date the
condemning authority takes title or possession, by delivering written notice to
the other within ten (10) days after receipt of written notice of such taking
(or in the absence of such notice, within ten (10) days after the condemning
authority takes title or possession). If neither Landlord nor Tenant terminates
this Lease, this Lease shall remain in effect as to the portion of the Property
not taken, except that the Base Rent and Additional Rent shall be reduced in
proportion to the reduction in the floor area of the Property. Any Condemnation
award or payment shall be distributed in the following order: (a) first, to any
ground lessor, mortgagee or beneficiary under a deed of trust encumbering the
Property, the amount of its interest in the Property; (b) second, to Tenant,
only the amount of any award specifically designated for loss of or damage to
Tenant's trade fixtures or removable personal property; and (c) third, to
Landlord, the remainder of such award, whether as compensation for reduction in
the value of the leasehold, the taking of the fee, or otherwise. If this Lease
is not terminated, Landlord shall repair any damage to the Property caused by
the Condemnation, except that Landlord shall not be obligated to repair any
damage for which Tenant has been reimbursed by the condemning authority. If the
severance damages received by Landlord are not sufficient to pay for such
repair, Landlord shall have the right to either terminate this lease or make
such repair at Landlord's expense.
ARTICLE NINE: ASSIGNMENT AND SUBLETTING
Section 9.01. LANDLORD'S CONSENT REQUIRED. No portion of the Property
or of Tenant's interest in this Lease may be acquired by any other person or
entity, whether by sale, assignment, mortgage, sublease, transfer, operation of
law, or act of Tenant, without Landlord's prior written consent, except as
provided in Section 9.02 below. Landlord has the right to grant or withhold its
consent as provided in Section 9.05 below. Any attempted transfer without
consent shall be void and shall constitute a non-curable breach of this Lease.
If Tenant is a partnership, any cumulative transfer of more than twenty percent
(20%) of the partnership interests shall require Landlord's consent.
Section 9.02. TENANT AFFILIATE. Tenant may assign this Lease or
sublease the Property, without Landlord's consent, to any corporation which
controls, is controlled by or is under common control with Tenant, or to any
corporation resulting from the merger of or consolidation with Tenant
("Tenant's Affiliate"). In such case, any Tenant's Affiliate shall assume in
writing all of Tenant's obligations under this Lease.
Section 9.03. NO RELEASE OF TENANT. No transfer permitted by this
Article Nine, whether with or without Landlord's consent, shall release Tenant
or change Tenant's primary liability to pay the rent and to perform all other
obligations of Tenant under this Lease. Landlord's acceptance of rent from any
other person is not a waiver of any provision of this Article Nine. Consent to
one transfer is not a consent to any subsequent transfer. If Tenant's transferee
defaults under this Lease, Landlord may proceed directly against Tenant without
pursuing remedies against the transferee. Landlord may consent to subsequent
assignments or modifications of this Lease by Tenant's transferee, without
notifying Tenant or obtaining its consent. Such action shall not relieve
Tenant's liability under this Lease.
Section 9.04. OFFER TO TERMINATE. If Tenant desires to assign the
Lease or sublease the Property, Tenant shall have the right to offer, in
writing, to terminate the Lease as of a date specified in the offer. If
Landlord elects in writing to accept the offer to terminate within twenty (20)
days after notice of the offer, the Lease shall terminate as of the date
specified and all the terms and provisions of the Lease governing termination
shall apply. If Landlord does not so elect, the Lease shall continue in affect
until otherwise terminated and the provisions of Section 9.05 with respect to
any proposed transfer shall continue to apply.
Section 9.05. LANDLORD'S CONSENT.
(a) Tenant's request for consent to any transfer described in Section
9.01 shall set forth in writing the details of the proposed transfer, including
the name, business and financial condition of the prospective transferee,
financial details of the proposed transfer (e.g., the term of and the rent and
security deposit payable under any proposed assignment or sublease), and any
other information Landlord deems relevant. Landlord shall have the right to
withhold consent, if reasonable, or to grant consent, based on the following
factors: (i) the business of the proposed assignee or subtenant and the
proposed use of the Property; (ii) the net worth and financial reputation of
the proposed assignee or subtenant; (iii) Tenant's compliance with all of its
obligations under the Lease; and (iv) such other factors as Landlord may
reasonably deem relevant. If Landlord objects to a proposed assignment solely
because of the net worth and/or financial reputation of the proposed assignee,
Tenant may nonetheless sublease (but not assign), all or a portion of the
Property to the proposed transferee, but only on the other terms of the
proposed transfer.
(b) If Tenant assigns or subleases, the following shall apply:
(i) Tenant shall pay to Landlord as Additional Rent under the Lease
the Landlord's Share (stated in Section 1.14) of the Profit (defined
below) on such transaction as and when received by Tenant, unless
Landlord gives written notice to Tenant and the assignee or subtenant
that Landlord's Share shall be paid by the assignee or subtenant to
Landlord directly.
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The Profit means (A) all amounts paid to Tenant for such assignment or
sublease including "key" money monthly rent in excess of the monthly
rent payable under the Lease, and all fees and other consideration paid
for the assignment or sublease, including fees under any collateral
agreements, less (B) costs and expenses directly incurred by Tenant in
connection with the execution and performance of such assignment or
sublease for real estate broker's commissions and costs of renovation or
construction of tenant improvements required under such assignment or
sublease. Tenant is entitled to recover such costs and expenses before
Tenant is obligated to pay the Landlord's Share to Landlord. The Profit
in the case of a sublease of less than all the Property is the rent
allocable to the subleased space as a percentage on a square footage
basis.
(ii) Tenant shall provide Landlord a written statement certifying all
amounts to be paid from any assignment or sublease of the Property
within thirty (30) days after the transaction documentation is signed,
and Landlord may inspect Tenant's books and records to verify the
accuracy of such statement. On written request, Tenant shall promptly
furnish to Landlord copies of all the transaction documentation, all of
which shall be certified by Tenant to be complete, true and correct.
Landlord's receipt of Landlord's Share shall not be a consent to any
further assignment or subletting. The breach of Tenant's obligation
under this Paragraph 9.05(b) shall be a material default of the Lease.
Section 9.06. NO MERGER. No merger shall result from Tenant's sublease
of the Property under this Article Nine. Tenant's surrender of this Lease or
the termination of this Lease in any other manner. In any such event, Landlord
may terminate any or all subtenancies or succeed to the interest of Tenant as
sublandlord under any or all subtenancies.
*
ARTICLE TEN: DEFAULTS, REMEDIES
Section 10.01. COVENANTS AND CONDITIONS. Tenant's performance of each
of Tenant's obligations under this Lease is a condition as well as a covenant.
Tenant's right to continue in possession of the Property is conditioned upon
such performance. Time is of the essence in the performance of all covenants
and conditions.
Section 10.02. DEFAULTS. Tenant shall be in material default under
this Lease:
(a) If Tenant abandons the Property or if Tenant's vacation of the
Property results in the cancellation of any insurance described in Section 4.04;
(b) If Tenant fails to pay rent within three (3) days of written
notice from Landlord or any other charge when due;
(c) If Tenant fails to perform any of Tenant's non-monetary
obligations under this Lease for a period of thirty (30) days after written
notice from Landlord; provided that if more than thirty (30) days are required
to complete such performance, Tenant shall not be in default if Tenant
commences such performance within the thirty (30)-day period and thereafter
diligently pursues its completion. However, Landlord shall not be required to
give such notice if Tenant's failure to perform constitutes a non-curable
breach of this Lease. The notice required by this Paragraph is intended to
satisfy any and all notice requirements imposed by law on Landlord and is not
in addition to any such requirement.
(d) (i) If Tenant makes a general assignment or general arrangement
for the benefit of creditors; (ii) if a petition for adjudication of bankruptcy
or for reorganization or rearrangement is filed by or against Tenant and is not
dismissed within thirty (30) days; (iii) if a trustee or receiver is appointed
to take possession of substantially all of Tenant's assets located at the
Property or of Tenant's interest in this Lease and possession is not restored
to Tenant within thirty (30) days or (iv) if substantially all of Tenant's
assets located at the Property or of Tenant's interest in this Lease is
subjected to attachment, execution or other judicial seizure which is not
discharged within thirty (30) days. If a court of competent jurisdiction
determines that any of the acts described in this subparagraph (d) is not a
default under this Lease, and a trustee is appointed to take possession (or if
Tenant remains a debtor in possession) and such trustee or Tenant transfers
Tenant's interest hereunder, then Landlord shall receive, as Additional Rent,
the excess, if any, of the rent (or any other consideration) paid in connection
with such assignment or sublease over the rent payable by Tenant under this
Lease.
(e) If any guarantor of the Lease revokes or otherwise terminates,
or purports to revoke or otherwise terminate, any guaranty of all or any
portion of Tenant's obligations under the Lease. Unless otherwise expressly
provided, no guaranty of the Lease is revocable.
Section 10.03. REMEDIES. On the occurrence of any material default by
Tenant, 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:
(a) Terminate Tenant's right to possession of the Property by any
lawful means, in which case this Lease shall terminate and Tenant shall
immediately surrender possession of the Property to Landlord. In such event,
Landlord shall be entitled to recover from Tenant all damages incurred by
Landlord by reason of Tenant's default, including (i) the worth at the time of
the award of the unpaid Base Rent, Additional Rent and other charges which
Landlord had earned at the time of the termination; (ii) the worth at the time
of the award of the amount by which the unpaid Base Rent, Additional Rent and
other charges which Landlord would have earned after termination until the time
of the award exceeds the amount of such rental loss that Tenant proves Landlord
could have reasonably avoided; (iii) the worth at the time of the award of the
amount by which the unpaid Base Rent, Additional Rent and other charges which
Tenant would have paid for the balance of the Lease Term after the time of
award exceeds the amount of such rental loss that Tenant proves Landlord could
have reasonably avoided; and (iv) any other amount necessary to compensate
Landlord for all the detriment proximately caused by Tenant's failure to
perform its obligations under the Lease or which in the ordinary course of
things would be likely to result therefrom, including, but not limited to, any
costs or expenses Landlord incurs in maintaining or preserving the Property
after such default, the cost of recovering possession of the Property, expenses
of reletting, including necessary renovation or alteration of the Property.
Landlord's reasonable attorneys' fees incurred in connection therewith, and
real estate commission paid or payable. As used in subparts (i) and (ii) above,
the "worth at the time of the award" is computed by allowing interest on unpaid
amounts at the rate of fifteen percent (15%) per annum, or such lesser amount
as may then be the maximum lawful rate. As used in subpart (iii) above, the
"worth at the time of the award" is computed by discounting such amount at the
discount rate of the Federal Reserve Bank of San Francisco at the time of the
award, plus one percent (1%). If Tenant has abandoned the Property, Landlord
hall have the option of (i) retaking possession of the Property and recovering
from Tenant the amount specified in this Paragraph 10.03(a), or (ii) proceeding
under Paragraph 10.03(b):
* Section 9.07. Landlord shall have the right to terminate this Lease as of
the proposed sublease date/assignment date rather than approve
sublease/assignment per the terms and conditions of this Lease. However, Tenant
shall be allowed to
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concurrently Sublease its space provided Tenant remains the
primary occupant of the Property.
<PAGE> 10
(b) Maintain Tenant's right to possession, in which case this Lease
shall continue in effect whether or not Tenant has abandoned the Property. In
such event, Landlord shall be entitled to enforce all of Landlord's rights and
remedies under this Lease, including the right to recover the rent as it
becomes due:
(c) Pursue any other remedy now or hereafter available to Landlord
under the laws of judicial decisions of the state in which the Property is
located.
Section 10.05. AUTOMATIC TERMINATION. Notwithstanding any other term or
provision hereof to the contrary, the Lease shall terminate on the occurrence
of any act which affirms the Landlord's intention to terminate the Lease as
provided in Section 10.03 hereof, including the filing of an unlawful detainer
action against Tenant. On such termination, Landlord's damages for default
shall include all costs and fees, including reasonable attorneys' fees that
Landlord incurs in connection with the filing, commencement, pursuing and/or
defending of any action in any bankruptcy court or other court with respect to
the Lease; the obtaining of relief from any stay in bankruptcy restraining any
action to evict Tenant; or the pursuing of any action with respect to
Landlord's right to possession of the Property. All such damages suffered
(apart from Base Rent and other rent payable hereunder) shall constitute
pecuniary damages which must be reimbursed to Landlord prior to assumption of
the Lease by Tenant or any successor to Tenant in any bankruptcy or other
proceeding.
Section 10.06. CUMULATIVE REMEDIES. Landlord's exercise of any right or
remedy shall not prevent it from exercising any other right or remedy.
ARTICLE ELEVEN: PROTECTION OF LENDERS
Section 11.01. SUBORDINATION. Landlord shall have the right to
subordinate this Lease to any ground lease, deed of trust or mortgage
encumbering the Property, any advances made on the security thereof and any
renewals, modifications, considerations, replacements or extensions thereof,
whenever made or recorded. Tenant shall cooperate with Landlord and any lender
which is acquiring a security interest in the Property or the Lease. Tenant
shall execute such further documents and assurances as such lender may require,
provided that Tenant's obligations under this Lease shall not be increased in
any material way (the performance of ministerial acts shall not be deemed
material), and Tenant shall not be deprived of its rights under this Lease.
Tenant's right to quiet possession of the Property during the Lease Term shall
not be disturbed if Tenant pays the rent and performs all of Tenant's
obligations under this Lease and is not otherwise in default. If any ground
lessor, beneficiary or mortgagee elects to have this Lease prior to the lien of
its ground Lease, deed of trust or mortgage and gives written notice thereof to
Tenant, this Lease shall be deemed prior to such ground Lease, deed of trust or
mortgage whether this Lease is dated prior or subsequent to the date of said
ground Lease, deed of trust or mortgage or the date of recording thereof.*
Section 11.02. ATTORNMENT. If Landlord's interest in the Property is
acquired by any ground lessor, beneficiary under a deed of trust, mortgagee, or
purchaser at a foreclosure sale, Tenant shall attorn to the transferee of or
successor to Landlord's interest in the Property and recognize such transferee
or successor as Landlord under this Lease. Tenant waives the protection of any
statute or rule of law which gives or purports to give Tenant any right to
terminate this Lease or surrender possession of the Property upon the transfer
of Landlord's interest.
Section 11.03. SIGNING OF DOCUMENTS. Tenant shall sign and deliver any
instrument or documents necessary or appropriate to evidence any such attornment
or subordination or agreement to do so. If Tenant fails to do so within ten (10)
days after written request, Tenant hereby makes, constitutes and irrevocably
appoints Landlord, or any transferee or successor of Landlord, the
attorney-in-fact of Tenant to execute and deliver any such instrument or
document.
Section 11.04. ESTOPPEL CERTIFICATES.
(a) Upon Landlord's written request, Tenant shall execute, acknowledge
and deliver to Landlord a written statement certifying: (i) that none of the
terms or provisions of this Lease have been changed (or if they have been
changed, stating how they have been changed; (ii) that this Lease has not been
cancelled or terminated; (iii) the last date of payment of the Base Rent and
other charges and the time period covered by such payment; (iv) that Landlord
is not in default under this Lease (or, if Landlord is claimed to be in
default, stating why); and (v) such other representations or information with
respect to Tenant or the Lease as Landlord may reasonably request or which any
prospective purchaser or encumbrancer of the Property may require. Tenant shall
deliver such statement to Landlord within ten (10) days after Landlord's
request. Landlord may give any such statement by Tenant to any prospective
purchaser or encumbrancer of the Property. Such purchaser or encumbrancer may
rely conclusively upon such statement as true and correct.
(b) If Tenant does not deliver such statement to Landlord within such
ten (10)-day period, Landlord, and any prospective purchaser or encumbrancer,
may conclusively presume and rely upon the following facts: (i) that the terms
and provisions of this Lease have not been changed except as otherwise
represented by Landlord; (ii) that his Lease has not been cancelled or
terminated except as otherwise represented by Landlord; (iii) that not more
than one month's Base Rent or other charges have been paid in advance; and (iv)
that Landlord is not in default under the Lease. In such event, Tenant shall be
estopped from denying the truth of such facts.
Section 11.05. TENANT'S FINANCIAL CONDITION. Within ten (10) days after
written request from Landlord, Tenant shall delivery to Landlord such financial
statements as Landlord reasonably requires to verify the net worth of Tenant or
any assignee, subtenant, or guarantor of Tenant. In addition, Tenant shall
deliver to any lender designated by Landlord any financial
--------------
* Landlord will use its best efforts to have the holders of the existing deed
of trust encumbering the Project execute a non-disturbance agreement with
respect to this Lease, in form reasonably acceptable to all parties.
1988 Southern California Chapter Initials
of the Society of Industrial [LOGO] ------------------------
and Office Realtors,! Inc.
------------------------
(Multi-Tenant Gross Form)
<PAGE> 11
statements required by such lender to facilitate the financing or refinancing
of the Property. Tenant represents and warrants to Landlord that each such
financial statement is a true and accurate statement as of the date of such
statement. All financial statements shall be confidential and shall be used
only for the purposes set forth in this Lease.
ARTICLE TWELVE: LEGAL COSTS
Section 12.01. LEGAL PROCEEDINGS. If Tenant or Landlord shall be in
breach or default under this Lease, such party (the "Defaulting Party") shall
reimburse the other party (the "Nondefaulting Party") upon demand for any costs
or expenses that the Nondefaulting Party incurs in connection with any breach
or default of the Defaulting Party under this Lease, whether or not suit is
commenced or judgment entered. Such costs shall include legal fees and costs
incurred for the negotiation of a settlement, enforcement of rights or
otherwise. Furthermore, if any action for breach of or to enforce the
provisions of this Lease is commenced, the court in such action shall award to
the party in whose favor a judgment is entered, a reasonable sum as attorneys'
fees and costs. The losing party in such action shall pay such attorneys' fees
and costs. Tenant shall also indemnify Landlord against and hold Landlord
harmless from all costs, expenses, demands and liability Landlord may incur if
Landlord becomes or is made a party to any claim or action (a) instituted by
Tenant against any third party, or by any third party against Tenant, or by or
against any person holding any interest under or using the Property by license
of or agreement with Tenant; (b) for foreclosure of any lien for labor or
material furnished to or for Tenant or such other person; (c) otherwise arising
out of or resulting from any act or transaction of Tenant or such other person;
or (d) necessary to protect Landlord's interest under this Lease in a
bankruptcy proceeding, or other proceeding under Title 11 of the United States
Code, as amended. Tenant shall defend Landlord against any such claim or action
at Tenant's expense with counsel reasonably acceptable to Landlord or, at
Landlord's election, Tenant shall reimburse Landlord for any legal fees or
costs Landlord incurs in any such claim or action.
Section 12.02 LANDLORD'S CONSENT. Tenant shall pay Landlord's
reasonable attorneys' fees not to exceed $500 incurred in connection with
Tenant's request for Landlord's consent under Article Nine (Assignment and
Subletting), or in connection with any other act which Tenant proposes to do
and which requires Landlord's consent.
ARTICLE THIRTEEN: MISCELLANEOUS PROVISIONS
Section 13.01. NON-DISCRIMINATION. Tenant promises, and it is a
condition to the continuance of this Lease, that there will be no
discrimination against, or segregation of, any person or group of persons on
the basis of race, color, sex, creed, national origin or ancestry in the
leasing, subleasing, transferring, occupancy, tenure or use of the Property or
any portion thereof.
Section 13.02. LANDLORD'S LIABILITY; CERTAIN DUTIES.
(a) As used in this Lease, the term "Landlord" means only the current
owner or owners of the fee title to the Property or Project or the leasehold
estate under a ground lease of the Property or Project at the time in question.
Each Landlord is obligated to perform the obligations of Landlord under this
Lease only during the time such Landlord owns such interest or title. Any
Landlord who transfers its title or interest is relieved of all liability with
respect to the obligations of Landlord under this Lease to be performed on or
after the date of transfer. However, each Landlord shall deliver to its
transferee all funds that Tenant previously paid if such funds have not yet
been applied under the terms of this Lease.
(b) Tenant shall give written notice of any failure by Landlord to
perform any of its obligations under this Lease to Landlord and to any ground
lessor, mortgagee or beneficiary under any deed of trust encumbering the
Property whose name and address have been furnished to Tenant in writing.
Landlord shall not be in default under this Lease unless Landlord (or such
ground lessor, mortgagee or beneficiary) fails to cure such non-performance
within thirty (30) days after receipt of Tenant's notice. However, if such
non-performance reasonably requires more than thirty (30) days to cure. Landlord
shall not be in default if such cure is commenced within such thirty (30)-day
period and thereafter diligently pursued to completion.
(c) Notwithstanding any term or provision herein to the contrary, the
liability of Landlord for the performance of its duties and obligations under
this Lease is limited to Landlord's interest in the Property and the Project,
and neither the Landlord nor its partners, shareholders, officers or other
principals shall have any personal liability under this Lease.
Section 13.03. SEVERABILITY. A determination by a court of competent
jurisdiction that any provision of this Lease or any part thereof is illegal
or unenforceable shall not cancel or invalidate the remainder of such provision
or this Lease, which shall remain in full force and effect.
Section 13.04. INTERPRETATION. The captions of the Articles or
Sections of this Lease are to assist the parties in reading this Lease and are
not a part of the terms or provisions of this Lease. Whenever required by the
context of this Lease, the singular shall include the plural and the plural
shall include the singular. The masculine, feminine and neuter genders shall
each include the other in any provision relating to the conduct, acts or
omissions of Tenant, the term "Tenant" shall include Tenant's agents,
employees, contractors, invitees, successors or others using the Property with
Tenant's expressed or implied permission.
Section 13.05. INCORPORATION OF PRIOR AGREEMENTS; MODIFICATIONS. This
Lease is the only agreement between the parties pertaining to the lease of the
Property and no other agreements are effective. All amendments to this Lease
shall be in writing and signed by all parties. Any other attempted amendment
shall be void.
Section 13.06. NOTICES. All notices required or permitted under this
Lease shall be in writing and shall be personally delivered or sent by
certified mail, return receipt requested, postage prepaid. Notices to Tenant
shall be delivered to the address specified in Section 1.03 above, except that
upon Tenant's taking possession of the Property, the Property shall be Tenant's
address for notice purposes. Notices to Landlord shall be delivered to the
address specified in Section 1.02 above. All notices shall be effective upon
delivery. Either party may change its notice address upon written notice to the
other party.
Section 13.07. WAIVERS. All waivers must be in writing and signed by
the waiving party. Landlord's failure to enforce any provision of this Lease or
its acceptance of rent shall not be a waiver and shall not prevent Landlord
from enforcing that provision or any other provision of this Lease in the
future. No statement on a payment check from Tenant or in a letter accompanying
a payment check shall be binding on Landlord. Landlord may, with or without
notice to Tenant, negotiate such check without being bound to the conditions of
such statement.
Section 13.08. NO RECORDATION. Tenant shall not record this Lease
without prior written consent from Landlord. However, either Landlord or Tenant
may require that a "Short Form" memorandum of this Lease executed by both
parties be recorded. The party requiring such recording shall pay all transfer
taxes and recording fees.
1988 Southern California Chapter Initials
of the Society of Industrial [LOGO] ------------------------
and Office Realtors,! Inc.
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11
(Multi-Tenant Gross Form)
<PAGE> 12
Section 13.09. BINDING EFFECT; CHOICE OF LAW. This Lease binds any
party who legally acquires any rights or interest in this Lease from Landlord
or Tenant. However, Landlord shall have no obligation to Tenant's successor
unless the rights or interests of Tenant's successor are acquired in accordance
with the terms of this Lease. The laws of the state in which the Property is
located shall govern this Lease.
Section 13.10. CORPORATE AUTHORITY; PARTNERSHIP AUTHORITY. If Tenant is
a corporation, each person signing this Lease on behalf of Tenant represents
and warrants that he has full authority to do so and that this Lease binds the
corporation. Within thirty (30) days after this Lease is signed, Tenant shall
deliver to Landlord a certified copy of a resolution of Tenant's Board of
Directors authorizing the execution of this Lease or other evidence of such
authority reasonably acceptable to Landlord. If Tenant is a partnership, each
person or entity signing this Lease for Tenant represents and warrants that he
or it is a general partner of the partnership, that he or it has full authority
to sign for the partnership and that this Lease binds the partnership and all
general partners of the partnership. Tenant shall give written notice to
Landlord of any general partner's withdrawal or addition. Within thirty (30)
days after this Lease is signed. Tenant shall deliver to Landlord a copy of
Tenant's recorded statement of partnership or certificate of limited
partnership.
Section 13.11. JOINT AND SEVERAL LIABILITY. All parties signing this
Lease as Tenant shall be jointly and severally liable for all obligations of
Tenant.
Section 13.12. FORCE MAJEURE. If Landlord cannot perform any of its
obligations due to events beyond Landlord's control, the time provided for
performing such obligations shall be extended by a period of time equal to the
duration of such events. Events beyond Landlord's control include, but are not
limited to, acts of God, war, civil commotion, labor disputes, strikes, fire,
flood or other casualty, shortages of labor or material, government regulation
or restriction and weather conditions.
Section 13.13 EXECUTION OF LEASE. This Lease may be executed in
counterparts and, when all counterpart documents are executed, the counterparts
shall constitute a single binding instrument. Landlord's delivery of this Lease
to Tenant shall not be deemed to be an offer to lease and shall not be binding
upon either party until executed and delivered by other parties.
Section 13.14. SURVIVAL. All representations and warranties of Landlord
and Tenant shall survive the termination of this Lease.
ARTICLE FOURTEEN: BROKERS
Section 14.01. BROKER'S FEE. Landlord shall pay a real estate
commission to Landlord's Broker named in Section 1.08 above, if any, as
provided in the written agreement between Landlord and Landlord's Broker, for
services rendered to Landlord by Landlord's Broker in this transaction. Such
commission shall be the amount set forth in Landlord's Broker's commission
schedule in effect as of the execution of this Lease. If a Tenant's Broker is
named in Section 1.08 above, Landlord's Broker shall pay fifty percent (50%) of
its commission to Tenant's Broker. Nothing contained in this Lease shall impose
any obligation on Landlord to pay a commission or fee to any party other than
Landlord's Broker. (1) as follows:*
Section 14.02. PROTECTION OF BROKERS. If Landlord sells the Property, or
assigns Landlord's interest in this Lease, the buyer or assignee shall, by
accepting such conveyance of the Property or assignment of the Lease, be
conclusively deemed to have agreed to make all payments to Landlord's Broker
thereafter required of Landlord under this Article Fourteen. Landlord's Broker
shall have the right to bring a legal action to enforce or declare rights under
this provision. The prevailing party in such action shall be entitled to
reasonable attorneys' fees to be paid by the losing party. Such attorneys' fees
shall be fixed by the court in such action. This Paragraph is included in this
Lease for the benefit of Landlord's Broker.
Section 14.03. BROKER'S DISCLOSURE OF AGENCY. Landlord's Broker hereby
discloses to Landlord and Tenant and Landlord and Tenant hereby consent to
Landlord's Broker acting in this transaction as the agent of (check one):
/ X / Landlord exclusively; or
/ / both Landlord and Tenant.
Section 14.04. NO OTHER BROKERS. Tenant represents and warrants to
Landlord that the brokers named in Section 1.08 above are the only agents,
brokers, finders or other parties with whom Tenant has dealt who are or may be
entitled to any commission or fee with respect of this Lease or the Property.
ADDITIONAL PROVISIONS MAY BE SET FORTH IN A RIDER OR RIDERS ATTACHED
HERETO OR IN THE BLANK SPACE BELOW. IF NO ADDITIONAL PROVISIONS ARE INSERTED,
PLEASE DRAW A LINE THROUGH THE SPACE BELOW.
* one-half (1/2) upon Lease signature and one-half (1/2) upon Tenant's
occupancy and payment of rent.
Initials [ILLEGIBLE]
----------------------
[ILLEGIBLE]
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1988 Southern California Chapter
of the Society of Industrial [LOGO]
and Office Realtors,(!) Inc.
12
(Multi-Tenant Gross Form)
<PAGE> 13
EXHIBIT "B"
ALQUIST-PRIOLO SPECIAL
EARTHQUAKE STUDIES ZONE ACT
This Addendum is attached as Exhibit "B" to the Lease Dated June 25, 1992 in
which Steritech Inc., a California Corporation is referred to as Tenant and
Shamrock Development Company is referred to as Landlord.
The property which is the subject of this Agreement is or may be situated in a
Special Study Zone as designated under the Alquist-Priolo Special Zone Act,
Sections 2621-2630, inclusive of the California Public Resources Code. No
representations on the subject are made by Landlord or By TRI Commercial Real
Estate Services or its agents or employees, and the Tenant should make his own
inquiry or investigation.
Landlord and Tenant have signed this Lease at the place and on the
dates specified adjacent to their signatures below and have initialed all
Riders which are attached to or incorporated by reference in this Lease.
"LANDLORD"
Signed on Oct. 9, 1992 Shamrock Development Company,
a California Corporation
at
----------------------------- By: /s/ Richard L. Rosenberry
---------------------------
Richard L. Rosenberry
Its: President
-------------------------
By:
--------------------------
Its:
-------------------------
"TENANT"
Signed on Oct. 9, 1992 Steritech, Inc.
a California Corporation
at Concord, CA
---------------------------- By: /s/ Stephen T. Isaacs
--------------------------
Stephen T. Isaacs
Its: President
-------------------------
By: /s/ Peter G. Carroll
--------------------------
Peter G. Carroll
Its: Secretary
-------------------------
IN ANY REAL ESTATE TRANSACTION, IT IS RECOMMENDED THAT YOU CONSULT WITH
A PROFESSIONAL, SUCH AS A CIVIL ENGINEER, INDUSTRIAL HYGIENIST OR OTHER PERSON
WITH EXPERIENCE IN EVALUATING THE CONDITION OF THE PROPERTY, INCLUDING THE
POSSIBLE PRESENCE OF ASBESTOS, HAZARDOUS MATERIALS AND UNDERGROUND STORAGE
TANKS.
THIS PRINTED FORM LEASE HAS BEEN DRAFTED BY LEGAL COUNSEL AT THE
DIRECTION OF THE SOUTHERN CALIFORNIA CHAPTER OF THE SOCIETY OF INDUSTRIAL AND
OFFICE REALTORS, INC. NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE
SOUTHERN CALIFORNIA CHAPTER OF THE SOCIETY OF INDUSTRIAL AND OFFICE REALTORS,
INC., ITS LEGAL COUNSEL, THE REAL ESTATE BROKERS NAMED HEREIN, OR THEIR
EMPLOYEES OR AGENTS, AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT OR TAX
CONSEQUENCES OF THIS LEASE OR OF THIS TRANSACTION. LANDLORD AND TENANT SHOULD
RETAIN LEGAL COUNSEL TO ADVISE THEM ON SUCH MATTERS AND SHOULD RELY UPON THE
ADVICE OF SUCH LEGAL COUNSEL.
1988 Southern California Chapter Initials
of the Society of Industrial [LOGO] ------------------------
and Office Realtors,! Inc.
------------------------
13
(Multi-Tenant Gross Form)
<PAGE> 14
LEASE RIDER
This Lease Rider is attached to and made a part of the Lease dated ___________,
1992 between Shamrock Development Company, a California Corporation (Landlord)
and Steritech, Inc., a California Corporation (Tenant).
The parties agree to the following additions to and modifications of the Lease:
NEW SECTION 1.16 TENANT IMPROVEMENTS. Tenant shall have improvements
constructed at the Property in accordance with this section.
(a) Tenant Improvement Allowance. Landlord shall make available to
Tenant for the payment of Tenant's costs for construction of tenant
improvements, demolition, permits and fees, and space planning/architectural
costs (collectively "Tenant Improvements") up to a maximum of $11.64 per
rentable square foot of the Property (i.e., a total of $106,310.00) (the
"Allowance"), which amount shall be used strictly for such purposes, and shall
be payable in the following progress payments:
25% when Tenant Improvements are 10% completed;
25% when Tenant Improvements are 25% completed;
25% when Tenant Improvements are 50% completed; and
25% when Tenant Improvements are 95% completed.
Percentage completion shall be reasonably determined by Tenant's architect. If
Landlord fails to pay (or cause to be paid, as provided in subparagraph (b),
below) any portion of the Allowance to Tenant as provided herein, Tenant shall
be entitled to offset any unpaid amounts against the rent and any other sums
due to Landlord under the Lease.
(b) Payments. When Tenant is entitled to each progress payment as
provided in subparagraph (a) above, Tenant shall submit to Landlord, and
Landlord shall thereupon immediately submit to Concord Commercial Bank, whose
office is located at Concord, California ("Agent"), invoices for costs incurred
in connection with the Tenant Improvements, with instructions to Agent
immediately to issue checks from its escrow account number 001201530 to the
entity or entities to whom payment is due, as shown on said invoices; provided,
however, that in no event shall the total value of such checks exceed the
amount of the progress payment to which Tenant is then entitled. In no event,
however, shall Tenant be entitled to payment for any invoices submitted to
Landlord after April 1, 1993. Agent's failure or inability to issue checks as
provided herein shall not relieve Landlord from its obligation to cause
payments up to the amount of the Allowance to be made to those entitled to
payment on account of the Tenant Improvements.
<PAGE> 15
(c) Development of Plans. Attached to this Lease as Exhibit A is a
preliminary space plan (the "Preliminary Space Plan"), which Landlord hereby
approves. Tenant shall cause to be prepared for Landlord's review plans,
specifications, and working drawings for the construction of the Tenant
Improvements (the "Final Plans"). Landlord shall approve the Final Plans so
long as they are a logical evolution of the Preliminary Space Plan. To the
extent that the Final Plans are not a logical evolution of the Preliminary
Space Plan, Landlord nevertheless shall not unreasonably withhold or delay its
approval of the Final Plans.
(d) Construction. Tenant shall give Landlord not less than five days'
written notice prior to commencement of construction of the Tenant Improvements
to enable Landlord to post notice of nonresponsibility. No construction shall
commence until Tenant has received all governmental permits necessary to permit
Tenant to legally commence the construction of the Tenant Improvements. Tenant
shall be responsible for monitoring and managing the construction of the Tenant
Improvements, and shall cause the same to be constructed with due diligence and
in compliance with all governmental regulations and the Final Plans (as the
same may be revised from time to time with the approval of Landlord, which
shall not be unreasonably withheld or delayed). Landlord shall have the right
to approve the general contractor(s) to be used by Tenant for the construction
of the Tenant Improvements. If Tenant selects the following general contractor,
Landlord will be deemed to have approved the same: RUDOLPH SLETTEN.
(e) Other Tenants. Tenant shall ensure that the construction of the
Tenant Improvements shall not prevent the access of other tenants of the
Project to their respective premises or the parking areas of the Project.
Tenant will also use reasonable efforts to ensure that its contractors avoid
creating undue noise and inconvenience to such other tenants during
construction of the Tenant Improvements. Landlord acknowledges and agrees,
however, that some noise and inconvenience is inevitable, and Tenant shall not
be liable therefor.
(f) Indemnification; Bonds; Proof of Payment. Tenant shall submit for
Landlord's approval evidence of the general contractor's liability and worker's
compensation insurance. Tenant shall maintain the liability insurance required
under Section 4.04(a) of the Lease from and after the date commencement of
construction begins. So long as the estimated total cost of construction of the
Tenant Improvements does not exceed $1,000,000, Tenant shall not be required to
furnish or cause its contractor(s) to furnish payment and completion bonds.
Except to the extent cause by negligence or willful misconduct of Landlord or
its agents, employees, or contractors, Tenant shall indemnify Landlord against
any and all claims made as a result of the construction of the Tenant
Improvements. Tenant shall also provide Landlord copies of proof of payment of
invoices (other than those to be paid through the Agent) on a monthly basis.
-2-
<PAGE> 16
(g) Term Commencement. The term of the Lease (and Tenant's obligation
to pay rent) shall commence on February 1, 1993, or upon Tenant's actually
moving into the Property and commencing operations, whichever occurs first.
Tenant shall be given full access to the Property immediately upon execution of
this Lease for all purposes reasonably related to the constructing the Tenant
Improvements.
(h) Landlord's Consents. Whenever Landlord's consent is required
pursuant to the provisions of this Section, Landlord shall not unreasonably
withhold or delay such consent. If Landlord fails to notify Tenant in writing
of its disapproval of any matter for which consent is requested within five
business days after Tenant's request therefor, Landlord will be deemed to have
granted its consent.
REVISED SECTION 4.05 (d) MAINTENANCE OF COMMON AREAS. Landlord shall maintain
the common areas in good order, condition and repair and shall operate the
project, in Landlord's sole discretion, as a first-class industrial/commercial
real property development. Tenant shall pay Tenant's pro rata share (as
determined below) of all of the following costs incurred by Landlord for the
operation and maintenance of the Common Areas which increase above the 1993
Base Year expenses for the Project: gardening and landscaping; utilities, water
and sewage charges; maintenance of signs (other than tenants' signs); premiums
for liability, property damage, fire and other types of casualty insurance
(excluding earthquake and flood insurance) on the Common Areas and worker's
compensation insurance; all property taxes and assessments levied on or
attributable to the Common Areas and all Common Area improvements; all personal
property taxes levied on or attributable to personal property used in
connection with the Common Areas; straight-line depreciation on personal
property owned by Landlord which is consumed in the operation or maintenance of
the Common Areas; rental or lease payments paid by Landlord for rented or
leased personal property used in the operation or maintenance of the Common
Areas; fees for required licenses and permits; repairing, resurfacing,
repaving, maintaining, painting, lighting, cleaning, refuse removal, security
and similar items; reserves for roof replacement and exterior painting and
other appropriate reserves; and a reasonable allowance to Landlord for
Landlord's supervision of the Common Areas (not to exceed five percent (5%) of
the gross rents of the Project for the calendar year). Landlord may cause any
or all of such services to be provided by third parties and the cost of such
services shall be included in Common Area costs. Notwithstanding any of the
foregoing Common Area costs shall not include depreciation of real property
which forms part of the Common Areas or expenses that would be considered
capital expenses under generally accepted accounting principles.
-3-
<PAGE> 17
REVISED MATERIAL 5.03 HAZARDOUS MATERIALS.
(a) Tenant shall at all times and in all respects comply with all
federal, state and local laws, ordinances and regulations, including, but not
limited to, the Federal Water Pollution Control Act (33 U.S.C. Section 1251, et
seq.), Resource Conservation & Recovery Act (42 U.S.C. Section 6901, et seq.),
Safe Drinking Water Act (42 U.S.C. Section 3000f, et seq.), Toxic Substances
Control Act (15 U.S.C. Section 2601, et seq.), the Clean Air Act (42 U.S.C.
Section 7401, et seq.), Comprehensive Environmental Response, Compensation and
Liability Act (42 U.S.C. Section 9601, et seq.), California Health & Safety
Code (Section 25100, et seq.; Section 39000, et seq.), California Safe Drinking
Water & Toxic Enforcement Act of 1986 (Health & Safety Code Section 25249.5, et
seq.), California Water Code (Section 13000, et seq.), and other comparable
state and federal laws ("Hazardous Material Laws"), relating to the use,
analysis, generation, manufacture, storage, disposal or transportation of any
Hazardous Material.
(b) Tenant shall, at its own expense, procure, maintain in effect and
comply with all conditions of any and all permits, licenses, and other
governmental and regulatory approvals required for Tenant's use of Hazardous
Material on the Property, including, without limitation, discharge of
(appropriately treated) materials or wastes into or through any sanitary sewer
serving the Property. Tenant shall cause any and all of its Hazardous Material
to be removed from the Property solely in compliance with all applicable
Hazardous Material Laws. Tenant shall in all respects handle, treat, deal with
and manage any and all Hazardous Material in, on, under or about the Property
in total conformity with all applicable Hazardous Material Laws and prudent
industry practices regarding management of such Hazardous Material. Upon
expiration or earlier termination of the term, Tenant shall cause all of its
Hazardous Material to be removed from the Property in accordance with and in
compliance with all applicable Hazardous Material Laws.
(c) Tenant shall indemnify, defend (by counsel reasonably acceptable to
Landlord), protect, and hold Landlord and each of Landlord's officers,
shareholders, employees, agents, attorneys, successors and assigns, free and
harmless from and against any and all claims, liabilities, penalties,
forfeitures, losses or expenses (including attorneys' fees) arising from or
caused in whole or in part, directly or indirectly, by (i) an Environmental
Activity by Tenant; or (ii) Tenant's failure to comply with any Hazardous
Material Law. Tenant's obligations under this Section shall include, without
limitation, and whether foreseeable or unforeseeable, all costs of any repair,
cleanup or detoxification or decontamination of the Property and the Project,
or the preparation and implementation of any closure, remedial action or other
plans in connection therewith that are required as a result of any
Environmental Activity by Tenant, and shall survive the expiration or earlier
termination of this Lease. Landlord shall indemnify, defend (by counsel
reasonably acceptable to Tenant),
-4-
<PAGE> 18
protect, and hold Tenant and each of Tenant's officers, shareholders,
employees, agents, attorneys, successors and assigns, free and harmless from and
against any and all liability, loss, suit, claim, action, cost and expense,
including, without limitation, any attorneys' fees, arising from the occurrence
of any Environmental Activity where such Environmental Activity was caused by
(i) Landlord, (ii) another tenant's conduct at the Project, or (iii) anyone's
conduct at the Project before the date of this Lease. The provisions of this
Section shall survive the termination of this Lease. "Environmental Activity"
means any actual, proposed or threatened storage, holding, existence, release,
emission, discharge, generation, processing, abatement, removal, disposition,
handling or transportation of any Hazardous Material from, into or on the
Property or any other activity or occurrence that causes or would cause any
such event to exist.
(d) It is expressly understood and agreed that to the extent that
neither Landlord nor Tenant has expressly agreed to indemnify the other
pursuant to this Section 5.03, the absence of any such indemnity shall not be
construed to be a waiver by either party of any claims, actions, rights or
remedies at law or in equity against the other party or any other person.
REVISED SECTION 6.01 EXISTING CONDITIONS. To the best of Landlord's knowledge,
as of the execution of the Lease, the Project is in compliance with all laws,
ordinances and governmental regulations and orders. Except as provided in this
Lease, Tenant acknowledges that neither Landlord nor any agent of Landlord has
made any representation as to the condition of the Property or its suitability
for Tenant's intended use. Tenant has inspected the Property and determined the
suitability of all utility services, the HVAC system, and fire safety and alarm
features for Tenant's intended use. Subject to Section 1.16, Tenant will be
considered to accept the Property in its condition as of the date possession is
given to Tenant.
ADDITION TO SECTION 6.05(a) ALTERATIONS, ADDITIONS, AND IMPROVEMENTS. Landlord
shall not unreasonably withhold consent to alterations, additions or
improvements proposed by Tenant and requiring Landlord's consent pursuant to
Section 6.05(a) of the Lease, unless such alterations, additions or
improvements are visible from outside the Property. In granting or withholding
consent, Landlord shall in all events be entitled to consider the impact of
Tenant's proposal on the value of the Project, the cost of restoration of the
Property when possession is recovered from Tenant, and the impact of Tenant's
proposal on other Project tenants, and Landlord may condition any approval on
Tenant's giving adequate assurance of full compliance with all terms of the
Lease and amelioration of any such adverse impacts.
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ADDITION TO SECTION 10.02 DEFAULTS.
(f) A release or discharge of Hazardous Material (as that term is
defined in Section 5.03) occurs at the Property in violation of Hazardous
Material Law as a result of Tenant's activities there, upon Landlord's written
notice to Tenant; provided that Tenant can cure such a default by promptly
commencing and completing the removal of, or taking other appropriate remedial
action with respect to, such release or discharge. The removal or remedial
action shall be conducted in accordance with all applicable laws and regulations
and in a manner which is reasonably acceptable to, and which is approved in
writing by, Landlord.
ARTICLE SIXTEEN: BASE YEARS FOR OTHER CHARGES. Notwithstanding Article Four:
(a) Real Property Taxes. The Base Real Property Taxes on the Property
shall be those assessed for the July 1, 1992 -- June 30, 1993 tax fiscal year,
subject to Tenant's liability for real property tax attributable to that
portion of the Tenant Improvements in excess of $106,310.00.
Example: The real property tax assessed against the Property for the July 1,
1992 -- June 30, 1993 tax fiscal year is $7,000. For the July 1, 1993 -- June
30, 1994 tax fiscal year, the real property tax assessed against the Property
is $12,140, of which $5,000 is attributable (according to the Contra Costa
County Assessor's worksheets) to Tenant Improvements amounting to $440,000.
Under Section 4.02(e) of the Lease, Tenant is responsible for $3,931.93 of the
1993-94 taxes ($140 + 333,690/440,000 x $5,000), and the Landlord is
responsible for the remainder, $8,208.07. The latter figure becomes the Base
Real Property Taxes, so that for future tax fiscal years during the Lease term,
Tenant will be responsible for real property taxes assessed against the
Property in excess of $8,208.07, subject to Tenant's protection against tax
increases resulting from a sale of the Project during the first three years of
the initial term. Landlord would have paid all of the 1992-93 assessment of
$7,000; however, if the Assessor made any supplemental assessment for 1992-93
attributable to the Tenant Improvements, the supplemental assessment would be
allocated between Landlord and Tenant according to the principles of Section
4.02(e).
(b) Insurance Premiums. The Base Premiums for Landlord's insurance
shall be those payable by Landlord for the July 1, 1992 -- June 30, 1993
policy year.
(c) Common Area Costs. Tenant shall be responsible for its pro rate
share of increases in Common Area costs over the amount of those costs for
1993. The Property's share of costs for management and water for 1993 shall be
adjusted as if 95% of the rentable square feet in the Project were leased for
the entire year, if the Project occupancy is less.
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(d) Renewal of Term. If Tenant exercises its option to renew pursuant
to Article Seventeen, then during the renewal term, Tenant's additional rent
under Article Four of the Lease will be calculated using real property taxes
assessed on the Property for the July 1, 1997 - June 30, 1998 tax fiscal year
as Base Real Property Taxes, insurance premiums for the July 1 1997 - June 30,
1998 policy year as Base Premiums, and 1998 Common Area costs. Tenant shall
remain responsible, however, for real property tax attributable to that portion
of the Tenant Improvements in excess of $106,310.00, in accordance with (a)
above.
ARTICLE SEVENTEEN: OPTION TO RENEW. Provided the Tenant is not in default of
any terms and conditions of this Lease either at the time the option is
exercised or as of the date of commencement of the renewal term, Landlord shall
grant to Tenant one (1) option to renew this Lease for an additional term of
five (5) years commencing on expiration of the initial term, and on all the
other terms and conditions contained herein, excepting the Base Rent. The new
Base Rent (Section 1.12) shall equal the number of rentable square feet of
space included in the Property (9,131) multiplied by the average rent per
square foot for building standard office space then being charged in the
Project, or if none, then the fair market rent per square foot for building
standard office space at Stanwell Industrial Park, Concord, California, as of
September 1, 1997. In determining such fair market rent, there shall be taken
into account the fact that the Lease is a gross lease with pass throughs of
increases in property taxes, insurance premiums, and Common Area costs, as
provided in Article Sixteen. Tenant shall give Landlord at least one hundred
eighty (180) days' advance written notice prior to the expiration of this Lease
if it intends to exercise this option to renew. This option shall be exclusive
to Tenant and may not be assigned or otherwise transferred, except pursuant to
an approved or otherwise permitted assignment or sublease under this Lease.
Landlord and Tenant shall have 30 days after Tenant notifies Landlord of the
exercise of its option to renew in which to agree to the new Base Rent. If the
parties cannot agree to the new Base Rent within such 30 day period, each party
shall appoint an Appraiser and shall give notice to the other party of the
identity of the Appraiser within 10 days after the expiration of said 30 day
period. For purposes hereof, "Appraiser" means a real estate broker or MAI
designated appraiser, in either case with not less than five years of full time
commercial appraisal or brokerage experience in the area in which the Project
is located and with no prior business dealings with the party appointing such
Appraiser. If either party fails to appoint an Appraiser, the sole Appraiser
appointed shall make the determination of fair market rent per square foot. If
two Appraisers are appointed, they shall immediately meet and attempt to agree
upon the fair market rent per square foot. If they are unable to do so within
15 days after their first meeting, they shall jointly appoint a third Appraiser
to make such determination, and the third Appraiser shall make such
determination within 10 days of
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his/her appointment. If the two Appraisers are unable to agree upon such third
Appraiser, either party may petition the Presiding Judge of the Superior Court
of Contra Costa County to appoint such third Appraiser. The determination of
fair market rent per square foot as provided in this Article shall be binding
upon the parties. In no event, however, shall the new Base Rent be less than
the Base Rent in effect at the time Tenant exercises its option to renew. The
new Base Rent shall be subject to adjustment for increases in the cost of
living (Section 3.02) as of the first day of the 25th, 37th and 49th months of
the renewal term, subject to the limitations and provisions of Section 1.12(a)
of the Lease.
ARTICLE EIGHTEEN: RIGHT TO TERMINATE. Tenant shall have a one time right to
terminate this Lease per the terms and conditions of this Lease effective
January 31, 1996 ("Early Termination Date"). To exercise this right to
terminate, Tenant shall give Landlord written notice of this election on or
before September 1, 1995.
In the event Tenant elects to terminate the Lease on the Early Termination
Date, Tenant shall additionally include with its notice to the Landlord a check
made payable to Landlord in the amount of Ninety-Eight Thousand Dollars
($98,000.00), which represents the remaining unamortized balance for Landlord's
share of Tenant Improvements, brokerage commissions and three months' rent.
ARTICLE NINETEEN: RESTORATION OF PROPERTY. Upon termination of the Lease
pursuant to Article Eighteen, Tenant shall, at Landlord's option, either vacate
the Property as provided in this Lease or shall pay the Landlord within 10 days
of request the sum of Forty-Five Thousand Six Hundred Fifty-Five ($45,655.00)
Dollars for Landlord's demolition of the Property. In any case Tenant shall be
entitled to remove and retain possession of any specialized laboratory
equipment installed in the Property, provided Tenant repairs any damage caused
by the removal.
ARTICLE TWENTY: PRE-TERMINATION ENVIRONMENT TESTING. Three months or more
before expiration of the Lease term, or before the Early Termination Date if
Tenant exercises its right to early termination pursuant to Article Eighteen,
Landlord shall have the right to conduct environmental tests at the Property.
The cost of such tests shall be borne equally by Landlord and Tenant, at a
total cost of not more than $6,000 unless Landlord elects to pay all of any
excess. Tenant at its sole expense shall remedy any Hazardous Material
contamination that may be discovered from such tests that Tenant is responsible
for. If Tenant fails to remedy contamination it is responsible for by the
expiration of the Lease term, Tenant shall be considered to have held over, and
the provisions of Section 2.04 of the Lease shall apply until all such
contamination has been remedied; and in addition Tenant shall be responsible
for any additional loss sustained by Landlord as a result of such
contamination, including diminution in value of the Project, additional costs
of investigation and cleanup, and claims from subsequent tenants for any delays
or other damage sustained by them.
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ARTICLE TWENTY-ONE: LEGAL COMPLIANCE. (a) Tenant expressly assumes the
responsibility of obtaining required governmental approvals for all aspects of
its anticipated use of the Property, including the storage, use and disposal of
Hazardous Material as disclosed in this Lease. Tenant waives application of the
doctrine of commercial frustration to its obligations under this Lease as
regards its anticipated use of the Property. Tenant will assume responsibility
for continuing compliance with all governmental laws and regulations which may
apply to its operations at the Property, including the cost of any preventative
or reparative actions now or in the future required by laws and orders
governing Tenant's use of the Property.
(b) Notwithstanding the foregoing, if Tenant is unable to obtain all
required governmental approvals by October 25, 1992, then Tenant may elect on
written notice to Landlord given on or before that date, and before
commencement of construction of Tenant Improvements, to cancel this Lease. In
the event of such cancellation, Landlord shall be entitled to retain the sum of
$19,176.00 paid by Tenant upon execution of this Lease as liquidated damages to
compensate Landlord for holding the Property off of the market and for all
other damages sustained by Landlord; however, Tenant shall have no further
obligations under this Lease.
In the event a conflict exists between the Lease and the Lease Rider the terms
and conditions of the Lease Rider shall prevail.
Dated as of the date of the Lease.
LANDLORD TENANT
SHAMROCK DEVELOPMENT COMPANY STERITECH, INC.
By /s/ Richard L. Rosenberry By /s/ Stephen T. Isaacs
-------------------------- -------------------------
RICHARD L. ROSENBERRY STEPHEN T. ISAACS
President President
By /s/ Peter G. Carroll
-------------------------
PETER G. CARROLL
Secretary
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FIRST AMENDMENT TO INDUSTRIAL REAL ESTATE LEASE
This Agreement is made between STANWELL DRIVE PROPERTIES, A CALIFORNIA
LIMITED PARTNERSHIP ("Landlord"), a California limited partnership, and
STERITECH, INC. ("Tenant"), a California corporation.
RECITALS
A. Landlord is the successor to Shamrock Development Co. as owner
and lessor of that certain office building in the City of Concord, Contra Costa
County, California, commonly known as Buchanan Oaks IV, located at 2525
Stanwell Drive ("the Project").
B. Tenant is a tenant of a portion of the Project under a lease
agreement entitled Industrial Real Estate Lease (Multi-Tenant Facility)
("Lease") dated October 1, 1992, entered into between Tenant and Landlord's
predecessor in ownership.
C. The parties wish to modify the provisions of the Lease to
embrace additional space within the Project and to modify other provisions of
the Lease as to the rent, the term, and other matters more particularly set
forth below.
AGREEMENT
IT IS THEREFORE AGREED BETWEEN THE PARTIES AS FOLLOWS:
1. AMENDMENT TO BASIC TERMS.
The following sections of Article One of the Lease are amended as
follows:
SECTION 1.04. PROPERTY: As of the date of execution of this Agreement,
the Property shall include:
(a) 2525 Stanwell Drive, Suite 300, Concord, California,
consisting of approximately 9,131 rentable square feet of office, laboratory
and warehouse space ("the Original Premises"); and
(b) 2525 Stanwell Drive, Suite 100, Concord, California, of
approximately 8,270 rentable square feet of office, laboratory and warehouse
space ("the Expansion Premises").
<PAGE> 24
SECTION 1.05. LEASE TERM: Subject to Paragraph 5(b) below, for the
Original Premises the Lease Term shall be six years five months, beginning on
February 1, 1993, and ending on June 30, 1999, and for the Expansion Premises,
the Lease Term shall be five years beginning on July 1, 1994, and ending on
June 30, 1999.
SECTION 1.11 VEHICLE PARKING SPACES ALLOCATED TO TENANT (SEE SECTION
4.05): Forty (40) non-exclusive on-site parking spaces and 32 non-exclusive
parking spaces in the exclusive parking easement across the street.
SECTION 1.12 RENT AND OTHER CHARGES PAYABLE BY TENANT:
(a) BASE RENT:
(1) The Base Rent for the Original Premises, payable
as provided in Section 3.01, shall be $9,922.00 per month for the period from
February 1, 1993, until January 31, 1995. This Base Rent shall be adjusted on
February 1, 1995, and on each February 1 thereafter during the Lease Term in
the manner provided in Section 3.02; however, the maximum increase at any
single Rental Adjustment Date shall be $992.20 (10% of the initial Base Rent).
In addition, the increase as of February 1, 1995, shall be further limited to
an amount equal to the sum of:
(i) The lesser of $446.10 or the amount of the
increase which would have applied under Section 3.02 as of February 1, 1994,
if that date were a Rental Adjustment Date; and
(ii) The lesser of $446.10 or the amount of
the increase which would have applied under Section 3.02 of February 1, 1995,
if February 1, 1994, were a Rental Adjustment Date.
(2) The Base Rent for the Expansion Premises, payable
on July 1, 1994, and on the first day of each month thereafter and otherwise in
accordance with the terms of Section 3.01, shall be $8,683.50 per month for the
period from July 1, 1994, until June 30, 1996. This Base Rent shall be adjusted
on July 1, 1996, and on each July 1 thereafter during the Lease Term in the
manner provided in Section 3.02; however, the maximum increase at any single
Rental Adjustment Date shall be $868.35 (10% of the initial Base Rent). In
addition, the increase as of July 1, 1996, shall be further limited to an
amount equal to the sum of:
(i) The lesser of $434.17 or the amount of the
increase which would have applied under Section 3.02 as of July 1, 1995, if
that date were a Rental Adjustment Date; and
(ii) The lesser of $434.18 or the amount of the
increase which would have applied under Section 3.02 as of July 1, 1996, if
July 1, 1995, were a Rental Adjustment Date.
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<PAGE> 25
(3) If the Lease Term is extended by reason of Tenant's
exercise of its option under Paragraph 5 below, the Base Rent for both the
Original Premises and the Expansion Premises shall continue to be adjusted as
set forth above on the same basis.
(b) OTHER PERIODIC PAYMENTS: Pursuant to Section 4.05(e) of the Lease,
Tenant will be responsible for 34.3% of Common Area expense increases over the
1993 base year for the Original Premises, and 31.1% of the Common Area expense
increases above the 1994 base year for the Expansion Premises.
SECTION 1.14. LANDLORD'S SHARE OF PROFIT ON ASSIGNMENT OR SUBLEASE:
The Landlord's Share shall be increased from 30% to 50% of the Profit.
2. INCREASE IN SECURITY DEPOSIT.
Effective on execution of this instrument, the Security Deposit
required of Tenant under the Lease shall be $12,000, and Tenant shall at that
time pay to Landlord the sum of $2,078 in order to increase the Security
Deposit to the sum of $12,000. The provisions of Section 3.03(b) of the Lease
shall not apply.
3. TENANT IMPROVEMENTS.
Landlord shall make available to Tenant for the payment of Tenant's
costs for construction of Tenant improvements, demolition, permits and fees,
and space planning/architectural costs (collectively "Tenant Improvements") to
the Expansion Premises up to a maximum of $10 per rentable square foot (i.e., a
total of $82,700) ("the Allowance") which amount shall be used strictly for
such purposes. The schedule and other terms of payment to be made by Landlord
for these Tenant Improvements shall be in accordance with the following
provisions:
(a) Schedule. The Allowance is payable in the following
progress payments:
25% when Tenant Improvements are 10% completed;
25% when Tenant Improvements are 25% completed;
25% when Tenant Improvements are 50% completed; and
25% when Tenant Improvements are 95% completed.
Percentage completion shall be reasonably determined by Tenant's architect. If
Landlord fails to pay any portion of the Allowance to Tenant as provided
herein, Tenant shall be entitled to offset any unpaid amounts against the rent
and any other sums due to Landlord under the Lease.
(b) Payments. When Tenant is entitled to each progress payment
as provided in subparagraph (a) above, Tenant shall submit to Landlord invoices
for
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<PAGE> 26
costs incurred in connection with the Tenant Improvements; provided, however,
that in no event shall the amount then payable to Tenant exceed the amount of
the progress payment to which Tenant is then entitled.
(c) Development of Plans. Attached to this Agreement as Exhibit 1 is a
preliminary space plan (the "Preliminary Space Plan"), which Landlord hereby
approves. Tenant shall cause to be prepared for Landlord's review plans,
specifications, and working drawings for the construction of the Tenant
Improvements (the "Final Plans"). Landlord shall approve the Final Plans so
long as they are a logical evolution of the Preliminary Space Plan. To the
extent that the Final Plans are not a logical evolution of the Preliminary
Space Plan, Landlord nevertheless shall not unreasonably withhold or delay its
approval of the Final Plans.
(d) Construction. Tenant shall give Landlord not less than five days'
written notice prior to commencement of construction of the Tenant Improvements
to enable Landlord to post notice of nonresponsibility. No construction shall
commence until Tenant has received all governmental permits necessary to permit
Tenant to legally commence the construction of the Tenant Improvements. Tenant
shall be responsible for monitoring and managing the construction of the Tenant
Improvements, and shall cause the same to be constructed with due diligence and
in compliance with all governmental regulations and the Final Plans (as the
same may be revised from time to time with the approval of Landlord, which
shall not be unreasonably withheld or delayed). Landlord shall have the right
to approve the general contractor(s) to be used by Tenant for the construction
of the Tenant Improvements. If Tenant selects the following general contractor,
Landlord will be deemed to have approved the same: WESTFOUR CONSTRUCTION.
(e) Other Tenants. Tenant shall ensure that the construction of the
Tenant Improvements shall not prevent the access of other tenants of the
Project to their respective premises or the parking areas of the Project.
Tenant will also use reasonable efforts to ensure that its contractors avoid
creating undue noise and inconvenience to such other tenants during
construction of the Tenant Improvements. Landlord acknowledges and agrees,
however, that some noise and inconvenience is inevitable, and Tenant shall not
be liable therefor.
(f) Indemnification; Bonds; Proof of Payment. Tenant shall submit for
Landlord's approval evidence of the general contractor's liability and worker's
compensation insurance. Tenant shall maintain the liability insurance required
under Section 4.04(a) of the Lease from and after the date commencement of
construction begins. So long as the estimated total cost of construction of the
Tenant Improvements does not exceed $1,000,000, Tenant shall not be required to
furnish or cause its contractor(s) to furnish payment and completion bonds.
Except to the extent caused by negligence or willful misconduct of Landlord
or its agents, employees, or contractors, Tenant shall indemnify Landlord
against any and all claims made as a result of the
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<PAGE> 27
construction of the Tenant Improvements. Tenant shall also provide Landlord
copies of proof of payment of invoices on a monthly basis.
(g) Term Commencement. As to the Expansion Space, the Lease Term (and
Tenant's obligation to pay rent) shall commence on July 1, 1994, or upon
Tenant's actually moving into the Expansion Premises and commencing operations,
whichever occurs first. Tenant shall be given full access to the Expansion
Premises immediately upon execution of this Agreement for all purposes
reasonably related to the constructing the Tenant Improvements.
(h) Landlord's Consents. Whenever Landlord's consent is required
pursuant to the provisions of this Paragraph 3, Landlord shall not unreasonably
withhold or delay such consent. If Landlord fails to notify Tenant in writing
of its disapproval of any matter for which consent is requested within five
business days after Tenant's request therefor, Landlord will be deemed to have
granted its consent.
4. EARLY TERMINATION.
Articles Eighteen and Nineteen of the Lease Rider to the Lease are
hereby revoked and deleted.
5. FUTURE EXPANSION OPTION.
Landlord hereby grants to Tenant the option to lease approximately
9,205 rentable square feet ("Additional Space") within the Project known as
2525 Stanwell Drive, Suite 200, presently occupied by Spine and Sports Medicine
Institute of Northern California, Inc. ("SSMI") under a lease dated February 6,
1992, subject to the terms and conditions of this paragraph. Tenant may notify
Landlord of its election to exercise the option at any time before December 31,
1995, accompanied by payment in the sum of $265,000 payable to Landlord in
order to pay the costs of relocating SSMI or its successor occupying the
Additional Space. Notwithstanding any other provision of the Lease, the failure
of Landlord to receive both Tenant's notice of exercise of the option plus the
required payment on or before December 31, 1995, shall result in the automatic
termination of Tenant's option rights to the Additional Space. If Tenant does
effectively exercise the option:
(a) Landlord shall immediately take steps to terminate any lease then
in effect for the Additional Space, and will use its best efforts to deliver
possession of the Additional Space within 180 days after Tenant's exercise of
the option. In all events Landlord shall deliver possession of the Additional
Space to Tenant within 270 days after Tenant's exercise of the option. Without
limiting Tenant's other remedies, including without limitation the right to
damages and specific performance, if Landlord fails to deliver possession of
the Additional Space to Tenant within 270 days after Tenant's exercise of the
option, Tenant shall have the right to withdraw its exercise of
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<PAGE> 28
the option at any time before possession is actually tendered to Tenant, by
giving notice of its election to Landlord. Upon receipt of such notice,
Landlord shall refund to Tenant the amount of the payment which accompanied
Tenant's exercise of the option, with interest at the rate then payable by
Concord Commercial Bank on six month certificates of deposit in excess of
$250,000. If Landlord fails to so refund to Tenant within 10 days of receipt of
notice, the amount due Tenant shall thereafter accrue interest at the rate of
15% per annum, or the maximum legal rate, whichever is less, until paid, and
Tenant shall have the right to deduct said amount from rent or any other sums
due Landlord under the Lease.
(b) The Lease Term as to the Additional Space and payment of Base Rent
for the Additional Space shall commence on delivery of possession of that space
to Tenant. Landlord shall give Tenant at least 90 days' advance notice of the
date as of which the Additional Space shall be available, and Tenant shall not
be obligated to take possession before expiration of that notice period. The
Base Rent for the Additional Space shall equal the number of rentable square
feet multiplied by 96.63374% of the Base Rent per rentable square foot of the
Original Premises, as then in effect and as subsequently modified in accordance
with the terms of the Lease, as amended. If the Lease Term for the Additional
Space commences on a date other than the first day of a month, the Base Rent
for that partial month shall be prorated, and thereafter Base Rent for the
Additional Space shall be payable on the first day of each month thereafter.
The entire Lease Term shall be extended from June 30, 1999, until June 30,
2002. In calculating the Additional Rent payable by Tenant with respect to the
Additional Space under Article Four of the Lease, the Base Real Property Taxes
on the Additional Space shall be those assessed for the July 1, 1992-June 30,
1993 tax fiscal year, the Base Premiums for Landlord's Insurance shall be those
payable by Landlord for the July 1, 1992-June 30, 1993 policy year, and
Tenant's share of increases in Common Area costs shall be calculated on the
basis of the amount of those costs for calendar year 1993, the same as for the
Original Premises, with Tenant's initial pro rata share of Common Area expenses
attributable to the Additional Space equal to 34.6%.
(c) Prior to December 31, 1995, Tenant may on at least 72 hours
advance notice to Landlord arrange for an inspection of the Additional Space,
accompanied by Landlord's representative. In exercising the option, Tenant will
be considered to have inspected the Additional Space and determined the
suitability of all utility services, the HVAC system, and fire safety and alarm
features for Tenant's intended use and to have accepted the Additional Space in
its condition as of the date of the exercise of its option. Landlord shall be
required only to tender possession of the Additional Space to Tenant in
essentially the same condition as when Tenant exercised the option, and shall
not be obligated to pay for any tenant improvements to that space. Upon
receiving possession of the Additional Space, Tenant shall immediately pay to
Landlord the unamortized portion of the original brokerage costs for SSMI
determined from the table attached as Exhibit 2 (calculated on the basis of
$43,000, the amount of the leasing commission, amortized monthly at 9.5%
interest over ten years from July 1, 1992).
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<PAGE> 29
(d) Tenant shall have improvements constructed at the Additional
Space in accordance with this section. Tenant shall cause to be prepared for
Landlord's review a preliminary space plan (the "Preliminary Space Plan") for
the construction of the Tenant Improvements of a similar nature to improvements
made by Tenant in the Original Premises and the Expansion Premises. Landlord
shall not unreasonably withhold or delay its approval of the Preliminary Space
Plan. Tenant shall then cause to be prepared for Landlord's review plans,
specifications and working drawings for the construction of the Tenant
Improvements (the "Final Plans"). Landlord shall approve the Final Plans so long
as they are a logical evolution of the Preliminary Space Plan. To the extent
that the Final Plans are not a logical evolution of the Preliminary Space Plan,
Landlord nevertheless shall not unreasonably withhold or delay its approval of
the Final Plans. The terms of this Agreement relating to Tenant Improvements
shall apply as stated in Paragraph 3 (d), (e), (f) and (h).
(e) At the time possession of the Additional Space is given to
Tenant, the parties agree to execute an amendment to the Lease confirming the
commencement date for the Lease Term as to the Additional Space. Except as
otherwise provided above, all the remaining terms of the Lease as amended shall
apply to the Additional Space.
6. LANDLORD'S RIGHT TO TERMINATE.
The parties hereby revoke and delete Section 9.07 of the Lease.
7. AMENDMENT TO EXHIBIT C.
Exhibit C to the Lease (referenced in Section 6.06 of the Lease)
is modified to delete the following from the list of Tenant's removable
property: specialized lab casework (including wall-mounted cases). The parties
intend and agree that by deleting this item from Exhibit C, it will become
Landlord's property upon termination of the Lease. The parties further agree
that Landlord's said right to require Tenant to remove any alterations,
additions or improvements pursuant to Section 6.06 of the Lease will in any
event not apply with respect to alterations, additions or improvements made by
Tenant to (i) the Original Premises pursuant to Section 1.16 of the Lease Rider
to the Lease, (ii) the Expansion Premises pursuant to Paragraph 3 of this
Agreement, or (iii) the Additional Space pursuant to Paragraph 5 of this
Agreement, except for those items listed in Exhibit C as amended by this
Agreement. If Tenant exercises its option to renew granted in Paragraph 8(a) of
this Agreement, Exhibit C to the Lease shall be modified to delete the following
additional equipment: fume hoods; water system; and non-portable bio safety
cabinets. The parties intend and agree that by deleting those items from Exhibit
C, they will become Landlord's property upon termination of the Lease.
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<PAGE> 30
8. OPTIONS TO RENEW.
Article Seventeen of the Lease Rider to the Lease is amended to read as
follows:
(a) Provided Tenant is not in default of any terms and
conditions of the Lease either at the time the option is exercised or as
of the date of commencement of the renewal term, Landlord grants to
Tenant an option to renew the Lease for an additional term of five (5)
years commencing on expiration of the initial term, as amended, and on
all the other terms and conditions contained in the Lease as amended,
excepting the Base Rent. The new Base Rent (Section 1.12) shall equal
the number of rentable square feet of space included in the Property
then under the Lease multiplied by the fair market rent per square foot
for building standard office space at Stanwell Industrial Park, Concord,
California, as of the date four months prior to expiration of the
initial term, as amended. In determining such fair market rent, there
shall be taken into account the fact that the Lease is a gross lease
with pass-throughs of increases in property taxes, insurance premiums,
and Common Area costs, as provided in Article Sixteen of the Lease
Rider, as well as periodic cost of living increases as provided in
Sections 1.12 and 3.02 of the Lease.
(b) Provided Tenant has exercised the option granted under (a)
above, and is not in default of any terms and conditions of the Lease
either at the time the second option is exercised or as of the date of
commencement of the second renewal term, Landlord grants to Tenant a
second option to renew the Lease for an additional term of five years
commencing on expiration of the first renewal term, and on all the other
terms and conditions contained in the Lease as amended, excepting the
Base Rent. The new Base Rent (Section 1.12) initially shall equal the
number of rentable square feet of space included in the Property then
under the Lease multiplied by the fair market rent per square foot for
building standard office space at Stanwell Industrial Park, Concord,
California, as of the date four months prior to expiration of the first
renewal term; and then as of the beginning of the 31st month of the
second renewal term, the Base Rent shall be recalculated to equal the
number of rentable square feet of space included in the Property then
under the Lease multiplied by the average of (i) the fair market rent
per square foot for building standard office space at Stanwell
Industrial Park, Concord California, as of the date four months prior to
the commencement of the 31st month of the second extension term, and
(ii) the fair market rent per square foot for fully improved biotech
laboratory space in buildings with spaces of comparable amenities, age
and size in Alameda and Contra Costa Counties as of the same date. In
determining
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<PAGE> 31
such fair market rent, there shall be taken into account the location of the
Project in the City of Concord, California, and the fact that the Lease is a
gross lease with pass-throughs of increases in property taxes, insurance
premiums, and Common Area costs, as provided in Article Sixteen of the Lease
Rider, as well as periodic cost of living increases as provided in Sections
1.12 and 3.02 of the Lease.
(c) Tenant shall give Landlord at least one hundred eighty (180)
days' advance written notice prior to the expiration of the then current term
of the Lease if it intends to exercise an option to renew. All options shall be
exclusive to Tenant and may not be assigned or otherwise transferred, except
pursuant to an approved or otherwise permitted assignment or sublease under the
Lease.
(d) Landlord and Tenant shall have until the date four months
before new Base Rent is to become effective under this Article to agree to the
new Base Rent. If the parties cannot agree to the new Base Rent by that date,
each party shall appoint an Appraiser and shall give notice to the other party
of the identity of the Appraiser within 10 days after that date. For purposes
hereof, "Appraiser" means a real estate broker or MAI designated appraiser, in
either case with not less than five years of full time commercial appraisal or
brokerage experience in the area in which the Project is located and with no
prior business dealings with the party appointing such Appraiser. If either
party fails to appoint an Appraiser, the sole Appraiser appointed shall make
the determination(s) of fair market rent per square foot. If two Appraisers are
appointed, they shall immediately meet and attempt to agree upon the
determination(s) of fair market rent per square foot. If they are unable to do
so within 15 days after their first meeting, they shall jointly appoint a third
Appraiser to make such determination(s), and the third Appraiser shall make
such determination(s) within 10 days of appointment. If the two Appraisers are
unable to agree upon such third Appraiser, either party may petition the
presiding judge of the Superior Court of Contra Costa County to appoint such
third Appraiser. The determination(s) of fair market rent per square foot as
provided in this Article shall be binding upon the parties. In no event,
however, shall the new Base Rent be less than the Base Rent in effect at the
time Tenant exercises an option to renew.
(e) During each renewal term the new Base Rent shall be subject to
annual adjustment each July 1 (the Rental Adjustment Date) for increases in the
cost of living (Section 3.02); provided that during each such term the maximum
increase at any single Rental Adjustment Date shall be 10% of the new Base Rent
in effect at commencement of that term.
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<PAGE> 32
9. BASE YEAR DETERMINATIONS.
Subparagraph (d) of Article Sixteen of the Lease Rider to the Lease is
amended to read as follows:
(d) Renewal of Term. If tenant exercises either of its options
to renew pursuant to Article Seventeen as amended, then during each
renewal term, Tenant's additional rent under Article Four of the Lease
will be calculated using real property taxes assessed on the Property
for the first tax fiscal year commencing after the expiring term as Base
Real Property Taxes, insurance premiums for the first policy year
commencing after the expiring term as Base Premiums, and Common Area
Costs for the calendar year in which the renewal term commences. Tenant
shall remain responsible, however, for real property taxes attributable
to that portion of the Tenant Improvements to the Original Premises in
excess of $106,310, in accordance with (a) of this Article, that portion
of the Tenant Improvements to the Expansion Premises in excess of
$82,700, and that portion of the Tenant Improvements installed by Tenant
in the Additional Space, on the same principle.
10. PARKING.
Section 4.05 (c) of the Lease is amended to read as follows:
(c) SPECIFIC PROVISION RE: VEHICLE PARKING. Tenant shall be
entitled to use the number of vehicle parking spaces in the Project
allocated to Tenant in Section 1.11 of the Lease without paying any
additional rent. Tenant's parking shall not be reserved and shall be
limited to vehicles no larger than standard size automobiles or pickup
utility vehicles. Tenant shall not cause large trucks or other large
vehicles to be parked within the Project or on the adjacent public
streets. Temporary parking of large delivery vehicles in the Project may
be permitted by the rules and regulations established by Landlord and in
areas specified by Landlord. Vehicles shall be parked only in striped
parking spaces and not in driveways, loading areas or other locations
not specifically designed for parking. Handicapped spaces shall only be
used by those legally permitted to use them. If Tenant parks more
vehicles in the parking area than the number set forth in Section 1.11
of this Lease, Tenant shall at Landlord's option, immediately remove the
additional vehicles upon notice from Landlord or pay a reasonable daily
charge determined by Landlord for each such additional vehicle.
11. PROPERTY TAXES.
Notwithstanding any provisions of the Lease, as amended, to the
contrary, in no event will Tenant be responsible for paying an increase in real
property taxes
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<PAGE> 33
pursuant to Section 4.02 of the Lease attributable to any tenant improvement
constructed by or on behalf of anyone other than Tenant after May 1, 1994.
12. ENCUMBRANCE OF TENANT'S EQUIPMENT.
Landlord shall execute and deliver such documents as may reasonably be
requested by Tenant's lender or chattel lessor in order to assure the
enforceability of perfected security interests in equipment used by Tenant on
the Property. As a condition to the foregoing obligation, Tenant shall provide
Landlord with a complete copy of the loan or chattel lease documentation, which
shall expressly provide for notice to Landlord of any default by Tenant and
give Landlord the right to cure the default on Tenant's account and, in the
case of a chattel lease, the right to acquire on the same terms available to
Tenant any items which would (if owned by Tenant) have become Landlord's
property on termination of the Lease, pursuant to Paragraph 7 of this
Agreement. Landlord shall have the right to recover from Tenant, in the same
manner as rent, any sums paid by Landlord to Tenant's lender or chattel lessor
pursuant to this paragraph.
13. EXPANSION SPACE LIGHT FIXTURES.
Landlord shall be responsible for the prompt disposal in accordance
with all applicable laws, ordinances and governmental regulations, of all light
fixtures currently stored in the Expansion Premises and all installed light
fixtures in the Expansion Premises disconnected by Tenant's contractors by July
1, 1994.
14. CONFIRMATION OF REMAINING PROVISIONS.
Except as modified by this Agreement, the terms of the Lease remain in
full force and effect between the parties.
Dated: May 16, 1994
LANDLORD TENANT
STANWELL DRIVE PROPERTIES, STERITECH, INC.
A CALIFORNIA LIMITED PARTNERSHIP
BY: SHAMROCK DEVELOPMENT CO.,
General Partner By: /s/ Steven T. Isaacs
--------------------------
STEVEN T. ISAACS,
President
By: /s/ Richard L. Rosenberry
---------------------------
RICHARD L. ROSENBERRY,
President and Secretary By: /s/ Lori L. Roll
--------------------------
LORI ROLL,
Secretary
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<PAGE> 34
EXHIBIT 1
PRELIMINARY PLAN FOR
STERITECH INC.
SCHEME # 3 2-18-94
[FLOOR PLAN]
<PAGE> 35
EXHIBIT 2
================================================================================
MONTH DURING WHICH TENANT RECEIVES AMOUNT PAYABLE BY
POSSESSION OF ADDITIONAL SPACE TENANT TO LANDLORD
================================================================================
1/95 $35,718
2/95 $35,445
3/95 $35,169
4/95 $34,891
5/95 $34,611
6/95 $34,328
7/95 $34,044
8/95 $33,757
10/95 $33,176
11/95 $32,882
12/95 $32,586
1/96 $32,228
2/96 $31,987
3/96 $31,684
4/96 $31,378
5/96 $31,070
6/96 $30,760
7/96 $30,447
8/96 $30,132
9/96 $29,814
10/96 $29,493
11/96 $29,170
12/96 $28,845
--------------------------------------------------------------------------------
NOTE: If Tenant receives possession on a date other than the first of a month,
the difference between the figure shown for that month and the figure shown for
the following month shall be prorated on a daily basis.
<PAGE> 36
Example 1: On December 29, 1995, Tenant notifies Landlord of its exercise of
the Option to Lease the Additional Space and concurrently pays to Landlord the
sum of $265,000 pursuant to Paragraph 5 of the Agreement. On March 8, 1996,
Landlord notifies Tenant that the Additional Space will be available in 90
days. SSMI in fact vacates the Additional Space by April 25, 1996, and Landlord
tenders possession to Tenant. Tenant elects to go into actual possession as of
May 1, 1996, in lieu of waiting out the full 90 days. Pursuant to Paragraph
5(c), Tenant shall at that time pay to Landlord an additional $31,070 from the
above table together with the first month's Base Rent for the Additional Space.
Example 2: Same facts as in Example 1, except that Tenant does not go into
possession of the Additional Space until June 6, 1996 (90 days after Landlord's
notice of availability). Pursuant to Paragraph 5(c), Tenant shall at that time
pay to Landlord an additional $30,708 ($30,447 + $261 [$30,760 - $30,447 = $313
x 25/30 = $261] = $30,708) from the above table together with 25/30 of the
monthly Base Rent for the Additional Space.
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<PAGE> 37
SECOND AMENDMENT TO INDUSTRIAL REAL ESTATE LEASE
This Agreement is made between STANWELL DRIVE PROPERTIES, A CALIFORNIA
LIMITED PARTNERSHIP ("Landlord"), a California limited partnership, and
STERITECH, INC. ("Tenant"), a California corporation.
RECITALS
A. Landlord is the successor to Shamrock Development Co. as owner
and lessor of that certain office building in the City of Concord, Contra Costa
County, California, commonly known as Buchanan Oaks IV, located at 2525
Stanwell Drive ("the Project").
B. Tenant is a tenant of a portion of the Project under a lease
agreement entitled Industrial Real Estate Lease (Multi-Tenant Facility)
(hereafter "Lease") dated October 1, 1992, entered into between Tenant and
Landlord's predecessor in ownership, as amended by an agreement entitled First
Amendment to Industrial Real Estate Lease (hereafter "First Amendment to
Lease"), dated May 16, 1994, entered into between Tenant and Landlord.
C. The parties wish to modify the provisions of the First
Amendment to Lease to extend the term of the Future Expansion Option granted to
Tenant in the First Amendment at Paragraph 5.
AGREEMENT
IT IS THEREFORE AGREED BETWEEN THE PARTIES AS FOLLOWS:
1. AMENDMENT TO FUTURE EXPANSION OPTION.
Paragraph 5 of the First Amendment, which grants to Tenant the option
to lease approximately 9,205 rentable square feet ("Additional Space") within
the Project known as 2525 Stanwell Drive, Suite 200, presently occupied by
Spine and Sports Medicine Institute of Northern California, Inc. ("SSMI") under
a lease dated February 6, 1992, is amended as follows:
<PAGE> 38
The date by which Tenant may notify Landlord of its election to
exercise the option is hereby extended from December 31, 1995 to January 1,
1997. In accordance with this change, Tenant may arrange for an inspection of
the Additional Space, as provided in Section (c) of Paragraph 5, prior to
January 1, 1997.
2. CONFIRMATION OF REMAINING PROVISIONS
Except as modified by this Second Amendment to Industrial Real Estate Lease,
the terms of the Lease, as modified by the First Amendment to Lease, remain in
full force and effect between the parties.
Dates: December 21, 1995
LANDLORD TENANT
STANWELL DRIVE PROPERTIES, STERITECH, INC.
A CALIFORNIA LIMITED PARTNERSHIP
BY: SHAMROCK DEVELOPMENT CO., By: /s/ Stephen T. Isaacs
General Partner ---------------------------
STEPHEN T. ISAACS
By: /s/ Richard L. Rosenberry, President
-----------------------------
RICHARD L. ROSENBERRY, By: /s/ Lori L. Roll
President and Secretary ---------------------------
LORI L. ROLL,
Secretary
SSMI
SPINE AND SPORTS MEDICINE INSTITUTE
OF NORTHERN CALIFORNIA, INC.
By: /s/ Richard L. Rosenberry
-----------------------------
Name:
---------------------------
Position: CFO
-----------------------