California-San Diego-9350 Trade Place Lease - Judd/King No. 1 and Digirad Corp.
1. BASIC LEASE TERMS.
1.1 DATE OF LEASE: January 27 1998
1.2 TENANT: Digirad Corporation, a Delaware corporation
Trade Name:
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Address (Leased Premises): 9350 Trade Place, Suite A
San Diego, CA 92126
Address (For Notices): 7408 Trade Street, San Diego, CA 92121
1.3 LANDLORD: Judd/King No. 1, a California general partnership
Address (For Notices): P.O. Box 501448, San Diego, CA
92150-1448 or to such other places as Landlord may from time
to time designate by notice to Tenant.
1.4 TENANT'S USE OF PREMISES: office, research and development,
production, manufacturing, distribution, and any other use
permitted under all applicable laws in the City of San Diego,
State of California.
1.5 PREMISES AREA: 13,436
Rentable Square Feet.
1.6 PROJECT AREA: 41,478
Square Feet.
1.7 PREMISES PERCENT OF PROJECT: 32.4%
1.8 TERM OF LEASE: Commencement Date: 2-16-98
Expiration Date: 3-31-02
1.9 BASE MONTHLY RENT: $ 10,748.80
Due Date of First Payment: upon Lease execution
Default and Landlord Advance Interest Rate: ten (10) percent
per annum.
1.10 RENT ADJUSTMENT (INITIAL ONE):
(2) Step Increase. If this provision is initialed, the step
adjustment provisions of Section 4.2.(2) apply as follows:
____________("Initial)
Effective Date of Increase New Base Monthly Rent
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4-1 , 1999 $11,071.26
4-1 , 2000 $11,403.40
4-1 , 2001 $11,745.50
, 19 $
, 19 $
(3) Prepaid Rent: $ -0-
(4) Total Security Deposit $ 11,745.50 including a $ -0-
non refundable cleaning fee
(5) Broker(s): CB Commercial Real Estate Group, Inc.
represented Landlord and The Irving Hughes Group,
Inc. represented Tenant.
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(6) Brokerage Commission Payable By: Landlord
(7) Guarantors: N/A
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(8) Additional Sections:
Additional sections of this Lease numbered 30 through 40 are
attached hereto and made a part hereof. If none, so state in
the following space
(9) Additional Exhibits:
Additional exhibits lettered D through __________ are attached
hereto and made a part hereof. If none, so state in the
following space NONE
Section 1 represents a summary of basic terms of this Lease. In the event of any
inconsistency between the terms contained in Section 1 and any specific clause
of this Lease, the terms of the more specific clause shall prevail.
2. PREMISES. Landlord hereby leases to Tenant and Tenant leases from
Landlord, these certain promises described in Section 1 and in Exhibit A
attached hereto (the "Premises"), located in the project described on Exhibit
B (the "Project"), upon all of the conditions set forth herein. Landlord
reserves the right to modify Tenant's percentage of the Project as set forth
in Section 1.7 if the size of the project is increased through the
development of additional property. By entry on the Premises, Tenant
acknowledges that it has examined the Premises and accepts the Premises in
their present condition as outlined on Exhibit A, subject to any additional
work Landlord has agreed to do.
3. TERM. Subject to the provisions hereof, including without limitation
Sections 16, 17 and 20, the term of this Lease (the ("Term") shall be for the
period set forth in Section 1.8, commencing on the date set forth in Section
1.8 (the "Commencement Date"). If Landlord, for any reason, cannot deliver
possession of the Premises to Tenant upon the Commencement Date, this Lease
shall not be void or voidable, nor shall Landlord be liable to Tenant for any
loss or damage resulting from such delay; rather, there shall be a rent
abatement covering the period between the Commencement Date and the date upon
which Landlord delivers possession to Tenant, and all other terms and
conditions of this Lease shall remain in full force and effect; provided,
however, that if Landlord cannot deliver possession of the Premises to Tenant
within 5 days of the Commencement Date, this Lease shall be void and neither
party shall have any liability to the other except that all prepaid rent
(including, without limitation, the Termination Fee) and security deposit
shall be immediately refunded to Tenant. If a delay in possession is caused
by Tenant's failure to perform any obligation in accordance with this Lease,
the Term shall commence on the Commencement Date and there shall be no
abatement of rent.
4. RENT.
4.1 BASE RENT. Tenant shall pay Landlord the Base Monthly Rent set
forth in Section 1.9 monthly, in advance, on the first day of each and
every calendar month ("Base Monthly Rent"); provided, (a) the first
full month's rent shall be due and payable upon execution of this
Lease, and (b) any appropriate partial month proration for the first
month shall be due and payable upon execution of this Lease.
Notwithstanding anything to the contrary contained in this Lease, the
Base Monthly Rent in February 1998 shall be $1247.55 and the Base
Monthly Rent in March 1998 shall be $2,687.20
4.2 RENT ADJUSTMENT.
(2) STEP INCREASE. If Section 1.10(2) is initiated, the Base
Monthly Rent shall be increased to the amounts and at times
set forth in Section 1.10(2).
4.3 EXPENSES. The purpose of the Section 4.3 is to ensure that
Tenant bears a share of all Expenses related to the use, operation,
maintenance, ownership, repair and insurance of the Project, except
depreciation of the Project, loan repayment (except as in
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Section 4.3(l)(g) below), and real estate commissions. Accordingly
Tenant shall pay to Landlord Tenant's Share (as defined below) of
Expenses related to the Project
(1) EXPENSES DEFINED. The term "Expenses" shall mean all
costs and expenses of the use, operation, maintenance,
ownership, repair and insurance of the Project, including,
without limitation, the following costs:
(a) All supplies, materials, labor and equipment,
used in or related to the Project; excluding tenant
improvements installed for any other tenant in the project.
(b) All utilities, including without limitation,
water, electricity, gas, heating, light, sewer, waste
disposal, security, air conditioning and ventilating costs and
all charges relating to the Project;
(c) All maintenance, janitorial and service
agreements related to the Project; Landlord shall keep in
force the service contract for the HVAC and ventilation
systems to the Premises.
(d) All reasonable legal expenses and accounting
costs (excluding legal costs of negotiating, terminating or
extending teases, or legal costs incurred in proceedings
against any tenant other than Tenant or arising from
Landlord's breach of this or any other lease in the Project.
(e) All insurance premiums and costs, including but
not limited to the premiums and costs of fire, casualty and
liability, rental abatement, related to the Project, and,
subject to amortization of capital repairs in accordance with
(g) below, the cost of damage to the common areas of the
Project caused by an uninsured loss or casualty;
(f) All maintenance and repair costs relating to the
areas within or around the Project, including without
limitations, sidewalks, landscaping, service areas, driveways,
parking areas, walkways, building exteriors (including
painting), signs and directories, including, for example,
costs of resurfacing and restriping parking areas, repairing
and replacing roofs and walls, and including any assessments
charged or levied by a Tenant's and/or Owner's Association ,if
any;
(g) Amortization (principal and interest) of the cost
of capital improvements made to the Project over their useful
life as determined in accordance with generally accepted
accounting principals which may be required by any government
authority or which will improve the operating efficiency of
the Project (provided, however, that the amount of such
amortization charged to all tenants for improvements not
mandated by government authority shall not exceed, in any
calendar year, the total amount of costs reasonably determined
by Landlord in its sole discretion to have been saved by the
expenditures, either through a reduction of such costs or a
minimization of increases of such costs which would have
otherwise occurred). SEE ADDENDUM A-1
(h) All other costs of managing, maintaining,
repairing, operating and insuring the Project, including, for
example, clerical, supervisory and janitorial staff costs.
There shall be a ceiling of three (3) percent of the Base
Monthly Rent as a Landlord charged management fee.
(i) "Real Property Taxes", which include all taxes,
assessments (general and special) and other impositions or
charges which may be taxed, charged, levied, assessed or
imposed upon or against all or any portion of or in relation
to the Project, any leasehold estate in the Premises or
measured by rent from the Premises, including any increase
caused by the transfer, sale or encumbrance of the Project or
any portion thereof. "Real Property Taxes" also includes any
form of assessment, levy, penalty, charge or tax (other than
estate, inheritance, net income or franchise taxes) imposed by
any authority having a
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direct or indirect power to tax or charge, including without
limitation any city, county, state, federal or any improvement
or other district, whether such tax is (1) determined by the
area of the Project or the rent or other sums payable under
this Lease; (2) upon or with respect to any legal or equitable
interest of Landlord in the Project or any part thereof,
(3) upon this transaction or any document to which Tenant is a
party creating a transfer in any interest in the Project;
(4) in lieu of or as a direct substitute in whole or in part
of or in addition to any real property taxes on the Project;
(5) based on any parking spaces or parking facilities provided
in the Project; or (6) in consideration for services, such as
police protection, fire protection, street, sidewalk, roadway
maintenance, refuse removal or other services that may be
provided by any governmental or quasi-governmental agency from
time-to time which were formerly provided without charge or
with less charge to property owners or occupants. SEE
ADDENDUM A-2
(2) ANNUAL ESTIMATE OF EXPENSES; TENANT'S SHARE. On the
Commencement Date, and prior to commencement of each calendar year
thereafter, Landlord shall prepare and deliver to Tenant its reasonable
estimate of Expenses for the Project for the coming year. Tenant's
Share of all actual Expenses shall be determined by multiplying the
total of all actual Expenses by the Premises Percent of Project set
forth in Section 1.7 (herein "Tenant's Share").
(3) MONTHLY PAYING OF EXPENSES; ANNUAL RECAP. Tenant shall pay to
Landlord, monthly, in advance, as additional rent, one-twelfth of the
product achieved by multiplying the then current estimate of annual
Expenses by the Premises Percent of Project set forth in Section 1.7.
As soon as practical following the end of each calendar year, Landlord
shall prepare an accounting of actual Expenses incurred during the
prior calendar year. If the amount of additional rent paid by Tenant as
Tenant's Share during the preceding calendar year was less than the
actual amount of Tenant's Share of Expenses, Landlord shall so notify
Tenant and Tenant shall pay to Landlord the difference between said two
amounts within thirty (30) days of receipt of such notice. Such amount
shall be deemed to have accrued during the prior calendar year and
shall be due and payable from Tenant even though the Term of this Lease
may have terminated prior to Tenant's receipt of the notice. If the
amount of additional rent paid by Tenant as Tenant's Share during the
preceding calendar year was greater than the actual amount of Tenant's
Share of Expenses, then Landlord shall promptly so notify Tenant and
such overpayment shall be credited by Landlord or, at the end of the
Lease Term, shall be immediately refunded to Tenant to the monthly
payment of Tenant's Share of Expenses next due from Tenant to Landlord.
In no event shall such credit be used to offset or in any way reduce
the Base Monthly Rent. During February 1998 and March 1, 1998 Tenant
shall pay twenty five (25) percent of the Expenses due for each of
these months.
4.4 RENT WITHOUT OFFSET. All rent shall be paid by Tenant to
Landlord monthly in advance on the first day of every calendar month,
at the address shown in Section 1.3, or at such other place as Landlord
may designate in writing from time-to-time. All rent shall be paid
without prior demand or notice and without any deduction or offset
whatsoever. All rent shall be paid in lawful currency of the United
States of America. All rent due for any partial month shall be
prorated, when appropriate, at the rate of one-thirtieth (1/30) of the
total monthly rent per day.
4.5 LATE CHARGE. Time is of the essence to the performance of this
Lease. Tenant acknowledges that late payment by Tenant to Landlord of
any base monthly rent or other sums due under this Lease will cause
Landlord to incur costs and damages, including but not limited to
processing and accounting charges and late charges that may be imposed
on Landlord by the terms of any encumbrance secured by the Premises, as
well as the loss of the use and time value of money. Landlord and
Tenant specifically agree and acknowledge that the exact amount of such
costs and damages would be difficult or impossible to prove. Provided
that Landlord and Tenant initial here:
\s\ illegible LANDLORD
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TENANT
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Tenant agrees that, if any rent or other sum due from Tenant is not
received when due, Tenant shall pay to Landlord an additional sum equal
to TEN (10) PERCENT OF THE UNPAID BALANCE DUE. Landlord and Tenant
hereby agree that they have attempted to estimate the amount of costs
and damages which would result from delay in payment, and that the
agreed late charge represents a fair and reasonable estimate of the
costs and damages that Landlord will incur by reason of any such late
payment in light of the anticipated or actual harm which would be
caused by such delays, the difficulties of proof of loss, and the
inconvenience or nonfeasibility of Landlord otherwise obtaining an
adequate remedy. Additionally, all such delinquent rent or other sums,
plus this late charge, shall bear interest at the rate per annum set
forth in Section 1.9 above. Any payments of any kind returned
insufficient funds will be subject to an additional handling charge of
$25.00.
6. DEPOSIT. Upon execution of this Lease, Tenant shall deposit with
Landlord the amount of the security deposit set forth in Section 1.10(4)
(herein the "Security Deposit"), in part as security for the performance by
Tenant of the provisions of this Lease. In the event of default by Tenant,
Landlord shall have the right to use the Security Deposit or any portion of
it to cure the default or to compensate Landlord for all damage sustained by
Landlord resulting from Tenant's default. Upon demand, Tenant shall
immediately pay to Landlord a sum equal to the portion of the Security
Deposit so expended or applied so as to maintain the Security Deposit in the
amount initially deposited with Landlord. If Tenant is not in default at the
expiration or termination of this Lease, Landlord shall return the entire
Security Deposit to Tenant. Landlord's obligations with respect to the
Security Deposit are not those of a trustee, such that, for example, Landlord
may commingle the Security Deposit with Landlord's general funds. Landlord
shall not be required to pay Tenant interest with respect to the Security
Deposit. Landlord shall be entitled to immediately endorse and cash any check
tendered as the Security Deposit; however, such endorsement and cashing shall
not constitute Landlord's acceptance of this Lease. In the event Landlord
does not accept this Lease, Landlord shall immediately return the Security
Deposit.
7. CONDITION AND USE OF PREMISES AND PROJECT FACILITIES. Tenant shall
use the Premises solely for the purpose set forth in Section 1.4 and for no
other purpose without obtaining the prior written consent of Landlord. Tenant
has decided to lease the Premises based upon Tenant's independent
investigations, inquiry, and business judgment. Tenant acknowledges that
neither Landlord nor any agent of Landlord has made any representation or
warranty with respect to the Premises or the Project or with respect to the
uses to which the Premises may be put or the suitability of the Premises or
the Project for the conduct of Tenant's business, nor has Landlord agreed to
undertake any modification, alteration or improvement to the Premises or to
the Project, except as provided in writing in this Lease. Tenant has
inspected the Premises and accepts the same "AS IS." Tenant acknowledges that
Landlord may, from time-to-time, in its sole discretion, make such
modifications, alterations, deletion or improvements to the Project as
Landlord may deem necessary or desirable, without compensation or notice to
Tenant, provided that such modifications, alterations, deletions or
improvements do not interfere with access to the Premises or Tenant's
permitted use of the Premises and does not otherwise impair Tenant's rights
hereunder. Tenant shall promptly comply with all laws, ordinances, orders and
regulations affecting the Premises and the Project, including without
limitation any rules and regulations that may be attached to this Lease and
to any reasonable none-discriminatory modifications to these rules and
regulations as Landlord may adopt from time-to-time. Should Tenant do or
permit anything to be done in or about the Premises or bring or keep anything
in the Premises that in any way increases the premiums paid by Landlord on
its insurance related to the Project or which will in any way increase the
premiums for fire or casualty insurance carried by other tenants in the
Project. Tenant shall pay for said increase in premium. Tenant will not
perform any act or carry on any practice that may injure the Premises or the
Project, be a nuisance or menace to other tenants in the Project, or in any
way interfere with the quiet enjoyment of such other tenants. Tenant shall
not use the Premises for sleeping, washing clothes, cooking or the
preparation, manufacture or mixing of anything that might emit any
objectionable odor, noises, vibrations or lights onto such other tenants. If
sound insulation is required to muffle noise produced by Tenant on the
Premises, Tenant at its own cost shall provide all necessary insulation.
Tenant shall not overload any existing parking or service to the Premises.
Pets and/or animals of any type shall not be kept on the Premises.
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8. SIGNAGE; ALARMS. All signing shaft comply with rules and regulations
set forth by Landlord as may be modified from time-to-time. Current rules and
regulations relating to signs are described on Exhibit C attached hereto.
Subject to paragraph 38 hereof, Tenant shall place no window covering (e.g.,
shades, blinds, curtains, drapes, screens or tinting material), stickers,
signs, lettering, banners or advertising or display material on or near
exterior windows or doors if such materials are visible from the exterior of
the Premises, without Landlord's prior written consent. Similarly, Tenant may
not install any alarm boxes, foil protection tape or other security equipment
on the Premises without Landlord's prior written consent. Any material
violating this provision may be removed by Landlord without compensation to
Tenant.
9. PERSONAL PROPERTY TAXES. Tenant shall pay before delinquency all taxes,
assessments, license fees and public charges levied, assessed or imposed upon
its business operations as welt as upon all trade fixtures, leasehold
improvements, merchandise and other personal property in or about the Premises.
10. PARKING. Landlord hereby grants to Tenant and Tenant's customers,
suppliers, employees and invitees, a non-exclusive privilege to use the
parking areas in the Project for the use of motor vehicles during the term of
this Lease. Landlord reserves the right at any time to grant similar
non-exclusive privileges to other tenants, to promulgate rules and
regulations relating to the use of such parking areas, including reasonable
restrictions on parking by tenants and employees, to designate specific
spaces for the use of any tenant, to make changes in the parking layout from
time-to-time, and to establish reasonable time limits on parking. Overnight
parking is prohibited and any vehicle violating this or any other vehicle
regulation adopted by Landlord is subject to removal at the owner's expense.
Notwithstanding anything to the contrary contained in this Lease, Tenant may
designate up to six (6) parking spaces in the front row of the parking
closest to the entrance at Suite A as visitor and/or reserved.
11. UTILITIES. Tenant shall pay for all water, gas, heat, light, power,
electricity, telephone or other service metered, chargeable or provided to the
Premises. If Landlord reasonably determines that Tenant is using excessive
amounts of water, Landlord may install a separate water meter for the Premises
which cost shall be paid for by Tenant.
12. MAINTENANCE. Landlord shall maintain, in good condition, the structural
parts of the Premises, which shall include only the foundations, bearing and
exterior walls (excluding glass) subflooring and roof (excluding skylights), the
unexposed electrical, plumbing and sewerage systems, including without
limitation, those portions of the systems lying outside the Premises, exterior
doors (excluding glass) window frames, gutters and downspouts on the Building
and the heating, ventilating and air conditioning system servicing the Premises;
provided, however, the cost of all such maintenance shall be considered
"Expenses" for purposes of Section 4.3. Except as provided above, Tenant shall
repair and maintain the Premises in good condition, including without
limitation, maintaining and repairing walls, floors, ceilings, interior doors,
exterior and interior windows and fixtures as well as damage caused by Tenant,
its agents, employees or invitees. Upon expiration or termination of this Lease,
Tenant shall surrender the Premises and all tenant improvements and alterations
to Landlord in the same condition as they existed on the Commencement Date,
except for (a) reasonable wear and tear, and (b) damage caused by fire or other
casualty.
13. ALTERATIONS. Tenant shall not make any alterations to the Premises,
or tox the Project, including any changes to the existing landscaping,
without Landlord's prior written consent which shall not be unreasonably
withheld, conditioned or delayed. If Landlord gives its consent to such
alterations, Landlord may post notices of nonresponsibility in accordance
with the laws of the slate in which the Premises are located. Any alterations
made shall remain on and be surrendered with the Premises upon expiration or
termination of this Lease, except that Landlord may, within thirty (30) days
before or thirty (30) days after expiration of the Term, elect to require
Tenant to remove any alterations which Tenant may have made to the Premises.
If Landlord so elects, Tenant shall, at its own cost, restore the Premises to
the condition designated by Landlord in its election, before the last day of
the term or within thirty (30) days alter notice of Landlord's election is
given, whichever is later. Tenant shall cause no damage to the Premises in
removing alterations.
Should Landlord consent in writing to Tenant's alteration of the Premises,
Tenant shall contract with a contractor approved by Landlord for the
construction of such alterations, which approval
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shall not be unreasonably withheld, shall secure all appropriate governmental
approvals and permits, and shall complete such alterations with due diligence
in compliance with plans and specifications approved by Landlord. All such
construction shall be performed in a manner which will not interfere with the
quiet enjoyment of other tenants of the Project. Tenant shall pay all costs
for such construction and shall keep the Premises and the Project free and
clear of all liens which may result from construction by Tenant.
14. RELEASE AND INDEMNITY. As material consideration to Landlord, and
despite any active or passive negligence on their part or parts, Tenant
agrees that Landlord and its employees, officers, partners and directors
shall not be liable for any injury or damage to the person, property, or
business of Tenant, its employees, invitees, permittees, customers, or any
other person in or about the Premises from any cause, and Tenant waives all
claims against such parties for damage to persons or property arising for any
reason, except only for damage or injury resulting directly from Landlord's
gross negligence, willful misconduct or breach of its express obligations
under this Lease which Landlord has not cured within a reasonable time after
receipt of written notice of such breach from Tenant. In no event shall
Landlord have any liability for any act or omission of Tenant, its employees,
invitees, permittees or customers, or of any other tenant of the Project, or
its employees, invitees, permittees or customers with the exception of such
liability resulting from Landlord's (or its employees, invitees, other than
Tenant, agents or contractors), gross negligence or willful misconduct.
Tenant shall indemnify and hold harmless Landlord (and its employees,
officers, partners, and directors), the Premises and the Project, from all
damages, injuries, claims, costs and expenses related to acts, events or
omissions occurring in, on or about the Premises, or arising out of or in any
way related to Tenant's use or occupancy of the Premises, Tenant's breach of
any term of this Lease, or any work, activity or thing done, permitted or
suffered by Tenant in, on or about the Premises or the Project.
15. INSURANCE AND WAIVER OF SUBROGATION.
15.1 LIABILITY INSURANCE. Tenant at its cost, shall maintain
public liability insurance with a single combined liability limit of
$1,000,000.00, insuring against the hazards of Premises and operations,
independent contractors, contractual liability (covering the Indemnity
Clause contained herein), products and completed operations arising out
of or in connection with Tenant's use, occupancy or maintenance of the
Premises. Such insurance policy shall (1) name Landlord and his
managing agent as an additional insured, (2) contain a cross liability
provision, and (3) contain an endorsement that the insurance provided
the Landlord hereunder shall be primary with respect to the Premises
and noncontributing with any other insurance available to the Landlord.
15.2 PROPERTY INSURANCE. At its cost, Tenant shall maintain a
policy of standard fire and extended coverage insurance with vandalism
and malicious mischief endorsements and "all risk" coverage on all
Tenant's personal property, improvements, fixtures and alterations in
or about the Premises, to the extent of a least ninety percent (90%) of
their full replacement value. A stipulated value or agreed amount
endorsement deleting the coinsurance clause shall be produced with said
insurance. The proceeds from any such policy shall be used by Tenant
for the replacement of personal property and the restoration of
Tenant's improvements, fixtures or alterations. Said insurance shall
provide for payment of loss to, and shall name as additional insureds,
the Landlord and the holders of mortgages or deeds of trust on the
building(s). If such insurance has a deductible clause, the deductible
amount shall not exceed $1,000 per occurrence and the Lessee shall be
liable for such deductible. Landlord shall maintain a policy of
standard fire and extended coverage insurance with vandalism and
malicious mischief endorsements and "all risk" coverage on the Project
to the extent of at least ninety percent (90%) of the full replacement
value.
15.3 BUSINESS INTERRUPTION AND INSURANCE. Tenant shall, at its
cost, obtain business interruption insurance of such type and amount
sufficient to pay all rent and other sums due hereunder for a period of
at least of at least twelve (12) months in the event of any cessation
or reduction of Tenant's business for any reason, including without
limitation, damage or destruction. In no event shall Landlord be liable
to Tenant for any loss of
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income from the operation of Tenant's business for any reason
whatsoever, including without limitation, from an inability to occupy
the Premises.
15.4 INSURANCE POLICIES; Subrogation. All insurance required to be
provided by Tenant or Landlord under this Lease:
(a) shall be issued in a form reasonably satisfactory
to Landlord and shall be issued by insurance companies which
are authorized to do business in the state in which the
Premises are located and which are satisfactory and acceptable
to Landlord, provided that such companies shall each enjoy a
financial rating of at least an A+X status as rated in the
most recent edition of Best's Insurance Reports;
(b) shall contain an endorsement requiring at least
thirty (30) days prior written notice of cancellation to
Landlord and Landlord's lender, before cancellation or change
in coverage, scope or amount of any policy;
(c) shall release the other party to this Lease from
any claims for damage to any person or to the Premises and the
Project, and to Tenant's fixtures, personal property,
improvements and alterations in or on the Premises or the
Project caused by or resulting from risks insured against
under any insurance policy carried by the party insured
hereunder and in force at the time of such damage.
Tenant shall deliver a certificate or copy of each insurance
policy together with evidence of payment of all current
premiums to Landlord within thirty (30) days of execution of
this Lease. Tenant's failure to provide evidence of such
coverage to Landlord may, in Landlord's sole discretion,
constitute a default under this Lease. Tenant and Landlord
hereby waive their entire right of subrogation against each
other for loss damage arising out of or incident to the perils
insured against pursuant to this Section 15. All insurance
policies shall provide for waiver of subrogation releasing
the non-insured party from liability as provided in this
Section 15.
16. DESTRUCTION. If, during the Term, the Premises or Project are more
than ten percent (10%) destroyed from any cause, or rendered inaccessible or
unusable from any cause, Landlord may, in its sole discretion and without
compensation or liability to Tenant, terminate this Lease by delivery of
notice to Tenant within thirty (30) days of such event. If, in Landlord's
estimation, the Premises cannot be restored within ninety (90) days following
such destruction, then Landlord shall immediately notify Tenant and Tenant
may terminate this Lease by delivery of notice to Landlord within thirty (30)
days of receipt of Landlord's notice otherwise this Lease shall remain in
full force and effect. If Landlord does not terminate this Lease and if in
Landlord's estimation the Premises can be restored within ninety (90) days,
then Landlord shall commence to restore the Premises in compliance with then
existing laws and shall complete such restoration with due diligence. In such
event this Lease shall remain in full force and effect except that the then
current Base Monthly Rent shall be reduced in the same ratio as the total
number of square feet in the Premises damaged or destroyed bears to the total
number of square feet in the Premises.
17. CONDEMNATION.
17.1 DEFINITIONS. The following definitions shall apply:
(1) "Condemnation" means (a) the exercise of any governmental power of
eminent domain, whether by legal proceedings or otherwise by condemner,
and (b) the voluntary sale or transfer by Landlord to any condemnor
either under threat of condemnation or while legal proceedings for
condemnation are proceeding; (2) "Date of Taking" means the date the
condemnor has the right to possession of the property being condemned;
(3) "Award" means all compensation, sums or anything of value awarded,
paid or received in connection with a total or partial Condemnation;
and (4) "Condemnor" means any public or quasi-public authority, or
private corporation or individual, having a power of Condemnation.
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17.2 OBLIGATIONS TO BE GOVERNED BY LEASE. If, during the Term of
this Lease, there is any Condemnation of all or any part of the
Premises or the Project, the rights and obligations of the parties
shall be determined pursuant to this Lease.
17.3 TOTAL OR PARTIAL TAKING. If the Premises are totally taken by
Condemnation, this Lease shall terminate on the Date of Taking. If only
a portion of the Premises is Condemned, this Lease shall continue in
effect, except that Tenant may elect to terminate this Lease if the
remaining portion of the Premises is rendered unsuitable for Tenant's
continued use of the Premises. If Tenant elects to terminate this
Lease, Tenant must exercise its right to terminate by giving notice to
Landlord within thirty (30) days alter the nature and extent of the
Condemnation have been finally determined. If Tenant elects to
terminate this Lease, Tenant shall also notify Landlord of the date of
termination, which date shall not be earlier than thirty (30) days nor
later than ninety (90) days after tenant has notified Landlord of its
election to terminate; except that this Lease shall terminate on the
Date of Taking if the Date of Taking falls on a date before the date of
termination as designated by Tenant. If any portion of the Premises is
taken by Condemnation and this Lease remains in full force and effect,
then from and after the Date of Taking the then current Base Monthly
Rent shall be reduced in the same ratio as the total number of square
feet in the Premises taken bears to the total number of square feet in
the Premises immediately before the Date of Taking.
18. ASSIGNMENT OR SUBLEASE. Tenant shall not assign or encumber its
interest in this Lease or the Premises, nor sublease all or any part of the
Premises, nor allow any other person or entity (except Tenant's authorized
representatives, employees, invitees, or guests) to occupy or use all or any
part of tile Premises, without first obtaining Landlord's written consent which
Landlord shall not unreasonably withhold, condition or delay. Any such
assignment or sublease shall not relieve Tenant of any obligation hereunder and
Tenant shall remain liable for the performance of each term hereof. Any
assignment, encumbrance or sublease without Landlord's written consent shall be
voidable and, at Landlord's election, shall constitute a default. If Tenant is a
partnership, withdrawal or change, voluntary, involuntary or by operation of
law, of any partner, or the dissolution of the partnership, shall be deemed a
voluntary assignment. If Tenant consists of more than one person, a purported
assignment, voluntary or involuntary or by operation of law from one person to
the other shall be deemed a voluntary assignment. All rent received by Tenant
from its subtenants in excess of the rent payable by Tenant to Landlord under
this Lease shall be paid to Landlord, or any sums to be paid by an assignee to
Tenant in consideration of the assignment of this Lease shall be paid to
Landlord. If Tenant requests Landlord to consent to a proposed assignment or
subletting, Tenant shall pay to Landlord, whether or not consent is ultimately
given, $100 or Landlord's reasonable attorney's fees incurred in connection with
such request, whichever is greater. SEE ADDENDUM A-3
No interest of Tenant in this Lease shall be assignable by involuntary
assignment through operation of law (including without limitation the transfer
of this Lease by testacy or intestacy). Each of the following acts shall be
considered an involuntary assignment: (a) If Tenant is or becomes bankrupt or
insolvent, makes an assignment for the benefit of creditors, or institutes
proceedings under the Bankruptcy Act in which Tenant is bankrupt; or if Tenant
is a partnership or consists of more than one person or entity, if any partner
of the partnership or other person or entity is or becomes bankrupt or
insolvent, or makes an assignment for the benefit of creditors: or (b) if a writ
of attachment or execution is levied on this Lease; or (c) if in any proceeding
or action to which Tenant is a party, a receiver is appointed with authority to
take possession of the Premises. An involuntary assignment shall constitute a
default by Tenant and Landlord shall have the right to elect to terminate this
Lease, in which case this Lease shall not be treated as an asset of Tenant.
19. DEFAULT. In addition to the acts, events, and omissions elsewhere
specified in this Lease as such, the occurrence of any of the following shall
constitute a default by Tenant: (a) A failure to pay rent or other charge
when due; (b) Abandonment of the Premises (failure to occupy and operate the
Premises for ten consecutive days shall be deemed an abandonment and
vacation); and (c) Failure to perform any other term or provision of this
Lease, within a reasonable time for performance thereof.
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20. LANDLORD'S REMEDIES.
20.1 REMEDIES. In the event of default, Landlord shall have the
remedies set forth in this Section 20. These remedies are not
exclusive; they are cumulative and in addition to any remedies now or
later allowed by law. Landlord may terminate Tenant's right to
possession of the Premises at any time. No act by Landlord other than
giving notice to Tenant shall terminate this Lease. Acts of
maintenance, efforts to release the Premises or the appointment of a
receiver on Landlord's initiative to protect Landlord's interest under
this Lease shall not constitute a termination of this Lease. Upon
termination of this Lease, Landlord shall have the right to recover
from Tenant: (1) The worth of the unpaid rent that had been earned at
the time of termination of this lease; (2) The worth of the amount of
the unpaid rent that would have been earned after the date of
termination of this Lease; and (3) Any other amount, including court,
attorney and collection fees and costs, necessary to compensate
Landlord for Tenant's default. "The worth" as used in item 20(1) is to
be computed by allowing interest at the rate per annum set forth in
Section 1.9 above. "The worth" as used for item 20(2) is to be computed
by discounting the amount at the discount rate of the Federal Reserve
Bank or San Francisco at the time of termination of Tenant's right of
possession.
20.2 PERFORMANCE BY LANDLORD OF TENANT'S OBLIGATIONS. All covenants
and agreements to be performed by Tenant under any of the terms or this
Lease shall be performed by Tenant at Tenant's sole cost and expense
and without any abatement of rent. If Tenant shall fail to pay any sum
or money owed to any party, other than Landlord, for which it is liable
hereunder, or it Tenant shall fail to perform any other act on its part
to be performed hereunder or otherwise violate any term or provision of
this Lease including, without limitation, its obligations pursuant to
Sections 7, 12 and 13, Landlord may, without waiving any default or
releasing Tenant from any obligation hereunder, but shall not be
obligated to, make any such payment or perform any such other act to be
made or performed by Tenant. All sums so paid by Landlord and all
necessary incidental costs, together with interest thereon from the
date of such payment by Landlord at the rate per annum set forth in
Section 1.9 above, shall be payable to Landlord on demand. Tenant
covenants to pay any such sums.
21. ENTRY ON PREMISES. Landlord and its authorized representatives shall
have the right to enter the Premises at all reasonable times for any of the
following purposes: (a) To determine whether the Premises are in good condition
and whether Tenant is complying with its obligations under this Lease; (b) To do
any necessary maintenance and to make any restoration to the Premises or the
Project that Landlord has the right or obligation to perform; (c) To post "for
sale" signs at any time during the Term, to post "for rent" or "for lease" signs
during the last ninety (90) days of the term, or during any period while Tenant
is in default; (d) To show the Premises to prospective brokers, agents, buyers,
tenants or persons interested in an exchange, at any time during the Term; or
(e) To repair, maintain or improve the Project and to erect scaffolding and
protective barricades around and about the Premises (but not so as to prevent
entry to the Premises), and (f) To do any other act or thing necessary for the
safety or preservation of the Premises or the Project. Landlord shall not be
liable in any manner for any inconvenience, disturbance, loss of business,
nuisance or other damage arising out of Landlord's entry onto the Premises as
provided in this Section 21. Tenant shall not be entitled to an abatement or
reduction of rent if Landlord exercises any rights reserved in this Section 21.
Landlord shall conduct its activities on the Premises as provided herein in a
manner that will cause the least inconvenience, annoyance or disturbance to
Tenant. For each of these purposes, Tenant shall not alter any lock or install a
new or additional lock or bolt on any door of the Premises without prior written
consent of Landlord. If Landlord shall give its consent, Tenant shall in each
case furnish Landlord with a key for any such lock.
22. SUBORDINATION; CERTIFICATES. Without the necessity of any additional
document being executed by Tenant for the purpose of effecting a subordination,
and at the election of Landlord or any mortgagee or any beneficiary of a deed of
trust with a lien on the Project or any ground lessor with respect to the
Project, this Lease shall be subject and subordinate at all times to (a) all
ground leases or underlying leases which may now exist or hereafter be executed
affecting the Project, and (b) the lien of any mortgage or deed of trust which
may now exist or hereafter be executed in any amount for which the Project,
ground leases or underlying leases, or Landlord's interest or estate in any of
said items is specified as
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security. In the event that any ground lease or underlying lease terminates
for any reason or any mortgage or deed of trust is foreclosed or a conveyance
in lieu of foreclosure is made for any reason, Tenant shall, notwithstanding
any subordination, attorn to and become the Tenant of the successor in
interest to Landlord, at the option of such successor in interest. Tenant
covenants and agrees to execute and deliver, upon demand, by Landlord and in
the form requested by Landlord, any additional documents evidencing the
priority or subordination of this Lease with respect to any such ground lease
or underlying leases or the lien of any such mortgage or deed of trust.
Tenant hereby irrevocably appoints Landlord as attorney-in-fact of Tenant to
execute, deliver and record any such document in the name and on behalf of
Tenant.
Tenant, within ten days from notice from Landlord, shall execute and deliver
to Landlord, in recordable form, certificates stating that Landlord is not in
default hereunder, that the Lease is unmodified and in full force and effect,
or in full force and effect as modified, and stating the modification. Such
certificate shall also state the amount of current monthly rent, the dates to
which rent has been paid in advance, and the amount of any security deposit
and prepaid rent. Failure to deliver this certificate to Landlord within
ten (10) days shall be conclusive upon Tenant that this Lease is in full force
and effect and has not been modified except as may be represented by Landlord.
23. NOTICE. Any notice, demand, request, consent, approval, or
communication desired by either party or required to be given, shall be in
writing and served personally and sent by prepaid first class mail, addressed
as set forth in Section 1. Either party may change its address by notification
to the other party. Notice shall be deemed to be communicated forty-eight (48)
hours from the time of mailing, if mailed, or from time of service, if
personally served.
24. WAIVER. No delay or omission in the exercise of any right or remedy by
Landlord shall impair such right or remedy or be construed as a waiver. No act
or conduct of Landlord, including without limitation, acceptance of the keys to
the Premises, shall constitute an acceptance of the surrender of the Premises by
Tenant before the expiration of the Term. Only written notice from Landlord to
Tenant shall constitute acceptance of the surrender of the Premises and
accomplish termination of the Lease. Landlord's consent for approval shall not
be deemed to waive or render unnecessary Landlord's consent to or approval of
any subsequent act by Tenant. Any waiver by Landlord of any default must be in
writing and shall not be a waiver of any other default concerning the same or
any other provision of the Lease.
25. SURRENDER OF PREMISES; HOLDING OVER. Upon expiration of the Term,
Tenant shall surrender to Landlord the Premises and all tenant improvements and
alterations in the condition described in Section 13 above. Tenant shall remove
all personal property owned by Tenant and shall perform all restoration made
necessary by the removal of any alterations or Tenant's personal property before
the expiration of the Term, including for example, restoring all wall surfaces
to their condition prior to the Commencement Date. Landlord shall have the right
to elect to retain or dispose of in any manner Tenant's personal property not so
removed. Tenant waives all claims against Landlord for any damage to Tenant or
such personal property resulting from Landlord's retention or disposal of
Tenant's personal property. Tenant shall be liable to Landlord for Landlord's
costs for storage, removal and disposal of Tenant's personal property.
If Tenant, with Landlord's express written consent, remains in possession of the
Premises after expiration or termination of this Lease, or after the date in any
notice given by Landlord to Tenant terminating this Lease, such possession by
Tenant shall be deemed to be a month-to-month tenancy terminable on thirty (30)
day notice at any time, be either party. All provisions of this Lease, except
those pertaining to Term and rent, shall apply to the month-to-month tenancy.
Tenant shall pay monthly rent in an amount equal to 125% of the Base Monthly
Rent which was due with respect to the last full calendar month during the Term,
plus 100% of said last month's Tenant's Share of Expenses.
If Tenant holds over after the expiration of the Term or the earlier termination
hereof without the express written consent of Landlord, Tenant shall become a
tenant at sufferance only, at a rental rate equal to one hundred fifty percent
(150%) of the Base Monthly Rent in effect upon the date of such termination
expiration, prorated on a daily basis, and subject to the terms, covenants and
conditions herein specified, so far as applicable, including Section 4.3.
Acceptance by Landlord of rent after such expiration or earlier termination
shall not result in a renewal or extension of
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this Lease. The foregoing provisions of this Section 25 are in addition to
and do not affect Landlord's right of re-entry or any rights of Landlord
hereunder or as otherwise provided by law. If Tenant fails to surrender the
Premises upon the expiration of this Lease despite demand to do so by
Landlord, Tenant shall indemnify and hold Landlord harmless from all loss or
liability, including without limitation, any claim made by any succeeding
tenant founded on or resulting from such failure to surrender and any
attorney's fees and costs.
26. MORTGAGEE PROTECTION. In the event of any default by Landlord, Tenant
will give notice by registered or certified mail to any beneficiary of a deed of
trust or mortgagee of a mortgage covering the Premises whose address shall have
been furnished to Tenant, and shall offer such beneficiary or mortgagee a
reasonable opportunity to cure the default, including time to obtain possession
of the Premises by power of sale or a judicial foreclosure, if such should prove
necessary to effect a cure.
27. LIMITATION OF LIABILITY. In consideration of the benefits accruing
hereunder, Tenant agrees that, in the event of any actual or alleged failure,
breach or default of this Lease by Landlord, if Landlord is a partnership:
(a) The sole and exclusive remedy shall be against the partnership and its
partnership assets and the Project, (b) No partner of Landlord shall be sued or
named as a party in any suit or action (except as may be necessary to secure
jurisdiction of the partnership); (c) No service of process shall be made
against any partner of Landlord (except as may be necessary to secure
jurisdiction of the partnership); (d) No partner of Landlord shall be required
to answer or otherwise plead to any service of process; (e) No judgment may be
taken against any partner of Landlord; Any judgment taken against any partner of
Landlord may be vacated and set aside at any time without hearing; (g) No writ
of execution will ever be levied against the assets of any partner of Landlord;
(h) These covenants and agreements are enforceable both by Landlord and also by
any partner of Landlord.
Tenant agrees that each of the foregoing provisions shall be applicable to any
covenant or agreement either expressly contained in this Lease or imposed by
statute or at common law.
28. MISCELLANEOUS PROVISIONS.
28.1 TIME OF ESSENCE. Time is of the essence of each provision of
this Lease.
28.2 SUCCESSOR. This Lease shall be binding on and inure to the
benefit of the parties and their successors, except as provided in
Section 18 herein.
28.3 LANDLORD'S CONSENT. Any consent required by Landlord under
this Lease must be granted in writing and may be withheld by Landlord
in its sole and absolute discretion.
28.4 COMMISSIONS. Each party represents that it has not had
dealings with any real estate broker, finder or other person with
respect to this Lease in any manner, except for the broker identified
in Section 1.10(5), who shall be compensated by the party identified
in Section 1.10(6).
28.5 OTHER CHARGES. If Landlord becomes a party to any litigation
concerning this Lease, the Premises or the Project, by reason of any
act or omission of Tenant or Tenant's authorized representatives,
Tenant shall be liable to Landlord for reasonable attorney's fees and
court costs incurred by Landlord in the litigation whether or not such
litigation leads to actual court action. If either party commences an
action against the other party arising out of or in connection with
this Lease, the prevailing party shall be entitled to recover from the
other party reasonable attorney's fees and costs of suit, both at trial
and on appeal, such fees to be set by the court before which the matter
is heard. If Landlord employs a collection agency to recover delinquent
charges, Tenant agrees to pay all collection agency fees charged to
Landlord in addition to rent, late charges, interest and other sums
payable under this Lease. Tenant shall pay a charge of $75 to Landlord
for preparation of a demand for delinquent rent.
28.6 LANDLORD'S SUCCESSORS. In the event of a sale or conveyance
by Landlord of the Project, the same shall operate to release Landlord
from any liability under this Lease, and in such event Landlord's
successor in interest shall be solely responsible for all obligations
of Landlord under this Lease.
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28.7 INTERPRETATION. This Lease shall be construed and interpreted
in accordance with the laws of the slate in which the Premises are
located. This Lease constitutes the entire agreement between the
parties with respect to the Premises and the Project, except for such
guarantees or modifications hereof as may be executed in writing by the
parties from time-to-time. When required by the context of this Lease,
the singular shall include the plural and vice versa, and any gender
shall include the other and/or neuter. "Party" shall mean Landlord or
Tenant. Each provision hereof is intended to be severable. The
enforceability, invalidity or illegality of any provision shall not
render the other provisions unenforceable, invalid or illegal, and the
parties intend each provision to be enforceable to the fullest extent
permissible as determined by a court of competent jurisdiction if such
court determines that any such provision is not fully enforceable as
agreed herein.
28.8 EXECUTION AND LIABILITY. If more than one person or entity
constitutes Tenant, the obligations of Tenant herein contained shall be
joint and several. Each person executing this Lease on behalf of Tenant
hereby represents and warrants his or her authority to do so.
28.9 COMPLIANCE WITH DECLARATION. Tenant acknowledges that the
Premises are subject to that certain Declaration of Covenants,
Conditions, Restrictions and Reservations of Easements for Carmel
Mountain Ranch Business Community ("Declaration") recorded May 24,
1984 in the Official Records of San Diego County as instrument
No. 84-195381. Tenant covenants and agrees that it accepts the
leasehold estate subject to the Declaration to the extent the
Declaration affects the Premises subject to this Lease.
29. ENVIRONMENTAL MATTERS
29.1 NO USE OF HAZARDOUS MATERIALS. Lessee agrees that Lessee shall
not keep, use, generate, store, release, threaten release, or dispose
of any Hazardous Materials (as defined below) on or about the Premises
or Project without the prior express written consent of Lessor, which
consent may be withheld by Lessor in its sole and absolute discretion
provided that such consent shall not be withheld for any Hazardous
Materials used by Tenant in the ordinary course of its business and
operations at the Premises. For purposes of this provision, "Hazardous
Materials shall include all oil, flammable explosives, asbestos, urea
formaldehyde, radioactive materials or waste, or other hazardous,
toxic, contaminated, or polluting materials, substances or wastes,
including, without limitation, substances defined as "hazardous
substances," "hazardous materials," "hazardous wastes," or "toxic
substances" under any laws, ordinances or regulations heretofore or
hereafter enacted or adopted. Under no circumstances shall any sublease
or assignment occur, whether with or without the consent of Lessor,
which involves any tenant, subtenant or other occupant who keeps, uses,
generates, stores, releases, threatens release of or disposes of any
Hazardous Materials on or about the Premises or Project in violation of
applicable governmental regulations.
29.2 COMPLIANCE WITH ENVIRONMENTAL LAWS. If Lessor consents in
writing to the presence, use, generation, storage, release or
disposition of Hazardous Materials (collectively, "Use of Hazardous
Materials") on or about the Premises or Project, then Lessee shall
conduct such Use of Hazardous Materials subject to, and in full
compliance with, all local, state, federal and other laws and
regulations governing the Use of Hazardous Materials. Lessee 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 Lessee's use of the Premises, and its
Use of Hazardous Materials, including, without limitation, discharge of
appropriately treated materials or wastes. Lessee shall, at its sole
expense, cause any known Hazardous Materials located on or about the
Premises or Project existing as a result of the activities of Lessee,
its agents, employees, invitees or contractors to promptly be removed
and transported from the Premises or Project solely by duly licensed
haulers to duly licensed facilities for final disposal of such
materials and wastes. Lessee shall, in all respects, handle, treat,
deal with and manage any and all Hazardous Materials in, on, under or
about the Premises or Project in total conformity with all applicable
laws and regulations governing the Use of
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Hazardous Materials and prudent industrial practices regarding
management of such Hazardous Materials. Upon the expiration or earlier
termination of the Lease Term, Lessee shall, at its sole expense:
(i) cause all Hazardous Materials existing as a result of the
activities of Lessee, its agents, employees, invitees or contractors to
be removed from the Premises or Project and transported for use,
storage or disposal in accordance and compliance with all applicable
laws and regulations governing the Use of Hazardous Materials; and
(ii) obtain a certificate from an engineer, duly licensed in the State
of California and approved by Lessor, certifying that the Premises are
completely free of all Hazardous Materials existing as a result of the
activities of Lessee, its agents, employees, invitees or contractors:
Immediately following the removal of Hazardous Materials, Lessee shall
fully restore the Premises or Project to good condition and repair,
satisfactory to Lessor and suitable for rental to a new tenant, at
Lessee's sole expense, without any abatement or rent. To the extent
Landlord is indemnified by any other tenant or occupant of the Project
for Hazardous Materials costs, liabilities and claims, to the extent
Lessee incurs any costs, expenses or liabilities for such Hazardous
Materials, such indemnification shall extend to Tenant under this
Lease.
29.3 NOTICES. Lessee shall immediately notify Lessor in writing of:
(i) any enforcement, clean-up, removal or other governmental or
regulatory actions instituted, completed or threatened pursuant to any
laws or regulations governing the use of Hazardous Materials; (ii) any
claim made or threatened against Lessee, the Premises, or the Project
relating to damage, contribution, cost recovery, compensation, loss or
injury resulting from or claimed to result from any Hazardous
Materials; and (iii) any reports made to any environmental agency
arising out of or in connection with any Hazardous Materials in or
removed from the Premises or Project, including any complaints,
notices, warnings or asserted violations in connection therewith.
Lessee shall also supply to Lessor as promptly as possible, and in any
event within five (5) business days after Lessee first received or
sends the same, copies of all claims, reports, complaints, notices,
warnings or asserted violations relating in any way to the Premises,
Project or Lessee's use thereof. Lessee shall promptly deliver to
Lessor copies of hazardous waste manifests reflecting the legal and
proper disposal of all Hazardous Materials removed from the Premises or
Project.
29.4 RELEASE OF LIABILITY. Lessee expressly acknowledges that
Lessor has made no representations or warranties, express or implied,
with respect to Hazardous Materials in, on, under or about the Premises
or Project Lessee fully accepts the Premises in their "AS IS" condition
and in connection therewith, Lessee hereby waives and fully releases
Lessor from and against any and all claims against Lessor resulting
from or related to, directly or indirectly, the existing of any other
Hazardous Materials in, on, under or about the Premises or Project
prior to the Commencement Date of the Lease. This release of liability
and all of the terms herein shall survive the expiration or earlier
termination of this Lease.
29.5 INDEMNIFICATION. Lessee hereby agrees to indemnify, defend and
hold harmless and release Lessor, its trustees, officers, employees and
agents, and the beneficiary or mortgagee under any deed of trust or
mortgage now or hereafter encumbering all or any portion or the
Premises or Project, from and against any and all actions, legal or
administrative proceedings, claims, demands, damages, fines, punitive
damages, losses, costs, liabilities, interest, attorney's fees
(including any such fees and expenses incurred in enforcing this
indemnity), resulting from or relating to, directly or indirectly, the
Tenant's use of Hazardous Materials on or about the Premises or
Project. The Indemnity set forth herein shall include, without
limitation, the cost of any required or necessary repair, clean-up or
detoxification of the Premises or Project and the surrounding property
and shall survive the expiration or earlier termination of the Lease
Term.
29.6 ADDITIONAL INSURANCE OR FINANCIAL CAPACITY. If at any time it
reasonably appears to Lessor that Lessee is not maintaining sufficient
insurance or other means of financial capacity to enable Lessee to
fulfill its obligations to Lessor under this Section 29, whether or not
then accrued, liquidated, conditional or contingent, Lessee shall
procure and thereafter maintain in full force and effect such insurance
or other form of
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financial assurance acceptable to Lessor as Lessor may from
time-to-time reasonably request.
30. LEASE BONUS. Upon occupancy, Landlord shall provide $40,308 to Tenant
as a lease bonus ("Lease Bonus") for entering into this Lease Agreement.
31. AMERICANS WITH DISABILITIES ACT COMPLIANCE. Landlord shall only pay
for Americans with Disabilities Act ("ADA") compliance items that are actually
identified by the City of San Diego and shall not be responsible for alterations
that are considered Tenant elective or any code compliance issues that result
from any improvements to be constructed at the Building or Premises by Tenant.
As an example, if Tenant builds additional offices in the Premises and a fire
corridor results from such construction, Tenant shall be responsible for the
cost to create such a corridor and Landlord shall have no liability with regard
to said construction; but if Tenant builds additional offices, and ADA bathroom
upgrades are required in existing bathrooms as a condition of approval for
Tenant's construction, Landlord shall be responsible for such upgrade costs.
32. AUDIT OF OPERATING EXPENSES. Tenant, at Tenant's sole cost, shall have
the right to review and audit the Expense records for the Project and Premises
at Landlord's office with reasonable notice, not more frequently than one time
per year. Landlord agrees to be prudent and reasonable in the management of thc
Project and Premises in order to minimize the Expenses.
33. RENEWAL OPTION. If Tenant is not in default under any of the terms and
conditions of this Lease, at the time Tenant exercises such option, Tenant shall
have one (1) three (3) year option to renew (the "Option") the Lease for the
Premises at the then current market rate. The then current market rate
("Market") shall be defined as similar buildings in the area and include all
concessions that would be offered, if any, to a tenant of comparable credit
worthiness. Said Option shall not take into consideration the value of any
improvements installed by Tenant during the term of this Lease. Should Tenant
wish to exercise its option to renew, Tenant must give a six (6) month written
notice to Landlord mailed certified by the United States Postal Service.
34. SUBLEASING. Notwithstanding anything to the contrary contained in this
Lease, Tenant shall have the right to sublease or assign any portion of the
Premises to any subtenant with Landlord's written consent, which consent shall
not be unreasonably withheld. All rent received by Tenant from its subtenants in
excess of the rent payable by Tenant to Landlord under this Lease shall be paid
to Landlord after Tenant recaptures its reasonable costs of subleasing which
shall be limited to leasing commissions and tenant improvements constructed for
the subtenant by Tenant.
35. EARLY TERMINATION. Tenant shall have the right to terminate the lease
early ("Early Termination") on March 31, 2000 and again on March 31, 2001. To
exercise the Early Termination on March 31, 2000, Tenant must give written
notice to Landlord no later than September 30, 1999. To exercise the Early
Termination on March 31, 2001, Tenant must give written notice to Landlord no
later than September 30, 2000. Written notice of Early Termination must be sent
by certified mail through the United States Postal Service.
36. EARLY TERMINATION FEE. Upon Lease execution, Tenant shall tender a
termination fee (the "Termination Fee") to Landlord in the amount of $52,884.
The Termination Fee shall be retained by Landlord in a separate money market
account selected by Landlord in its sole discretion. All interest earned on said
Termination Fee money market account shall be paid to Tenant by Landlord on a
yearly basis in arrears. In the event Tenant does not exercise its right to
Early Termination on March 31, 2000, the Base Monthly Rent in October 1999 shall
be rent free and the November 1999 Base Monthly rent shall be $9,917.52. At this
time, the Termination Fee money market account will be reduced by $ l2,225 which
shall be retained by Landlord in exchange for the free rent in October 1999 and
the reduced rent in November 1999. In the event Tenant does not exercise its
right to Early Termination on March 31, 2001, the Base Monthly Rent in October
2000, November 2000 and December 2000 shall be rent free and the Base Monthly
Rent in January 2001 shall be $4,954.60. At this time, the Termination Fee money
market account will be reduced by $40,659 to zero and the funds will be retained
by Landlord in exchange for the free rent in October, November and December 2000
and the reduced rent in January 2001. If Tenant exercises its right to Early
Termination on March 31, 2000 Landlord
15
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shall close the separate money market account and shall retain the entire
$52,884. If Tenant exercises its right to Early Termination on March 31, 2001,
Landlord shall close the separate money market account and shall retain the
$40,659. In the event this Lease terminates for reasons of Destruction or
Condemnation, the outstanding amount of the Termination Fee shall be refunded to
Tenant. The Termination Fee shall not be considered or recharacterized as a
security deposit.
37. NON-DISTURBANCE. Landlord shall make its best efforts to secure a
commercially reasonable non-disturbance agreement from any existing or future
mortgage lender or ground lessor for the Project on behalf of Tenant. Tenant
shall provide the form of non-disturbance agreement to Landlord that it wishes
to be signed by Landlord's mortgage lender(s) and ground lessor(s).
38. SIGNAGE. Tenant shall be allowed, with Landlord's reasonable consent,
to install a sign at the Project on the building in conformance with all City of
San Diego laws and ordinances, the Planned Industrial Development Permit, the
CC&R's recorded that affect the property, and any other laws and ordinances
which may affect the Property and the Premises in accordance with Exhibit "C"
attached hereto.
39. BUILDING WARRANTY. Notwithstanding anything to the contrary contained
in this Lease, Landlord, at Landlord's sole cost shall warrant that the roof,
existing equipment and HVAC systems, windows and seals, structural components,
and all mechanical, electrical and plumbing systems at the Premises and the
Project are in good working and waterproof condition. Landlord, at Landlord's
sole cost, shall deliver the Premises and Project in a condition that meets with
all current codes and conditions and the American's with Disabilities Act. Any
such costs for Landlord to comply with this paragraph shall be bid separately by
Tenant's contractor, at Landlord's option to use such contractor, and Landlord
shall reimburse Tenant for that portion of the work ten (10) working days
following receipt of proof of payment by Tenant.
40. HAZARDOUS MATERIALS. Notwithstanding anything to the contrary contained
in this Lease, Landlord shall provide to Tenant the existing February 1992
Phase I Environmental Report. Tenant's review and approval of said report shall
be a condition to entering into the Lease. Once Tenant has executed this Lease,
said condition shall be deemed waived and satisfied. Landlord shall indemnify
Tenant against any hazardous materials that may have existed prior to
February 1, 1998 in or upon the Project and Premises. Tenant shall indemnify
Landlord against Tenant's use of any hazardous materials and shall use any such
materials in compliance with all governmental codes and regulations. SEE
ADDENDUM A-4.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of the date
first above written.
LANDLORD JUDD/KING NO. 1, a California general partnership
By: /s/ illegible
------------------------------------------
TENANT: DIGIRAD CORPORATION, a Delaware corporation
By: /s/ Karen Klause
------------------------------------------
Karen Klause - Chief Executive Officer
<Page>
ADDENDUM
A-1 Notwithstanding any provision of this Lease to the contrary, the following
shall not be included within Operating Expenses: (i) damage and repairs
attributable to fire or other casualty capable of insurance under a standard
form of "all-risk" property insurance on the Building or Project; (ii) damage
and repairs covered under any other insurance policy carried by Landlord in
connection with the Project, to the extent that Tenant's insurance is not the
primary coverage therefor, (iii) damage and repairs necessitated by the
negligence or willful misconduct of Landlord, its partners, employees, agents,
contractors or invitees; (iv) reserves for the repair, replace or improvement of
the Building or Project; (v) all rental and other costs due under any ground or
underlying lease; (vi) expenses incurred by Landlord in connection with services
or other benefits which are not offered to Tenant or items and services for
which Tenant or any other occupant of the Project reimburses Landlord (other
than through its share of Operating Expenses) or which Landlord provides
selectively to one or more tenants, other than Tenant, without reimbursement,
and the cost of which is included as Operating Expenses; (vii) the cost of
repairing any structural defects in the Building or Project and repairing any
material defects in the design, materials or workmanship of the Building or
Project; and (viii) Landlord's general overhead and administrative expenses.
A-2 Real property taxes and assessments shall not include (i) reserves for
future real property taxes and assessments; and (ii) any documentary transfer
taxes arising from a voluntary transfer of the Building or any portion of the
Project by Landlord. If a reduction in real property' taxes is obtained for any
year of the Term during which Tenant paid tenant's percentage of such real
property taxes, then the Expenses for such year shall be retroactively adjusted
and Landlord shall provide Tenant with a credit against Tenant's next due
obligations for rent or, if none, refund such amount to Tenant within thirty
(30) days based on such adjustment. If, by applicable law, any taxes or
assessments may be paid in installments at the option of the taxpayer, then
whether or not Landlord elects to pay taxes and assessments in such
installments, Tenant's liability for such taxes and assessments shall be
computed as if such election had been made, and only the installments thereof
which would have become due during the term of the Lease shall be included in
Tenant's tax obligations.
A-3 Any provision in this Lease to the contrary notwithstanding, Landlord's
consent shall not be required for an assignment or subletting to: (a) any entity
who controls, is controlled by or is under common control with Tenant; (b) any
successor corporation resulting from reincorporation in another jurisdiction,
merger, consolidation, non-bankruptcy reorganization or governmental action
(provided that Tenant's net worth and ability to perform its obligations under
this Lease are not reduced, and the occupancy density of the Premises is not
materially increased, as a result of such merger or consolidation); or (c) to
any person or legal entity which acquires all the assets of Tenant as a going
concern of the business being conducted on the Premises (each of the foregoing
is hereinafter referred to as a "Tenant Affiliate"; provided that before such
assignment shall be effective, (a) said Tenant Affiliate shall assume, in full,
the obligations of Tenant under this Lease, (b) Landlord shall be given written
notice of such assignment and assumption and (c) the use of the Premises by the
Tenant Affiliate shall be for the permitted uses set forth in Section 1.4 only.
For purposes of this paragraph, the term "control" means possession directly or
indirectly, of the power to direct or cause the direction of the management,
affairs, and policies of anyone, whether through the ownership of voting
securities, by contract or otherwise. The sale or transfer of Tenant's capital
stock, including without limitation a transfer in connection with a merger,
consolidation or non-bankruptcy reorganization of Tenant and any sale through a
public stock exchange, shall not be deemed an assignment, subletting or other
transfer or encumbrance of the Lease or the Premises.
A-4 If the release of any Hazardous Materials on, under, from or about the
Premises or the Project caused by Landlord, its authorized agents or employees,
and not introduced by Tenant, its agents, employees, contractors, licensees, or
invitees results in (i) injury to any person or (ii) injury to or any
contamination of the Premises or Project at levels which require clean up or
remediation under applicable laws, Landlord, at its expense (which shall not be
included in Operating Expenses), shall promptly take all actions necessary to
return the Premises and the Project to the condition existing prior to the
introduction of such Hazardous Materials, or to such condition that is
satisfactory to all governmental agencies asserting jurisdiction and to remedy
or repair any such injury or contamination, including without limitation, any
clean up remediation, removal, disposal, neutralization or other treatment of
any such Hazardous Materials. If the
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release of Hazardous Materials caused by Landlord, its authorized agents or
employees, renders the Premises untenantable in whole or in part or results
in Tenant being required to vacate the Premises in whole or in part pursuant
to an order or requirement of any governmental agency or authority, then the
Base Monthly Rent and Expenses and other charges, if any, payable by Tenant
hereunder for the period during which the Premises (or a portion thereof)
remains so impaired shall be abated in proportion to the agreed of which
Tenant's use of the Premises is impaired and for the period of such
impairment. If the period of such impairment shall exceed three (3) months,
Tenant shall have the right to terminate this Lease upon written notice to
Landlord given within tell (10) days following the passage of such three (3)
month period. Tenant's termination of this Lease pursuant to this paragraph
shall be effective as of the date of such notice.
<Page>
EXHIBIT A
[FLOOR PLAN]
<Page>
EXHIBIT "B"
The Project
[FLOOR PLAN]
<Page>
EXHIBIT C
SIGN REGULATIONS:
These sign regulations have been established for the purpose of maintaining the
overall appearance of the project at 9350 Trade Place, San Diego, CA 92126.
Conformance will be strictly enforced. Any sign installed that does not conform
to the sign regulations or have specific written approval of Landlord will be
brought immediately to conformity at the expense of the Tenant.
General Requirements:
1. A drawing of all proposed tenant signs indicating copy, sizes, color
and location shall be submitted to Landlord, prior to fabrication or
installation of any sign.
2. Approval of all copy and/or logo design and color must be obtained
from Lessor prior to fabrication of installation of any sign.
3. Tenant shall be responsible for the fulfillment of requirements set
forth in this Exhibit.
4. Sign fabrication and installation shall be paid for by the Tenant.
General Specifications:
1. Tenant will be allowed the use of his own logo/logotype for his tenant
identification. When tenant logo and logotype are used together, then
logo and logotype shall not exceed two (2) feet in height (measured
capital height). If logo is used alone, then maximum height of logo can
be increased to three (3) feet. Logotype, however, can never exceed two
(2) feet in height. Maximum sign area shall not exceed forty (40)
square feet. The area shall be fabricated as individual letters and, if
illuminated, shall be internally illuminated without a halo. No
illuminated sign cabinets shall be permitted.
2. All signs and their installation must comply with all local, building
and electrical codes.
3. Signs visible from the exterior of the building, if illuminated, shall
be internally illuminated without a halo, but no signs or any other
contrivance shall be devised or constructed so as to rotate, gyrate,
blink, move, or appear to move in any fashion.
4. Any damage to the building caused by removal of any sign will be
repaired by the Tenant at Tenant's sole expense.
5. Except as provided herein, no advertising placards, banners, pennants,
insignia, trademark or other descriptive material shall be affixed to
or maintained upon any automated machine, glass panes of the building,
landscaped areas, streets, or parking areas.
<Page>
FIRST AMENDMENT TO LEASE
This First Amendment to Leases entered into as of January 27, 1998, by
and between Judd/King No. 1 ("Landlord") and Digirad Corporation, a Delaware
Corporation ("Tenant") with reference to the following facts:
A. On or about January 27, 1998, Landlord and Tenant entered
into a lease ("Lease") for the premises described as follows:
9350 Trade Place, Suite A, San Diego, CA 92126.
B. Landlord and Tenant now desire to amend the Lease as set
forth herein.
NOW, THEREFORE, the parties hereto agree as follows:
1. CONDEMNATION. Section 17.4 of the Lease is hereby
amended and restated in its entirety as follows:
17.4 AWARD. Any award for the taking of all or any part
of the Premises as a result of any Condemnation for any
payment under the threat of exercise of Condemnation shall be
the property of Landlord, whether such Award shall be made as
compensation for diminution in value of the leasehold or for
the taking of the fee or as severance damages or for any other
reason; provided, however, that Tenant shall be entitled to
any Award expressly and separately made for loss of or damage
to Tenant's trade fixtures and removable personal property and
relocation expenses.
2. DEFAULT. Section 19 of the Lease is hereby amended
by adding thereto the following sentence:
In addition, the occurrence of any of the following shall also
constitute a default by Tenant: (i) the making by Tenant of
any general arrangement or assignment for the benefit of
creditors; (ii) Tenant becomes a "debtor" as defined in
12 U.S.C. Section 101 or any successor statute thereto
(unless, in the case of a petition filed against Tenant, the
same is dismissed within 60 days); (iii) the appointment of a
trustee or receiver to take possession of substantially all of
Tenant's assets located at the Premises or of Tenant's
interest in this Lease, where possession is not restored to
Tenant within 30 days; or (iv) the attachment, execution or
other judicial seizure of substantially all of Tenant's assets
located at the Premises or of Tenant's interest in this Lease,
where such seizure is not discharged within 30 days.
3. SUBORDINATION. Section 22 of the Lease is hereby
amended such that all references to a deed of trust or mortgage shall refer to a
first and senior deed of trust or mortgage, as the case may be.
<Page>
4. LIMITATION OF LIABILITY. Section 27 of the Lease is
hereby amended and restated in its entirety as follows:
27. LIMITATION OF LIABILITY. In consideration of the
benefits accruing hereunder, Tenant agrees that in the event
of any actual or alleged failure, breach or default of this
Lease by Landlord:
a. The sole and exclusive remedy shall be
against the property of which the Premises are a part; and
b. Neither Landlord, any partner of Landlord if
Landlord is a partnership, or any shareholder of Landlord if
Landlord is a corporation shall be sued or named as a party in
any suit or action (except as may be necessary to secure
jurisdiction over the Property of which the Premises are a
part), and no judgment may be taken against any such person.
5. LANDLORD SUCCESSORS. Section 28.6 is hereby amended
and restated in its entirety as follows:
28.6 LANDLORD SUCCESSORS. In the event of a sale,
conveyance, foreclosure action or deed in lieu of foreclosure
by Landlord of the Project, the same shall operate to release
Landlord from any liability under this Lease, and in such
event Landlord's successor in interest shall be solely
responsible for all obligations of Landlord under this Lease
arising after such sale or conveyance; provided however, such
successor shall not be liable for any prior defaults of
Landlord.
6. FULL FORCE AND EFFECT. Except as set forth herein, the Lease
is unmodified and in full force and effect.
LANDLORD:
Judd/King No. 1,
a California general partnership
By: /s/ illegible
----------------------------------------
TENANT:
Digirad Corporation, a Delaware corporation
By: /s/ Karen Klause
----------------------------------------
(printed name and title)
Karen Clause - Chief Executive Officer