California-Carlsbad-5931 Darwin Court Lease - The Childs Family Investment Partnership LP, The A.J. Gardner Family Trust and Immune Response Corp.
AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION
STANDARD INDUSTRIAL COMMERCIAL SINGLE-TENANT LEASE - NET
(DO NOT USE THIS FORM FOR MULTI-TENANT BUILDINGS)
1. BASIC PROVISIONS ("BASIC PROVISIONS")
1.1 PARTIES: This Lease ("Lease"), dated for reference purposes only,
December 15, 1997, is made by and between The Childs Family Investment
Partnership, L.P. and The A.J. Gardner Family Trust, U/T/A 3/5/81 ("Lessor"),
and The Immune Response Corporation, a Delaware Corporation ("Lessee"),
(collectively the "Parties," or individually a "Party").
1.2 PREMISES: That certain real property, including all improvements
therein or to be provided by Lessor under the terms of this lease, and commonly
known as 5931 Darwin Court, Carlsbad, California 92008, located in the County of
San Diego, State of California and generally described as (describe briefly the
nature of the property and, if applicable, the "Project", if the property is
located within a Project) An approximately 31,200 square foot concrete tilt up
freestanding building and appurtances located in the Carlsbad Research Center.
(See Addendum) ("Premises"). (See also Paragraph 2)
1.3 TERM: Ten (10) years and Zero (0) months ("Original Term") commencing
See Addendum ("Commencement Date") and ending one hundred twenty (120) months
thereafter ("Expiration Date"). (See also Paragraph 3)
1.4 EARLY POSSESSION: See Addendum ("Early Possession Date"). (See also
Paragraphs 3.2 and 3.3)
1.5 BASE RENT: $18,408.00 (See Addendum) per month ("Base Rent"), payable
in advance on the first (1st) day of each month commencing on the Commencement
date. (See also Paragraph 4)
/X/ If this box is checked, there are provisions in this Lease for the Base
Rent to be adjusted.
1.6 BASE RENT PAID UPON EXECUTION: $18,408.00 (Eighteen Thousand Four
Hundred Eight and no/100ths Dollars) as Base Rent for the period beginning with
the first month following the Commencement Date.
1.7 SECURITY DEPOSIT: $24,024.00 ("Security Deposit"). (See also
Paragraph 5)
1.8 AGREED USE: See Addendum. (See also Paragraph 6)
1.9 INSURING PARTY. Lessor is the "Insuring Party" unless otherwise
stated herein. (See also Paragraph 8)
1.10 REAL ESTATE BROKERS: (See also Paragraph 15)
(a) REPRESENTATION: The following real estate brokers (collectively,
the "Brokers") and brokerage relationships exist in this transaction (check
applicable boxes):
/X/ David Onosko, CB Commercial Real Estate Group, Inc. represents Lessor
exclusively ("Lessor's Broker");
/X/ William Driscoll, CB Commercial Real Estate Group, Inc. represents Lessee
exclusively ("Lessee's Broker"); or
/ / ____________________ represents both Lessor and Lessee ("Dual Agency").
(b) PAYMENT TO BROKERS: Upon execution and delivery of this Lease by
both Parties, Lessor shall pay to the Broker the fee agreed to in their separate
written agreement (or if there is no such agreement, the sum of _____% of the
total Base Rent for the brokerage services rendered by said Broker).
1.11 GUARANTOR. The obligations of the Lessee under this Lease are to be
guaranteed by N/A ("Guarantor"). (See also Paragraph 37)
1.12 ADDENDA AND EXHIBITS. Attached hereto is an Addendum or Addenda
consisting of 15 Pgs through ____ and Exhibits 1.2, 5, 6.2, 50 and 56, all of
which constitute a part of this Lease.
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2. PREMISES.
2.1 LETTING. Lessor hereby leases to Lessee, and Lessee hereby leases
from Lessor, the Premises. for the term, at the rental, and upon all of the
terms, covenants and conditions set forth in this Lease. Unless otherwise
provided herein, any statement of size set forth in this Lease, or that may have
been used in calculating rental. is an approximation which the Parties agree is
reasonable and the rental based thereon is not subject to revision whether or
not the actual size is more or less.
2.2 CONDITION. Lessor shall deliver the Premises to Lessee broom clean
and free of debris on the Commencement Date or the Early Possession Date,
whichever first occurs ("Start Date"), and, so long as the required service
contracts described in Paragraph 7.1(b) below are obtained by Lessee within
thirty (30) days following the Start Date, warrants that the existing
electrical, plumbing, fire sprinkler, lighting, heating, ventilating and air
conditioning systems ("HVAC"), loading doors, if any, and all other such
elements in the Premises, other than those constructed by Lessee, shall be in
good operating condition on said date and that the structural elements of the
roof, bearing walls and foundation of any buildings on the Premises (the
"Building") shall be free of material defects. If a non-compliance with said
warranty exists as of the Start Date, Lessor shall, as Lessor's sole obligation
with respect to such matter, except as otherwise provided in this Lease,
promptly after receipt of written notice from Lessee setting forth with
specificity the nature and extent of such non-compliance, rectify same at
Lessor's expense. If, after the Start Date, Lessee does not give Lessor written
notice of any non-compliance with this warranty within (i) one year* as to the
surface of the roof and the structural portions of the roof, foundations and
bearing walls, (ii) six (6) months as to the HVAC systems, (iii) thirty (30)
days as to the remaining systems and other elements of the Building, correction
of such non-compliance shall be the obligation of Lessee at Lessee's sole cost
and expense. *as to patent defects and three (3) years as to latent defects
2.3 COMPLIANCE. Lessor warrants that the improvements on the Premises
comply with all applicable laws, covenants or restrictions of record, building
codes, regulations and ordinances ("Applicable Requirements") in effect on the
Start Date. Said warranty does not apply to the use to which Lessee will put the
Premises or to any Alterations or Utility Installations (as defined in Paragraph
7.3(a)) made or to be made by Lessee. NOTE: Lessee is responsible for
determining whether or not the zoning is appropriate for Lessees intended use,
and acknowledges that past uses of the Premises may no longer be allowed If the
Premises do not comply with said warranty, Lessor shall, except as otherwise
provided, promptly after receipt of written notice from Lessee setting forth
with specificity the nature and extent of such noncompliance, rectify the same
at Lessors expense. If Lessee does not give Lessor written notice of a
non-compliance with this warranty within six (6) months following the Start
Date, correction of that non-compliance shall be the obligation of Lessee at
Lessee's sole cost and expense. If the Applicable Requirements are hereafter
changed (as opposed to being in existence at the Start Date, which is addressed
in Paragraph 6.2(e) below) so as to require during the term of this Lease the
construction of an addition to or an alteration of the Building, the remediation
of any Hazardous Substance. or the reinforcement or other physical modification
of the Building ("Capital Expenditure"), Lessor and Lessee shall allocate the
cost of such work as follows:
(a) Subject to Paragraph 2.3(c) below, if such Capital Expenditures
are required as a result of the specific and unique use of the Premises by
Lessee as compared with uses by tenants in general, Lessee shall be fully
responsible for the cost thereof, provided, however that if such, Capital
Expenditure is required during the last two (2) years of this Lease and the cost
thereof exceeds six (6) months' Base Rent, Lessee may instead terminate this
Lease unless Lessor notifies Lessee, in writing, within ten (10) days after
receipt of Lessee's termination notice that Lessor has elected to pay the
difference between the actual cost thereof and the amount equal to six (6)
months' Base Rent. If Lessee elects termination., Lessee shall immediately cease
the use of the Premises which requires such Capital Expenditure and deliver to
Lessor written notice specifying a termination date at least ninety (90) days
thereafter. Such termination date shall, however, in no event be earlier than
the last day that Lessee could legally utilize the Premises without commencing
such Capital Expenditure.
(b) If such Capital Expenditure is not the result of the specific and
unique use of the Premises by Lessee (such as, governmentally mandated seismic
modifications), then Lessor and Lessee shall allocate the obligation to pay for
such costs pursuant to the provisions of Paragraph 7.1 (c): provided, however,
that if such Capital Expenditure is required during the last two years of this
Lease or if Lessor reasonably determines that it is not economically feasible to
pay its share thereof, Lessor shall have the option to terminate this Lease upon
ninety (90) days prior written notice to Lessee unless Lessee notifies Lessor,
in writing, within ten (10) days after receipt of Lessor's termination notice
that Lessee will pay for such Capital Expenditure. If Lessor does not elect to
terminate, and fails to tender its share of any such Capital
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Expenditure, Lessee may advance such funds and deduct same, with Interest,
from Rent until Lessor's share of such costs have been fully paid. If Lessee
is unable to finance Lessor's share, or if the balance of the Rent due and
payable for the remainder of this Lease is not sufficient to fully reimburse
Lessee on an offset basis, Lessee shall have the right to terminate this
Lease upon thirty (30) days written notice to Lessor.
(c) Notwithstanding the above, the provisions concerning Capital
Expenditures are intended to apply only to non-voluntary, unexpected, and new
Applicable Requirements. If the Capital Expenditures are instead triggered by
Lessee as a result of an actual or proposed in use, change in intensity of
use, or modification to the Premises then, and in that event, Lessee shall be
fully responsible for the cost thereof, and Lessee shall not have any right
to terminate this Lease.
2.4 ACKNOWLEDGEMENTS. Lessee acknowledges that: (a) it has been advised
by Lessor and/or Brokers to satisfy itself with respect to the condition of the
Premises (including but not limited to the electrical, HVAC and fire sprinkler
systems, security, environmental aspects, and compliance with Applicable
Requirements), and their suitability for Lessee's intended use, (b) Lessee has
made such investigation as it deems necessary with reference to such matters and
assumes all responsibility therefor as the same relate to its occupancy of the
Premises, and (c) neither Lessor, Lessor's agents, nor any Broker has made any
oral or written representations or warranties with respect to said matters other
than as set forth in this Lease. In addition, Lessor acknowledges that: (a)
Broker has made no representations, promises or warranties concerning Lessee's
ability to honor the Lease or suitability to occupy the Premises, and (b) it is
Lessor's sole responsibility to investigate the financial capability and/or
suitability of all proposed tenants.
2.5 LESSEE AS PRIOR OWNER/OCCUPANT. The warranties made by Lessor in
Paragraph 2 shall be of no force or effect if immediately Prior to the Start
Date Lessee was the owner or occupant of the Premises. In such event, Lessee
shall be responsible for any necessary corrective work.
3. TERM.
3.1 TERM. The Commencement Date, Expiration Date and Original Term of
this Lease are as specified in Paragraph 1.3.
3.2 EARLY POSSESSION. If Lessee totally or partially occupies the
Premises prior to the Commencement Date, the obligation to pay Base Rent shall
be abated for the period of such early possession. All other terms of this Lease
(including but not limited to the obligations to pay Real Property Taxes and
insurance premiums and to maintain the Premises) shall, however, be in effect
during such period. Any such early possession shall not affect the Expiration
Date.
3.3 DELAY IN POSSESSION. Lessor agrees to use its best commercially
reasonable efforts to deliver possession of the Premises to Lessee by
December 31, 1997. If, despite said efforts, Lessor is unable to deliver
possession as agreed, Lessor shall not be subject to any liability therefor, nor
shall such failure affect the validity of this Lease. Lessee shall not,
however, be obligated to pay Rent or perform its other obligations until it
receives possession of the Premises. If possession is not delivered within
sixty (60) days after the Commencement Date, Lessee may, at its option, by
notice in writing within ten (10) days after the end of such sixty (60) day
period, cancel this Lease, in which event the Parties shall be discharged from
all obligations hereunder. If such written notice is not received by Lessor
within said ten (10) day period, Lessee's right to cancel shall terminate.
Except as otherwise provided, if possession is not tendered to Lessee *by
December 31, 1997 the April 1, 1998 date in 1.3 shall be extended by the number
of days beyond December 31, 1997 that the Lessor delivered possession, but minus
any days of delay caused by the acts or omissions of Lessee. If possession of
the Premises is not delivered within four (4) months after December 31, 1997,
this Lease shall terminate unless other agreements are reached between Lessor
and Lessee, in writing.
3.4 LESSEE COMPLIANCE. Lessor shall not be required to tender possession
of the Premises to Lessee until Lessee complies with its obligation to provide
evidence of insurance (Paragraph 8.5). Pending delivery of such evidence,
Lessee shall be required to perform all of its obligations under this Lease from
and after the Start Date, including the payment of Rent, notwithstanding
Lessor's election to withhold possession pending receipt of such evidence of
insurance. Further, if Lessee is required to perform any other conditions prior
to or concurrent with the Start Date, the Start Date shall occur but Lessor may
elect to withhold possession until such conditions are satisfied.
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4. RENT.
4.1 RENT DEFINED. All monetary obligations of Lessee to Lessor under the
terms of this Lease (except for the Security Deposit) are deemed to be rent
("Rent").
4.2 PAYMENT. Lessee shall cause payment of Rent to be received by Lessor
in lawful money of the United States, without offset or deduction, on or before
the day on which it is due. Rent for any period during the term hereof which is
for less than one (1) full calendar month shall be prorated based upon the
actual number of days of said month. Payment of Rent shall be made to Lessor at
its address stated herein or to such other persons or place as Lessor may from
time to time designate in writing. Acceptance of a payment which is less than
the amount then due shall not be a waiver of Lessor's rights to the balance of
such Rent, regardless of Lessor's endorsement of any check so stating. Rent
shall be payable to LANDCO and mailed to 432 So. Bentley Avenue, Los Angeles,
California 90049-3513.
5. SECURITY DEPOSIT. Lessee shall deposit with Lessor upon execution hereof
the Security Deposit as security for Lessee's faithful performance of its
obligations under this Lease. If Lessee fails to pay Rent, or otherwise
Defaults under this Lease, Lessor may use, apply or retain all or any portion of
said Security Deposit for the payment of any amount due Lessor or to reimburse
or compensate Lessor for any liability, expense, loss or damage which Lessor may
suffer or incur by reason thereof. If Lessor uses or applies all or any portion
of said Security Deposit, Lessee shall within ten (10) days after written
request therefor deposit monies with Lessor sufficient to restore said Security
Deposit to the full amount required by this Lease. If the Base Rent increases
during the term of this Lease, Lessee shall, upon written request from Lessor,
deposit additional moneys with Lessor so that the total amount of the Security
Deposit shall at ail times bear the same proportion to the increased Base Rent
as the initial Security Deposit bore to the initial Base Rent. Should the
Agreed Use be amended to accommodate a material change in the business of Lessee
or to accommodate a sublessee or assignee, Lessor shall have the right to
increase the Security Deposit to the extent necessary, in Lessors reasonable
judgment, to account for any increased wear and tear that the Premises may
suffer as a result thereof. If a change in control of Lessee occurs during this
Lease and following such change the financial condition of Lessee is, in
Lessor's reasonable judgment, significantly reduced, Lessee shall deposit such
additional monies with Lessor as shall be sufficient to cause the Security
Deposit to be at a commercially reasonable level based on said change in
financial condition. Lessor shall not be required to keep the Security Deposit
separate from its general accounts. Within fourteen (14) days after the
expiration or termination of this Lease, if Lessor elects to apply the Security
Deposit only to unpaid Rent, and otherwise within thirty (30) days after the
Premises have been vacated pursuant to Paragraph 7.4(c) below, Lessor shall
return that portion of the Security Deposit not used or applied by Lessor. No
part of the Security Deposit shall be considered to be held in trust, to bear
interest or to be prepayment for any monies to be paid by Lessee under this
Lease.
6. USE.
6.1 USE. Lessee shall use and occupy the Premises only for the Agreed
Use, or any other legal use which is reasonably comparable thereto, and for no
other purpose, Lessee shall not use or permit the use of the Premises in a
manner that is unlawful, creates damage, waste or a nuisance, or that disturbs
owners and/or occupants of, or causes damage to neighboring properties. Lessor
shall not unreasonably withhold or delay its consent to any written request for
a modification of the Agreed Use, so long as the same will not impair the
structural integrity of the improvements on the Premises or the mechanical or
electrical systems therein, is not significantly more burdensome to the
Premises. If Lessor elects to withhold consent, Lessor shall within five (5)
business days after such request give written notification of same, which notice
shall include an explanation of Lessor's objections to the change in use.
6.2 HAZARDOUS SUBSTANCES. (See Addendum)
(a) REPORTABLE USES REQUIRE CONSENT. The term "Hazardous Substance"
as used in this Lease shall mean any product, substance, or waste whose
presence, use, manufacture, disposal, transportation, or release, either by
itself or in combination with other materials expected to be on the Premises, is
either: (i) potentially injurious to the public health, safety or welfare, the
environment or the Premises, (ii) regulated or monitored by any governmental
authority, or (iii) a basis for potential liability of Lessor to any
governmental agency or third party under any applicable statute or common law
theory. Hazardous Substances shall include, but not be limited to,
hydrocarbons, petroleum, gasoline, and/or crude oil or any products, by-products
or fractions thereof, Lessee shall not engage in any activity in or on the
Premises which constitutes a Reportable Use of Hazardous Substances without the
express prior written consent of Lessor and timely compliance (at Lessee's
expense) with all Applicable Requirements. "Reportable Use" shall mean (i) the
installation or use
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of any above or below ground storage tank, (ii) the generation, possession,
storage, use, transportation, or disposal of a Hazardous Substance that
requires a permit from, or with respect to which a report, notice,
registration or business plan is required to be filed with, any governmental
authority, and/or (ml the presence at the Premises of a Hazardous Substance
with respect to which any Applicable Requirements requires that a notice be
given to persons entering or occupying the Premises or neighboring
properties. Notwithstanding the foregoing, Lessee may use any ordinary and
customary materials reasonably required to be used in the normal course of
the Agreed Use, so long as such use is in compliance with all Applicable
Requirements, is not a Reportable Use, and does not expose the Premises or
neighboring property to any meaningful risk of contamination or damage or
expose Lessor to any liability therefor. In addition, Lessor may condition
its consent to any Reportable Use upon receiving such additional assurances
as Lessor reasonably deems necessary to protect itself, the public, the
Premises and/or the environment against damage, contamination, injury and/or
liability, including, but not limited to, the installation (and removal on or
before Lease expiration or termination) of protective modifications (such as
concrete encasements) and/or increasing the Security Deposit.
(b) DUTY TO INFORM LESSOR. If Lessee knows, or has reasonable cause
to believe, that a Hazardous Substance has come to be located in, on, under or
about the Premises, other than as previously consented to by Lessor, Lessee
shall immediately give written notice of Such fact to Lessor, and provide Lessor
with a copy of any report, notice, claim or other documentation which it has
concerning the presence of such Hazardous Substance.
(c) LESSEE REMEDIATION. Lessee shall not cause or permit any
Hazardous Substance to be spilled or released in, on, under, or about the
Premises (including through the plumbing or sanitary sewer system) and shall
promptly, at Lessee's expense, take all investigatory and/or remedial action
reasonably recommended, whether or not formally ordered or required, for the
cleanup of any contamination of, and for the maintenance, security and/or
monitoring of the Premises or neighboring properties, that was caused or
materially contributed to by Lessee, or pertaining to or involving any Hazardous
Substance brought onto the Premises during the term of this Lease, by or for
Lessee, or any third party.
(d) LESSEE INDEMNIFICATION. Lessee shall indemnify, defend and hold
Lessor, its agents, employees, lenders and ground lessor, if any, harmless from
and against any and all loss of rents and/or damages, liabilities, judgments,
claims, expenses, penalties, and attorneys' and consultants' fees arising out of
or involving any Hazardous Substance brought onto the Premises by or for Lessee,
or any third party (provided, however, that Lessee shall have no liability under
this Lease with respect to underground migration of any Hazardous Substance
under the Premises from adjacent properties.* Lessee's obligations shall
include, but not be limited to, the effects of any contamination or injury to
person, property or the environment created or suffered by Lessee, and the cost
of investigation, removal, remediation, restoration and/or abatement, and shall
survive the expiration or termination of this Lease. No termination,
cancellation or release agreement entered into by Lessor and Lessee shall
release Lessee from its obligations under this Lease with respect to Hazardous
Substances, unless specifically so agreed by Lessor in writing at the time of
such agreement.
* unless migration is from an affiliated company
(e) LESSOR INDEMNIFICATION. Lessor and its successors and assigns
shall indemnify, defend, reimburse and hold Lessee, its employees and lenders,
harmless from and against any and all environmental damages, including the cost
of remediation, which existed as a result of Hazardous Substances on the
Premises prior to the Start Date or which are caused by the gross negligence or
willful misconduct of Lessor, its agents or employees. Lessor's obligations, as
and when required by the Applicable Requirements, shall include, but not be
limited to, the cost of investigation, removal, remediation, restoration and/or
abatement, and shall survive the expiration or termination of this Lease.
(f) INVESTIGATIONS AND REMEDIATIONS. Lessor shall retain the
responsibility and pay for any investigations or remediation measures required
by governmental entities having jurisdiction with respect to the existence of
Hazardous Substances on the Premises prior to the Start Date, unless such
remediation measure is required as a result of Lessee's use (including
"Alterations", as defined in paragraph 7.3(a) below) of the Premises, in which
event Lessee shall be responsible for such payment. Lessee shall cooperate
fully in any such activities at the request of Lessor, including allowing Lessor
and Lessor's agents to have reasonable access to the Premises at reasonable
times in order to carry out Lessor's investigative and remedial
responsibilities.
(g) LANDLORD TERMINATION OPTION. If a Hazardous Substance Condition
occurs during the term of this Lease, unless Lessee is legally responsible
therefor (in which case Lessee shall make the investigation and remediation
thereof required by the Applicable Requirements and this Lease shall continue in
full force and effect, but subject to
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Lessor's rights under Paragraph 6.2(d) and Paragraph 13), Lessor may, at
Lessor's option, either (i) investigate and remediate such Hazardous
Substance Condition, if required, as soon as reasonably possible at Lessor's
expense, in which event this Lease shall continue in full force and effect,
or (ii) if the estimated cost to remediate such condition exceeds twelve (12)
times the then monthly Base Rent or $100,000, whichever is greater, give
written notice to Lessee, within thirty (30) days after receipt by Lessor of
knowledge of the occurrence of such Hazardous Substance Condition, of
Lessor's desire to terminate this Lease as of the date sixty (60) days
following the date of such notice. In the event Lessor elects to give a
termination notice, Lessee may, within ten (10) days thereafter, give written
notice to Lessor of Lessee's commitment to pay the amount by which the cost
of the remediation of such Hazardous Substance Condition exceeds an amount
equal to twelve (12) times the then monthly Base Rent or $100,000, whichever
is greater. Lessee shall provide Lessor with said funds or satisfactory
assurance thereof within thirty (30) days following such commitment. In such
event, this Lease shall continue in full force and effect, and Lessor shall
proceed to make such remediation as soon as reasonably possible after the
required funds are available. If Lessee does not give such notice and
provide the required funds or assurance thereof within the time provided,
this Lease shall terminate as of the date specified in Lessor's notice of
termination.
6.3 LESSEE'S COMPLIANCE WITH APPLICABLE REQUIREMENTS. Except as otherwise
provided in this Lease, Lessee shall, at Lessee's sole expense, fully,
diligently and in a timely manner, materially comply with all Applicable
Requirements, the requirements of any applicable fire insurance underwriter or
rating bureau, and the recommendations of Lessor's engineers and/or consultants
which relate in any manner to the Premises, without regard to whether said
requirements are now in effect or become effective after the Start Date. Lessee
shall, within ten (10) days after receipt of Lessor's written request, provide
Lessor with copies of all permits and other documents, and other information
evidencing Lessee's compliance with any Applicable Requirements specified by
Lessor, and shall immediately upon receipt, notify Lessor in writing (with
copies of any documents involved) of any threatened or actual claim, notice,
citation, warning, complaint or report pertaining to or involving the failure of
Lessee or the Premises to comply with any Applicable Requirements.
6.4 INSPECTION; COMPLIANCE. Lessor and Lessor's "Lender" (as defined in
Paragraph 30 below) and consultants shall have the right to enter into Premises
at any time, in the case of an emergency, and otherwise at reasonable times, for
the purpose of inspecting the condition of the Premises and for verifying
compliance by Lessee with this Lease. The cost of any such inspections shall be
paid by Lessor, unless a violation of Applicable Requirements, or a
contamination is found to exist or be imminent, or the inspection is requested
or ordered by a governmental authority. In such case, Lessee shall upon request
reimburse Lessor for the cost of such inspections, so long as such inspection is
reasonably related to the violation or contamination.
7. MAINTENANCE; REPAIRS, UTILITY INSTALLATIONS; TRADE FIXTURES AND
ALTERATIONS.
7.1 LESSEE'S OBLIGATIONS.
(a) IN GENERAL. Subject to the provisions of Paragraph 2.2
(Condition), 2.3 (Compliance), 6.3 (Lessee's Compliance with Applicable
Requirements), 7.2 (Lessor's Obligations), 9 (Damage or Destruction), and 14
(Condemnation), Lessee shall, at Lessee's sole expense, keep the Premises,
Utility Installations, and Alterations in good order, condition and repair
(whether or not the portion of the Premises requiring repairs, or the means of
repairing the same, are reasonably or readily accessible to Lessee, and whether
or not the need for such repairs occurs as a result of Lessee's use, any prior
use, the elements or the age of such portion of the Premises), including, but
not limited to, all equipment or facilities, such as plumbing, heating,
ventilating, air-conditioning, electrical, lighting facilities, boilers,
pressure vessels, fire protection system, fixtures, walls (interior and
exterior), foundations, ceilings, roofs, floors, windows, doors, plate glass,
skylights, landscaping, driveways, parking lots, fences, retaining walls, signs,
sidewalks and parkways located in, on, or adjacent to the Premises. Lessee, in
keeping the Premises in good order, condition and repair, shall exercise and
perform good maintenance practices, specifically including the Procurement and
maintenance of the service contracts required by Paragraph 7.1(b) below.
Lessee's obligations shall include restorations, replacements or renewals when
necessary to keep the Premises and all improvements thereon or a part thereof in
good order, condition and state of repair, Lessee shall, during the term of this
Lease, keep the exterior appearance of the Building in a first-class condition
consistent with the exterior appearance of other similar facilities of
comparable age and size in the vicinity, including, when necessary, the exterior
repairing of the Building.
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(b) SERVICE CONTRACTS. Lessee shall, at Lessee's sole expense,
procure and maintain contracts, with copies to Lessor, in customary form and
substance for, and with contractors specializing and experienced in the
maintenance of the following equipment and improvements, if any, if and when
installed on the Premises: (i) HVAC equipment, (ii) boiler, and pressure
vessels, (iii) fire extinguishing systems, including fire alarm and/or smoke
detection, (iv) landscaping and irrigation systems, (v) roof covering and
drains, (vi) driveways and parking lots, (vii) clarifiers (viii) basic
utility feed to the perimeter of the Building, and (ix) any other equipment,
if reasonably required by Lessor. Lessee may use its own qualified personnel
with Lessor's approval which shall not be unreasonably withheld.
(c) REPLACEMENT. Subject to Lessees indemnification of Lessor as
set forth in Paragraph 8.7 below, and without relieving Lessee of liability
resulting from Lessee's failure to exercise and perform good maintenance
Practices, if the Basic Elements described in Paragraph 7.1(b) cannot be
repaired other than at a cost which is in excess of 50% of the cost of
replacing such Basic Elements, then such Basic Elements shall be replaced by
Lessor, and the cost thereof shall be prorated between the Parties and Lessee
shall only be obligated to pay, each month during the remainder of the term
of this Lease, on the date on which Base Rent is clue, an amount equal to the
product of multiplying the cost of such replacement by a fraction, the
numerator of which is one, and the denominator of which is the number of
months of the useful life of such replacement as such useful life is
specified pursuant to Federal income tax regulations or guidelines for
depreciation thereof (including interest on the unamortized balance as is
then commercially reasonable in the judgment of Lessor's accountants), with
Lessee reserving the right to prepay its obligation at any time.
7.2 LESSOR'S OBLIGATIONS. Subject to the provisions of Paragraphs 2.2
(Condition), 2.3 (Compliance), 9 (Damage or Destruction) and 14
(Condemnation), it is intended by the Parties hereto that Lessor have no
obligation, in any manner whatsoever, to repair and maintain the Premises, or
the equipment therein, all of which obligations are intended to be that of
the Lessee. It is the intention of the Parties that the terms of this Lease
govern the respective obligations of the Parties as to maintenance and repair
of the Premises, and they expressly waive the benefit of any statute now or
hereafter in effect to the extent it is inconsistent with the terms of this
Lease.
7.3 UTILITY INSTALLATIONS; TRADE FIXTURES; ALTERATIONS. (See Addendum)
(a) DEFINITIONS; CONSENT REQUIRED. The term "Utility
Installations" refers to all floor and window coverings, air lines, power
panels, electrical distribution, security and fire protection systems,
communication systems, lighting fixtures, HVAC equipment, plumbing, and
fencing in or on the Premises. The term "Alterations" shall mean any
modification of the improvements, other than Utility Installations or Trade
Fixtures, whether by addition or deletion, "Lessee Owned Alterations and/or
Utility Installations" are defined as Alterations and/or Utility
Installations made by Lessee that are not yet owned by Lessor pursuant to
Paragraph 7.4(a). Lessee shall not make any Alterations or Utility
Installations to the Premises without Lessor's prior written consent. Lessee
may, however, make non-structural Utility Installations to the interior of
the Premises (excluding the roof) without such consent but upon notice to
Lessor, as long as they are not visible from the outside, do not involve
puncturing, relocating or removing the roof or any existing walls, and the
cumulative cost thereof during this Lease as extended does not exceed $50,000
in the aggregate or $10,000 in any one year.
(b) CONSENT. Any Alterations or Utility Installations that Lessee
shall desire to make and which require the consent of the Lessor shall be
presented to Lessor in written form with detailed plans. Consent shall be
deemed conditioned upon Lessee's: (i) acquiring all applicable governmental
permits, (ii) furnishing Lessor with copies of both the permits and the plans
and specifications prior to commencement of the work, and (iii) compliance
with all conditions of said permits and other Applicable Requirements in a
prompt and expeditious manner. Any Alterations or Utility Installations
shall be performed in a workmanlike manner with good and sufficient
materials. Lessee shall promptly upon completion furnish Lessor with
as-built plans and specifications. For work which costs an amount equal to
the greater of one month's Base Rent, or $10,000. Lessor may condition its
consent upon Lessee providing a lien and completion pond in an amount equal
to one and one-half times the estimated cost of such Alteration or Utility
Installation and/or upon Lessee's posting an additional Security Deposit with
Lessor.
(c) INDEMNIFICATION. Lessee shall pay, when due, all claims for
labor or materials furnished or alleged to have been furnished to or for
Lessee at or for use on the Premises, which claims are or may be secured by
any mechanic's or materialmen's lien against the Premises or any interest
therein. Lessee shall give Lessor not less than ten (10) days' notice prior
to the commencement of any work in, on or about the Premises, and Lessor
shall have the right to post
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notices of non-responsibility. If Lessee shall contest the validity of any
such lien, claim or demand, then Lessee shall, at its sole expense defend and
protect itself, Lessor and the Premises against the same and shall pay and
satisfy any such adverse judgment that may be rendered thereon before the
enforcement thereof. If Lessor shall require, Lessee shall furnish a surety
bond in an amount equal to one and one-half times the amount of such
contested lien, claim or demand, indemnifying Lessor against liability for
the same. If Lessor elects to participate in any such action, Lessee shall
pay Lessor's attorneys fees and costs.
7.4 OWNERSHIP; REMOVAL; SURRENDER; AND RESTORATION.
(a) OWNERSHIP. Subject to Lessor's right to require removal or
elect ownership as hereinafter provided, all Alterations and Utility
Installations made by Lessee shall be the property of Lessee, but considered
a part of the Premises. Lessor may, at any time, elect in writing to be the
owner of all or any specified part of the Lessee Owned Alterations and
Utility Installations. Unless otherwise instructed per Paragraph 7.4(b)
hereof, all Lessee Owned Alterations and Utility Installations shall, at the
expiration or termination of this Lease, become the property of Lessor and be
surrendered by Lessee with the Premises.
(b) REMOVAL. By delivery to Lessee of written notice from Lessor
not earlier than ninety (90) and not later than thirty (30) days prior to the
end of the term of this Lease, Lessor may require that any or all Lessee
Owned Alterations or Utility Installations be removed by the expiration or
termination of this Lease. Lessor may require the removal at any time of all
or any part of any Lessee Owned Alterations or Utility Installations made
without the required consent.
(c) SURRENDER/RESTORATION. Lessee shall surrender the Premises by
the Expiration Date or any earlier termination date, with all of the
improvements, parts and surfaces thereof broom clean and free of debris, and
in good operating order, condition and state of repair, ordinary wear and
tear excepted. "Ordinary wear and tear" shall not include any damage or
deterioration that would have been prevented by good maintenance practice.
Lessee shall repair any damage occasioned by the installation, maintenance or
removal of Trade Fixtures, Lessee Owned Alterations and/or Utility
Installations, furnishings, and equipment as well as the removal of any
storage tank installed by or for Lessee, and the removal, replacement, or
remediation of any soil, material or groundwater contaminated by Lessee.
Trade Fixtures shall remain the property of Lessee and shall be removed by
Lessee. The failure by Lessee to timely vacate the Premises pursuant to this
Paragraph 7.4(c) without the express written consent of Lessor shall
constitute a holdover under the provisions of Paragraph 26 below.
8. INSURANCE; INDEMNITY.
8.1 PAYMENT FOR INSURANCE. Lessee shall pay for all insurance required
under Paragraph 8 except to the extent of the cost attributable to liability
insurance carried by Lessor under Paragraph 8.2(b) in excess of $2,000,000
per occurrence. Premiums for policy periods commencing prior to or extending
beyond the Lease term shall be prorated to correspond to the Lease term.
Payment shall be made by Lessee to Lessor on a monthly basis along with
other estimated Triple Net Expenses.
8.2 LIABILITY INSURANCE.
(a) CARRIED BY LESSEE. Lessee shall obtain and keep in force a
Commercial General Liability Policy of Insurance protecting Lessee and Lessor
against claims for bodily injury, personal injury and property damage based
upon or arising out of the ownership, use, occupancy or Maintenance of the
Premises and all areas appurtenant thereto. Such insurance shall be on an
occurrence basis providing single limit coverage in an amount not less than
$2,000,000 per occurrence with an "Additional Insured-Managers or Lessors of
Premises Endorsement" and contain the "Amendment of the Pollution Exclusion
Endorsement" for damage caused by heat, smoke or fumes from a hostile fire.
The Policy shall not contain any intra-insured exclusions as between insured
persons or organizations, but shall include coverage for liability assumed
under this Lease as an "insured contract" for the performance of Lessee's
indemnity obligations under this Lease. The limits of said insurance shall
not, however, limit the liability of Lessee nor relieve Lessee of any
obligation hereunder. All insurance carried by Lessee shall be primary to
and not contributory with any similar insurance carried by Lessor, whose
insurance shall be considered excess insurance only.
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(b) CARRIED BY LESSOR. Lessor may maintain liability insurance
as described in Paragraph 8.2(a), in addition to, and not in lieu of, the
insurance required to be maintained by Lessee. Lessee shall not be named as
an additional insured therein.
8.3 PROPERTY INSURANCE - BUILDING, IMPROVEMENTS AND RENTAL VALUE.
(a) BUILDING AND IMPROVEMENTS. The Insuring Party shall obtain
and keep in force a policy or policies in the name of Lessor, with loss
payable to Lessor, any groundlessor, and to any Lender(s) insuring loss or
damage to the Premises. The amount of such insurance shall be equal to the
full replacement cost of the Premises, as the same shall exist from time to
time, or the amount required by any Lenders, but in no event more than the
commercially reasonable and available insurable value thereof. If Lessor is
the Insuring Party, however, Lessee Owned Alterations and Utility
installations, Trade Fixtures, and Lessee's personal property shall be
insured by Lessee under Paragraph 8.4 rather than by Lessor, it the coverage
is available and commercially appropriate, such policy or policies shall
insure against all risks of direct physical loss or damage* (except the
perils of flood ), including coverage for debris removal and the enforcement
of any Applicable Requirements requiring the upgrading, demolition,
reconstruction or replacement of any portion of the Premises as the result of
a covered loss. Said policy or policies shall also contain an agreed
valuation provision in lieu of any coinsurance clause, waiver of subrogation,
and inflation guard protection causing an increase in the annual property
insurance coverage amount by a factor of not less than the adjusted U.S.
Department of Labor Consumer Price Index for All Urban Consumers for the city
nearest to where the Premises are located. If such insurance coverage has a
deductible clause, the deductible amount shall not exceed $1,000 per
occurrence, and Lessee shall be liable for such deductible amount in the
event of an Insured Loss.
*including earthquake
(b) RENTAL VALUE. The Insuring Party shall obtain and keep in
force a policy or policies in the name of Lessor with loss payable to Lessor
and any Lender, insuring the loss of the full Rent for one (1) year. Said
insurance shall provide that in the event the Lease is terminated by reason
of an insured loss, the period of indemnity for such coverage shall be
extended beyond the date of the completion of repairs or replacement of the
Premises, to provide for one full year's loss of Rent from the date of any
such loss. Said insurance shall contain an agreed valuation provision in
lieu of any coinsurance clause, and the amount of coverage shall be adjusted
annually to reflect the projected Rent otherwise payable by Lessee, for the
next twelve (12) month period. Lessee shall be liable for any deductible
amount in the event of such loss.
(c) ADJACENT PREMISES. If the Premises are part of a larger
building, or of a group of buildings owned by Lessor which are adjacent to
the Premises, the Lessee shall pay for any increase in the premiums for the
property insurance of such building or buildings if said increase is caused
by Lessee's acts, omissions, use or occupancy of the Premises.
8.4 LESSEE'S PROPERTY/BUSINESS INTERRUPTION INSURANCE.
(a) PROPERTY DAMAGE. Lessee shall obtain and maintain insurance
coverage on all of Lessee's personal property, Trade Fixtures, and Lessee
Owned Alterations and Utility Installations. Such insurance shall be full
replacement cost coverage with a deductible of not to exceed $1,000 per
occurrence. The proceeds from any such insurance shall be used by Lessee for
the replacement of personal property, Trade Fixtures and Lessee Owned
Alterations and Utility Installations. Lessee shall provide Lessor with
written evidence that such insurance is in force.
(b) BUSINESS INTERRUPTION. Lessee shall obtain and maintain loss
of income and extra expense insurance in amounts as will reimburse Lessee for
direct or indirect loss of earnings attributable to all perils commonly
insured against by prudent lessees in the business of Lessee or attributable
to prevention of access to the Premises as a result of such perils.
(c) NO REPRESENTATION OF ADEQUATE COVERAGE. Lessor makes no
representation that the limits or forms of coverage of insurance specified
herein are adequate to cover Lessee's property, business operations or
obligations under this Lease.
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8.5 INSURANCE POLICIES. Insurance required herein shall be by
companies duly licensed or admitted to transact business in the state where
the Premises are located, and maintaining during the policy term a "General
Policyholders Rating" of at least B+, V, as set forth in the most current
issue of "Best's Insurance Guide", or such other rating as may be required by
a Lender. Lessee shall not do or permit to be done anything which
invalidates the required insurance policies. Lessee shall, prior to the
Start Date, deliver to Lessor certified copies of policies of such insurance
or certificates evidencing the existence and amounts of the required
insurance. No such policy shall be cancelable or subject to modification
except after thirty (30) days prior written notice to Lessor. Lessee shall,
at least thirty (30) days prior to the expiration of such policies, furnish
Lessor with evidence of renewals or "insurance binders" evidencing renewal
thereof, or Lessor may order such insurance and charge the cost thereof to
Lessee, which amount shall be payable by Lessee to Lessor upon demand. Such
policies shall be for a term of at least one year, or the length of the
remaining term of this Lease, whichever is less. If either Party shall fail
to procure and maintain the insurance required to be carried by it, the other
Party may, but shall not be required to, procure and maintain the same.
8.6 WAIVER OF SUBROGATION. Without affecting any other rights or
remedies, Lessee and Lessor each hereby release and relieve the other, and
waive their entire right to recover damages against the other, for loss of or
damage to its property arising out of or incident to the perils required to
be insured against herein. The effect of such releases and waivers is not
limited by the amount of insurance carried or required, or by any deductibles
applicable hereto. The Parties agree to have their respective property
damage insurance carriers waive any right to subrogation that such companies
may have against Lessor or Lessee, as the case may be, so long as the
insurance is not invalidated thereby.
8.7 INDEMNITY. Except for Lessor's gross negligence or willful
misconduct, Lessee shall indemnity, protect, defend and hold harmless the
Premises, Lessor and its agents, Lessor's master or ground lessor, partners
and Lenders, from and against any and all claims, loss of rents and/or
damages, liens, judgments, penalties, attorneys' and consultants' fees,
expenses and/or liabilities arising out of, involving, or in connection with,
the use and/or occupancy of the Premises by Lessee. If any action or
proceeding is brought against Lessor by reason of any of the foregoing
matters, Lessee shall upon notice defend the same at Lessee's expense by
counsel reasonably satisfactory to Lessor and Lessor shall cooperate with
Lessee in such defense, Lessor need not have first paid any such claim in
order to be defended or indemnified.
8.8 EXEMPTION OF LESSOR FROM LIABILITY. Lessor shall not be liable for
injury or damage to the person or goods, wares, merchandise or other property
of Lessee. Lessee's employees, contractors, invitees, customers, or any
other person in or about the Premises, whether such damage or injury is
caused by or results from fire, steam, electricity, gas, water or rain, or
from the breakage, leakage, obstruction or other defects of pipes, fire
sprinklers, wires, appliances, plumbing, HVAC or lighting fixtures, or from
any other cause, whether the said injury or damage results from conditions
arising upon the Premises or upon other portions of the Building of which the
Premises are a part, or from other sources or places. Lessor shall not be
liable for any damages arising from any act or neglect of any other tenant of
Lessor, Notwithstanding Lessor's negligence or breach of this Lease, Lessor
shall under no circumstances be liable for injury to Lessee's business or for
any loss of income or profit therefrom.
9. DAMAGE OR DESTRUCTION.
9.1 DEFINITIONS.
(a) "PREMISES PARTIAL DAMAGE" shall mean damage or destruction to
the improvements on the Premises, other than Lessee Owned Alterations and
Utility Installations, which can reasonably be repaired in six (6) months or
less from the date of the damage or destruction. Lessor snail notify Lessee
in writing within thirty (30) days from the date of the damage or destruction
as to whether or not the damage is Partial or Total.
(b) "PREMISES TOTAL DESTRUCTION" shall mean damage or destruction
to the Premises, other than Lessee Owned Alterations and Utility
Installations and Trade Fixtures, which cannot reasonably be repaired in six
(6) months or less from the date of the damage or destruction, Lessor shall
notify Lessee in writing within thirty (30) days from the date of the damage
or destruction as to whether or not the damage is Partial or Total.
(c) "INSURED LOSS" shall mean damage or destruction to
improvements on the Premises, other than Lessee Owned Alterations and Utility
installations and Trade Fixtures, which was caused by an event required to be
covered by the insurance described in Paragraph 8.3(a), irrespective of any
deductible amounts or coverage limits involved.
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(d) "REPLACEMENT COST" shall mean the cost to repair or rebuild
the improvements owned by Lessor at the time of the occurrence to their
condition existing immediately prior thereto, including demolition, debris
removal and upgrading required by the operation of Applicable Requirements,
and without deduction for depreciation.
(e) "HAZARDOUS SUBSTANCE CONDITION" shall mean the occurrence or
discovery of a condition involving the presence of, or a contamination by, a
Hazardous Substance as defined in Paragraph 6.2(a), in, on, or under the
Premises.
9.2 PARTIAL DAMAGE - INSURED LOSS. If a Premises Partial Damage that
is an insured Loss occurs, then Lessor shall, at Lessor's expense, repair
such damage (but not Lessee's Trade Fixtures or Lessee Owned Alterations and
Utility installations) as soon as reasonably possible and this Lease shall
continue in full force and effect: provided, however, that Lessee shall, at
Lessor's election, make the repair of any damage or destruction the total
cost to repair of which is $10,000 or less, and, in such event, Lessor shall
make any applicable insurance proceeds available to Lessee on a reasonable
basis for that purpose. Notwithstanding the foregoing, if the required
insurance was not in force or the insurance proceeds are not sufficient to
effect such repair, the Insuring Party shall promptly contribute the shortage
in proceeds (except as to the deductible which is Lessee's responsibility) as
and when required to complete said repairs. In the event, however, such
shortage was due to the fact that, by reason of the unique nature of the
improvements, full replacement cost insurance coverage was not commercially
reasonable and available, Lessor shall have no obligation to pay for the
shortage in insurance proceeds or to fully restore the unique aspects of the
Premises unless Lessee provides Lessor with the funds to cover same, or
adequate assurance thereof, within ten (10) days following receipt of written
notice of such shortage and request therefor, it Lessor receives said funds
or adequate assurance thereof within said ten (10) day period, the party
responsible for making the repairs shall complete them as soon as reasonably
possible and this Lease shall remain in full force and effect, if such funds
or assurance are not received, Lessor may nevertheless elect by written
notice to Lessee within ten (10) days thereafter to: (i) make such
restoration and repair as is commercially reasonable with Lessor paying any
shortage in proceeds, in which case this Lease shall remain in full force and
effect, or have this Lease terminate thirty (30) days thereafter. Lessee
shall not be entitled to reimbursement of any funds contributed by Lessee to
repair any such damage or destruction. Premises Partial Damage due to flood
or earthquake shall be subject to Paragraph 9.3, notwithstanding that there
may be some insurance coverage, but the net proceeds of any such insurance
shall be made available for the repairs if made by either Party.
9.3 PARTIAL DAMAGE - UNINSURED LOSS. If a Premises Partial Damage that
is not an Insured Loss occurs, unless caused by a negligent or willful act of
Lessee (in which event Lessee shall make the repairs at Lessee's expense),
Lessor may either: (i) repair such damage as soon as reasonably possible at
Lessor's expense, in which event this Lease shall continue in full force and
effect, or (6) terminate this Lease by giving written notice to Lessee within
thirty (30) days after receipt by Lessor of knowledge of the occurrence of
such damage. Such termination shall be effective sixty (60) days following
the date of such notice. In the event Lessor elects to terminate this Lease,
Lessee shall have the right within ten (10) days after receipt of the
termination notice to give written notice to Lessor of Lessee's commitment to
pay for the repair of such damage without reimbursement from Lessor. Lessee
shall provide Lessor with said funds or satisfactory assurance thereof within
thirty (30) days after making such commitment. In such event this Lease
shall continue in full force and effect, and Lessor shall proceed to make
such repairs as soon as reasonably possible after the required funds are
available, If Lessee does not make the required commitment, this Lease shall
terminate as of the date specified in the termination notice.
9.4 TOTAL DESTRUCTION. Notwithstanding any other provision hereof, if
a Premises Total Destruction occurs, this Lease shall terminate sixty (60)
days following such Destruction. It the damage or destruction was caused by
the gross negligence or willful misconduct of Lessee. Lessor shall have the
right to recover Lessor's damages from Lessee, except as provided in
Paragraph 8.6.
9.5 DAMAGE NEAR END OF TERM. If at any time during the last six (6)
months of this Lease there is damage for which the cost to repair exceeds one
(1) month's Base Rent, whether or not an Insured Loss, Lessor may terminate
this Lease effective sixty (60) days following the date of occurrence of such
damage by giving a written termination notice to Lessee within thirty (30)
days after the date of occurrence of such damage. Notwithstanding the
foregoing, if Lessee at that time has an exercisable option to extend this
Lease or to purchase the Premises, then Lessee may preserve this Lease by,
(a) exercising such option and (b) providing Lessor with any shortage in
insurance proceeds (or adequate assurance thereof) needed to make the repairs
on or before the earlier of (i) the date which is ten days after Lessee's
receipt of Lessor's written notice purporting to terminate this Lease, or
(ii) the day prior to the date upon which such option expires. If Lessee
duly
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exercises such option during such period and provides Lessor with funds (or
adequate assurance thereof) to cover any shortage in insurance proceeds,
Lessor shall, at Lessors commercially reasonable expense, repair such damage
as soon as reasonably possible and this Lease shall continue in full force
and effect. If Lessee fails to exercise such option and provide such funds
or assurance during such period, then this Lease shall terminate on the date
specified in the termination notice and Lessee's option shall be extinguished.
9.6 ABATEMENT OF RENT; LESSEE'S REMEDIES.
(a) ABATEMENT. In the event of Premises Partial Damage or
Premises Total Destruction or a Hazardous Substance Condition for which
Lessee is not responsible under this Lease, the Rent payable by Lessee for
the period required for the repair, remediation or restoration of such damage
snail be abated in proportion to the degree to which Lessee's use of the
Premises is impaired, but not to exceed the proceeds received from the Rental
Value insurance. All other obligations of Lessee hereunder shall be
performed by Lessee, and Lessor shall have no liability for any such damage,
destruction, remediation, repair or restoration except as provided herein.
(b) REMEDIES. If Lessor shall be obligated to repair or restore
the Premises and does not commence, in a substantial and meaningful way, such
repair or restoration within ninety (90) days after such obligation shall
accrue, Lessee may, at any time prior to the commencement of such repair or
restoration, give written notice to Lessor and to any Lenders of which Lessee
has actual notice, of Lessee's election to terminate this Lease on a date not
less than sixty (60) days following the giving of such notice. If Lessee
gives such notice and such repair or restoration is not commenced within
thirty (30) days thereafter, this Lease shall terminate as of the date
specified in said notice. If the repair or restoration is commenced within
said thirty (30) days, this Lease shall continue in full force and effect,
"Commence" shall mean either the unconditional authorization of the
preparation of the required plans, or the beginning of the actual work on the
Premises, whichever first occurs.
9.7 TERMINATION-ADVANCE PAYMENTS. Upon termination of this Lease
pursuant to Paragraph 6.2(g) or Paragraph 9, an equitable adjustment shall be
made concerning advance Base Rent and any other advance payments made by
Lessee to Lessor, Lessor shall, in addition, return to Lessee so much of
Lessee's Security Deposit as has not been, or is not then required to be,
used by Lessor.
9.8 WAIVE STATUTES. Lessor and Lessee agree that the terms of this
Lease shall govern the effect of any damage to or destruction of the Premises
with respect to the termination of this Lease and hereby waive the provisions
of any present or future statute to the extent inconsistent herewith.
10. REAL PROPERTY TAXES.
10.1 DEFINITION OF "REAL PROPERTY TAXES." As used herein, the term
"Real Property Taxes" shall include any form of assessment: real estate,
general, special, ordinary or extraordinary, or rental levy or tax (other
than inheritance, personal income or estate taxes); improvement bond; and/or
license fee imposed upon or levied against any legal or equitable interest of
Lessor in the Premises, Lessor's right to other income therefrom, and/or
Lessor's business of leasing, by any authority having the direct or indirect
power to tax and where the funds are generated with reference to the Building
address and where the proceeds so generated are to be applied by the city,
county or other local taxing authority of a jurisdiction within which the
Premises are located. The term "Real Property Taxes" shall also include any
tax, fee, levy, assessment or charge, or any increase therein, imposed by
reason of events occurring during the term of this Lease, including but not
limited to, a change in the ownership of the Premises. Not withstanding the
foregoing, Lessee shall not be responsible for any increase in Real Property
Taxes during the first five (5) years following the Start Date.
10.2
(a) PAYMENT OF TAXES. Lessee shall pay the Real Property Taxes
applicable to the Premises during the term of this Lease on a monthly basis
along with other estimated Triple Net charges paid to Lessor. Subject to
Paragraph 10.2(b), all such payments shall be made at least ten (10) days
prior to any delinquency date. Lessee shall promptly furnish Lessor with
satisfactory evidence that such taxes have been paid. If any such taxes
shall cover any period of time prior to or after the expiration or
termination of this Lease, Lessee's share of such taxes shall be prorated to
cover only that portion of the tax bill applicable to the period that this
Lease is in effect, and Lessor shall reimburse Lessee for any overpayment, if
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Lessee shall fail to pay any required Real Property Taxes. Lessor shall have
the right to pay the same, and Lessee shall reimburse Lessor therefor upon
demand.
(b) ADVANCE PAYMENT. In the event Lessee incurs a late charge on
any Rent payment, Lessor may, at Lessor's option, estimate 'he current Real
Property Taxes, and require that such taxes be paid in advance to Lessor by
Lessee, either: (i) in a lump sum amount equal to the installment due, at
least twenty (20) days prior to the applicable delinquency date, or (ii)
monthly in advance with the payment of the Base event. If Lessor elects to
require payment monthly in advance, the monthly payment shall be an amount
equal to the amount of the estimated installment of taxes divided by the
number of months remaining before the month in which said installment becomes
delinquent. When the actual amount of the applicable tax bill is known, the
amount of such equal monthly advance payments shall be adjusted as required
to provide the funds needed to pay the applicable taxes. If the amount
collected by Lessor is insufficient to pay such Real Property Taxes when due,
Lessee shall pay Lessor, upon demand, such additional sums as are necessary
to pay such obligations. All moneys paid to Lessor under this Paragraph may
be intermingled with other moneys of Lessor and shall not bear interest. In
the event of a Breach by Lessee in the performance of its obligations under
this Lease, then any balance of funds paid to Lessor under the provisions of
this Paragraph may at the option of Lessor, be treated as an additional
Security Deposit.
10.3 JOINT ASSESSMENT. If the Premises are not separately assessed,
Lessee's liability shall be an equitable proportion of the Real Property
Taxes for all of the land and improvements included within the tax parcel
assessed, such proportion to be conclusively determined by Lessor from the
respective valuations assigned in the assessor's work sheets or such other
information as may be reasonably available.
10.4 PERSONAL PROPERTY TAXES. Lessee shall pay, prior to delinquency,
all taxes assessed against and levied upon Lessee Owned Alterations, Utility
Installations, Trade Fixtures, furnishings, equipment and all personal
property of Lessee. When possible, Lessee shall cause such property to be
assessed and billed separately from the real property of Lessor. It any of
Lessee's said personal property shall be assessed with Lessors real property,
Lessee shall pay Lessor the taxes attributable to Lessee's property within
ten (10) days after receipt of a written statement.
11. UTILITIES. Lessee shall pay for all water, gas, heat, light, power,
telephone, trash disposal and other utilities and services supplied to the
Premises, together with any taxes thereon. If any such services are not
separately metered to Lessee, Lessee shall pay a reasonable proportion, to be
determined by Lessor, of all charges jointly metered.
12. ASSIGNMENT AND SUBLETTING.
12.1 LESSOR'S CONSENT REQUIRED. SEE ADDENDUM
(d) An assignment or subletting without consent shall, at Lessor's
option, be a Default curable after notice per Paragraph 13.1(c), or a
noncurable Breach without the necessity of any notice and grace period. If
Lessor elects to treat such unapproved assignment or subletting as a
noncurable Breach. Lessor may either: (i) terminate this Lease, or
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(ii) upon thirty (30) days written notice, increase the monthly Base Rent to
one hundred ten percent (110%) of the Base Rent then in effect. Further, in
the event of such Breach and rental adjustment, (i) the purchase price of any
option to purchase the Premises held by Lessee shall be subject to similar
adjustment to one hundred ten percent (110%) of the price previously in
effect, and (ii) all fixed and non-fixed rental adjustments scheduled during
the remainder of the Lease term shall be increased to One Hundred Ten Percent
(1 10%) of the scheduled adjusted rent.
(e) Lessee's remedy for any breach of Paragraph 12.1 by Lessor
shall be limited to compensatory damages and/or injunctive relief.
12.2 TERMS AND CONDITIONS APPLICABLE TO ASSIGNMENT AND SUBLETTING.
(a) Regardless of Lessor's consent, any assignment or subletting
shall not: (i) be effective without the express written assumption by such
assignee or sublessee of the obligations of Lessee under this Lease, (ii)
release Lessee of any obligations hereunder, or (iii) alter the primary
liability of Lessee for the payment of Rent or for the performance of any
other obligations to be performed by Lessee.
(b) Lessor may accept Rent or performance of Lessee's obligations
from any person other than Lessee pending approval or disapproval of an
assignment. Neither a delay in the approval or disapproval of such assignment
nor the acceptance of Rent or performance shall constitute a waiver or
estoppel of Lessor's right to exercise its remedies for Lessee's Default or
Breach.
(c) Lessor's consent to any assignment or subletting shall not
constitute a consent to any subsequent assignment or subletting.
(d) In the event of any Default or Breach by Lessee, Lessor may
proceed directly against Lessee, any Guarantors or anyone else responsible
for the performance of Lessee's obligations under this Lease, including any
assignee or sublessee, without first exhausting Lessor's remedies against any
other person or entity responsible therefore to Lessor, or any security held
by Lessor.
(e) Each request for consent to an assignment or subletting shall
be in writing, accompanied by information relevant to Lessor's determination
as to the financial and operational responsibility and appropriateness of the
proposed assignee or sublessee, including but not limited to the intended use
and/or required modification of the Premises, if any, together with a fee of
$1,000 or ten percent (1 0%) of the current monthly Base Rent applicable to
the portion of the Premises which is the subject of the proposed assignment
or sublease, whichever is greater, as consideration for Lessor's considering
and processing said request. Lessee agrees to provide Lessor with such other
or additional information and/or documentation as may be reasonably requested.
(f) Any assignee of, or sublessee under, this Lease shall, by
reason of accepting such assignment or entering into such sublease, be deemed
to have assumed and agreed to conform and comply with each and every term,
covenant, condition and obligation herein to be observed or performed by
Lessee during the term of said assignment or sublease, other than such
obligations as are contrary to or inconsistent with provisions of an
assignment or sublease to which Lessor has specifically consented to in
writing.
12.3 ADDITIONAL TERMS AND CONDITIONS APPLICABLE TO SUBLETTING. The
following terms and conditions shall apply to any subletting by Lessee of all
or any part of the Premises and shall be deemed included in all subleases
under this Lease whether or not expressly incorporated therein:
(a) Lessee hereby assigns and transfers to Lessor all of Lessee's
interest in all Rent payable on any sublease, and Lessor may collect such
Rent and apply same toward Lessee's obligations under this Lease, provided,
however, that until a Breach shall occur in the performance of Lessee's
obligations, Lessee may collect said Rent. Lessor shall not, by reason of
the foregoing or any assignment of such sublease, nor by reason of the
collection of Rent, be deemed liable to the sublessee for any failure of
Lessee to perform and comply with any of Lessee's obligations to such
sublessee. Lessee hereby irrevocably authorizes and directs any such
sublessee, upon receipt of a written notice from Lessor stating that a Breach
exists in the performance of Lessee's obligations under this Lease, to pay to
Lessor all Rent due and to become due under the sublease. Sublessee shall
rely upon any such notice from Lessor and shall pay all Rents to
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Lessor without any obligation or right to inquire as to whether such Breach
exists, notwithstanding any claim from Lessee to the contrary.
(b) In the event of a Breach by Lessee. Lessor may, at its
option, require sublessee to attorn to Lessor, in which event Lessor shall
undertake the obligations of the sublessor under such sublease from the time
of the exercise of said option to the expiration of such sublease; provided,
however, Lessor shall not be liable for any prepaid rents or security deposit
paid by such sublessee to such sublessor or for any prior Defaults or
Breaches of such sublessor.
(c) Any matter requiring the consent of the sublessor under a
sublease shall also require the consent of Lessor.
(d) No sublessee shall further assign or sublet all or any part of
the Premises without Lessor's prior written consent.
(e) Lessor shall deliver a copy of any notice of Default or Breach
by Lessee to the sublessee, who shall have the right to cure the Default of
Lessee within the grace period, if any, specified in such notice. The
sublessee shall have a right of reimbursement and offset from and against
Lessee for any such Defaults cured by the sublessee.
13. DEFAULT; BREACH, REMEDIES.
13.1 DEFAULT; BREACH. A "Default" is defined as a failure by the
Lessee to comply with or perform any of the terms, covenants, conditions or
rules under this Lease. A "Breach" is defined as the occurrence of one or
more of the following Defaults, and the failure of Lessee to cure such
Default within any applicable grace period:
(a) The abandonment of the Premises: or the vacating of the
Premises without providing a commercially reasonable level of security, or
where the coverage of the property insurance described in Paragraph 8.3 is
jeopardized as a result thereof, or without providing reasonable assurances
to minimize potential vandalism.
(b) The failure of Lessee to make any payment of Rent or any
Security Deposit required to be made by Lessee hereunder, whether to Lessor
or to a third party, when due, to provide reasonable evidence of insurance or
surety bond, or to fulfill any obligation under this Lease which endangers or
threatens life or property, where such failure continues for a period of
three (3) business days following written notice to Lessee.
(c) The failure by Lessee to provide (i) reasonable written
evidence of compliance with Applicable Requirements, (ii) the service
contracts, (iii) the rescission of an unauthorized assignment or subletting,
(iv) a Tenancy Statement, (v) a requested subordination, (vi) evidence
concerning any guaranty and/or Guarantor, (vii) any document requested under
Paragraph 42 (easements), or (viii) any other documentation or information
which Lessor may reasonably require of Lessee under the terms of this Lease,
where any such failure continues for a period of ten (1 0) days following
written notice to Lessee.
(d) A Default by Lessee as to the terms, covenants, conditions or
provisions of this Lease, or of the rules adopted under Paragraph 40 hereof,
other than those described in subparagraphs 13.1(a), (b) or (c), above, where
such Default continues for a period of thirty (30) days after written notice;
provided, however, that if the nature of Lessee's Default is such that more
than thirty (30) days are reasonably required for its cure, then it shall not
be deemed to be a Breach if Lessee commences such cure within said thirty
(30) day period and thereafter diligently prosecutes such cure to completion.
(e) The occurrence of any of the following events: (i) the making
of any general arrangement or assignment for the benefit of creditors; (ii)
becoming a "debtor" as defined in 11 U.S.C. Section 101 or any successor
statute thereto (unless, in the case of a petition filed against Lessee, the
same is dismissed within sixty (60) days); (iii) the appointment of a trustee
or receiver to take possession of substantially all of Lessee's assets
located at the Premises or of Lessee's interest in this Lease, where
possession is not restored to Lessee within thirty (30) days; or (iv) the
attachment, execution or other judicial seizure of substantially all of
Lessee's assets located at the Premises or of Lessee's interest in this
Lease, where such seizure is not discharged within thirty (30) days;
provided, however, in the event that any provision of this subparagraph (e)
is contrary to any applicable law, such provision shall be of no force or
effect, and not affect the validity of the remaining provisions.
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(f) The discovery that any financial statement of Lessee or of any
Guarantor given to Lessor was materially false.
(g) If the performance of Lessee's obligations under this Lease is
guaranteed: (i) the death of a Guarantor, (6) the termination of a
Guarantor's liability with respect to this Lease other than in accordance
with the terms of such guaranty, (iii) a Guarantor's becoming insolvent or
the subject of a bankruptcy filing, (iv) a Guarantor's refusal to honor the
guaranty, or (v) a Guarantor's breach of its guaranty obligation on an
anticipatory basis, and Lessee's failure, within sixty (60) days following
written notice of any such event, to provide written alternative assurance or
security, which, when coupled with the then existing resources of Lessee,
equals or exceeds the combined financial resources of Lessee and the
Guarantors that existed at the time of execution of this Lease.
13.2 REMEDIES. If Lessee fails to perform any of its affirmative
duties or obligations, within ten (10) days after written notice (or in case
of an emergency, without notice), Lessor may, at its option, perform such
duty or obligation on Lessee's behalf, including but not limited to the
obtaining of reasonably required bonds, insurance policies, or governmental
licenses, permits or approvals. The costs and expenses of any such
performance by Lessor shall be due and payable by Lessee upon receipt of
invoice therefor. If any check given to Lessor by Lessee shall not be
honored by the bank upon which it is drawn, Lessor, at its option, may
require all future payments to be made by Lessee to be by cashiers check. In
the event of a Breach, Lessor may, with or without further notice or demand,
and without limiting Lessor in the exercise of any right or remedy which
Lessor may have by reason of such Breach:
(a) Terminate Lessee's right to possession of the Premises by any
lawful means, in which case this Lease shall terminate and Lessee shall
immediately surrender possession to Lessor. In such event Lessor shall be
entitled to recover from Lessee: (i) the unpaid Rent which had been earned at
the time of termination; (ii) the worth at the time of award of the amount by
which the unpaid rent which would have been earned after termination until
the time of award exceeds the amount of such rental loss that the Lessee
proves could have been reasonably avoided: (iii) the worth at the time of
award of the amount by which the unpaid rent for the balance of the term
after the time of award exceeds the amount of such rental loss that the
Lessee proves could be reasonably avoided; and (iv) any other amount
necessary to compensate Lessor for all the detriment proximately caused by
the Lessee's failure to perform its obligations under this Lease or which in
the ordinary course of things would be likely to result therefrom, including
but not limited to the cost of recovering possession of the Premises,
expenses of reletting, including necessary renovation and alteration of the
Premises, reasonable attorneys' fees, and that portion of any leasing
commission paid by Lessor in connection with this Lease applicable to the
unexpired term of this Lease. The worth at the time of award of the amount
referred to in provision (iii) of the immediately preceding sentence shall be
computed by discounting such amount at the discount rate of the Federal
Reserve Bank of the District within which the Premises are located at the
time of award plus one percent (1%). Efforts by Lessor to mitigate damages
caused by Lessee's Breach of this Lease shall not waive Lessor's right to
recover damages under Paragraph 12. If termination of this Lease is obtained
through the provisional remedy of unlawful detainer, Lessor shall have the
right to recover in such proceeding any unpaid Rent and damages as are
recoverable therein, or Lessor may reserve the right to recover all or any
part thereof in a separate suit. If a notice and grace period required under
Paragraph 13.1 was not previously given, a notice to pay rent or quit, or to
perform or quit given to Lessee under the unlawful detainer statute shall
also constitute the notice required by Paragraph 13.1. In such case, the
applicable grace period required by Paragraph 13.1 and the unlawful detainer
statute shall run concurrently, and the failure of Lessee to cure the Default
within the greater of the two such grace periods shall constitute both an
unlawful detainer and a Breach of this Lease entitling Lessor to the remedies
provided for in this Lease and/or by said statute.
(b) Continue the Lease and Lessee's right to possession and
recover the Rent as it becomes due, in which event Lessee may sublet or
assign, subject only to reasonable limitations. Acts of maintenance, efforts
to relet, and/or the appointment of a receiver to protect the Lessor's
interests, shall not constitute a termination of the Lessee's right to
possession.
(c) Pursue any other remedy now or hereafter available under the
laws or judicial decisions of the state wherein the Premises are located.
The expiration or termination of this Lease and/or the termination of
Lessee's right to possession shall not relieve Lessee from liability under
any indemnity provisions of this Lease as to matters occurring or accruing
during the term hereof or by reason of Lessee's occupancy of the Premises.
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13.3 INDUCEMENT RECAPTURE. Any agreement for free or abated rent or
other charges, or for the giving or paying by Lessor to or for Lessee of any
cash or other bonus, inducement or consideration for Lessee's entering into
this Lease, all of which concessions are hereinafter referred to as
"Inducement Provisions," shall be deemed conditioned upon Lessee's full and
faithful performance of all of the terms, covenants and conditions of this
Lease. Upon Breach of this Lease by Lessee, any such Inducement Provision
shall automatically be deemed deleted from this Lease and of no further force
or effect, and any rent, other charge, bonus, inducement or consideration
theretofore abated, given or paid by Lessor under such an Inducement
Provision shall be immediately due and payable by Lessee to Lessor,
notwithstanding any subsequent cure of said Breach by Lessee. The acceptance
by Lessor of rent or the cure of the Breach which initiated the operation of
this paragraph shall not be deemed a waiver by Lessor of the provisions of
this paragraph unless specifically so stated in writing by Lessor at the time
of such acceptance.
13.4 LATE CHARGES. Lessee hereby acknowledges that late payment by
Lessee of Rent will cause Lessor to incur costs not contemplated by this
Lease, the exact amount of which will be extremely difficult to ascertain.
Such costs include, but are not limited to, processing and accounting
charges, and late charges which may be imposed upon Lessor by any Lender.
Accordingly, if any Rent shall not be received by Lessor within five (5) days
after such amount shall be due, then, without any requirement for notice to
Lessee, Lessee shall pay to Lessor a one-time late charge equal to ten
percent (10%) of each such overdue amount. The parties hereby agree that
such late charge represents a fair and reasonable estimate of the costs
Lessor will incur by reason of such late payment. Acceptance of such late
charge by Lessor shall in no event constitute a waiver of Lessee's Default or
Breach with respect to such overdue amount, nor prevent the exercise of any
of the other rights and remedies granted hereunder. In the event that a late
charge is payable hereunder, whether or not collected, for three (3)
consecutive installments of Base Rent, then notwithstanding any provision of
this Lease to the contrary, Base Rent shall, at Lessor's option, become due
and payable quarterly in advance.
13.5 INTEREST. Any monetary payment due Lessor hereunder, other than
late charges, not received by Lessor, when due as to scheduled payments (such
as Base Rent) or within thirty (30) days following the date on which it was
due for non-scheduled payment, shall bear interest from the date when due, as
to scheduled payments, or the thirty-first (31st) day after it was due as to
non-scheduled payments. The interest ("Interest") charged shall be equal to
the prime rate reported in the Wall Street Journal as published closest prior
to the date when due plus four percent (4%), but shall not exceed the maximum
rate allowed by law. Interest is payable in addition to the potential late
charge provided for in Paragraph 13.4.
13.6 BREACH BY LESSOR.
(a) NOTICE OF BREACH. Lessor shall not be deemed in breach of
this Lease unless Lessor fails within a reasonable time to perform an
obligation required to be performed by Lessor. For purposes of this
Paragraph, a reasonable time shall in no event be less than thirty (30) days
after receipt by Lessor, and any Lender whose name and address shall have
been furnished Lessee in writing for such purpose, of written notice
specifying wherein such obligation of Lessor has not been performed;
provided, however, that if the nature of Lessor's obligation is such that
more than thirty (30) days are reasonably required for its performance, then
Lessor shall not be in breach if performance is commenced within such thirty
(30) day period and thereafter diligently pursued to completion.
(b) PERFORMANCE BY LESSEE ON BEHALF OF LESSOR. In the event that
neither Lessor nor Lender cures said breach within thirty (30) days after
receipt of said notice, or if having commenced said cure they do not
diligently pursue it to completion, then Lessee may elect to cure said breach
at Lessee's expense and offset from Rent an amount equal to the greater of
one month's Base Rent or the Security Deposit, and to pay an excess of such
expense under protest, reserving Lessee's right to reimbursement from Lessor,
Lessee shall document the cost of said cure and supply said documentation to
Lessor.
14. CONDEMNATION. If the Premises or any portion thereof are taken under
the power of eminent domain or sold under the threat of the exercise of said
power (collectively "Condemnation"), this Lease shall terminate as to the
part taken as of the date the condemning authority takes title or possession,
whichever first occurs. If more than ten percent (10%) of any building
portion of the premises, or more than twenty-five percent (25%) of the land
area portion of the premises not occupied by any building, is taken by
Condemnation, Lessee may, at Lessee's option, to be exercised in writing
within ten (10) days after Lessor shall have given Lessee written notice of
such taking (or in the absence of such notice, within ten (10) days after
the condemning authority shall have taken possession) terminate this Lease as
of the date the condemning authority takes such possession. It Lessee does
not terminate this Lease in accordance with the foregoing, this Lease shall
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remain in full force and effect as to the portion of the Premises remaining,
except that the Base Rent shall be reduced in proportion to the reduction in
utility of the Premises caused by such Condemnation. Condemnation awards
and/or payments shall be the property of Lessor, whether such award shall be
made as compensation for diminution in value of the leasehold, the value of
the part taken, or for severance damages; provided, however, that Lessee
shall be entitled to any compensation for Lessee's relocation expenses, loss
of business goodwill and/or Trade Fixtures, without regard to whether or not
this Lease is terminated pursuant to the provisions of this Paragraph. All
Alterations and Utility Installations made to the Premises by Lessee, for
purposes of Condemnation only, shall be considered the property of the Lessee
and Lessee shall be entitled to any and ail compensation which is payable
therefor. In the event that this Lease is not terminated by reason of the
Condemnation, Lessor shall repair any damage to the Premises caused by such
Condemnation.
15. BROKERS' FEE.
15.3 REPRESENTATIONS AND INDEMNITIES OF BROKER RELATIONSHIPS. Lessee
and Lessor each represent and warrant to the other that it has had no
dealings with any person, firm, broker or finder (other than the Brokers, if
any) in connection with this Lease, and that no one other than said named
Brokers is entitled to any commission or finder's fee in connection herewith,
Lessee and Lessor do each hereby agree to indemnify, protect, defend and hold
the other harmless from and against liability for compensation or charges
which may be claimed by any such unnamed broker, finder or other similar
party by reason of any dealings or actions of the indemnifying Party,
including any costs, expenses, attorneys' fees reasonably incurred with
respect thereto.
16. TENANCY STATEMENT/ESTOPPEL CERTIFICATES.
(a) Each Party (as "Responding Party") shall within ten (10) days after
written notice from the other Party (the "Requesting Party") execute,
acknowledge and deliver to the Requesting Party a statement in writing in
form similar to the then most current "Estoppel Certificate" form published
by the American Industrial Real Estate Association, plus such additional
information, confirmation and/or statements as may be reasonably requested by
the Requesting Party.
(b) If the Responding Party shall fail to execute or deliver the
Estoppel Certificate within such ten day period, the Requesting Party may
execute an Estoppel Certificate stating that: (i) the Lease is in full force
and effect without modification except as may be represented by the
Requesting Party, (ii) there are no uncured defaults in the Requesting
Party's performance, and (iii) it Lessor is the Requesting Party, not more
than one month's rent has been paid in advance, Prospective purchasers and
encumbrancers may rely upon the Requesting Party's Estoppel Certificate, and
the Responding Party shall be estopped from denying the truth of the facts
contained in said Certificate.
(c) If Lessor desires to finance, refinance, or sell the Premises, or
any part thereof, Lessee and all Guarantors shall deliver to any potential
lender or purchaser designated by Lessor such financial statements as may be
reasonably required by such tender or purchaser, including but not limited to
Lessee's financial statements for the past three (3) years. All such
financial statements shall be received by Lessor and such lender or purchaser
in confidence and shall be used only for the purposes herein set forth.
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17. DEFINITION OF LESSOR. The term "Lessor" as used herein shall mean the
owner or owners at the time in question of the fee title to the Premises, or, if
this is a sublease, of the Lessee's interest in the prior lease. In the event
of a transfer of Lessor's title or interest in the Premises or this Lease.
Lessor shall deliver to the transferee or assignee (in cash or by credit) any
unused Security Deposit held by Lessor. Upon such transfer or assignment and
delivery of the Security Deposit, as aforesaid, the prior Lessor shall be
relieved of all liability with respect to the obligations and/or covenants under
this Lease thereafter to be performed by the Lessor. Subject to the foregoing,
the obligations and/or covenants in this Lease to be performed by the Lessor
shall be binding only upon the Lessor as hereinabove defined. Notwithstanding
the above, and subject to the provisions of Paragraph 20 below, the original
Lessor under this Lease, and all subsequent holders of the Lessors interest in
this Lease shall remain liable and responsible with regard to the potential
duties and liabilities of Lessor pertaining to Hazardous Substances as outlined
in Paragraph 6 above.
18. SEVERABILITY. The invalidity of any provision of this Lease, as determined
by a court of competent jurisdiction, shall in no way affect the validity of any
other provision hereof.
19. DAYS. Unless otherwise specifically indicated to the contrary, the word
"days" as used in this Lease shall mean and refer to calendar days.
20. LIMITATION ON LIABILITY. Subject to the provisions of Paragraph 17 above,
the obligations of Lessor under this Lease shall not constitute personal
obligations of Lessor, the individual partners of Lessor or its or their
individual partners, directors, officers or shareholders, and Lessee shall look
to the Premises, and to no other assets of Lessor, for the satisfaction of any
liability of Lessor with respect to this Lease, and shall not seek recourse
against the individual partners of Lessor, or its or their individual partners,
directors, officers or shareholders, or any of their personal assets for such
satisfaction.
21. TIME OF ESSENCE. Time is of the essence with respect to the performance of
all obligations to be performed or observed by the Parties under this Lease.
22. NO PRIOR OR OTHER AGREEMENTS: BROKER DISCLAIMER. This Lease contains all
agreements between the Parties with respect to any matter mentioned herein, and
no other prior or contemporaneous agreement or understanding shall be effective.
Lessor and Lessee each represents and warrants to the Brokers that it has made,
and is relying solely upon, its own investigation as to the nature, quality,
character and financial responsibility of the other Party to this Lease and as
to the nature, quality and character of the Premises. Brokers have no
responsibility with respect thereto or with respect to any default or breach
hereof by either Party. The liability (including court costs and Attorneys'
fees), of any Broker with respect to negotiation, execution, delivery or
performance by either Lessor or Lessee under this Lease or any amendment or
modification hereto shall be limited to an amount up to the tee received by such
Broker pursuant to this Lease: provided, however, that the foregoing limitation
on each Broker's liability shall not be applicable to any gross negligence or
willful misconduct of such Broker.
23. NOTICES.
23.1 NOTICE REQUIREMENTS. All notices required or permitted by this Lease
shall be in writing and may be delivered in person (by hand or by courier) or
may be sent by regular, certified or registered mail or U.S. Postal Service
Express Mail, with postage prepaid, or by facsimile transmission, and shall be
deemed sufficiently given it served in a manner specified in this Paragraph 23.
The addresses noted adjacent to a Party's signature on this Lease shall be that
Party's address for delivery or mailing of notices. Either Party may by written
notice to the other specify a different address for notice, except that upon
Lessees taking possession of the Premises, the Premises shall constitute
Lessee's address for notice. A copy of all notices to Lessor shall be
concurrently transmitted to such party or parties at such addresses as Lessor
may from time to time hereafter designate in writing.
23.2 DATE OF NOTICE. Any notice sent by registered or certified mail,
return receipt requested, shall be deemed given on the date of delivery shown on
the receipt card, or if no delivery date is shown, the postmark thereon. If
sent by regular mail the notice shall be deemed given forty-eight (48) hours
after the same is addressed as required herein and mailed with postage prepaid.
Notices delivered by United States Express Mail or overnight courier that
guarantee next day delivery shall be deemed given twenty-four (24) hours after
delivery of the same to the Postal Service or courier. Notices transmitted by
facsimile transmission or similar means shall be deemed delivered upon telephone
confirmation of receipt,
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provided a copy is also delivered via delivery or mail. If notice is received
on a Saturday, Sunday or legal holiday, it shall be deemed received on the
next business day.
24. WAIVERS. No waiver by Lessor of the Default or Breach of any term,
covenant or condition hereof by Lessee, shall be deemed a waiver of any other
term, covenant or condition hereof, or of any subsequent Default or Breach by
Lessee of the same or of any other term, covenant or condition hereof. Lessor's
consent to, or approval of, any act shall not be deemed to render unnecessary
the obtaining of Lessor's consent to, or approval of, any subsequent or similar
act by Lessee, or be construed as the basis of an estoppel to enforce the
provision or provisions of this Lease requiring such consent. The acceptance of
Rent by Lessor shall not be a waiver of any Default or Breach by Lessee. Any
payment by Lessee may be accepted by Lessor on account of moneys or damages due
Lessor, notwithstanding any qualifying statements or conditions made by Lessee
in connection therewith, which such statements and/or conditions shall be of no
force or effect whatsoever unless specifically agreed to in writing by Lessor at
or before the time of deposit of such payment.
25. RECORDING. Either Lessor or Lessee shall, upon request of the other,
execute, acknowledge and deliver to the other a short form memorandum of this
Lease for recording purposes. The Party requesting recordation shall be
responsible for payment of any fees applicable thereto.
26. NO RIGHT TO HOLDOVER. Lessee has no right to retain possession of the
Premises or any part thereof beyond the expiration or termination of this Lease.
In the event that Lessee holds over, then the Base Rent shall be increased to
one hundred fifty percent (150%) of the Base Rent applicable during the month
immediately preceding the expiration or termination. Nothing contained herein
shall be construed as consent by Lessor to any holding over by Lessee.
27. CUMULATIVE REMEDIES. No remedy or election hereunder shall be deemed
exclusive but shall, wherever possible, be cumulative with all other remedies at
law or in equity.
28. COVENANTS AND CONDITIONS; CONSTRUCTION OF AGREEMENT. All provisions of
this Lease to be observed or performed by Lessee are both covenants and
conditions. In construing this Lease, all headings and titles are for the
convenience of the parties only and shall not be considered a part of this
Lease. Whenever required by the context, the singular shall include the plural
and vice versa. This Lease shall not be construed as if prepared by one of the
parties, but rather according to its fair meaning as a whole, as if both parties
had prepared it.
29. BINDING EFFECT; CHOICE OF LAW. This Lease shall be binding upon the
parties, their personal representatives, successors and assigns and be governed
by the laws of the State in which the Premises are located. Any litigation
between the Parties hereto concerning this Lease shall be initiated in the
county in which the Premises are located.
30. SUBORDINATION; ATTORNMENT; NON-DISTURBANCE.
30.1 SUBORDINATION. This Lease and any Option granted hereby shall be
subject and subordinate to any ground lease, mortgage, deed of trust, or other
hypothecation or security device (collectively, "Security Device"), now or
hereafter placed upon the Premises, to any and all advances made on the security
thereof, and to all renewals, modifications, and extensions thereof. Lessee
agrees that the holders of any such Security Devices (in this Lease together
referred to as "Lessor's Lender") shall have no liability or obligation to
perform any of the obligations of Lessor under this Lease. Any Lender may elect
to have this Lease and/or any Option granted hereby superior to the lien of its
Security Device by giving written notice thereof to Lessee, whereupon this Lease
and such Options shall be deemed prior to such Security Device, notwithstanding
the relative dates of the documentation or recordation thereof.
30.2 ATTORNMENT. Subject to the non-disturbance provisions of Paragraph
30.3, Lessee agrees to attorn to a Lender or any other party who acquires
ownership of the Premises by reason of a foreclosure of a Security Device, and
that in the event of such foreclosure, such new owner shall not: (i) be liable
for any act or omission of any prior lessor or with respect to events occurring
prior to acquisition of ownership: (ii) be subject to any offsets or defenses
which Lessee might have against any prior lessor, or (iii) be bound by
prepayment of more than one (1) month's rent.
30.3 NON-DISTURBANCE. With respect to Security Devices entered into by
Lessor after the execution of this Lease, Lessee's subordination of this Lease
shall be subject to receiving a commercially reasonable non-disturbance
agreement (a "Non-Disturbance Agreement") from the Lender which Non-Disturbance
Agreement provides that Lessee's possession of
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the Premises, and this Lease, including any options to extend the term
hereof, will not be disturbed so long as Lessee is not in Breach hereof and
attorns to the record owner of the Premises. Further, within sixty (60) days
after the execution of this Lease. Lessor shall use its commercially
reasonable efforts to obtain a Non-Disturbance Agreement from the holder of
any pre-existing Security Device which is secured by the Premises. In the
event that Lessor is unable to provide the Non-Disturbance Agreement within
said sixty (60) days, then Lessee may, at Lessee's action, directly contact
Lessors lender and attempt to negotiate for the execution and delivery of a
Non-Disturbance Agreement.
30.4 SELF-EXECUTING. The agreements contained in this Paragraph 30 shall
be effective without the execution of any further documents: provided, however,
that, upon written request from Lessor or a Lender in connection with a sale,
financing or refinancing of the Premises, Lessee and Lessor shall execute such
further writings as may be reasonably required to separately document any
subordination, attornment and/or Non-Disturbance Agreement provided for herein.
31. ATTORNEYS' FEES. It any Party brings an action or proceeding involving
the Premises to enforce the terms hereof or to declare rights hereunder, the
Prevailing Party (as hereafter defined) in any such proceeding, action, or
appeal thereon, shall be entitled to reasonable attorneys' fees. Such fees may
be awarded in the same suit or recovered in a separate suit, whether or not such
action or proceeding is pursued to decision or judgment. The term, "Prevailing
Party" shall include, without limitation, a Party who substantially obtains or
defeats the relief sought, as the case may be, whether by compromise,
settlement, judgment, or the abandonment by the other Party of its claim or
defense. The attorneys' fees award shall not be computed in accordance with any
court fee schedule, but shall be such as to fully reimburse all attorneys' fees
reasonably incurred, in addition, Lessor shall be entitled to attorneys' fees,
costs and expenses incurred in the preparation and service of notices of Default
and consultations in connection therewith, whether or not a legal action is
subsequently commenced in connection with such Default or resulting Breach.
32. LESSOR'S ACCESS; SHOWING PREMISES: REPAIRS. Lessor and Lessor's agents
shall have the right to enter the Premises at any time in the case of an
emergency, and otherwise at reasonable times for the purpose at showing the same
to prospective purchasers, lenders, or lessees, and making such alterations,
repairs, improvements or additions to the Premises as Lessor may deem necessary.
All such activities shall be without abatement of rent or liability to Lessee.
Lessor may at any time place on the Premises any ordinary "For Sale" signs and
Lessor may during the last six (6) months of the term hereof place on the
Premises any ordinary "For Lease" signs. Lessee may at any time place on or
about the Premises any ordinary "For Sublease" sign.
33. AUCTIONS. Lessee shall not conduct, nor permit to be conducted, any
auction upon the Premises without Lessors prior written consent. Lessor shall
not be obligated to exercise any standard of reasonableness in determining
whether to permit an auction.
34. SIGNS. Except for ordinary "For Sublease" signs, Lessee shall not place
any sign upon the Premises without Lessor's prior written consent. All signs
must comply with all Applicable Requirements.
35. TERMINATION; MERGER. Unless specifically stated otherwise in writing by
Lessor, the voluntary or other surrender of this Lease by Lessee, the mutual
termination or cancellation hereof, or a termination hereof by Lessor for Breach
by Lessee, shall automatically terminate any sublease or lesser estate in the
Premises; provided, however, that Lessor may elect to continue any one or all
existing subtenancies, Lessor's failure within ten (110) days following any
such event to elect to the contrary by written notice to the holder of any such
lesser interest, shall constitute Lessor's election to have such event
constitute the termination of such interest.
36. CONSENTS. Except as otherwise provided herein, wherever in this Lease the
consent of a Party is required to an act by or for the other Party, such consent
shall not be unreasonably withheld or delayed, Lessor's actual reasonable costs
and expenses (including but not limited to architects', attorneys', engineers'
and other consultants' fees) incurred in the consideration of, or response to, a
request by Lessee for any Lessor consent, including but not limited to consents
to an assignment, a subletting or the presence or use of a Hazardous Substance,
shall be paid by Lessee upon receipt at an invoice and supporting documentation
therefor. Lessor's consent to any act, assignment or subletting shall not
constitute an acknowledgment that no Default or Breach by Lessee of this Lease
exists, nor shall such consent be deemed a waiver of any then existing Default
or Breach, except as may be otherwise specifically stated in writing by Lessor
at the time of such consent. The failure to specify herein any particular
condition to Lessor's consent shall not preclude the imposition by Lessor at the
time of consent of such further or other conditions as are then reasonable with
reference to the particular matter for which consent is being given. In the
event that either Party disagrees with any determination made by the other
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hereunder and reasonably requests the reasons for such determination, the
determining party shall furnish its reasons in writing and in reasonable detail
within ten (10) business days following such request.
37. GUARANTOR.
37.1 EXECUTION. The Guarantors, if any, shall each execute a guaranty in
the form most recently published by the American Industrial Real Estate
Association, and each such Guarantor shall have the same obligations as Lessee
under this Lease.
37.2 DEFAULT. It shall constitute a Default of the Lessee if any
Guarantor fails or refuses, upon request to provide: (a) evidence of the
execution of the guaranty, including the authority of the party signing on
Guarantor's behalf to obligate Guarantor, and in the case of a corporate
Guarantor, a certified copy of a resolution of its board of directors
authorizing the making of such guaranty, (b) current financial statements, (c) a
Tenancy Statement, or (d) written confirmation that the guaranty is still in
effect.
38. QUIET POSSESSION. Subject to payment by Lessee of the Rent and performance
of all of the covenants, conditions and provisions on Lessee's part to be
observed and performed under this Lease, Lessee shall have quiet possession and
quiet enjoyment of the Premises during the term hereof.
39. OPTIONS.
39.1 DEFINITION. "Option" shall mean: (a) the right to extend the term of
or renew this Lease or to extend or renew any lease that Lessee has on other
property of Lessor; (b) the right of first refusal or first offer to lease
either the Premises or other property of Lessor; (c) the right to purchase or
the right of first refusal to purchase the Premises or other property of Lessor.
39.2 OPTIONS PERSONAL TO ORIGINAL LESSEE. Each Option granted to Lessee
in this Lease is personal to the original Lessee, and cannot be assigned or
exercised by anyone other than said original Lessee and only while the original
Lessee is in full possession of the Premises and, if requested by Lessor, with
Lessee certifying that Lessee has no intention of thereafter assigning or
subletting.
39.3 MULTIPLE OPTIONS. In the event that Lessee has any multiple Options
to extend or renew this Lease, a later Option cannot be exercised unless the
prior Options have been validly exercised.
39.4 EFFECT OF DEFAULT ON OPTIONS.
(a) Lessee shall have no right to exercise an Option: (i) during the
period commencing with the giving of any notice of Default and continuing until
said Default is cured, (ii) during the period of time any Rent is unpaid
(without regard to whether notice thereof is given Lessee), (iii) during the
time Lessee is in Breach of this Lease, or (iv) in the event that Lessee has
been given three (3) or more notices of separate Default, whether or not the
Defaults are cured, during the twelve (12) month period immediately preceding
the exercise of the Option.
(b) The period of time within which an Option may be exercised shall
not be extended or enlarged by reason of Lessees inability to exercise an Option
because of the provisions of Paragraph 39.4(a).
(c) An Option shall terminate and be of no further force or effect,
notwithstanding Lessee's due and timely exercise of the Option, if, after such
exercise and prior to the commencement of the extended term, (i) Lessee fails to
pay Rent for a period of thirty (30) days after such Rent becomes due (without
any necessity of Lessor to give notice thereof), (ii) Lessor gives to Lessee
three (3) or more notices of separate Default during any twelve (12) month
period, whether or not the Defaults are cured, or (iii) if Lessee commits a
Breach of this Lease.
40. MULTIPLE BUILDINGS. If the Premises are a part of a group of buildings
controlled by Lessor, Lessee agrees that it will observe all reasonable rules
and regulations which Lessor may make from time to time for the management,
safety, and care of said properties, including the care and cleanliness of the
grounds and including the parking, loading and unloading of vehicles, and that
Lessee will pay its fair share of common expenses incurred in connection
therewith.
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41. SECURITY MEASURES. Lessee hereby acknowledges that the rental payable to
Lessor hereunder does not include the cost of guard service or other security
measures, and that Lessor shall have no obligation whatsoever to provide same,
Lessee assumes all responsibility for the protection of the Premises, Lessee,
its agents and invitees and their properly from the acts of third parties.
42. RESERVATIONS. Lessor reserves to itself the right, from time to time, to
grant, without the consent or joinder of Lessee, such easements, rights and
dedications that Lessor deems necessary, and to cause the recordation of parcel
maps and restrictions, so long as such easements, rights, dedications, maps and
restrictions do not unreasonably interfere with the use of the Premises by
Lessee. Lessee agrees to sign any documents reasonably requested by Lessor to
effectuate any such easement rights, dedication, map or restrictions.
43. PERFORMANCE UNDER PROTEST. If at any time a dispute shall arise as to any
amount or sum of money to be paid by one Party to the other under the provisions
hereof, the Party against whom the obligation to pay the money is asserted shall
have the right to make payment "under protest and such payment shall not be
regarded as a voluntary payment and there shall survive the right on the Part of
said Party to institute suit for recovery of such sum. If it shall be adjudged
that there was no legal obligation on the part of said Party to Pay such sum or
any part thereof, said Party shall be entitled to recover such sum or so much
thereof as it was not legally required to pay.
44. AUTHORITY. If either Party hereto is a corporation, trust, limited
liability company, partnership, or similar entity, each individual executing
this Lease on behalf of such entity represents and warrants that he or she is
duly authorized to execute and deliver this Lease on its behalf. Each party
shall, within thirty (30) days after request, deliver to the other party
satisfactory evidence of such authority.
45. CONFLICT. Any conflict between the printed provisions of this Lease and
the typewritten or handwritten provisions shall be controlled by the typewritten
or handwritten provisions.
46. OFFER. Preparation of this Lease by either Party or their agent and
submission of same to the other Party shall not be deemed an offer to lease to
the other Party. This Lease is not intended to be binding until executed and
delivered by all Parties hereto.
47. AMENDMENTS. This Lease may be modified only in writing, signed by the
Parties in interest at the time of the modification. As long as they do not
materially change Lessee's obligations hereunder. Lessee agrees to make such
reasonable non-monetary modifications to this Lease as may be reasonably
required by a Lender in connection with the obtaining of normal financing or
refinancing of the Premises.
48. MULTIPLE PARTIES. If more than one person or entity is named herein as
either Lessor or Lessee, such multiple Parties shall have joint and several
responsibility to comply with the terms of this Lease.
49. MEDIATION AND ARBITRATION OF DISPUTES. An Addendum requiring the Mediation
and/or the Arbitration of all disputes between the Parties and/or Brokers
arising out of this Lease : is 9 is not attached to this Lease.
LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND
PROVISION CONTAINED HEREIN, AND BY THE EXECUTION OF THIS LEASE SHOW THEIR
INFORMED AND VOLUNTARY CONSENT THERETO, THE PARTIES HEREBY AGREE THAT AT THE
TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE
AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE
PREMISES.
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ATTENTION: NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE AMERICAN
INDUSTRIAL REAL ESTATE ASSOCIATION OR BY ANY BROKER AS TO THE LEGAL
SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR THE
TRANSACTION TO WHICH IT RELATES, THE PARTIES ARE URGED TO:
1. SEEK ADVICE OF COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS
LEASE.
2. RETAIN APPROPRIATE CONSULTANTS TO REVIEW AND INVESTIGATE THE CONDITION
OF THE PREMISES, SAID INVESTIGATION SHOULD INCLUDE BUT NOT BE LIMITED
TO: THE POSSIBLE PRESENCE OF HAZARDOUS SUBSTANCES, THE ZONING OF THE
PREMISES, THE STRUCTURAL INTEGRITY, THE CONDITION OF THE ROOF AND OPERATING
SYSTEMS, AND THE SUITABILITY OF THE PREMISES FOR LESSEE'S INTENDED USE.
WARNING: IF THE PREMISES IS LOCATED IN A STATE OTHER THAN CALIFORNIA, CERTAIN
PROVISIONS OF THE LEASE MAY NEED TO BE REVISED TO COMPLY WITH THE LAWS OF THE
STATE IN WHICH THE PREMISES IS LOCATED.
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<PAGE>
The parties hereto have executed this Lease at the place and on the dates
specified above their respective signatures.
Executed at: Executed at:
------------------------- ----------------------------
on: on:
---------------------------------- -------------------------------------
By LESSOR: By LESSEE:
THE CHILDS FAMILY INVESTMENT THE IMMUNE RESPONSE CORPORATION,
PARTNERSHIP, L.P. AND THE A.J. GARDNER A DELAWARE CORPORATION
FAMILY TRUST, U/T/A 3/5/81
By: /s/ ROLAND A. CHILDS By: /s/ PAULA BAXTER ATKINS
---------------------------------- -------------------------------------
Name Printed: ROLAND A. CHILDS Name Printed: DENNIS J. CARLO, PH.D.
------------------------ ---------------------------
Title: Title: PRESIDENT CHIEF EXECUTIVE OFFICER
------------------------------- ----------------------------------
By: /s/ ALLAN J. GARDNER By:
---------------------------------- -------------------------------------
Name Printed: ALLAN J. GARDNER Name Printed:
------------------------ ---------------------------
Title: Title:
------------------------------- ----------------------------------
Address: C/O LANDCO, 432 SOUTH Address:
----------------------------- --------------------------------
BENTLEY AVENUE, LOS ANGELES,
------------------------------------- ----------------------------------------
CA 90049-3513
------------------------------------- ----------------------------------------
Telephone: (310) 476-3209 Telephone: ( )
-------------------------- ------------------------------
Facsimile: (310) 476-0111 Facsimile: ( )
--------------------------- ------------------------------
Federal ID No. Federal ID No.
----------------------- --------------------------
BROKER: BROKER:
------------------------------------- ----------------------------------------
Executed at: Executed at:
------------------------- ----------------------------
on: on:
---------------------------------- -------------------------------------
By: By:
---------------------------------- -------------------------------------
Name Printed: Name Printed:
------------------------ ---------------------------
Title: Title:
------------------------------- ----------------------------------
Address: Address:
----------------------------- --------------------------------
------------------------------------- ---------------------------------------
Telephone: ( ) Telephone: ( )
-------------------------- -----------------------------
Facsimile: ( ) Facsimile: ( )
--------------------------- -----------------------------
Federal ID No. Federal ID No.
----------------------- --------------------------
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ADDENDUM TO LEASE
This Addendum to Lease ("Addendum") is made by and between The Childs Family
Partnership, L.P. and The A. J. Gardner Family Trust u/t/a 3/5/81, general
partners doing business as "Darwin Court" but holding title as tenants-in-common
(collectively, "Lessor") and The Immune Response Corporation, a Delaware
corporation ("Lessee") and shall supplement that certain Standard
Industrial/Commercial Single-Tenant Lease Net between Lessor and Lessee dated as
of December 15, 1997 and Exhibits thereto (collectively, the "Lease"). Where
appropriate the numbering used in the Addendum shall refer to the same numbered
paragraphs in the Lease. Notwithstanding anything contained in the Lease to the
contrary, the provisions set forth below will be deemed to be part of the Lease
and if there is any inconsistency between this Addendum and the Lease, the terms
of this Addendum shall supersede and control. All references in the Lease and
in this Addendum shall be construed to mean the Lease and the Exhibits thereto,
as amended and supplemented by this Addendum. All defined terms used in this
Addendum, unless specifically defined in this Addendum, shall have the same
meaning as such terms have in the Lease. References to "Paragraph" shall refer
to the pre-printed Lease form and references to "Section" shall refer to this
Addendum.
1.1 PARTIES. The phrase ", general partners doing business as "Darwin Court"
but holding title as tenants-in-common" is inserted after the names of the
entities comprising Lessor.
1.2 PREMISES. Lessor at its expense shall construct a Building Shell of
approximately 31,200 square feet. The phrase "Building Shell" means the
Building improvements and related site improvements as shown on those certain
plans and specifications (collectively, "Lessor's Plans") prepared by Smith
Consulting Architects ("Lessor's Architect"), dated on the various sheets
between April 3, 1997 and April 18, 1997 an entire set of which has been
delivered to Lessee by Lessor's contractor, Riggins Construction & Management,
Inc. as listed on the attached Schedule 1.2. Lessee has the right to expand the
second floor office space at its cost in which case the total leasable area will
be correspondingly increased. Lessor shall not amend or modify Lessor's Plans
in any material respect without the prior consent of Lessee.
Lessor represents and warrants that no part of the Building Shell will
contain asbestos, asbestos-containing material or other Hazardous Substances
(collectively "ACHM"). If Lessor does employ ACHM, the ACHM will be promptly
removed in a manner required by the appropriate government agency and in
accordance with Applicable Requirements.
Lessor will be fully responsible for making all alterations and repairs to
the Premises and the Building Shell at its cost required to remove any and all
ACHM discovered at any time to have existed in the Premises or Building Shell as
of the Start Date, or resulting from or necessitated by the failure by Lessor
and/or Lessor's contractor to comply with Applicable Requirements regarding
ACHM, or from Lessor's and/or Lessor's contractor's utilization of Hazardous
Substances as defined by Applicable Requirements at the time the Lease is
executed, in violation of such Applicable Requirements or which could pose a
health risk to occupants of the Premises.
1.3 TERM. The Commencement Date shall be the earliest of the completion of
Lessee's completion of Lessee's Tenant Improvements (as defined in Addendum
Section 50.1 below) or April 1, 1998. Lessor will confirm in writing the exact
Commencement Date and Lease expiration date both of which will be acknowledged
in writing by Lessee upon Lessee's confirmation of the accuracy thereof. For
purposes of this Section 1.3, completion of Lessee's Tenant Improvements shall
be deemed to have occurred on the date on which (i) Lessee's architect, with no
undue delay, issues a certificate to Lessee stating that all Tenant Improvements
have, in all material respects, been completed in accordance with drawings
approved by Lessee therefor and are operable, (ii) all Utility Installations
which are identified as part of Lessee's Tenant Improvements are operational at
the Premises, (iii) adequate access to the Premises for Lessee's uses under the
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Lease has been completed, and (iv) the government agency having appropriate
jurisdiction thereover issues a "right to occupy" designation (or such similar
designation) in the inspection record for Lessee's Tenant Improvements.
1.4 EARLY POSSESSION. Early Possession will start when the Lessor has
completed the Building Shell in accordance with Lessor's Plans and shall end at
the earliest of Lessee's completion of the Tenant Improvements as described in
Section 1.3 above or April 1, 1998. In the event of the imposition of a water
moratorium by local governmental agencies with authority thereover such that
establishment of exterior landscaping to be installed by Lessor would be
adversely affected, Lessor may delay completion of such landscaping without
affecting the Start Date otherwise applicable, provided such landscaping is
completed as soon as practicable thereafter, and in all events not later than
the Commencement Date.
1.5 BASE RENT. Base Rent is calculated on the basis of $.59 per square foot of
the Premises per month on a "triple net" basis. The Base Rent shall be subject
to adjustment during the ninety (90) day period following the Commencement Date
by $.59/ft. if Lessor's Architect determines the Building is more or less than
31,200 sq. ft. based on Building "as-builts" filed with the City of Carlsbad.
All square footage measurements shall be from the roof "drip line" and in
accordance with the Building Owners and Managers Association International
standards for industrial/commercial projects (the "BOMA Standard"). Lessor's
Architect shall complete such calculations within said 90-day period at Lessor's
expense. Lessee shall have the right, exercisable within ninety (90) days after
the later of (a) the date Lessor gives Lessee written notice of the final
calculation of the Premises and the Building as contemplated above, or (b) the
date Lessee commences business operations from the Premises (or, when
appropriate, any additional space leased by Lessee pursuant to the Lease), to
remeasure the Premises and the Building within such ninety (90) day period. In
the event that subsequent remeasurement of the Premises and/or the Building by
Lessee, within the time period specified above, indicates that the square
footage measurement prepared by Lessor produces a square footage number in
excess of or lower than the square footage number which would have resulted had
the BOMA Standard been properly utilized, any payments due to Lessor from Lessee
based upon the amount of square feet contained in the Premises shall be
proportionally, retroactively and prospectively reduced or increased, as
appropriate, to reflect the actual number of square feet as properly remeasured
under the BOMA Standard. If Lessor disagrees with Lessee's remeasurement and if
a dispute occurs regarding the final accuracy of the measurement of the Premises
and the Building in accordance with the BOMA Standard, such dispute will be
resolved pursuant to binding arbitration pursuant to this Addendum. Operating
Expenses (defined below) other than the Administration Fee (defined below) shall
commence on the Start Date. Base Rent and the Administration Fee shall not
commence prior to the Commencement Date; PROVIDED, HOWEVER, to the extent Lessee
commences business operations on, and utilizes therefor, any portion of the
Premises from and after the Start Date, Lessee shall be responsible for payment
of Base Rent and the Administration Fee prorated with respect to the portion of
the Premises so used. In no event shall use of the Premises for Lessee's
construction activities prior to the Commencement Date be deemed to constitute a
use of the Premises for Lessee's business operations.
1.8 AGREED USE. Lessee will use the Premises for general medical, office use
and biopharmaceutical use, research and development, product production,
manufacture and distribution and any other like use in keeping with the class
and character of the building and permitted uses within the Carlsbad Research
Center.
1.9 INSURING PARTY. Lessee may opt to be the Insuring Party for all leasehold
improvements which are for biopharmaceutical uses as opposed to
industrial/office uses upon thirty (30) days prior written notice to Lessor.
Lessee shall also have the option of insuring the Building Shell in the event
Lessee can obtain the insurance coverages required under the Lease with respect
thereto at a premium cost of at least ten percent (10%) less than the premium
cost obtained by Lessor provided Lessee's carriers for such insurance are
substantially comparable in all material respects to Lessor's. Notwithstanding
the foregoing, Lessor may opt to remain the
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<PAGE>
Insuring Party and retain its insurance carrier if it pays the amounts in
excess of such ten percent (10%) premium differential at its sole cost and
expense.
2.2 CONDITION. Lessor's delivery of the Premises shall include the Building
Shell fully completed in accordance with the Plans and ready for Lessee's
construction of its Tenant Improvements. There shall be no requirement that
service contracts under Paragraph 7.1(b) of the Lease be obtained by Lessee as a
condition to Lessor's warranty regarding the HVAC as the HVAC systems are the
responsibility of Lessee as part of the Tenant Improvements (defined below).
Written notices to be given to Lessor regarding non-compliance with the
warranties given under Paragraph 2.2 of the Lease shall be given with reasonable
promptness by Lessee following discovery of the condition giving rise to such
notice and the period during which such notices may be given is modified to one
(1) year as to all systems and elements of the Building which are part of the
Building Shell, however, Lessee shall have the benefit of any longer warranty
periods otherwise accruing to Lessor from contractors and suppliers providing
services or materials to Lessor as part of the Building Shell construction. The
acknowledgements set forth in Paragraph 2.4 of the Lease shall not affect this
Section.
2.3 COMPLIANCE. Lessor shall be responsible for the compliance of the Building
Shell with all Applicable Requirements in effect as of the Start Date throughout
the Term of the Lease and shall effect such compliance promptly following notice
from any party, including Lessee, thereof at any time during the Term or any
extensions thereof. Lessee shall not be required to comply with the six month
notification period stated in Paragraph 2.3 with respect to such non-compliance.
All costs incurred by Lessor to comply with Applicable Requirements in effect on
the Start Date shall be born by Lessor solely and shall not be part of the Base
Rent or otherwise payable by Lessee. The acknowledgements set forth in
Paragraph 2.4 of the Lease shall not affect this Section.
2.4 ACKNOWLEDGEMENTS. All references to Brokers are hereby deleted from
Paragraph 2.4.
2.5 LESSEE AS PRIOR OWNER/OCCUPANT. Paragraph 2.5 of the Lease is hereby
deleted.
3.3 DELAY IN POSSESSION. In the event possession of the Premises is not
delivered by Lessor to Lessee by April 1, 1998, Lessee shall have the right to
terminate the Lease.
3.4 LESSEE COMPLIANCE. The last sentence of Paragraph 3.4 is hereby deleted.
5. SECURITY DEPOSIT. In the event Lessor utilizes the Security Deposit as
permitted under the Lease, Lessee shall have thirty (30) days after request
therefore to replenish the amount of the Security Deposit with the required
amount under the Lease. Lessee shall have no obligation to increase the amount
of the Security Deposit, for any reason, so long as the L/C (as defined below)
is in place. Any application by Lessor of the Security Deposit shall cure the
default to which such portion of the Security Deposit is applied, to the extent
thereof. As additional security for monetary defaults, Lessee shall deliver to
Lessor no later than the Start Date an irrevocable Letter of Credit for $600,000
from Union Bank of California or other comparable financial institution having
substantially the same net worth, substantially in the form attached as Schedule
5 (excluding any terms which are found to be commercially unreasonable by the
issuer thereof), or otherwise on terms and conditions mutually acceptable to
Lessor, Lessee and such issuer ("L/C"). If Lessee fails to timely deliver the
L/C, and such failure continues for a period of thirty (30) days following the
Start Date, Lessor shall have the right to immediately terminate the Lease by
giving Lessee written notice of such election, and such termination shall be
effective immediately upon Lessor's delivery of such notice. Lessee shall also
have the option of maintaining the L/C amount as a cash deposit with Lessor as
contemplated under Section 5.2(i) below.
5.1 Lessor shall not resort to the L/C without first exhausting the proceeds of
the monetary portion of the Security Deposit. Fifteen (15) days before each
anniversary of the issuance of the L/C, Lessee shall obtain a
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<PAGE>
commitment of renewal and if the L/C is not renewed within ten (10) days, the
failure to renew will permit Lessor to draw down the L/C in full and maintain
it in lieu of the L/C as contemplated under Section 5.2(i) below.
5.2 Notwithstanding any other provision of the Lease and so long as no uncured
material Breach exists, Lessor agrees to release the L/C under any one of the
following independent conditions:
(i) Lessee substitutes cash with Lessor which Lessor agrees to keep in
interest bearing accounts in the name of Lessor with Lessee entitled to an
offset against rental obligations for the amount of interest income earned (the
financial institutions with which such deposit, or portions thereof, is
maintained, and the rate of interest accruing thereon, shall be reasonably
acceptable to Lessee), or
(ii) Lessee reports net income of at least $50,000,000 for three years in a
row, or
(iii) Lessee's audited Balance Sheet indicates a Net Worth of at least
$100,000,000.
6.2 HAZARDOUS SUBSTANCES. The word "potentially" is hereby deleted from
Paragraph 6.2(a)(i). Paragraph 6.2(b) is hereby modified to provide that such
notice from Lessee to Lessor regarding the presence of Hazardous Substances with
respect to the Premises shall only be required if such presence of Hazardous
Substances is in violation of Applicable Requirements. Paragraph 6.2(c) is
modified to require that Lessee shall not be responsible for any Hazardous
Substances brought on to the Premises by Lessor, its employees, agents or
representatives. Paragraph 6.2(d) is modified to provide that Lessee shall not
be required to indemnify Lessor or its employees, agents or representatives
against such party's own actions, negligence or omissions. Without limiting
Lessee's obligations under this section regarding reporting requirements with
respect to Hazardous Substances, Lessee shall, within ten (10) business days
following Lessee's first use of a Hazardous Substance required to be reported
thereon, complete and deliver to applicable government authorities a Hazardous
Materials Questionnaire in the form as set forth in Schedule 6.2 annexed to this
Addendum, with a copy to Lessor.
6.3 LESSEE'S COMPLIANCE WITH APPLICABLE REQUIREMENTS. Lessee shall be entitled
to satisfy its requirements regarding evidencing its compliance with Applicable
Requirements by providing Lessor with copies of permits filed with applicable
government authorities by Lessee on an annual basis other than building permits,
copies of which shall be provided to Lessor by Lessee as soon as practicable
following Lessee's receipt of same. Lessee shall only be required to comply
with reasonable recommendations of Lessor's engineers and/or consultants.
7.1 LESSEE'S OBLIGATIONS. Lessor shall assign all warranties and guarantees in
connection with the Building Shell and the Premises for work completed by or on
behalf of Lessor, to Lessee and shall extend all reasonable assistance to Lessee
in the enforcement thereof. Lessor shall also provide a list of all
subcontractors and vendors supplying services or materials in connection with
the construction and completion of the Building Shell and the Premises to Lessee
promptly following the Commencement Date.
7.3 ALTERATIONS; TRADE FIXTURES. Lessee is granted the right to make
non-structural alterations and improvements to the Premises costing less than
$100,000 per year without any consent required of Lessor, as long as (a) Lessee
pays for the entire cost of such alterations and improvements, (b) Lessee agrees
to remove said alterations and improvements upon the expiration or termination
of the Lease, if requested by Lessor, and (c) such alterations and improvements
will not adversely affect the structural integrity of the Premises and/or the
Building. Any time Lessee proposes to make such alterations and/or improvements
for which Lessor has a right of approval hereunder, Lessee shall provide Lessor
with ten (10) business days' notice of such proposed alterations and/or
improvements, together with the plans and specifications therefor and a list of
all vendors and
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subcontractors supplying services or materials with respect to such
alterations, and Lessor shall grant its approval within such ten (10) day
period, unless Lessor reasonably determines that such alterations and/or
improvements would adversely affect the structural integrity of the Premises
and/or the Building or would adversely affect the exterior appearance of the
Building. Lessee shall not be required to provide any completion bonds with
respect to alterations installed by Lessee. Lessee shall provide "as-builts"
for all alterations.
Notwithstanding anything to the contrary in the Lease, all articles of
personal property and all Trade Fixtures, machinery and equipment, furniture and
movable partitions owned by Lessee or installed by or on behalf of Lessee in the
Premises shall remain the property of Lessee, and may be removed by Lessee at
any time during the Term of the Lease as long as Lessee is not in Breach
hereunder with any applicable cure period having expired. If Lessee fails to
remove all of its effects from the Premises upon the expiration or earlier
termination of the Lease for any cause whatsoever, Lessor may, at its option,
any time after five (5) days' written notice to Lessee of its intention to
remove such effects, remove same in any manner that Lessor shall choose and
store such effects without liability to Lessee for loss thereof, and Lessee
shall pay Lessor upon demand any and all reasonable expenses incurred in
connection with such removal, including court costs, attorneys' fees, and
reasonable storage charges incurred while such effects were in Lessor's
possession. The term "Trade Fixtures" shall mean Lessee's machinery and
equipment that has been installed without penetrating the roof membrane and can
be removed without doing material damage to the Premises (unless repaired by
Lessee) whether or not the item is plugged into an electrical outlet or hot
wired.
7.4(b) REMOVAL. Lessee shall receive not less than one hundred twenty (120)
days prior written notice from Lessor to remove alterations required by Lessor
to be removed due to the expiration of the Lease Term, such removal to be
completed within said 120-day period or as soon as practicable thereafter with
due and diligent effort. Such 120-day notice from Lessor may be given at any
time during the period commencing on the date which is six (6) months prior to
the expiration of the Term of the Lease and ending on the date which is six (6)
months after the expiration of the Term of the Lease.
8.1 PAYMENT FOR INSURANCE. To the extent Lessor is the Insuring Party,
payments for premiums shall be made by Lessee to Lessor annually not less than
fifteen (15) business days following Lessee's receipt of notification from
Lessor of such premium amount based on the actual due date for Lessor's annual
payment of such premiums.
8.3(a) PROPERTY INSURANCE-BUILDING AND IMPROVEMENTS. Notwithstanding
language to the contrary, deductibles for policies of insurance required to be
maintained hereunder may be $25,000 per occurrence.
8.3(b) RENTAL VALUE. Rental Value insurance required to be maintained under
the Lease shall not extend beyond the date of completion of repairs or
replacements with respect to any such loss giving rise to a claim thereunder, or
beyond the date of any termination of the Lease.
8.3(c) ADJACENT PREMISES. Paragraph 8.3(c) is hereby deleted.
8.4 LESSEE'S PROPERTY/BUSINESS INTERRUPTION INSURANCE. Paragraph 8.4 is hereby
deleted from the Lease.
8.5 INSURANCE POLICIES. Lessor shall not do or permit to be done anything
which invalidates required insurance policies under the Lease.
8.8 EXEMPTION OF LESSOR FROM LIABILITY. Lessor shall not be exempted from
liability for Lessor's (or anyone acting through or on behalf of Lessor)
intentional misconduct.
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9.2 PARTIAL DAMAGE - INSURED LOSS. The reference to a total cost of repair of
$10,000 shall be replaced with a reference to $100,000. Lessee shall have the
right to effect any repairs to the Premises which Lessor elects not to effect.
To the extent any amounts contributed by Lessee to repair damage or destruction
are in excess of the actual cost thereof, or cost savings are realized with
respect thereto, the full amount of such excess proceeds or cost savings shall
be paid to Lessee.
9.4 TOTAL DESTRUCTION. Lessee shall not be liable for payment of any rent
under the Lease after the date of Lease termination (subject to any abatement
occurring from the date of Premises Total Destruction).
9.5 DAMAGE NEAR END OF TERM. Lessee shall be entitled to a reciprocal right to
terminate the Lease in the event of such damage. Lessee is also granted the
following additional rights to terminate.
A. Notwithstanding anything in the Lease to the contrary, and except
as expressly set forth in Subsection (B) below, in the event that Lessee is
notified or becomes aware of the occurrence of the following:
(i) damage or destruction to the Premises, and/or the
Building or any part thereof so as to interfere substantially with
Lessee's use of the Premises, Premises parking, and/or the Building;
(ii) a taking by eminent domain or exercise of other
governmental authority of the Premises, and/or the Building or any
part thereof so as to interfere substantially with Lessee's use of the
Premises, Premises parking, and/or the Building; or
(iii) any discovery of Hazardous Substances in, on or
around the Premises, the Building and/or the Building site not placed
in, on or around the Premises, the Building and/or the site by Lessee,
that, considering the nature and amount of the substances involved,
interferes with Lessee's use of the Premises or which presents a
health risk to any occupants of the Premises (each of the items set
forth in provision (A)(i), (ii) and (iii) being referred to herein as
a "Trigger Event"); and
Lessee cannot, within nine (9) months ("Non-Use Period") of the occurrence of
the Trigger Event, be given reasonable use of, and access to, a fully repaired,
restored, safe and healthful Premises, Premises parking and Building (except for
minor "punch-list" items which will be repaired promptly thereafter), and the
utilities and services pertaining to the Premises, the Premises parking and the
Building, all suitable for the efficient conduct of Lessee's business therefrom,
then Lessee may elect to exercise a right to terminate the Lease upon thirty
(30) days' written notice sent to Lessor upon the expiration of the Non-Use
Period.
B. In the event of any Trigger Event occurring during the last year
of the Lease Term or, if an applicable renewal option has been exercised, during
the last year of any renewal term, should the Non-Use Period continue for ninety
(90) days, Lessee may elect to exercise a right to terminate the Lease upon
thirty (30) days' written notice sent to Lessor at any time following the
expiration of the Non-Use Period.
9.6 ABATEMENT OF RENT; LESSEE'S REMEDIES. Paragraph 9.6 of the Lease is hereby
deleted and replaced with the following:
In the event that Lessee is prevented from using, and does not use,
the Premises or any portion thereof, for five (5) consecutive business
days or ten (10) business days in any twelve (12) month period (the
"Eligibility Period") as a result of (a) any damage or destruction to
the Premises, the Premises parking and/or the Building (other than due
to Premises Total
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Destruction when abatement of Lessee's rent shall commence as of the
date of such destruction, (b) any repair, maintenance or alteration
performed by Lessor after the Commencement Date and required or
permitted by the Lease, which substantially interferes with Lessee's use
of the Premises, the Premises parking and/or the Building, (c) any
failure by Lessor to provide Lessee with services or access to the
Premises, the Premises parking and/or the Building, (d) because of an
eminent domain proceeding, or (e) because of the presence of Hazardous
Substances in, on or around the Premises, the Building or the Site which
could pose a health risk to occupants of the Premises, then Lessee's
Base Rent shall be abated or reduced, as the case may be, after
expiration of the Eligibility Period for such time that Lessee continues
to be so prevented from using, and does not use, the Premises or a
portion thereof, in the proportion that the rentable area of the portion
of the Premises that Lessee is prevented from using, and does not use,
bears to the total rentable area of the Premises. However, in the event
that any portion of the Premises comprising seventy-five percent (75%)
of the rentable area of the Premises is rendered unusable as described
hereinabove, then for such time after expiration of the Eligibility
Period during which such portion of the Premises is so rendered
unusable, the Base Rent for the entire Premises shall be abated;
provided, however, if Lessee reoccupies and conducts its business from
any portion of the Premises during such period, the rent allocable to
such reoccupied portion, based on the proportion that the rentable area
of such reoccupied portion of the Premises bears to the total rentable
area of the Premises, shall be payable by Lessee from the date such
business operations commence. If Lessee's right to abatement occurs
because of an eminent domain taking and/or because of damage or
destruction to the Premises, the Premises parking, the Building, or
Lessee's property, provided rental value insurance proceeds are
available to Lessor therefor, Lessee's abatement period shall continue
until Lessee has been given sufficient time and sufficient access to the
Premises, the Premises parking facility and/or the Building, to rebuild
such portion it is required to rebuild, to install its property,
furniture, fixtures, and equipment to the extent the same shall have
been removed and/or damaged as a result of such damage or destruction
and/or eminent domain taking and to move in over one (1) weekend. To
the extent Lessee is entitled to abatement without regard to the
Eligibility Period, because of an event covered by Lease Articles 9 or
14, then the Eligibility Period shall not be applicable.
10.1 DEFINITION OF "REAL PROPERTY TAXES". Real Property Taxes shall not include
any tax based on any net income of Lessor with respect to the Building for state
or federal income tax purposes and shall not include any tax penalties incurred
as a result of Lessor's negligence or failure to file any tax or informational
returns when due.
10.2 PAYMENT OF TAXES. Paragraph 10.2 is hereby deleted. Lessee shall pay all
Real Property Taxes to Lessor who shall pay such amounts directly to the taxing
authorities prior to delinquency thereof. Such payment shall be made only at
such time as payment of Real Property Taxes is actually due to the taxing
authorities to prevent imposition of penalties for delinquent payment. Real
Property Taxes shall also include reimbursement to Lessor for its prepayment of
amounts assessed against the Premises under City of Carlsbad Community
Facilities District #1, provided such reimbursement is made in such amounts and
at such times as such assessment would have been payable by Lessor in the
ordinary course absent such prepayment.
10.3 JOINT ASSESSMENT. Paragraph 10.3 of the Lease is hereby deleted.
10.4 PERSONAL PROPERTY TAXES. All of Paragraph 10.4 of the Lease except for the
first sentence thereof is hereby deleted.
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12.1 ASSIGNMENT AND SUBLETTING. Lessor's Consent required. All of Paragraph
12.1 of the Lease is hereby deleted and replaced with the following:
Lessee shall not voluntarily or by operation of law assign, transfer,
mortgage or encumber (collectively, "assign or assignment") or sublet all or any
part of Lessee's interest in this Lease or in the Premises without Lessor's
prior written consent. Notwithstanding the foregoing, Lessee may assign the
Lease or may sublet the Premises or any part thereof without Lessor's consent to
any subsidiary, parent, affiliate or control corporation or to any corporation
which acquires all of Lessee's assets or with which it may merge providing
Lessee remains liable and the use does not substantially change.
Notwithstanding any other provision in Paragraph 12 of the Lease, Lessor's
consent to a sublease shall not be required and Lessor shall not have the right
to adjust the rental so long as all of the following conditions are and remain
satisfied: (a) the sublease is for a portion of the Premises constituting less
than fifty percent (50%) of the total rentable square feet of the Premises; (b)
Lessee continues to occupy the remaining portions of the Premises; (c) the
sublessee does not employ on the Premises Hazardous Substances in violation of
Applicable Requirements and its use is not otherwise in violation of the Lease;
and (d) Lessee is not otherwise in Breach of this Lease.
For any other assignment or subletting, Lessor agrees it will not
unreasonably withhold, condition or delay its consent to any such assignment or
subletting. Rental amounts in excess of the Base Rent payable to Lessor by
Lessee under the Lease (the "Excess Rental") on account of such assignment or
subletting will be shared between the Lessor and Lessee. Lessor shall be
entitled to that portion of the Excess Rental arising by virtue of the value of
the Premises as a warehouse (offices, distribution of electrical, bathrooms
etc.) and Lessee shall be entitled to that portion of the Excess Rental arising
by virtue of the improvements installed by Lessee having a biopharmaceutical use
and character as opposed to an industrial/office use and character; PROVIDED,
HOWEVER, Excess Rental shall be calculated net of all expenses incurred by
Lessee in any assignment or subleasing of the Premises, including, without
limitation, any amounts paid to Lessor by Lessee during periods where the
assigned or subleased portion of the Premises was vacant; any improvement
allowance or other economic concession paid by Lessee to any sublessee or
assignee; broker's commissions; attorneys' fees; lease take-over payments; costs
of advertising the space for sublease or assignment; and any other costs
actually paid in assigning or subletting the Premises. Lessor shall not be paid
any Excess Rental amounts until Lessee has recovered all such costs incurred in
connection with such subleasing or assignment.
12.2(e) The amount which Lessor may receive for consideration of any request
for assignment or subletting shall not exceed $500 in any instance.
12.3(c) Paragraph 12.3(c) is hereby modified to provide that for any action by
a sublessee with respect to the Premises that would trigger a requirement for
Lessor's consent under the Lease if such action were taken by Lessee under the
Lease, such subtenant shall be required to seek Lessor's consent to such action.
12.3(e) The last sentence of Paragraph 12.3(e) is hereby deleted.
13.1(b) Paragraph 13.1(b) is hereby deleted and replaced with the following:
The failure to pay any installment of base rent, or any other monetary
payment required to be made by Lessee under the Lease, when due and
payable hereunder, upon the date when payment is due, such failure
continuing for a period of five (5) business days after written notice
of such failure; or
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13.1(c) Paragraph 13.1(c) is hereby modified to replace the reference to "ten
(10) days" with a reference to "thirty (30) days."
13.1(f) Paragraph 13.1(f) is hereby deleted and replaced with the following:
"All notices to be given pursuant to this Section 13.1 shall be in addition to,
and not in lieu of, the notice requirements of California Code of Civil
Procedure Section 1161."
13.1(g) Paragraph 13.1(g) is hereby deleted from the Lease.
13.4 LATE CHARGES. The late charge of 10% is deleted and replaced with a late
charge of six percent (6%).
13.5 INTEREST. The reference to 4% for purposes of calculating Interest on the
Lease is deleted and replaced with two percent (2%).
15. BROKERS' FEES. Lessor shall be responsible for payment of all fees owed to
the Brokers with respect to the Lease.
16.2 Lessee shall have no obligation to deliver any financial statements to
Lessor so long as Lessee is required to report to the United States Securities
and Exchange Commission with respect to its financial status and such filings
are publicly available.
26. NO RIGHT TO HOLDOVER. The amount of 150% as an increase in the Base Rent
for a holdover by Lessee shall not apply if Lessee has notified Lessor not less
than three (3) months prior to the expiration of the Term of the Lease that
Lessee intends to hold over in the Premises, subject to Lessor's written
consent, not to be unreasonably withheld, conditioned or delayed, in which event
such holdover by Lessee shall be on all the terms and provisions of the Lease,
at a Base Rent adjusted pursuant to Section 55 below. The duration of such
holdover shall be specified by Lessee at the time notice of such holdover is
given to Lessor and shall not exceed three (3) months.
30.2 ATTORNMENT. As a condition to any requirement of attornment hereunder, the
beneficiary of a Security Device shall have elected that this Lease shall be
prior and superior to such Security Device prior to any event of foreclosure
thereunder.
31. ATTORNEYS' FEES. The provisions of Paragraph 31 of the Lease shall apply
to arbitration.
32. LESSOR'S ACCESS. Lessor shall only enter the Premises to the extent
reasonably required by Lessor and not "as Lessor may deem necessary."
37. GUARANTOR. Paragraph 37 is hereby deleted from the Lease.
39.2 OPTIONS PERSONAL TO ORIGINAL LESSEE. Notwithstanding the provisions of
Paragraph 39.2, Lessee may assign its Options under the Lease to any permitted
assignee under the Lease provided Lessee remains liable for full performance of
the Lease by such assignee.
40. MULTIPLE BUILDINGS. Paragraph 40 is hereby deleted from the Lease.
50. TENANT IMPROVEMENTS. Lessee at its sole cost shall be responsible for the
Tenant Improvements including space plans, building plans, and for all costs of
construction including, but not by way of limitation, permit fees for its Tenant
Improvements. Office improvements shall be constructed of a quality comparable
to the quality existing at 5935 Darwin Court or otherwise reasonably acceptable
to Lessor and consist of a
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minimum of 5,100 square feet on the second floor and 5,100 square feet
directly below on the first floor. A minimum of 5,100 square feet of such
office improvements shall be completed within twelve (12) months of the
Commencement Date, with the remainder to be completed not later than eighteen
(18) months from the Commencement Date. Lessee's plans for construction of
the Tenant Improvements ("Lessee's Plans") and its general contractor for
such construction shall be subject to the Lessor's prior approval to be given
not later than ten (10) business days after submittal to Lessor, with
Lessor's approval not to be unreasonably withheld, conditioned or delayed. In
the event Lessor disapproves Lessee's Plans, Lessor shall specify the reasons
for such disapproval and Lessee shall have ten (10) business days to revise
and re-submit Lessee's Plans for Lessor's approval. Lessor shall respond
thereto within five (5) business days and if the revised Lessee's Plans are
again disapproved by Lessor, the foregoing procedure shall be re-instituted
until Lessor's approval is obtained. Lessee warrants that the Tenant
Improvements will comply with all Applicable Requirements in effect at the
time of such construction. Lessee shall construct as part of the Tenant
Improvements, screening of the HVAC units on the roof of the Building in
accordance with the requirements of the covenants, conditions and
restrictions ("CC&Rs") applicable to the project of which the Building is a
part. Lessee acknowledges that Lessor has notified those individuals
responsible for administering the CC&Rs that such screening will be completed
in accordance with the attached Schedule 50. Unless Lessee is successful in
obtaining such individual's consent to a deviation from the screening
requirements set forth in the attached Schedule 50, Lessee shall complete
such screening to the satisfaction of such individuals in accordance with the
attached Schedule 50.
50.1 The phrase "Tenant Improvements" means all interior and exterior
(including HVAC systems) improvements which will not be part of the Building
Shell constructed by Lessor and shall include but not by way of limitation (a)
partitions, walls, doors, (b) all surface finishes, including wall coverings,
paint, floor coverings, suspended ceilings and other similar items, (c) duct
work, heat pumps, vents filters, diffusers, terminal boxes and accessories for
completion of heating, ventilation and air conditioning systems within the
Premises, (d) electrical distribution systems (including panels, subpanels,
wires and outlets), lighting fixtures, outlets, switches and other electrical
work to be installed in the Premises, (e) plumbing lines, fixtures and
accessories, and all fire and life safety control systems such as fire walls and
fire alarms ( including piping, wiring and accessories) to be located in the
Premises , (f) improvements required for compliance with Title 24, and other
governmental agencies, and (g) all the construction specific for Lessee's
biopharmaceutical needs, to the extent the foregoing are included in the Plans.
Lessee represents and warrants that no part of its Tenant Improvements
will contain ACHM in violation of Applicable Requirements in effect at the time
of such construction. If Lessee does employ ACHM, the ACHM will be promptly
removed in a manner required by the appropriate government agency in accordance
with Applicable Requirements.
Lessee shall be fully responsible for making all alterations and
repairs to the Tenant Improvements at its cost to remove any and all ACHM
resulting from or necessitated by the failure of Lessee and/or Lessee's
contractor to comply with Applicable Requirements regarding ACHM's in effect at
the time of such construction, or from Lessee's and/or Lessee's contractor's
utilization of Hazardous Substances as defined by Applicable Requirements, in
violation of such Applicable Requirements or which could pose a health risk to
occupants of the Premises.
51 OPERATING EXPENSES. In addition to payment of the Base Rent, Lessee shall,
from and after the Start Date, be responsible for payment of all "Operating
Expenses." The term "Operating Expenses" means all direct expenses and costs
attributable to Lessee's use, occupancy and operation of the Premises which are
customary in a "triple net" lease. Other than payments of Real Property Taxes,
the Administration Fee and premiums for insurance policies maintained by Lessor
as the Insuring Party, all Operating Expenses shall be paid directly by Lessee
to the appropriate third party provider of services, utilities or items of
operating expense prior to
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delinquency. Lessor shall promptly forward to Lessee any and all invoices
received by Lessor with respect to Operating Expenses, and in all events in
sufficient time to permit timely payment thereof by Lessee. Operating
Expenses shall also include a fee payable to Lessor (the "Administration
Fee") for the due and punctual performance of all administrative
responsibilities of Lessor under the Lease. The Administration Fee shall be
payable concurrently with Base Rent in an amount equal to two percent (2%) of
the monthly Base Rent then payable with respect to the Premises. In the
event of any abatement of rent permitted Lessee pursuant to the provisions of
the Lease, the Administration Fee shall also be abated in the same proportion
as the Base Rent.
52. SERVICES. At the time of completion of the Building Shell, Lessor and its
contractors shall, at no cost to Lessee, provide "as-builts" for the Building
Shell and shall conduct a thorough inspection of the Building's systems in order
to certify that the equipment and systems are in full working order. At the
same time, Lessor will supply a written certification of the results of its
mechanical contractor's inspection. Lessee will be given all certifications
that Lessor receives from its contractors, subcontractors and vendors for
construction of the Building Shell.
53. NON-DISTURBANCE. Lessor warrants and represents that in the event Lessor
introduces any lien or mortgage holder to the Premises, then Lessor will obtain
nondisturbance agreements in a form reasonably acceptable to Lessee from any and
all of such mortgage or lien holders, ground lessors, etc., which agreements
shall provide that as long as Lessee is not in default of the Lease beyond any
applicable grace period, Lessee's occupancy of the Premises shall not be
disturbed, its rights under the Lease will continue to be recognized and all of
the Lessor's future obligations under the Lease will continue to be performed.
54. REAL ESTATE LICENSES. California law requires that Lessee be informed that
Roland A. Childs, a general partner of the Childs Family Investment Partnership,
L.P. and Allan J. Gardner, a trustee of the A. J. Gardner Family Trust are each
State of California Real Estate Licensees.
55. RENT ADJUSTMENTS. The monthly rent for each month of the adjustment periods
specified below shall be increased using the cost of living adjustment.
(a) On the month of the first anniversary of the Commencement Date and
each twelve months thereafter, the monthly rent payable under paragraph 1.5
("Base Rent") of the Lease shall be adjusted by the change, if any, from the
Base Month specified below, in the Consumer Price Index of the Bureau of Labor
Statistics of the US Department of Labor for CPI U (All Urban Consumers), for
Los Angeles-Anaheim-Riverside, All Items (19821984=100), herein referred to as
"CPI."
(b) The monthly rent payable in accordance with subparagraph (a) of this
Section 55 shall be calculated as follows: the Base Rent set forth in Paragraph
1.5 of the Lease, shall be multiplied by a fraction the numerator of which shall
be the CPI of the calendar month 2 (two) months prior to the month specified in
(a) during which the adjustment is to take effect, and the denominator of which
shall be the CPI of the calendar month which is two (2) months prior to the
month containing the Commencement Date. The sum so calculated shall constitute
the new monthly rent hereunder, but in no event, shall any such new monthly rent
be less than the rent payable for the month immediately preceding the date for
rent adjustment nor shall it be less than three (3) percent or more than six (6)
percent during the first five (5) years unless the CPI exceeds twelve (12)
percent in which case the overage over twelve (12) percent will be added to the
maximum six (6) percent as additional rent. Thereafter, during the remainder of
the initial term and any extension if one or both of the two options to extend
are exercised, the Base Rent will be adjusted utilizing the same CPI in the same
manner with an annual minimum of three (3) percent increase and a maximum seven
(7) percent increase unless the CPI exceeds thirteen (13) percent in which case
the overage over thirteen (13) percent will be added to the maximum seven (7)
percent as additional rent.
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56. OPTIONS TO EXTEND. Lessor hereby grants to Lessee two (2) options (each,
an "Option") to extend the Term of this Lease for an additional sixty (60) month
period for each Option, commencing when the prior term expires upon each and all
of the following terms and conditions:
(i) Lessee gives to Lessor and Lessor actually receives (which
receipt may be independently confirmed by Lessee) on a date which is prior to
the date that the option period would commence (if exercised) by at least six
(6) and not more than nine (9) months, a written notice in accordance with
the Lease of the exercise of the options to extend this Lease for said
additional terms, time being of the essence. If said notification of the
exercise of said Options are not so given and received, the Options shall
automatically expire; said Options may only be exercised consecutively;
(ii) The provisions of Paragraph 39, including the provision
relating to default of Lessee set forth in Paragraph 39.4 of this Lease are
conditions of the Options;
(iii) All of the terms and conditions of this Lease except where
specifically modified by these Options shall apply;
(iv) The monthly Base Rent for each month of the applicable Option
period shall be calculated as follows, using the methods indicated below:
MARKET RENTAL VALUE ADJUSTMENTS (MRV)
(a) On the 10th anniversary of the Commencement Date if the first
Option to extend is timely exercised and again five (5) years later if the
second Option to extend is timely exercised, Base Rent shall be adjusted to
the "Market Rental Value" of the Premises as follows:
1. Four months prior to the Market Rental Value (MRV) Adjustment
Dates described above, Lessor and Lessee shall meet to establish an agreed
upon new MRV for comparable space in the Carlsbad Research Center for the
specified term. In determining MRV, the comparable space will be limited to
an industrial building with offices, electrical distribution and other
typical warehouse space such as but not limited to bath rooms but
specifically excluding the peculiar attributes required by a
biopharmaceutical firm such as refrigeration, and required plumbing and
piping. If agreement cannot be reached, then:
(i) Lessor and Lessee shall immediately appoint a mutually
acceptable appraiser or broker to establish the new MRV within the next
thirty (30) days. Any associated costs will be split equally between the
parties, or
(ii) Both Lessor and Lessee shall each immediately select and
pay the appraiser or broker of their choice to establish a MRV within the
next thirty (30) days. If, for any reason, either one of the appraisals is
not completed within the next thirty (30) days, as stipulated, then the
appraisal that is completed at that time shall automatically become the new
MRV. If both appraisals are completed and the two appraisers/brokers cannot
agree on a reasonable average MRV then they shall immediately select a third
mutually acceptable appraiser/broker to establish a third MRV within the next
thirty (30) days. The average of the two appraisals closest in value shall
then become the new MRV. The costs of the third appraisal will be split
equally between the parties.
2. If Lessee does not add additional mezzanine to the existing
5,100 sq. ft., the minimum MRV will be One and Five One-Hundredths Dollars
($1.05) per ft. for the eleventh (11th) year and One and Twenty-One
One-Hundredths Dollars ($1.21) for the sixteenth (16th) year. If Lessee adds
additional mezzanine during the Term of the Lease, the minimum MRV will be
computed in the same manner as the
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stated minimums were determined, the example of which is shown on the
attached Schedule 56. In any event, the new MRV shall not be less than the
Base Rent payable for the month immediately preceding the date for rent
adjustment.
(b) Upon the establishment of each new MRV:
1. The monthly Base Rent so calculated for each Term as specified in
subsection (a) above will become the new "Base Rent" for the purpose of
calculating any further CPI adjustments as specified in Section 55 above; and
2. the first month of each Market Rental Value term as specified in
subsection (a) above shall become the new "Base Month" for the purpose of
calculating any further Cost of Living Adjustments as specified in Paragraph 55.
57. ARBITRATION. This Addendum provision contains the sole and exclusive
method, means and procedure to resolve any and all disputes or disagreements,
including whether any particular matter constitutes, or with the passage of time
would constitute, a Default or Breach under the Lease. The parties hereby
irrevocably waive any and all rights to the contrary and shall at all times
conduct themselves in strict, full, complete and timely accordance with the
provisions of this Addendum provision. Any and all attempts to circumvent the
provisions of this Addendum provision shall be absolutely null and void and of
no force or effect whatsoever. As to any matter submitted to arbitration to
determine whether it would, with the passage of time, constitute a Default or
Breach, such passage of time shall not commence to run until any such
affirmative determination, so long as it is simultaneously determined that the
challenge of such matter as a potential Default or Breach was made in good
faith, except with respect to the payment of money. With respect to the payment
of money, such passage of time shall not commence to run only if the party which
is obligated to make the payment does in fact make the payment to the other
party. Such payment can be made "under protest," which shall occur when such
payment is accompanied by a good-faith notice stating why the party has elected
to make a payment under protest. This Section shall not prevent Lessor's
recourse to the L/C or to cash held in lieu thereof for Breaches under the
Lease, however, if Lessee disputes the existence of such Breach any draw down of
the L/C or cash held in lieu thereof, as the case may be, shall be deemed made
"under protest" pending resolution of such dispute hereunder. Such protest will
be deemed waived unless the subject matter identified in the protest is
submitted to arbitration as set forth in the following:
(a) ARBITRATION PANEL. Within ninety (90) days after delivery of written
notice ("Notice of Dispute") of the existence and nature of any dispute given by
any party to the other party, and unless otherwise provided herein in any
specific instance, the parties shall each: (i) appoint one (1) lawyer actively
engaged in the licensed and full-time practice of law, specializing in real
estate, in the County of San Diego for a continuous period immediately preceding
the date of delivery ("Dispute Date") of the Notice of Dispute of not less than
ten (10) years, but who has at no time ever represented or acted on behalf of
any of the parties, and (ii) deliver written notice of the identity of such
lawyer and a copy of his or her written acceptance of such appointment and
acknowledgment of and agreement to be bound by the time constraints and other
provisions of this Addendum provision ("Acceptance") to the other parties
hereto. The party who selects the lawyer may not consult with such lawyer,
directly or indirectly, to determine the lawyer's position on the issue which is
the subject of the dispute. In the event that any party fails to so act, such
arbitrator shall be appointed pursuant to the same procedure that is followed
when agreement cannot be reached as to the third arbitrator. Within ten (10)
days after such appointment and notice, such lawyers shall appoint a third
lawyer (together with the first two (2) lawyers, "Arbitration Panel") of the
same qualification and background and shall deliver written notice of the
identity of such lawyer and a copy of his or her written Acceptance of such
appointment to each of the parties. In the event that agreement cannot be
reached on the appointment of a third lawyer within such period, such
appointment and notification shall be made as quickly as possible by any court
of competent jurisdiction,
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by any licensing authority, agency or organization having jurisdiction over
such lawyers, by any professional association of lawyers in existence for not
less than ten (10) years at the time of such dispute or disagreement and the
geographical membership boundaries of which extend to the County of San Diego
or by any arbitration association or organization in existence for not less
than ten (10) years at the time of such dispute or disagreement and the
geographical boundaries of which extend to the County of San Diego, as
determined by the party giving such Notice of Dispute and simultaneously
confirmed in writing delivered by such party to the other party. Any such
court, authority, agency, association or organization shall be entitled
either to directly select such third lawyer or to designate in writing,
delivered to each of the parties, an individual who shall do so. In the
event of any subsequent vacancies or inabilities to perform among the
Arbitration Panel, the lawyer or lawyers involved shall be replaced in
accordance with the provisions of this Addendum provision as if such
replacement was an initial appointment to be made under this Addendum
provision within the time constraints set forth in this Addendum provision,
measured from the date of notice of such vacancy or inability, to the person
or persons required to make such appointment, with all the attendant
consequences of failure to act timely if such appointed person is a party
hereto.
(b) DUTY. Consistent with the provisions of this Addendum provision, the
members of the Arbitration Panel shall utilize their utmost skill and shall
apply themselves diligently so as to hear and decide, by majority vote, the
outcome and resolution of any dispute or disagreement submitted to the
Arbitration Panel as promptly as possible, but in any event on or before the
expiration of thirty (30) days after the appointment of the members of the
Arbitration Panel. None of the members of the Arbitration Panel shall have any
liability whatsoever for any acts or omissions performed or omitted in good
faith pursuant to the provisions of this Addendum provision.
(c) AUTHORITY. The Arbitration Panel shall (i) enforce and interpret the
rights and obligations set forth in the Lease to the extent not prohibited by
law, (ii) fix and establish any and all rules as it shall consider appropriate
in its sole and absolute discretion to govern the proceedings before it,
including any and all rules of discovery, procedure and/or evidence, and
(iii) make and issue any and all orders, final or otherwise, and any and all
awards, as a court of competent jurisdiction sitting at law or in equity could
make and issue, and as it shall consider appropriate in its sole and absolute
discretion, including the awarding of monetary damages (but shall not award
consequential damages to either party and shall not award punitive damages
except in situations involving knowing fraud or egregious conduct condoned by,
or performed by, the person who, in essence, occupies the position which is the
equivalent of the chief executive officer of the party against whom damages are
to be awarded), the awarding of reasonable attorneys' fees and costs to the
prevailing party as determined by the Arbitration Panel and the issuance of
injunctive relief. If the party against whom the award is issued complies with
the award, within the time period established by the Arbitration Panel, then no
Default or Breach will be deemed to have occurred, unless the Default or Breach
pertained to the non-payment of money by Lessee or Lessor, and Lessee or Lessor
failed to make such payment under protest.
(d) APPEAL. The decision of the Arbitration Panel shall be final and
binding, may be confirmed and entered by any court of competent jurisdiction at
the request of any party and may not be appealed to any court of competent
jurisdiction or otherwise except upon a claim of fraud on the part of the
Arbitration Panel, or on the basis of a mistake as to the applicable law. The
Arbitration Panel shall retain jurisdiction over any dispute until its award has
been implemented, and judgment on any such award may be entered in any court
having appropriate jurisdiction.
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(e) COMPENSATION. Each member of the Arbitration Panel (i) shall be
compensated for any and all services rendered under this Addendum provision at a
rate of compensation not to exceed the sum of (a) Two Hundred Fifty Dollars
($250.00) per hour and (b) the sum of Ten Dollars ($10.00) per hour multiplied
by the number of full years of the expired Term under the Lease, plus
reimbursement for any and all expenses incurred in connection with the rendering
of such services, payable in full promptly upon conclusion of the proceedings
before the Arbitration Panel. Such compensation and reimbursement shall be
borne by the nonprevailing party as determined by the Arbitration Panel in its
sole and absolute discretion.
_________________ _________________
Lessor's Initials Lessee's Initials
58. ACCESS; PARKING. Lessee shall have full and uninterrupted access to the
Premises twenty-four (24) hours per day, seven (7) days per week, every day of
the year. All parking allocated to the Building under Applicable Requirements
shall be for Lessee's sole and exclusive use at no additional cost or rent
during the entire Lease Term or any extensions thereof. Lessee's parking
privileges shall be available to Lessee twenty-four (24) hours per day, seven
(7) days per week, every day of the year.
59. ENTRY BY LESSOR. Notwithstanding anything to the contrary set forth in the
Lease to the contrary, Lessor and/or those acting on Lessor's behalf may only
enter the Premises upon not less than two (2) business days prior notice to
Lessee acknowledged by Lessee, except in cases of emergency, in which case only
telephone notice shall be required. In any event, any such entry shall be
accomplished as expeditiously as reasonably possible, in a manner so as to cause
as little interference to Lessee as reasonably possible and in accordance with
Lessee's security requirements. Lessor shall be accompanied by an employee of
Lessee at all times. Lessee may designate certain areas of the Premises as
"Secured Areas" should Lessee require such areas for the purpose of securing
certain valuable property or confidential information or operations. Lessor may
not enter such Secured Areas except in the case of emergency or in the event of
a permitted Lessor inspection, in which case Lessor shall provide Lessee with
five (5) business days' prior written notice of the specific date and time of
such Lessor inspection and be accompanied by an employee of Lessee on all such
inspections.
60. WHEN PAYMENT IS DUE. Other than payment of Base Rent, whenever in the
Lease a payment is required to be made by one party to the other, but a specific
date for payment is not set forth or a specific number of days within which
payment is to be made is not set forth, or the words "immediately," "promptly"
and/or "on demand," or their equivalent, are used to specify when such payment
is due, then such payment shall be due thirty (30) days after the party which is
entitled to such payment sends written notice to the other party demanding such
payment.
61. LESSOR BANKRUPTCY PROCEEDING. In the event that the obligations of Lessor
under the Lease are not performed during the pendency of a bankruptcy or
insolvency proceeding involving the Lessor as the debtor, or following the
rejection of this Lease in accordance with Section 365 of the United States
Bankruptcy Code, then notwithstanding any provision of this Lease to the
contrary, Lessee shall have the right to set off against rents next due and
owing under this Lease (a) any and all damages caused by such non-performance of
Lessor's obligations under the Lease by Lessor, debtor-in-possession, or the
bankruptcy trustee, and (b) any and all damages caused by the non-performance of
Lessor's obligations under the Lease following any rejection of the Lease in
accordance with Section 365 of the United States Bankruptcy Code.
62. CONSENT/DUTY TO ACT REASONABLY. Regardless of any reference to the words
"sole" or "absolute" (but except for matters which (a) would have an adverse
effect on the structural integrity of the Building Shell, (b) could have an
adverse effect on the Building HVAC systems, or (c) could have an effect on the
exterior appearance of the Building, whereupon in each such case Lessor's duty
is to act in good faith and in compliance with the Lease), any time the consent
of Lessor or Lessee is required, such consent shall not be unreasonably
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withheld, conditioned or delayed. Whenever the Lease grants Lessor or Lessee
the right to take action, exercise discretion, establish rules and
regulations or make allocations or other determinations (other than decisions
to exercise expansion, contraction, cancellation, termination or renewal
options), Lessor and Lessee shall act reasonably and in good faith and take
no action which might result in the frustration of the reasonable
expectations of a sophisticated lessee or lessor concerning the benefits to
be enjoyed under the Lease.
63. COVENANTS AND AGREEMENTS. The failure of Lessor or Lessee to insist in any
instance on the strict keeping, observance or performance of any covenant or
agreement contained in the Lease, or the exercise of any election contained in
the Lease, shall not be construed as a waiver or relinquishment for the future
of such covenant or agreement, but the same shall continue and remain in full
force and effect.
64. DAYS. All references in the Lease to "days" involving less than "ten (10)
days" shall mean business days, and all references to "notice" shall mean
written notice.
65. JOINT AND SEVERAL OBLIGATIONS. The obligations of Lessor under the Lease
shall be joint and several obligations of the entities comprising Lessor.
66. DEFINITION OF APPLICABLE REQUIREMENTS. The use of the term "Applicable
Requirements" in the Lease and this Addendum shall mean those laws, statutes,
codes, ordinances, regulations, covenants and restrictions applicable to the
matter to which such Applicable Requirements are stated to apply in the Lease
and this Addendum.
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SCHEDULE 1.2
LIST OF LESSOR'S PLANS
[OMITTED]
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SCHEDULE 5
FORM OF LETTER OF CREDIT
[OMITTED]
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SCHEDULE 6.2
FORM OF HAZARDOUS MATERIALS QUESTIONAIRE
[OMITTED]
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SCHEDULE 50
PROPOSED ROOF SCREENING REQUIREMENTS
[4 PAGES OF GRAPHICS OF SCREENING OMITTED]
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SCHEDULE 56
MARKET RENTAL VALUE CALCULATION
[OMITTED]
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AMENDMENT NO. 1 TO LEASE
This AMENDMENT NO. 1 TO LEASE ("Amendment") is made as of January 31, 1998 by
and between The Childs Family Investment Partnership, L.P. and The A. J.
Gardner Family Trust u/t/a 3/5/81, general partners doing business as "Darwin
Court" but holding title as tenants-in-common (collectively, "Lessor") and
The Immune Response Corporation, a Delaware corporation ("Lessee") and shall
amend and supplement that certain Standard Industrial/Commercial
Single-Tenant Lease Net between Lessor and Lessee dated as of December 15,
1997, together with the Exhibits and a certain Addendum to Lease attached
thereto (collectively, the "Lease"). All defined terms used in this
Amendment, unless specifically defined in this Amendment, shall have the same
meaning as such terms have in the Lease.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
1. AMENDMENTS TO LEASE. The following amendments to the Lease shall become
effective upon full execution of this Amendment:
1.1 EARLY POSSESSION. Early Possession shall be deemed to have
occurred on February 1, 1998 (the "Early Possession Date"). Notwithstanding
such Early Possession, Lessee shall have no liability for claims or
liabilities that arise out of any items of construction comprising any
portion of the Building Shell to the extent such items were not completed as
required under this Lease by Lessor as of the Early Possession Date. Early
Possession by Lessee of such incomplete items shall not occur until such
items are completed by Lessor in accordance with the requirements of the
Lease.
1.2 COMMENCEMENT DATE. The Commencement Date of the Lease shall be the
first to occur of: (i) Lessee's completion of the Tenant Improvements in
accordance with the requirements of the Lease; and (ii) May 1, 1998.
2. EFFECT OF AMENDMENT; COUNTERPARTS. All references in the Lease and in
this Amendment shall be construed to mean the Lease, as amended and
supplemented by this Amendment. In the event of a conflict between the
provisions of the Lease and this Amendment, this Amendment shall control.
This Amendment may be executed in multiple counterparts, each of which shall
be deemed an original, but all of which, together, shall constitute one and
the same Amendment.
IN WITNESS WHEREOF, the parties have executed this Amendment No.1 to
Lease as of the date first set forth above.
LESSOR LESSEE
The Childs Family The Immune Response Corporation
Investment Partnership, L.P.
By: /s/ ROLAND A. CHILDS By: /s/ PAULA ATKINS
-------------------------- -------------------------------
Roland A. Childs Name: Paula Atkins
Its: General Partner ----------------------------
Title: Vice-President
----------------------------
/s/ ALLAN J. GARDNER
---------------------------
Allan J. Gardner, Trustee
of the A.J. Gardner Family
Trust, Under Declaration of
Trust Dated March 5, 1981
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