EXHIBIT 10.12
BUILD-TO-SUIT LEASE
Landlord: Britannia Pointe Grand Limited Partnership
Tenant: Rigel, Inc.
Date: June 2, 1998
TABLE OF CONTENTS
1. PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Lease of Property . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Landlord's Reserved Rights . . . . . . . . . . . . . . . . . . . 1
2. TERM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.1 Term. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.2 Early Possession . . . . . . . . . . . . . . . . . . . . . . . . 2
2.3 Delay In Possession . . . . . . . . . . . . . . . . . . . . . . 3
2.4 Acknowledgement Of Rent Commencement . . . . . . . . . . . . . . 3
2.5 Holding Over . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.6 Option To Extend Term . . . . . . . . . . . . . . . . . . . . . 4
3. RENTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.1 Minimum Rental . . . . . . . . . . . . . . . . . . . . . . . . . 4
(a) Rental Amounts . . . . . . . . . . . . . . . . . . . . . . 4
(b) Rental Amounts During First Extended Term . . . . . . . . . 5
(c) Rental Amounts During Second Extended Term . . . . . . . . 5
(d) Rental Adjustment Due to Change in Square Footage . . . . . 6
3.2 Late Charge . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4. STOCK WARRANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.1 Stock Warrants . . . . . . . . . . . . . . . . . . . . . . . . . 6
5. CONSTRUCTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5.1 Construction of Improvements . . . . . . . . . . . . . . . . . . 6
5.2 Condition of Property . . . . . . . . . . . . . . . . . . . . . . 7
5.3 Compliance with Law . . . . . . . . . . . . . . . . . . . . . . . 7
6. TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
6.1 Personal Property . . . . . . . . . . . . . . . . . . . . . . . . 7
6.2 Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . 8
7. OPERATING EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
7.1 Payment of Operating Expenses . . . . . . . . . . . . . . . . . . 8
7.2 Definition Of Operating Expenses . . . . . . . . . . . . . . . . 8
7.3 Determination Of Operating Expenses . . . . . . . . . . . . . . .10
7.4 Final Accounting For Lease Year . . . . . . . . . . . . . . . . .11
7.5 Proration . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
8. UTILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
8.1 Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
8.2 Interruption . . . . . . . . . . . . . . . . . . . . . . . . . .12
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9. ALTERATIONS; SIGNS . . . . . . . . . . . . . . . . . . . . . . . . . . .12
9.1 Right To Make Alterations . . . . . . . . . . . . . . . . . . . .12
9.2 Title To Alterations . . . . . . . . . . . . . . . . . . . . . .12
9.3 Tenant Fixtures . . . . . . . . . . . . . . . . . . . . . . . . .13
9.4 No Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
9.5 Signs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
10. MAINTENANCE AND REPAIRS . . . . . . . . . . . . . . . . . . . . . . . .14
10.1 Landlord's Work . . . . . . . . . . . . . . . . . . . . . . . . .14
10.2 Tenant's Obligation For Maintenance . . . . . . . . . . . . . . .14
(a) Good Order, Condition And Repair . . . . . . . . . . . . .14
(b) Landlord's Remedy . . . . . . . . . . . . . . . . . . . . .14
(c) Condition Upon Surrender . . . . . . . . . . . . . . . . .14
11. USE OF PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
11.1 Permitted Use . . . . . . . . . . . . . . . . . . . . . . . . . .15
11.2 [Omitted.] . . . . . . . . . . . . . . . . . . . . . . . . . . .15
11.3 No Nuisance . . . . . . . . . . . . . . . . . . . . . . . . . . .15
11.4 Compliance With Laws. - . . . . . . . . . . . . . . . . . . . . .15
11.5 Liquidation Sales . . . . . . . . . . . . . . . . . . . . . . . .16
11.6 Environmental Matters . . . . . . . . . . . . . . . . . . . . . .16
12. INSURANCE AND INDEMNITY . . . . . . . . . . . . . . . . . . . . . . . .19
12.1 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
12.2 Quality Of Policies And Certificates . . . . . . . . . . . . . .20
I2.3 Workers' Compensation . . . . . . . . . . . . . . . . . . . . . .21
12.4 Waiver Of Subrogation . . . . . . . . . . . . . . . . . . . . . .21
12.5 Increase In Premiums . . . . . . . . . . . . . . . . . . . . . .21
12.6 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . .21
12.7 Blanket Policy . . . . . . . . . . . . . . . . . . . . . . . . .22
13. SUBLEASE AND ASSIGNMENT . . . . . . . . . . . . . . . . . . . . . . . .22
13.1 Assignment And Sublease Of Building . . . . . . . . . . . . . . .22
13.2 Rights Of Landlord . . . . . . . . . . . . . . . . . . . . . . .22
14. RIGHT OF ENTRY AND QUIET ENJOYMENT . . . . . . . . . . . . . . . . . . .23
14.1 Right Of Entry . . . . . . . . . . . . . . . . . . . . . . . . .23
14.2 Quiet Enjoyment . . . . . . . . . . . . . . . . . . . . . . . . .23
15. CASUALTY AND TAKING . . . . . . . . . . . . . . . . . . . . . . . . . .23
15.1 Damage or Destruction . . . . . . . . . . . . . . . . . . . . . .23
15.2 Condemnation . . . . . . . . . . . . . . . . . . . . . . . . . .24
15.3 Reservation Of Compensation . . . . . . . . . . . . . . . . . . .25
15.4 Restoration Of Improvements . . . . . . . . . . . . . . . . . . .26
16. DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
16.1 Events Of Default . . . . . . . . . . . . . . . . . . . . . . . .26
(a) [Omitted.] . . . . . . . . . . . . . . . . . . . . . . . .26
(b) Nonpayment . . . . . . . . . . . . . . . . . . . . . . . .26
(c) Other Obligations . . . . . . . . . . . . . . . . . . . . .26
(d) General Assignment . . . . . . . . . . . . . . . . . . . .26
(e) Bankruptcy . . . . . . . . . . . . . . . . . . . . . . . .26
(f) Receivership . . . . . . . . . . . . . . . . . . . . . . .27
(g) Attachment . . . . . . . . . . . . . . . . . . . . . . . .27
(h) Insolvency . . . . . . . . . . . . . . . . . . . . . . . .27
16.2 Remedies Upon Tenant's Default . . . . . . . . . . . . . . . . .27
16.3 Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . .28
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17. SUBORDINATION, ATTORNMENT AND SALE . . . . . . . . . . . . . . . . . . .28
17.1 Subordination To Mortgage . . . . . . . . . . . . . . . . . . . .28
17.2 Sale Of Landlord's Interest . . . . . . . . . . . . . . . . . . .29
17.3 Estoppel Certificates . . . . . . . . . . . . . . . . . . . . . .29
17.4 Subordination to CC&R's . . . . . . . . . . . . . . . . . . . . .29
17.5 Mortgagee Protection . . . . . . . . . . . . . . . . . . . . . .29
18. SECURITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30
18.1 Deposit . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30
19. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
19.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
19.2 Successors And Assigns . . . . . . . . . . . . . . . . . . . . .31
19.3 No Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
19.4 Severability . . . . . . . . . . . . . . . . . . . . . . . . . .32
19.5 Litigation Between Parties . . . . . . . . . . . . . . . . . . .32
19.6 Surrender . . . . . . . . . . . . . . . . . . . . . . . . . . . .32
19.7 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . .32
19.8 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . .32
19.9 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . .32
19.10 No Partnership . . . . . . . . . . . . . . . . . . . . . . . . .32
19.11 Financial Information . . . . . . . . . . . . . . . . . . . . .32
19.12 Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33
19.13 Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33
19.14 Rules And Regulations . . . . . . . . . . . . . . . . . . . . .33
19.15 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . .33
19.16 Memorandum Of Lease . . . . . . . . . . . . . . . . . . . . . .33
19.17 Corporate Authority . . . . . . . . . . . . . . . . . . . . . .33
19.18 Execution and Delivery . . . . . . . . . . . . . . . . . . . . .34
19.19 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . .34
EXHIBITS
EXHIBIT A Real Property Description
EXHIBIT B Site Plan
EXHIBIT C Workletter
EXHIBIT D Estimated Construction Schedule
EXHIBIT E Acknowledgement of Rent Commencement Date
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BUILD-TO-SUIT LEASE
THIS BUILD-TO-SUIT LEASE ("LEASE") is made and entered into as of June
2, 1998, by and between BRITANNIA POINTE GRAND LIMITED PARTNERSHIP, a
Delaware limited partnership ("LANDLORD"), and RIGEL, INC., a Delaware
corporation ("TENANT").
THE PARTIES AGREE AS FOLLOWS:
1. PROPERTY
1.1 LEASE OF PROPERTY.
(a) Landlord leases to Tenant and Tenant hires and leases from
Landlord, on the terms, covenants and conditions hereinafter set forth, the
building (the "BUILDING") to be constructed pursuant to Article 5 hereof and
EXHIBIT C attached hereto on a portion of the real property described in
EXHIBIT A attached hereto (the "PROPERTY"), to consist of a two-story office
and laboratory building containing approximately 60,964 square feet. The
location of the Building on the Property is intended to be substantially as
shown on the site plan attached hereto as EXHIBIT B (the "SITE PLAN"). The
Property is part of the Britannia Pointe Grand Business Park (the "CENTER")
on East Grand Avenue in the City of South San Francisco, County of San Mateo,
State of California, which presently consists of the Property and certain
adjacent undeveloped land and presently includes the existing buildings
designated as Buildings D, E, F and G on the Site Plan (containing, in the
aggregate, approximately 177,253 square feet of office and research and
development space), as well as one additional building of approximately
47,000 square feet presently under construction in the area designated
"MetaXen Building" on the Site Plan. The Building and the other improvements
to be constructed on the Property pursuant to Article 5 hereof and EXHIBIT C
attached hereto are sometimes referred to collectively herein as the
"IMPROVEMENTS." The parking areas, driveways, sidewalks, landscaped areas and
other portions of the Center that lie outside the exterior walls of the
buildings now existing or to be constructed in the Center, as depicted in the
Site Plan and as hereafter modified by Landlord from time to time in
accordance with the provisions of this Lease, are sometimes referred to
herein as the "COMMON AREAS."
(b) As an appurtenance to Tenant's leasing of the Building
pursuant to Section 1. l(a), Landlord hereby grants to Tenant, for the
benefit of Tenant and its employees, suppliers, shippers, customers and
invitees, during the term of this Lease, the non-exclusive right to use, in
common with others entitled to such use, (i) those portions of the Common
Areas improved from time to time for use as parking areas, driveways,
sidewalks, landscaped areas, or for other common purposes, and (ii) all
access easements and similar rights and privileges relating to or appurtenant
to the Center and created or existing from time to time under any access
easement agreements, declarations of covenants, conditions and restrictions,
or other written agreements now or hereafter of record with respect to the
Center, subject however to any limitations applicable to such rights and
privileges under applicable law, under this Lease and/or under the written
agreements creating such rights and privileges.
1.2 LANDLORD'S RESERVED RIGHTS. To the extent reasonably necessary to
permit Landlord to exercise any rights of Landlord and discharge any
obligations of Landlord under this Lease, Landlord shall have, in addition to
the right of entry set forth in Section 16.1 hereof, the following rights:
(i) to make changes to the Common Areas, including, without limitation,
changes in the location, size or shape of any portion of the Common Areas,
and to relocate parking spaces in the Center (but not materially decrease the
number of such parking spaces in areas of the Center generally adjacent to
the Building); (ii) to close temporarily any of the Common Areas for
maintenance or other reasonable purposes, provided that reasonable parking
and reasonable access to the Building remain available;
(iii) to construct, alter or add to other buildings and Common Area
improvements in the center (including, but not limited to, construction of
site improvements, buildings and Common Area improvements in adjacent
portions of the Center as it may exist from time to time); (iv) to build in
areas adjacent to the Center and to add such areas to the Center; (v) to use
the Common Areas while engaged in making additional improvements, repairs or
alterations to the Center Or any portion thereof; and (vi) to do and perform
such other acts with respect to the Common Areas and the Center as may be
necessary or appropriate; PROVIDED, however, that notwithstanding anything to
the contrary in this Section 1.2, Landlord's exercise of its rights hereunder
shall not cause any material diminution of Tenant's rights, nor any material
increase of Tenant's obligations, under this Lease or with respect to the
Improvements.
2. TERM
2.1 TERM. The term of this Lease shall commence upon mutual execution
of this Lease by Landlord and Tenant. Tenant's minimum rental and Operating
Expense obligations shall commence on the earlier of (i) the date which is
six (6) months after the date Landlord delivers to Tenant a Structural
Completion Certificate pursuant to the Workletter attached hereto as EXHIBIT
C (subject to any adjustments authorized or required under the provisions of
such EXHIBIT C), correctly notifying Tenant that Landlord's construction of
the shell of the Building pursuant to Article V and EXHIBIT C is
substantially complete, or (ii) the date Tenant takes occupancy of and
commences operation of its business in the Building, the earlier of such
dates being herein called the "RENT COMMENCEMENT DATE," and shall end on the
day (the "TERMINATION DATE") immediately preceding the date seventeen (17)
years thereafter, unless sooner terminated or extended (if applicable) as
hereinafter provided.
2.2 EARLY POSSESSION. Tenant shall have the nonexclusive right to
occupy and take possession of the Building from and after the date of
Landlord's delivery of the Structural Completion Certificate described in
clause (i) of Section 2.1, even though Landlord will be continuing to
construct the balance of Landlord's Work as contemplated in EXHIBIT C, for
the purpose of constructing Tenant's Work as contemplated in EXHIBIT C and
for the purpose of installing fixtures and furniture, laboratory equipment,
computer equipment, telephone equipment, low voltage data wiring and personal
property and other similar work related to the construction of Tenant's Work
and/or preparatory to the commencement of Tenant's business on the Property.
Such occupancy and possession, and any early access under the next sentence
of this Section 2.2, shall be subject to and upon all of the terms and
conditions of this Lease and of the Workletter attached hereto as EXHIBIT C
including, but not limited to, conditions relating to the maintenance of
required insurance), except that Tenant shall have no obligation to pay
minimum rental or Operating Expenses for any period prior to the Rent
Commencement Date as determined under Section 2.1; such early possession
shall not advance or otherwise affect the Rent Commencement Date or
Termination Date determined under Section 2.1. Tenant shall also be entitled
to have early access to the Property at all appropriate times prior to
Landlord's delivery of the Structural Completion Certificate, subject to the
approval of Landlord and its general contractor (which approval shall not be
unreasonably withheld or delayed) and to all other provisions of this Section
2.2, solely for the purpose of performing work preparatory to the
construction of Tenant's Work or necessary for the orderly sequencing of such
work, and Tenant shall not be required to pay minimum rental or Operating
Expenses by reason of such early access until the Rent Commencement Date
otherwise occurs; without limiting the generality of the preceding portion of
this sentence, Tenant shall be entitled to have early access to the Property
and the Building as soon as the roof metal decking is in place to begin
hanging electrical, mechanical and plumbing services from the overhead
structure, subject to all of the provisions of this Section 2.2. Tenant shall
not interfere with or delay Landlord's contractors by any early access,
occupancy or possession under this Section 2.2, shall coordinate and
cooperate with Landlord and its contractors (who shall similarly coordinate
and cooperate with Tenant and its contractors) to minimize any interference
or delay by either party with respect to the other party's work following
Landlord's delivery of the Structural Completion Certificate, and shall
indemnify, defend and hold harmless Landlord and its agents and employees
from and against any and all claims, demands, liabilities, actions, losses,
costs and expenses, including
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(but not limited to) reasonable attorneys' fees, arising out of or in
connection with Tenant's early entry upon the Property hereunder.
2.3 DELAY IN POSSESSION. Landlord agrees to use its best reasonable
efforts to complete its portion of the work described in Section 5.1 and
EXHIBIT C promptly, diligently and within the respective time periods set
forth in the Estimated Construction Schedule attached hereto as EXHIBIT D and
incorporated herein by this reference, as such schedule may be modified from
time to time by mutual written agreement of Landlord and Tenant, and subject
to the effects of any delays caused by or attributable to Tenant or any other
circumstances beyond Landlord's reasonable control (excluding financial
inability); PROVIDED, however, that except to the extent caused by a material
default by Landlord of its obligations set forth in this Lease (including,
but not- limited to, its obligations set forth in this Section 2.3 and in
Section 5.1 and EXHIBIT C), Landlord shall not be liable for any damages
caused by any delay in the completion of such work, nor shall any such delay
affect the validity of this Lease or the obligations of Tenant hereunder.
Notwithstanding any other provision of this Section 2.3, however, if Landlord
fails to deliver the Structural Completion Certificate and tender possession
of the completed structural portions of the Building Shell (I.E., those
portions required to be completed as a condition of delivery of the
Structural Completion Certificate) to Tenant by the date which is twenty-one
(21) months after the date of this Lease, then Tenant shall have the right to
terminate this Lease without further liability hereunder by written notice
delivered to Landlord at any time prior to Landlord's delivery of the
Structural Completion Certificate and tender of possession of the completed
structural portions of the Building Shell to Tenant; PROVIDED, however, that
the 21-month period set forth in this sentence shall be extended, day for
day, for a period equal to the length of any delays in Landlord's design and
construction of the Building Shell that are caused by any material default by
Tenant in the performance of its obligations under this Lease, including (but
not limited to) any failure of Tenant to make prompt and timely delivery to
Landlord of all information reasonably necessary for Landlord to complete the
preparation of all drawings, designs and specifications for the Building
Shell and/or any failure of Tenant to respond in a prompt and timely manner
to any requests by Landlord or its architect for approval of drawings,
designs, specifications, changes or other matters requiring Tenant's review
or approval under the provisions of EXHIBIT C.
2.4 ACKNOWLEDGEMENT OF RENT COMMENCEMENT. Promptly following the Rent
Commencement Date, Landlord and Tenant shall execute a written
acknowledgement of the Rent Commencement Date, Termination Date and related
matters, substantially in the form attached hereto as EXHIBIT E (with
appropriate insertions), which acknowledgement shall be deemed to be
incorporated herein by this reference. Notwithstanding the foregoing
requirement, the failure of either party to execute such a written
acknowledgement shall not affect the determination of the Rent Commencement
Date, Termination Date and related matters in accordance with the provisions
of this Lease.
2.5 HOLDING OVER. If Tenant holds possession of the Property or any
portion thereof after the term of this Lease WITH Landlord's written consent,
then except as otherwise specified in such consent, Tenant shall become a
tenant from month to month at one hundred ten percent (110%) of the rental
and otherwise upon the terms herein specified for the period immediately
prior to such holding over and shall continue in such status until the
tenancy is terminated by either party upon not less than thirty (30) days
prior written notice. If Tenant holds possession of the Property or any
portion thereof after the term of this Lease WITHOUT Landlord's written
consent, then Landlord in its sole discretion may elect (by written notice to
Tenant) to have Tenant become a tenant either from month to month or at will
at one hundred fifty percent (150%) of the rental (prorated on a daily basis
for an at-will tenancy, if applicable) and otherwise upon the terms herein
specified for the period immediately prior to such holding over, or may elect
to pursue any and all legal remedies available to Landlord under applicable
law with respect to such unconsented holding over by Tenant. Tenant shall
indemnify and hold Landlord harmless from any loss, damage, claim, liability,
cost or expense (including reasonable attorneys' fees) resulting from any
delay by Tenant in surrendering the Property or any portion thereof (except
to the extent such delay is with Landlord's prior written consent), including
but not limited to any claims made by a
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succeeding tenant by reason of such delay. Acceptance of rent by Landlord
following expiration or termination of this Lease shall not constitute a
renewal of this Lease.
2.6 OPTION TO EXTEND TERM. Tenant shall have the option to extend the
term of this Lease, at the minimum rental set forth in Section 3. l(b) and
(c) and otherwise upon all the terms and provisions set forth herein with
respect to the initial term of this Lease, for up to two (2) additional
periods of five (5) years each, the first commencing upon the expiration of
the initial term hereof and the second commencing upon the expiration of the
first extended term, if any. Exercise of such option with respect to the
first such extended term shall be by written notice to Landlord at least nine
(9) months prior to the expiration of the initial term hereof; exercise of
such option with respect to the second extended term, if the first extension
option has been duly exercised, shall be by like written notice to Landlord
at least nine (9) months prior to the expiration of the first extended term
hereof. If Tenant is in default hereunder, beyond any applicable notice and
cure periods, on the date of such notice or on the date any extended term is
to commence, then the exercise of the option shall be of no force or effect,
the extended term shall not commence and this Lease shall expire at the end
of the then current term hereof (or at such earlier time as Landlord may
elect pursuant to the default provisions of this Lease). If Tenant properly
exercises one or more extension options under this Section, then all
references in this Lease (other than in this Section 2.6) to the "term" of
this Lease shall be construed to include the extension term(s) thus elected
by Tenant. Except as expressly set forth in this Section 2.6, Tenant shall
have no right to extend the term of this Lease beyond its prescribed-term.
3. RENTAL
3.1 MINIMUM RENTAL.
(a) RENTAL AMOUNTS. Tenant shall pay to Landlord as minimum rental
for the Building, in advance, without deduction, offset, notice or demand, on
or before the Rent Commencement Date and on or before the first day of each
subsequent calendar month of the term of this Lease, the following amounts
per month, subject to adjustment in accordance with the terms of this Section
3.1:
MONTHS MONTHLY MINIMUM RENTAL
------ -------------------------
001 - 012 $ 121,928 ($2.00/sq ft)
013 - 024 121,928 ($2.00/sq ft)
025 - 036 177,405 ($2.91/sq ft)
037 - 048 190,817 ($3.13/sq ft)
049 - 060 195,085 ($3.20/sq ft)
061 - 072 196,304 ($3.22/sq ft)
073 - 084 200,572 ($3.29/sq It)
085 - 096 165,822 ($2.72/sq ft)
097 - 108 170,699 ($2.80/sq ft)
109 - 120 175,576 ($2.88/sq ft)
121 - 132 158,506 ($2.60/sq ft)
133 - 144 163,993 ($2.69/sq ft)
145 - 156 170,090 ($2.79/sq ft)
157 - 168 176,186 ($2.89/sq ft)
169 - 180 162,164 ($2.66/sq ft)
181 - 192 168,261 ($2.76/sq ft)
193 - 204 174,967 ($2.87/sq ft)
If the obligation to pay minimum rental hereunder commences on other than the
first day of a calendar month or if the term of this Lease terminates on
other than the last day of a calendar month, the minimum rental for such
first or last month of the term of this Lease, as the case may be, shall be
prorated based on the number of days the term of this Lease is in effect
during such month. If an increase in minimum rental becomes effective on a
day other
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than the first day of a calendar month, the minimum rental for that month
shall be the sum of the two applicable rates, each prorated for the portion
of the month during which such rate is in effect.
(b) RENTAL AMOUNTS DURING FIRST EXTENDED TERM. If Tenant properly
exercises its right to extend the term of this Lease pursuant to Section 2.6
hereof, the minimum rental during the first extended term shall be equal to
ninety-five percent (95 %) of the fair market rental value of the Building
(as defined below), including any rental increase provisions then customary
in the City of South San Francisco for comparable commercial leases for
office, laboratory and research and development projects, determined as of
the commencement of such extended term in accordance with this paragraph.
Upon Landlord's receipt of a proper notice of Tenant's exercise of its option
to extend the term of this Lease, the parties shall have sixty (60) days in
which to agree on the fair market rental (including any applicable rental
increase provisions) for the Building at the commencement of the first
extended term for the uses permitted hereunder. If the parties agree on such
fair market rental and rental increase provisions (if any), they shall
execute an amendment to this Lease stating the amount of the applicable
minimum monthly rental and any applicable rental increase provisions. If the
parties are unable to agree on such rental (including an), applicable rental
increase provisions) within such sixty (60) day period, then within fifteen
(15) days after the expiration of such period each party, at its cost and by
giving notice to the other party, shall appoint a real estate appraiser with
at least five (5) years experience appraising similar commercial properties
in northeastern San Mateo County to appraise and set the fair market rental
and any applicable rental increase provisions for the Building at the
commencement of the first extended term in accordance with the provisions of
this Section 3.1(b). If either party fails to appoint an appraiser within the
allotted time, the single appraiser appointed by the other party shall be the
sole appraiser. If an appraiser is appointed by each party and the two
appraisers so appointed are unable to agree upon a fair market rental (and
any appropriate rental increase provisions) within thirty (30) days after the
appointment of the second, the two appraisers shall appoint a third similarly
qualified appraiser within ten (10) days after expiration of such 30-day
period; if they are unable to agree upon a third appraiser, then either party
may, upon not less than five (5) days notice to the other party, apply to the
Presiding Judge of the San Mateo County Superior Court for the appointment of
a third qualified appraiser. Each party shall bear its own legal fees in
connection with appointment of the third appraiser and shall bear one-half of
any other costs of appointment of the third appraiser and of such third
appraiser's fee. The third appraiser, however selected, shall be a person who
has not previously acted for either party in any capacity. Within thirty (30)
days after the appointment of the third appraiser, a majority of the three
appraisers shall set the fair market rental and any applicable rental
increase provisions for the first extended term and shall so notify the
parties. If a majority are unable to agree within the allotted time, (i) the
three appraised fair market rentals shall be added together and divided by
three and the resulting quotient shall be the fair market rental for the
first extended term, and (ii) the applicable rental increase provision shall
be equal to the mathematical average (or the nearest reasonable approximation
thereto) of the two rental increase provisions that are most closely
comparable, which determinations shall be binding on the parties and shall be
enforceable in any further proceedings relating to this Lease. For purposes
of this Section 3.1(b), the "FAIR MARKET RENTAL" of the Building shall be
determined with reference to the then prevailing market rental rates for
properties in the City of South San Francisco with shell and standard office,
research and development improvements and site (common area) improvements
comparable to those then existing in the Building and on the Property; no
equipment or laboratory improvements constructed by or for Tenant, whether at
Landlord's or Tenant's expense and whether paid for in cash or through
additional rent or financed in any other manner (including, but not limited
to, equipment and laboratory improvements installed as part of the initial
tenant improvements pursuant to Section 5.1 and EXHIBIT C), shall be taken
into account in determining such fair market rental.
(c) RENTAL AMOUNTS DURING SECOND EXTENDED TERM. If Tenant properly
exercises its right to a second extended term of this Lease pursuant to
Section 2.6 hereof, the minimum rental during such second extended term shall
be determined in the same manner provided in the preceding paragraph for the
first extended term, except that the determination shall be made as of the
commencement of the second extended term.
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(d) RENTAL ADJUSTMENT DUE TO CHANGE IN SQUARE FOOTAGE. The minimum
rental amounts specified in this Section 3.1 are based upon an estimated area
of 60,964 square feet for the Building. If the actual area of the Building
(measured from the exterior faces of exterior wails and from the dripline of
any overhangs, except that in the case of any two-story recesses or
overhangs, the area to the dripline of the overhang shall be counted as part
of the area of the first story but not as part of the area of the second
story), when completed, is greater or less than such estimated area, then the
minimum rentals specified in Section 3. l(a) shall be adjusted for each
rental period in strict proportion to the ratio between the actual area of
the Building during the applicable period (determined on the basis of
measurement described above in this sentence) and the assumed area of 60,964
square feet. Measurement of building area under this paragraph shall be made
initially by Landlord's architect, subject to review and approval by Tenant's
architect.
3.2 LATE CHARGE. If Tenant fails to pay when due rental or other
amounts due Landlord hereunder, such unpaid amounts shall bear interest for
the benefit of Landlord at a rate equal to the lesser of fifteen percent (15%)
per annum or the maximum rate permitted by law, from the date due to the
date of payment. In addition to such interest, Tenant shall pay to Landlord a
late charge in an amount equal to six percent (6%) Of any installment of
minimum rental and any other amounts due Landlord if not paid in full on or
before the fifth (5th) day after such rental or other amount is due. Tenant
acknowledges that late payment by Tenant to Landlord of rental or other
amounts due hereunder will cause Landlord to incur costs not contemplated by
this Lease, including, without limitation, processing and accounting charges
and late charges which may be imposed on Landlord by the terms of any loan
relating to the Property. Tenant further acknowledges that it is extremely
difficult and impractical to fix the exact amount of such costs and that the
late charge set forth in this Section 3.2 represents a fair and reasonable
estimate thereof. Acceptance of any late charge by Landlord shall not
constitute a waiver of Tenant's default with respect to overdue rental or
other amounts, nor shall such acceptance prevent Landlord from exercising any
other rights and remedies available to it. Acceptance of rent or other
payments by Landlord shall not constitute a waiver of late charges or
interest accrued with respect to such rent or other payments or any prior
installments thereof, nor of any other defaults by Tenant, whether monetary
or non-monetary in nature, remaining uncured at the time of such acceptance
of rent or other payments.
4. STOCK WARRANTS
4.1 STOCK WARRANTS. Within thirty (30) days after the execution of this
Lease, as a condition to Landlord's obligations hereunder, Tenant shall
deliver to Landlord or Landlord's designees (which may be any partners,
shareholders or affiliates of Landlord or any affiliates of any such
partners, shareholders or affiliates of Landlord) warrants registered in the
name of Landlord or Landlord's designees for the acquisition of an aggregate
of one hundred fifty thousand (150,000) shares of Tenant's common stock,
which warrants shall be in form and substance mutually satisfactory to
Landlord and Tenant. The warrants shall have an exercise price consistent
with the most recent arm's-length financing consummated by Tenant at the time
of execution of this Lease and shall be exercisable for a period beginning on
the date of this Lease and ending on the seventh (7th) anniversary of the
closing of the initial public offering (if any) of Tenant's common stock.
5. CONSTRUCTION
5.1 CONSTRUCTION OF IMPROVEMENTS.
(a) Landlord shall, at Landlord's cost and expense (except as
otherwise provided herein and in EXHIBIT C), construct Landlord's Work as
defined in and in accordance with the terms and conditions of the Workletter
attached hereto as EXHIBIT C (the "WORKLETTER"). Landlord shall use its best
reasonable efforts to complete such construction promptly, diligently and
within the applicable time periods set forth in the Estimated Construction
Schedule attached hereto as EXHIBIT D and incorporated herein by this
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reference, as such schedule may be modified from time to time in accordance
with the Workletter, subject to the effects of any delays caused by Tenant or
any other circumstances beyond Landlord's reasonable control (excluding any
financial inability), and subject to the provisions of Section 2.3 above.
(b) Tenant shall, at Tenant's cost and expense (except as
otherwise provided herein and in EXHIBIT C), promptly and diligently
construct Tenant's Work as defined in and in accordance with the terms and
conditions of the Workletter.
5.2 CONDITION OF PROPERTY. Landlord shall deliver the Building Shell
and other Improvements constructed by Landlord to Tenant clean and free of
debris, promptly upon completion of construction thereof, and Landlord
warrants to Tenant that the Building Shell and other Improvements constructed
by Landlord (i) shall be free from material structural defects and shall be
in good operating condition on the Rent Commencement Date, and (ii) shall be
constructed in compliance in all material respects with the plans and
specifications developed pursuant to the Workletter and mutually approved (to
the extent required thereunder) by Landlord and Tenant, subject to any
changes implemented in such specifications in accordance with the procedures
set forth in the Workletter. If this warranty is violated in any respect,
then it shall be the obligation of Landlord, after receipt of written notice
from Tenant setting forth with specificity the nature of the violation, to
promptly, :it Landlord's sole cost, correct the condition(s) constituting
such violation. Tenant's failure to give such written notice to Landlord
within one hundred eighty (180) days after the Commencement Date shall give
rise to a conclusive presumption that Landlord has complied with all
Landlord's obligations hereunder, except with respect to latent defects (as
to which such 180-day limitation shall not apply). Without limiting the scope
of Landlord's obligations under the foregoing provisions of this Section 5.2,
Landlord also agrees to either (x) use its best reasonable efforts to enforce
when and as necessary, for the benefit of Tenant and the Improvements, any
and all contractor's and/or manufacturer's warranties extending more than one
hundred eighty (180) days after the Rent Commencement Date with respect to
any of Landlord's Work or, at Tenant's request, (y) assign any or all of such
warranties to Tenant for enforcement purposes (PROVIDED, however, that
Landlord may reserve joint enforcement rights under such warranties to the
extent of Landlord's continuing obligations or warranties hereunder). TENANT
ACKNOWLEDGES THAT THE WARRANTY CONTAINED IN THIS SECTION IS IN LIEU OF ALL
OTHER WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE PHYSICAL CONDITION
OF THE IMPROVEMENTS TO BE CONSTRUCTED BY LANDLORD AND THAT LANDLORD MAKES NO
OTHER WARRANTIES EXCEPT AS EXPRESSLY SET FORTH IN THIS LEASE.
5.3 COMPLIANCE WITH LAW. Landlord warrants to Tenant that the Building
Shell and other Improvements constructed by Landlord (when constructed), as
they exist on the Rent Commencement Date, but without regard to the use for
which Tenant will occupy the Building, shall not violate any covenants or
restrictions of record or any applicable law, building code, regulation or
ordinance in effect on the Rent Commencement Date. Tenant warrants to
Landlord that the Tenant Improvements and any other improvements constructed
by Tenant from time to time shall not violate any applicable law, building
code, regulation or ordinance in effect on the Rent Commencement Date or at
the time such improvements are placed in service. If it is determined that
any of these warranties has been violated, then it shall be the obligation of
the warranting party, after written notice from the other party, to correct
the condition(s) constituting such violation promptly, at the warranting
party's sole cost and expense. Tenant acknowledges that except as expressly
set forth in this Lease, neither Landlord nor any agent of Landlord has made
any representation or warranty as to the present or future suitability of the
Property or Improvements for the conduct of Tenant's business or proposed
business thereon.
6. TAXES
6.1 PERSONAL PROPERTY. Tenant shall be responsible for and shall pay
prior to delinquency all taxes and assessments levied against or by reason of
(a) any and all
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alterations, additions and items installed or placed on or in the Building
and taxed as personal property rather than as real property, and/or (b) all
personal property, trade fixtures and other property placed by Tenant on or
about the Property. Upon request by Landlord, Tenant shall furnish Landlord
with satisfactory evidence of Tenant's payment thereof. If at any time during
the term of this Lease any of said alterations, additions or personal
property, whether or not belonging to Tenant, shall be taxed or assessed as
part of the Center, then such tax or assessment shall be paid by Tenant to
Landlord within fifteen (15) days after presentation by Landlord of copies of
the tax bills in which such taxes and assessments are included and shall, for
the purposes of this Lease, be deemed to be personal property taxes or
assessments under this Section 6.1.
6.2 REAL PROPERTY. To the extent any real property taxes and
assessments on the Property (including, but not limited to, the Improvements)
are assessed directly to Tenant, Tenant shall be responsible for and shall
pay prior to delinquency all such taxes and assessments levied against the
Property. Upon request by Landlord, Tenant shall furnish Landlord with
satisfactory evidence of Tenant's payment thereof. To the extent the Property
and/or Improvements are taxed or assessed to Landlord following the Rent
Commencement Date, such real property taxes and assessments shall constitute
Operating Expenses (as that term is defined in Section 7.2 of this Lease) and
shall be paid in accordance with the provisions of Article 7 of this Lease.
7. OPERATING EXPENSES
7.1 PAYMENT OF OPERATING EXPENSES.
(a) Tenant shall pay to Landlord, at the time and in the manner
hereinafter set forth, as additional rental, an amount equal to fifteen and
fifty-seven hundredths percent (15.57 %) ("TENANT'S OPERATING COST SHARE") of
the Operating Expenses defined in Section 7.2.
(b) Tenant's Operating Cost Share as specified in paragraph (a) of
this Section is based upon an estimated area of 60,964 square feet for the
Building and upon an aggregate area of 391,585 square feet for the existing
buildings owned by Landlord in the Center (Buildings D, E, F and G as shown
on the Site Plan), the Building and the two additional buildings that
Landlord is committed to build in the Center (the MetaXen Building and the
SUGEN Building, as designated on the Site Plan). If the actual area of the
Building (when completed) or of the other buildings owned from time to time
by Landlord in the Center, as determined in good faith by Landlord's
architect on the basis of measurement set forth in Section 3.1 (d) hereof,
differs from the assumed numbers set forth above (including, but not limited
to, any such difference arising from the MetaXen Building and/or the SUGEN
Building being completed and occupied later than the Rent Commencement Date
hereunder), then Tenant's Operating Cost Share shall be adjusted to reflect
the actual areas so determined as they exist from time to time.
(c) If Landlord constructs additional buildings in the Center or
on any adjacent property owned by Landlord and operated, for common area
purposes, on an integrated basis with the Center, Tenant's Operating Cost
Share shall be adjusted to be equal to the percentage determined by dividing
the gross square footage of the Building as it then exists by the gross
square footage of all buildings located in the Center or on any applicable
adjacent property owned by Landlord as described above. In determining such
percentage, a building shall be taken into account from and after the date on
which a tenant first enters into possession of the building or a portion
thereof, and the good faith determination of the gross square footage of any
such building by Landlord's architects shall be final and binding upon the
parties.
7.2 DEFINITION OF OPERATING EXPENSES.
(a) Subject to the exclusions and provisions hereinafter
contained, the term "OPERATING EXPENSES" shall mean the total costs and
expenses incurred by or allocable to
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Landlord for management, operation and maintenance of the Improvements, the
Property and the Center, including, without limitation, costs and expenses of
(i) insurance (which may include, at Landlord's option, earthquake insurance
as part of or in addition to any casualty or property insurance policy),
property management, landscaping, and the operation, repair. and maintenance
of buildings and Common Areas: (ii) all utilities and services; (iii) real
and personal property taxes and assessments or substitutes therefor levied or
assessed against the Center or any part thereof, including (but not limited
to) any possessory interest, use, business, license or other taxes or fees,
any taxes imposed directly on rents or services, any assessments or charges
for police or fire protection, housing, transit, open space, street or
sidewalk construction or maintenance or other similar services from time to
time by any governmental or quasi-governmental entity, and any other new
taxes on landlords in addition to taxes now in effect; (iv) supplies,
equipment, utilities and tools used in management, operation and maintenance
of the Center; (v) capital improvements to the Property, the Improvements or
the Center, amortized over a reasonable period, (aa) which reduce or will
cause future reduction of other items of Operating Expenses for which Tenant
is otherwise required to contribute or (bb) which are required by law,
ordinance, regulation or order of any governmental authority or (cc) of which
Tenant has use or which benefit Tenant; and (vi) any other costs (including,
but not limited to, any parking or utilities fees or surcharges) allocable to
or paid by Landlord, as owner of the Center or Improvements, pursuant to any
applicable laws, ordinances, regulations or orders of any governmental or
quasi-governmental authority or pursuant to the terms of any declarations of
covenants, conditions and restrictions now or hereafter affecting the Center
or over which Tenant has non-exclusive usage rights as contemplated in
Section 1. l(b) hereof. Operating Expenses shall not include any costs
attributable to the work for which Landlord is required to pay under Article
5 or EXHIBIT C, nor any costs attributable to the initial construction of
buildings or Common Area improvements in the Center. The distinction between
items of ordinary operating maintenance and repair and items of a capital
nature shall be made in accordance with generally accepted accounting
principles applied on a consistent basis or in accordance with tax accounting
principles, as determined in good faith by Landlord's accountants.
(b) Notwithstanding anything to the contrary contained in this
Lease, the following shall not be included within Operating Expenses:
(i) Costs of maintenance or repair of the roof membrane
for any building within the Center, except during periods (if any) in which
costs of maintenance or repair of the roof membrane for the Building are
likewise included as an Operating Expense (rather than being incurred
directly by Tenant or passed through directly to Tenant on a
building-by-building basis);
(ii) Leasing commissions, attorneys' fees, costs,
disbursements, and other expenses incurred in connection with negotiations or
disputes with tenants, or in connection with leasing, renovating or improving
space for tenants or other occupants or prospective tenants or other
occupants of the Center;
(iii) The cost of any service sold to any tenant (including
Tenant) or other occupant for which Landlord is entitled to be reimbursed as
an additional charge or rental over and above the basic rent and operating
expenses payable under the lease with that tenant;
(iv) Any depreciation on the Building or on any other
improvements in the Center;
(v) Expenses in connection with services or other benefits
of a type that are not offered or made available to Tenant but that are
provided to another tenant of the Center;
(vi) Costs incurred due to Landlord's violation of any
terms or conditions of this Lease or of any other lease relating to the
Building or to any other portion of the Center or the Property;
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(vii) Overhead profit increments paid to any subsidiary or
affiliate of Landlord for management or other services on or to the Center or
any portion thereof or for supplies or other materials to the extent that the
cost of the services, supplies or materials exceeds the cost that would have
been paid had the services, supplies or materials been provided by
unaffiliated parties on a competitive basis;
(viii) All interest, loan fees and other carrying costs
related to any mortgage or deed of trust or related to any capital item, and
all rental and other amounts payable under any ground or underlying lease, or
under any lease for any equipment ordinarily considered to be of a capital
nature (except (A) janitorial equipment which is not affixed to the Building
and/or (B) equipment the cost of which, if purchased, would be considered an
amortizable Operating Expense under the provisions of this Section 7.2,
notwithstanding the capital nature of such equipment);
(ix) Any compensation paid to clerks, attendants or Other
persons in commercial concessions operated by Landlord;
(x) Advertising and promotional expenditures;
(xi) Costs of repairs and other work occasioned by fire,
windstorm or other casualty of an insurable nature, except to the extent of
any applicable deductible amounts under insurance actually carried by
Landlord;
(xii) Any costs, fines or penalties incurred due to
violations by Landlord of any governmental rule or authority or of this Lease
or any other lease of any portion of the Center or the Property, or due to
Landlord's negligence or willful misconduct;
(xiii) Management costs to the extent they exceed a
reasonable and competitive rate for such services in the market for
management of comparable commercial properties in the San Francisco Bay Area;
(xiv) Costs for sculpture, paintings or other objects of
art, and for any insurance thereon or extraordinary security in connection
therewith;
(xv) Wages, salaries or other compensation paid to any
executive employees above the grade of building manager;
(xvi) The cost of correcting any building code or other
violations which were violations prior to the Rent Commencement Date;
(xvii) The cost of containing, removing or otherwise
remediating any contamination of the Property (including the underlying land
and groundwater) by any toxic or hazardous materials (including, without
limitation, asbestos and PCBs); and
(xviii) Premiums for earthquake insurance coverage, but only
to the extent (if any) that such premiums exceed, in any applicable period, a
commercially reasonable rate, taking into account all relevant factors
(including, but not limited to, the nature, size and location of the Center,
the nature and value of the improvements therein that are owned by or
insurable by Landlord, and the general availability and cost of commercial
earthquake insurance in the insurance markets existing from time to time
during the term of this Lease).
7.3 DETERMINATION OF OPERATING EXPENSES. On or before the Rent
Commencement Date and during the last month of each calendar year of the term
of this Lease ("LEASE YEAR"), or as soon thereafter as practical, Landlord
shall provide Tenant notice of Landlord's estimate of the Operating Expenses
for the ensuing Lease Year or applicable portion thereof. On or before the
first day of each month during the ensuing Lease Year or applicable portion
thereof, beginning on the Rent Commencement Date, Tenant shall pay to
Landlord Tenant's Operating Cost Share of the portion of such estimated
Operating Expenses allocable (on a prorata basis) to such month; PROVIDED,
however, that if such notice is not given in the last
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month of a Lease Year, Tenant shall continue to pay on the basis of the prior
year's estimate, if any, until the month after such notice is given. If at
any time or times it appears to Landlord that the actual Operating Expenses
will vary from Landlord's estimate by more than five percent (5 %), Landlord
may, by notice to Tenant, revise its estimate for such year and subsequent
payments by Tenant for such year shall be based upon such revised estimate.
7.4 FINAL ACCOUNTING FOR LEASE YEAR.
(a) Within ninety (90) days after the close of each Lease Year, or
as soon after such 90-day period as practicable, Landlord shall deliver to
Tenant a statement of Tenant's Operating Cost Share of the Operating Expenses
for such Lease Year prepared by Landlord from Landlord's books and records,
which statement shall be final and binding on Landlord and Tenant (except as
provided in Section 7.4(b)). If on the basis of such statement Tenant owes an
amount that is more or less than the estimated payments for such Lease Year
previously made by Tenant, Tenant or Landlord, as the case may be, shall pay
the deficiency to the other party within thirty (30) days after delivery of
the statement. Failure or inability of Landlord to deliver the annual
statement within such ninety (90) day period shall not impair or constitute a
waiver of Tenant's obligation to pay Operating Expenses, or cause Landlord to
incur any liability for damages.
(b) At any time within three (3) months after receipt of
Landlord's annual statement of Operating Expenses as contemplated in Section
7.4(a), Tenant shall be entitled, upon reasonable written notice to Landlord
and during normal business hours at Landlord's office or such other places as
Landlord shall designate, to inspect and examine those books and records of
Landlord relating to the determination of Operating Expenses for the
immediately preceding Lease Year covered by such annual statement or, if
Tenant so elects by written notice to Landlord, to request an independent
audit of such books and records. The independent audit of the books and
records shall be conducted by a certified public accountant acceptable to
both Landlord and Tenant or, if the parties are unable to agree, by a
certified public accountant appointed by the Presiding Judge of the San Mateo
County Superior Court upon the application of either Landlord or Tenant (with
notice to the other party). In either event, such certified public accountant
shall be one who is not then employed in any capacity by Landlord or Tenant
or by any of their respective affiliates. The audit shall be limited to the
determination of the amount of Operating Expenses for the subject Lease Year,
and shall be based on generally accepted accounting principles and tax
accounting principles, consistently applied. If it is determined, by mutual
agreement of Landlord and Tenant or by independent audit, that the amount of
Operating Expenses billed to or paid by Tenant for the applicable Lease Year
was incorrect, then the appropriate party shall pay to the other party the
deficiency or overpayment, as applicable, within thirty (30) days after the
final determination of such deficiency or overpayment. All costs and expenses
of the audit shall be paid by Tenant unless the audit shows that Landlord
overstated Operating Expenses for the subject Lease Year by more than five
percent (5 %), in which case Landlord shall pay all costs and expenses of the
audit. Each party agrees to maintain the confidentiality of the findings of
any audit in accordance with the provisions of this Section 7.4.
7.5 PRORATION. If the Rent Commencement Date falls on a day other than
the first day of a Lease Year or if this Lease terminates on a day other than
the last day of a Lease Year, then the amount of Operating Expenses payable
by Tenant with respect to such first or last partial Lease Year shall be
prorated on the basis which the number of days during such Lease Year in
which this Lease is in effect bears to 365. The termination of this Lease
shall not affect the obligations of Landlord and Tenant pursuant to Section
7.4 to be performed after such termination.
8. UTILITIES
8.1 PAYMENT. Commencing with the Rent Commencement Date and thereafter
throughout the term of this Lease, Tenant shall pay, before delinquency, all
charges for water, gas, heat, light, electricity, power, sewer, telephone,
alarm system, janitorial and
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other services or utilities supplied to or consumed in or with respect to the
Building (other than any separately metered costs for water, electricity or
other services or utilities furnished with respect to the Common Areas, which
costs shall be paid by Landlord and shall constitute Operating Expenses under
Section 7.2 hereof), including any taxes on such services and utilities. It
is the intention of the parties that all such services shall be separately
metered to the Building. In the event that any of such services supplied to
the Building are not separately metered, then the amount thereof shall be an
item of Operating Expenses and shall be paid as provided in Article 7.
8.2 INTERRUPTION. There shall be no abatement of rent or other charges
required to be paid hereunder and Landlord shall not be liable in damages or
otherwise for interruption or failure of any service or utility furnished to
or used with respect to the Building or Property because of accident, making
of repairs, alterations or improvements, severe weather, difficulty or
inability in obtaining services or supplies, labor difficulties or any other
cause. Notwithstanding the foregoing provisions of this Section 8.2, however,
in the event of any interruption or failure of any service or utility to the
Building that (i) is caused in whole or in material part by the active
negligence or willful misconduct of Landlord or its agents or employees AND
(ii) continues for more than three (3) business days AND (iii) materially
impairs Tenant's ability to use the Building for its intended purposes
hereunder, then following such three (3) business day period, Tenant's
obligations for payment of rent and other charges under this Lease shall be
abated in proportion to the degree of impairment of Tenant's use of the
Building, and such abatement shall continue until Tenant's use of the
Building is no longer materially impaired thereby.
9. ALTERATIONS; SIGNS
9.1 RIGHT TO MAKE ALTERATIONS. Tenant shall make no alterations,
additions or improvements to the Building or the Property, other than
interior non-structural alterations costing less than Fifty Thousand Dollars
($50,000.00) in the aggregate during any twelve (12) month period, without
the prior written consent of Landlord, which consent shall not be
unreasonably withheld or delayed. All such alterations, additions and
improvements shall be completed with due diligence in a first-class
workmanlike manner, in compliance with plans and specifications approved in
writing by Landlord and in compliance with all applicable laws, ordinances,
rules and regulations, and to the extent Landlord's consent is not otherwise
required hereunder for such alterations, additions or improvements, Tenant
shall give prompt written notice thereof to Landlord. Tenant shall cause any
contractors engaged by Tenant for work in the Building or on the Property to
maintain public liability and property damage insurance, and other customary
insurance, with such terms and in such amounts as Landlord may reasonably
require, naming as additional insureds Landlord and any of its partners,
shareholders, property managers and lenders designated by Landlord for this
purpose, and shall furnish Landlord with certificates of insurance or other
evidence that such coverage is in effect. Notwithstanding any other
provisions of this Section 9. I, under no circumstances shall Tenant make any
structural alterations or improvements, or any substantial changes to the
roof or substantial equipment installations on the roof, or any substantial
changes or alterations to the building systems, without Landlord's prior
written consent (which consent shall not be unreasonably withheld or
delayed). If Tenant so requests in seeking Landlord's consent to any
alterations, additions or improvements, Landlord shall specify in granting
such consent whether Landlord intends to require that Tenant remove such
alterations, additions or improvements (or any specified portions thereof)
upon expiration or termination of this Lease. Landlord shall receive no fee
for supervision, profit, overhead or general conditions in connection with
any alterations, additions or improvements constructed or installed by Tenant
under this Lease, whether as part of the initial Tenant's Work under EXHIBIT
C or otherwise.
9.2 TITLE TO ALTERATIONS. All alterations, additions and improvements
installed in, on or about the Building or the Property shall become part of
the Property and shall become the property of Landlord, unless Landlord
elects to require Tenant to remove the same upon the termination of this
Lease; PROVIDED, however, that the foregoing shall not apply to Tenant's
movable furniture and equipment and trade fixtures. Tenant shall promptly
repair
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any damage caused by its removal of any such furniture, equipment or trade
fixtures. Notwithstanding any other provisions of this Article 9, however,
(a) under no circumstances shall Tenant have any right to remove from the
Building or the Property, at the expiration or termination of this Lease, any
lab benches, fume hoods, cold rooms or other similar improvements and
equipment installed in the Building and paid for in whole or in part by
Landlord, even if such equipment and improvements were installed by Tenant as
part of Tenant's Work under EXHIBIT C and paid for by Tenant in the form of
rent (but Tenant SHALL have the right to remove any such equipment and
improvements installed entirely by Tenant at its own expense and paid for in
cash by Tenant, without any contribution or reimbursement from Landlord and
without any related rental obligation on the part of Tenant); and (b) if
Tenant requests Landlord's written consent to any alterations, additions or
improvements under Section 9.1 hereof and, in requesting such consent, asks
that Landlord specify whether Landlord will require removal of such
alterations, additions or improvements upon termination or expiration of this
Lease, then Landlord shall not be entitled to require such removal unless
Landlord specified its intention to do so at the time of granting of
Landlord's consent to the requested alterations, additions or improvements.
9.3 TENANT FIXTURES. Subject to the final sentence of Section 9.2 and
to Section 9.5, Tenant may install, remove and reinstall trade fixtures
without Landlord's prior written consent, except that installation and
removal of any fixtures which are affixed to the Building or the Property or
which affect the exterior or structural portions of the Building or the
building systems shall require Landlord's written approval, which approval
shall not be unreasonably withheld or delayed. Subject to the provisions of
Section 9.5, the foregoing shall apply to Tenant's signs, logos and insignia,
all of which Tenant shall have the right to place and remove and replace (a)
only with Landlord's prior written consent as to location, size and
composition, which consent shall not be unreasonably withheld or delayed, and
(b) only in compliance with all restrictions and requirements of applicable
law and of any covenants, conditions and restrictions or other written
agreements now or hereafter applicable to the Property. Tenant shall
immediately repair any damage caused by installation and removal of fixtures
under this Section 9.3.
9.4 NO LIENS. Tenant shall at all times keep the Building and the
Property free from all liens and claims of any contractors, subcontractors,
materialmen, suppliers or any other parties employed either directly or
indirectly by Tenant in construction work on the Building or the Property.
Tenant may contest any claim of lien, but only if, prior to such contest,
Tenant either (i) posts security in the amount of the claim, plus estimated
costs and interest, or (ii) records a bond of a responsible corporate surety
in such amount as may be required to release the lien from the Building and
the Property. Tenant shall indemnify, defend and hold Landlord harmless
against any and all liability, loss, damage, cost and other expenses,
including, without limitation, reasonable attorneys' fees, arising out of
claims of any lien for work performed or materials or supplies furnished at
the request of Tenant or persons claiming under Tenant.
9.5 SIGNS. Without limiting the generality of the provisions of Section
9.3 hereof, Tenant shall have the right to display its corporate name and
logo on the Building and in front of the entrance to the Building, subject to
Landlord's prior approval as to location, size, design and composition (which
approval shall not be unreasonably withheld or delayed), subject to the
established sign criteria for the Center and subject to all restrictions and
requirements of applicable law and of any covenants, conditions and
restrictions or other written agreements now or hereafter applicable to the
Property. Landlord is hereby deemed to have approved, as to location, any
signage the location of which is expressly designated on the Site Plan
attached hereto as EXHIBIT B or on any Approved Plan developed pursuant to
the Workletter.
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10. MAINTENANCE AND REPAIRS
10.1 LANDLORD'S WORK.
(a) Landlord shall repair and maintain or cause to be repaired and
maintained the Common Areas of the Center and the roof (structural portions
only), exterior walls and other structural portions of the Building. The cost
of all work performed by Landlord under this Section I0.1 shall be an
Operating Expense hereunder, except to the extent such work (i) is required
due to the negligence of Landlord, (ii) involves the repair or correction of
a condition or defect that Landlord is required to correct pursuant to
Section 5.2 hereof, (iii) is a capital expense not includible as an Operating
Expense under Section 7.2 hereof, (iv) is required due to the negligence or
willful misconduct of Tenant or its agents, employees or invitees (in which
event Tenant shall bear the full cost of such work pursuant to the
indemnification provided in Section 12.6 hereof, subject to the release set
forth in Section 12.4 hereof). Tenant knowingly and voluntarily waives the
right to make repairs at Landlord's expense, except to the extent permitted
by Section 10.1 (b) below, or to offset the cost thereof against rent, under
any law, statute, regulation or ordinance now or hereafter in effect.
(b) If Landlord fails to perform any repairs or maintenance
required to be performed by Landlord on the Building under Section 10. l(a)
and such failure continues for thirty (30) days or more after Tenant gives
Landlord written notice of such failure (or, if such repairs or maintenance
cannot reasonably be performed within such 30-day period, then if Landlord
fails to commence performance within such 30-day period and thereafter to
pursue such performance diligently to completion), then Tenant shall have the
right to perform such repairs or maintenance and Landlord shall reimburse
Tenant for the reasonable cost thereof within fifteen (15) days after written
notice from Tenant of the completion and cost of such work, accompanied by
copies of invoices or other reasonable supporting documentation. Under no
circumstances, however, shall Tenant have any right to offset the cost of any
such work against rent or other charges falling due from time to time under
this Lease.
10.2 TENANT'S OBLIGATION FOR MAINTENANCE.
(a) GOOD ORDER, CONDITION AND REPAIR. Except as provided in
Section 10.1 hereof, Tenant at its sole cost and expense shall keep and
maintain in good and sanitary order, condition and repair the Building and
every part thereof, wherever located, including but not limited to the roof
(non-structural portions only), signs, interior, ceiling, electrical system,
plumbing system, telephone and communications systems of the Building, the
HVAC equipment and related mechanical systems serving the Building (for which
equipment and systems Tenant shall enter into a service contract with a
person or entity designated or approved by Landlord), all doors, door checks,
windows, plate glass, door fronts, exposed plumbing and sewage and other
utility facilities, fixtures, lighting, wall surfaces, floor surfaces and
ceiling surfaces of the Building and all other interior repairs, foreseen and
unforeseen, with respect to the Building, as required.
(b) LANDLORD'S REMEDY. If Tenant, after notice from Landlord,
fails to make or perform promptly any repairs or maintenance which are the
obligation of Tenant hereunder, Landlord shall have the right, but shall not
be required, to enter the Building and make the repairs or perform the
maintenance necessary to restore the Building to good and sanitary order,
condition and repair. Immediately on demand from Landlord, the cost of such
repairs shall be due and payable by Tenant to Landlord.
(c) CONDITION UPON SURRENDER. At the expiration or sooner
termination of this Lease, Tenant shall surrender the Building and the
Improvements, including any additions, alterations and improvements thereto,
broom clean, in good and sanitary order, condition and repair, ordinary wear
and tear excepted, first, however, removing all goods and effects of Tenant
and all and fixtures and items required to be removed or specified to be
removed at Landlord's election pursuant to this Lease (including, but not
limited to, any such,, removal required as a result of an election duly made
by Landlord to require such removal as
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contemplated in Section 9.2), and repairing any damage caused by such
removal. Tenant shall not have the right to remove fixtures or equipment if
Tenant is in default hereunder unless Landlord specifically waives this
provision in writing. Tenant expressly waives any and all interest in any
personal property and trade fixtures not removed from the Property by Tenant
at the expiration or termination of this Lease, agrees that any such personal
property and trade fixtures may, at Landlord's election, be deemed to have
been abandoned by Tenant, and authorizes Landlord (at its election and
without prejudice to any other remedies under this Lease or under applicable
law) to remove and either retain, store or dispose of such property at
Tenant's cost and expense, and Tenant waives all claims against Landlord for
any damages resulting from any such removal, storage, retention or disposal.
11. USE OF PROPERTY
11.1 PERMITTED USE. Subject to Sections 11.3, 11.4 and 11.6 hereof,
Tenant shall use the Building solely for a laboratory research and
development facility, including (but not limited to) wet chemistry and
biology labs, clean rooms, pilot scale, clinical scale and GMP scale
manufacturing, storage and use of toxic and radioactive materials (subject to
the provisions of Section 11.6 hereof), storage and use of laboratory
animals, administrative offices, and other lawful purposes reasonably related
to or incidental to such specified uses (subject in each case to receipt of
all necessary approvals from the City of South San Francisco and other
governmental agencies having jurisdiction over the Building), and for no
other purpose.
11.2 [Omitted.]
11.3 NO NUISANCE. Tenant shall not use the Property for or carry on or
permit upon the Property or any part thereof any offensive, noisy or
dangerous trade, business, manufacture, occupation, odor or fumes, or any
nuisance or anything against public policy, nor interfere with the rights or
business of Landlord in the Building or the Property, nor commit or allow to
be committed any waste in, on or about the Property. Tenant shall not do or
permit anything to be done in or about the Property, nor bring nor keep
anything therein, which will in any way cause the Property to be uninsurable
with respect to the insurance required by this Lease or with respect to
standard fire and extended coverage insurance with vandalism, malicious
mischief and riot endorsements.
11.4 COMPLIANCE WITH LAWS. Tenant shall not use the Property or permit
the Property or the Center to be used in whole or in part for any purpose or
use that is in violation of any applicable laws, ordinances, regulations or
rules of any governmental agency or public authority. Tenant shall keep the
Building and Improvements equipped with all safety appliances required by
law, ordinance or insurance on the Property, or any order or regulation of
any public authority, because of Tenant's particular use of the Property.
Tenant shall procure all licenses and permits required for use of the
Property. Tenant shall use the Property in strict accordance with all
applicable ordinances, rules, laws and regulations and shall comply with all
requirements of all governmental authorities now in force or which may
hereafter be in force pertaining to the use of the Property by Tenant,
including, without limitation, regulations applicable to noise, water, soil
and air pollution, and making such nonstructural alterations and additions
thereto as may be required from time to time by such laws, ordinances, rules,
regulations and requirements of governmental authorities or insurers of the
Property (collectively, "REQUIREMENTS") because of Tenant's construction of
improvements in or other particular use of the Property. Any structural
alterations or additions required from time to time by applicable
Requirements because of Tenant's construction of improvements in the Building
or other particular use of the Property shall, at Landlord's election, either
(i) be made by Tenant, at Tenant's sole cost and expense, in accordance with
the procedures and standards set forth in Section 9.1 for alterations by
Tenant, or (ii) be made by Landlord at Tenant's sole cost and expense, in
which event Tenant shall pay to Landlord as additional rent, within ten (10)
days after demand by Landlord, an amount equal to all reasonable costs
incurred by Landlord in connection with such alterations or additions, The
judgment of any court, or the admission by Tenant in any proceeding against
Tenant, that Tenant has violated any law, statute, ordinance or
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governmental rule, regulation or requirement shall be conclusive of such
violation as between Landlord and Tenant.
11.5 LIQUIDATION SALES. Tenant shall not conduct or permit to be
conducted any auction, bankruptcy sale, liquidation sale, or going out of
business sale, in, upon or about the Property, whether said auction or sale
be voluntary, involuntary or pursuant to any assignment for the benefit of
creditors, or pursuant to any bankruptcy or other insolvency proceeding.
11.6 ENVIRONMENTAL MATTERS.
(a) For purposes of this Section, "HAZARDOUS SUBSTANCE" shall mean
the substances included within the definitions of the term "hazardous
substance" under (i) the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended, 42 U.S.C. Sections 9601 ET SEQ., and
the regulations promulgated thereunder, as amended, (ii) the California
Carpenter-Presley-Tanner Hazardous Substance Account Act, California Health &
Safety Code Sections 25300 ET SEQ., and regulations promulgated thereunder,
as amended, (iii) the Hazardous Materials Release Response Plans and
Inventory Act, California Heath & Safety Code Sections 25500 ET SEQ., and
regulations promulgated thereunder, as amended, and (iv) petroleum;
"HAZARDOUS WASTE" shall mean (i) any waste listed as or meeting the
identified characteristics of a "hazardous waste" under the Resource
Conservation and Recovery Act of 1976, 42 U.S.C. Sections 6901 ET SEQ., and
regulations promulgated pursuant thereto, as amended (collectively, "RCRA"),
(ii) any waste meeting the identified characteristics of "hazardous waste,"
"extremely hazardous waste" or "restricted hazardous waste" under the
California Hazardous Waste Control Law, California Health & Safety Code
Sections 25100 ET SEQ., and regulations promulgated pursuant thereto, as
amended (collectively, the "CHWCL"), and/or (iii) any waste meeting the
identified characteristics of "medical waste" under California Health &
Safety Code Sections 25015-25027.8, and regulations promulgated thereunder,
as amended; and "HAZARDOUS WASTE FACILITY" shall mean a hazardous waste
facility as defined under the CHWCL.
(b) Without limiting the generality of the obligations set forth
in Section 11.4 of this Lease:
(i) Tenant shall not cause or permit any hazardous
substance or hazardous waste to be brought upon, kept, stored or used in or
about the Property without the prior written consent of Landlord, which
consent shall not be unreasonably withheld, except that Tenant, in connection
with its permitted use of the Property as provided in Section 11.1, may keep,
store and use materials that constitute hazardous substances which are
customary for such permitted use, provided such hazardous substances are
kept, stored and used in quantities which are customary for such permitted
use and are kept, stored and used in full compliance with clauses (ii) and
(iii) immediately below.
(ii) Tenant shall comply with all applicable laws, rules,
regulations, orders, permits, licenses and operating plans of any
governmental authority with respect to the receipt, use, handling,
generation, transportation, storage, treatment and/or disposal of hazardous
substances or wastes by Tenant or its agents or employees, and Tenant will
provide Landlord with copies of all permits, licenses, registrations and
other similar documents that authorize Tenant to conduct any such activities
in connection with its authorized use of the Property from time to time.
(iii) Tenant shall not (A) operate on or about the Property
any facility required to be permitted or licensed as a hazardous waste
facility or for which interim status as such is required, nor (B) store any
hazardous wastes on or about the Property for ninety (90) days or more, nor
(C) conduct any other activities on or about the Property that could result
in the Property being deemed to be a "hazardous waste facility"(including,
but not limited to, any storage or treatment of hazardous substances or
hazardous wastes which could have such a result).
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(iv) Tenant shall comply with all applicable laws, rules,
regulations, orders and permits relating to underground storage tanks
installed by Tenant or its agents or employees or at the request of Tenant
(including any installation, monitoring, maintenance, closure and/or removal
of such tanks) as such tanks are defined in California Health & Safety Code
Section 25281(x), including, without limitation, complying with California
Health & Safety Code Sections 25280-25299.7 and the regulations promulgated
thereunder, as amended. Tenant shall furnish to Landlord copies of all
registrations and permits issued to or held by Tenant from time to time for
any and all underground storage tanks located on or under the Property.
(v) If applicable, Tenant shall provide Landlord in
writing the following information and/or documentation within fifteen (15)
days after the Rent Commencement Date, and shall update such information at
least annually, on or before each anniversary of the Rent Commencement Date,
to reflect any change in or addition to the required information and/or
documentation (PROVIDED, however, that in the case of the materials described
in subparagraphs (B), (C) and (E) below, Tenant shall not be required to
deliver copies of such materials to Landlord but shall maintain copies of
such materials to such extent and for such periods as may be required by
applicable law and shall permit Landlord or its representatives to inspect
and copy such materials during normal business hours at any time and from
time to time upon reasonable notice to Tenant):
(A) A list of all hazardous substances and/or wastes
that Tenant receives, uses, handles, generates, transports, stores, treats or
disposes of from time to time in connection with its operations on the
Property.
(B) All Material Safety Data Sheets ("MSDS'S"), if
any, required to be completed with respect to operations of Tenant at the
Property from time to time in accordance with Title 26, California Code of
Regulations Section 8-5194 or 42 U.S.C. Section 11021, or any amendments
thereto, and any Hazardous Materials Inventory Sheets that detail the MSDS's.
(C) All hazardous waste manifests (as defined in
Title 26, California Code of Regulations Section 22-66481), if any, that
Tenant is required to complete from time to time in connection with its
operations at the Property.
(D) A copy of any Hazardous Materials Management Plan
required from time to time with respect to Tenant's operations at the
Property, pursuant to California Health & Safety Code Sections 25500 ET SEQ.,
and any regulations promulgated thereunder, as amended.
(E) Any Contingency Plans and Emergency Procedures
required of Tenant from time to time due to its operations in accordance with
Title 26, California Code of Regulations Sections 22-67140 ET SEQ., and any
amendments thereto, and any Training Programs and Records required under
Title 26, California Code of Regulations, Section 22-67105, and any
amendments thereto.
(F) Copies of any biennial reports to be furnished to
the California Department of Health Services from time to time relating to
hazardous substances or wastes, pursuant to Title 26, California Code of
Regulations, Section 22-66493, and any amendments thereto.
(G) Copies of all industrial wastewater discharge
permits issued to or held by Tenant from time to time in connection with its
operations on the Property.
(H) Copies of any other lists or inventories of
hazardous substances and/or wastes on or about the Property that Tenant is
otherwise required to prepare and file from time to time with any
governmental or regulatory authority.
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(vi) Tenant shall secure Landlord's prior written approval
for any proposed receipt, storage, possession, use, transfer or disposal of
"radioactive materials" or "radiation," as such materials are defined in
Title 26, California Code of Regulations Section 17-30100, and/or any other
materials possessing the characteristics of the materials so defined, which
approval Landlord may withhold in its sole and absolute discretion; PROVIDED,
that such approval shall not be required for any radioactive materials for
which Tenant has secured prior written approval of the Nuclear Regulatory
Commission and delivered to Landlord a copy of such approval. Tenant, in
connection with any such authorized receipt, storage, possession, use,
transfer or disposal of radioactive materials or radiation, shall:
(A) Comply with all federal, state and local laws,
rules, regulations, orders, licenses and permits issued to or applicable to
Tenant with respect to its business operations on the Property;
(B) Maintain, to such extent and for such periods as
may be required by applicable law, and permit Landlord and its
representatives to inspect during normal business hours at any time and from
time to time upon reasonable notice to Tenant, a list of all radioactive
materials or radiation received, stored, possessed, used, transferred or
disposed of by Tenant or in connection with the operation of Tenant's
business on the Property from time to time, to the extent not already
disclosed through delivery of a copy of a Nuclear Regulatory Commission
approval with respect thereto as contemplated above; and
(C) Maintain, to such extent and for such periods as
may be required by applicable law, and permit Landlord or its representatives
to inspect during normal business hours at any time and from time to time
upon reasonable notice to Tenant, all licenses, registration materials,
inspection reports, governmental orders and permits in connection with the
receipt, storage, possession, use, transfer or disposal of radioactive
materials or radiation by Tenant or in connection with the operation of
Tenant's business on the Property from time to time.
(vii) Tenant shall comply with any and all applicable laws,
rules, regulations and orders of any governmental authority with respect to
the release into the environment of any hazardous wastes or substances or
radiation or radioactive materials by Tenant or its agents or employees.
Tenant shall give Landlord immediate verbal notice of any unauthorized
release of any such hazardous wastes or substances or radiation or
radioactive materials into the environment, and shall follow such verbal
notice with written notice to Landlord of such release within twenty-four
(24) hours of the time at which Tenant became aware of such release.
(viii) Tenant shall indemnify, defend and hold Landlord
harmless from and against any and all claims, losses (including, but not
limited to, loss of rental income), damages, liabilities, costs, legal fees
and expenses of any sort arising out of or relating to (A) any failure by
Tenant to comply with any provisions of this paragraph l l.6(b), or (B) any
receipt, use handling, generation, transportation, storage, treatment,
release and/or disposal of any hazardous substance or waste or any
radioactive material or radiation on or about the Property as a proximate
result of Tenant's use of the Property or as a result of any intentional or
negligent acts or omissions of Tenant or of any agent, employee or invitee of
Tenant.
(ix) Tenant shall cooperate with Landlord in furnishing
Landlord with complete information regarding Tenant's receipt, handling, use,
storage, transportation, generation, treatment and/or disposal of any
hazardous substances or wastes or radiation or radioactive materials. Upon
request, Tenant shall grant Landlord reasonable access at reasonable times to
the Property to inspect Tenant's receipt, handling, use, storage,
transportation, generation, treatment and/or disposal of hazardous substances
or wastes or radiation or radioactive materials, without being deemed guilty
of any disturbance of Tenant's use or possession and without being liable to
Tenant in any manner.
(x) Notwithstanding Landlord's rights of inspection and
review under this paragraph 11.6(b), Landlord shall have no obligation or
duty to so inspect or
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review, and no third party shall be entitled to rely on Landlord to conduct
any sort of inspection or review by reason of the provisions of this
paragraph 11.6(b).
(xi) If Tenant receives, handles, uses, stores, transports,
generates, treats and/or disposes of any hazardous substances or wastes or
radiation or radioactive materials on or about the Property at any time
during the term of this Lease, then within thirty (30) days after the
termination or expiration of this Lease, Tenant at its sole cost and expense
shall obtain and deliver to Landlord an environmental study, performed by an
expert reasonably satisfactory to Landlord, evaluating the presence or
absence of hazardous substances and wastes, radiation and radioactive
materials on and about the Property. Such study shall be based on a
reasonable and prudent level of tests and investigations of the Property and
surrounding portions of the Center (if appropriate), which tests shall be
conducted no earlier than the date of termination or expiration of this
Lease. Liability for any remedial actions required or recommended on the
basis of such study shall be allocated in accordance with Sections 11.4,
11.6, 12.6 and other applicable provisions of this Lease.
(c) Landlord shall indemnify, defend and hold Tenant harmless from
and against any and all claims, losses, damages, liabilities, costs, legal
fees and expenses of any sort arising out of or relating to (i) the presence
on the Property of any hazardous substances or wastes or radiation or
radioactive materials as of the Rent Commencement Date (other than as a
result of any intentional or negligent acts or omissions of Tenant or of any
agent, employee or invitee of Tenant), (ii) any unauthorized release into the
environment (including, but not limited to, the Property) of any hazardous
substances or wastes or radiation or radioactive materials to the extent such
release results from the negligence of or willful misconduct or omission by
Landlord or its agents or employees, and/or (iii) the presence on the
Property of any hazardous substances or wastes or radiation or radioactive
materials arising after the Rent Commencement Date from any cause or source
other than as a result of any intentional or negligent acts or omissions of
Tenant or of any agent, employee or invitee of Tenant.
(d) The provisions of this Section 11.6 shall survive the
termination of this Lease.
12. INSURANCE AND INDEMNITY
12.1 INSURANCE.
(a) Tenant shall procure and maintain in full force and effect at
all times during the term of this Lease, at Tenant's cost and expense,
commercial general liability insurance to protect against liability to the
public, or to any invitee of Tenant or Landlord, arising out of or related to
the use of or resulting from any accident occurring in, upon or about the
Property, with limits of liability of not less than (i) Two Million Dollars
($2,000,000.00) for injury to or death of one person, (ii) Five Million
Dollars ($5,000,000.00) for personal injury or death, per occurrence, and
(iii) One Million Dollars ($1,000,000.00) for property damage, or combined
single limit of liability of not less than Five Million Dollars
($5,000,000.00). Such insurance shall name Landlord, its general partners,
its Managing Agent and any lender holding a deed of trust on the Property
from time to time (as designated in writing by Landlord to Tenant from time
to time) as additional insureds thereunder. The amount of such insurance
shall not be construed to limit any liability or obligation of Tenant under
this Lease. Tenant shall also procure and maintain in full force and effect
at all times during the term of this Lease, at Tenant's cost and expense,
products/completed operations coverage on terms and in amounts (A) customary
in Tenant's industry for companies engaged in the marketing of products on a
scale comparable to that in which Tenant is engaged from time to time and (B)
mutually satisfactory to Landlord and Tenant in their respective reasonable
discretion.
(b) Landlord shall procure and maintain in full force and effect
at all times during the term of this Lease, at Landlord's cost and expense
(but reimbursable as an Operating Expense under Section 7.2 hereof),
commercial general liability insurance to
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protect against liability arising out of or related to the use of or
resulting from any accident occurring in, upon or about the Property, with
combined single limit of liability of not less than Five Million Dollars
($5,000,000.00) per occurrence for bodily injury and property damage.
(c) Landlord shall procure and maintain in full force and effect
at all times during the term of this Lease, at Landlord's cost and expense
(but reimbursable as an Operating Expense under Section 7.2 hereof), policies
of property insurance providing protection against "all risk of direct
physical loss" (as defined by and detailed in the Insurance Service Office's
Commercial Property Program "Cause of Loss--Special Form [CP1030]" or its
equivalent) for the Building Shell (as defined in EXHIBIT C) and for the
improvements in the Common Areas of the Property, on a full replacement cost
basis (with no co-insurance or, if coverage without co-insurance is not
reasonably available, then on an "agreed amount" basis). Such insurance may
include earthquake coverage to the extent Landlord in its discretion elects
to carry such coverage, and shall have such commercially reasonable
deductibles and other terms as Landlord in its discretion determines to be
appropriate. Landlord shall have no obligation to carry property damage
insurance for any alterations, additions or improvements installed by Tenant
in the Building or on or about the Property.
(d) Tenant shall procure and maintain in full force and effect at
all times during the term of this Lease, at Tenant's cost and expense,
policies of property insurance providing protection against "all risk of
direct physical loss" (as defined by and detailed in the Insurance Service
Office's Commercial Property Program "Cause of Loss-Special Form [CP1030]" or
its equivalent) for the Tenant Improvements constructed by Tenant pursuant to
EXHIBIT C and on all other alterations, additions and improvements installed
by Tenant from time to time in or about the Building, on a full replacement
cost basis (with no co-insurance or, if coverage without co-insurance is not
reasonably available, then on an "agreed amount" basis). Such insurance may
have such commercially reasonable deductibles and other terms as Tenant in
its discretion determines to be appropriate, and shall name both Tenant and
Landlord as insureds as their interests may appear.
(e) During the course of construction of the improvements being
constructed by Landlord and Tenant under Section 5.1 and EXHIBIT C, Landlord
and Tenant respectively shall each procure and maintain in full force and
effect, at its respective sole cost and expense, policies of builder's risk
insurance on the improvements respectively being constructed by it, in such
amounts and with such commercially reasonable deductibles and other terms as
Landlord in its reasonable discretion determines to be appropriate with
respect to the insurance to be maintained by Landlord, and in such amounts
and with such commercially reasonable deductibles and other terms as Landlord
and Tenant may mutually and reasonably determine to be appropriate with
respect to the insurance to be maintained by Tenant.
12.2 QUALITY OF POLICIES AND CERTIFICATES. All policies of insurance
required hereunder shall be issued by responsible insurers and, in the case
of policies carried or required to be carried by Tenant, shall be written as
primary policies not contributing with and not in excess of any coverage that
Landlord may carry. Tenant shall deliver to Landlord copies of policies or
certificates of insurance showing that said policies are in effect. The
coverage provided by such policies shall include the clause or endorsement
referred to in Section 12.4. If Tenant fails to acquire, maintain or renew
any insurance required to be maintained by it under this Article 12 or to pay
the premium therefor, then Landlord, at its option and in addition to its
other remedies, but without obligation so to do, may procure such insurance,
and any sums expended by it to procure any such insurance on behalf of or in
place of Tenant shall be repaid upon demand, with interest as provided in
Section 3.2 hereof. Tenant shall obtain written undertakings from each
insurer under policies required to be maintained by it to notify all insureds
thereunder at least thirty (30) days prior to cancellation of coverage.
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12.3 WORKERS' COMPENSATION. Tenant shall maintain in full force and effect
during the term of this Lease workers' compensation insurance in at least the
minimum amounts required by law, coveting all of Tenant's employees working on
the Property.
12.4 WAIVER OF SUBROGATION. To the extent permitted by law and without
affecting the coverage provided by insurance required to be maintained
hereunder, Landlord and Tenant each waive any tight to recover against the other
with respect to (i) damage to property, (ii) damage to the Property or any part
thereof, or (iii) claims arising by reason of any of the foregoing, but only to
the extent that any of the foregoing damages and claims under clauses (i)-(iii)
hereof are covered, and only to the extent of such coverage, by casualty
insurance actually carried or required to be carried hereunder by either
Landlord or Tenant. This provision is intended to waive fully, and for the
benefit of each party, any rights and claims which might give rise to a right of
subrogation in any insurance carrier. Each party shall procure a clause or
endorsement on any casualty insurance policy denying to the insurer rights of
subrogation against the other party to the extent rights have been waived by the
insured prior to the occurrence of injury or loss. Coverage provided by
insurance maintained by Tenant shall not be limited, reduced or diminished by
virtue of the subrogation waiver herein contained.
12.5 INCREASE IN PREMIUMS. Tenant shall do all acts and pay all expenses
necessary to insure that the Property is not used for purposes prohibited by any
applicable fire insurance, and that Tenant's use of the Property complies with
all requirements necessary to obtain any such insurance. If Tenant uses or
permits the Property to be used in a manner which increases the existing rate of
any insurance carried by Landlord on the Center and such use continues for
longer than a reasonable period specified in any written notice from Landlord to
Tenant identifying the rate increase and the factors causing the same, then
Tenant shall pay the amount of the increase in premium caused thereby, and
Landlord's costs of obtaining other replacement insurance policies, including
any increase in premium, within ten (10) days after demand therefor by Landlord.
12.6 INDEMNIFICATION.
(a) Tenant shall indemnify, defend and hold Landlord and its
partners, shareholders, officers, directors, agents and employees harmless from
any and all liability for injury to or death of any person, or loss of or damage
to the property of any person, and all actions, claims, demands, costs
(including, without limitation, reasonable attorneys' fees), damages or expenses
of any kind arising therefrom which may be brought or made against Landlord or
which Landlord may pay or incur by reason of the use, occupancy and enjoyment of
the Property by Tenant or any invitees, sublessees, licensees, assignees,
employees, agents or contractors of Tenant or holding under Tenant (including,
but not limited to, any such matters arising out of or in connection with any
early entry upon the Property by Tenant pursuant to Section 2.2 hereof) from any
cause whatsoever other than negligence or willful misconduct or omission by
Landlord, its agents or employees. Landlord and its partners, shareholders,
officers, directors, agents and employees shall not be liable for, and Tenant
hereby waives all claims against such persons for, damages to goods, wares and
merchandise in or upon the Property, or for injuries to Tenant, its agents or
third persons in or upon the Property, from any cause whatsoever other than
negligence or willful misconduct or omission by Landlord, its agents or
employees. Tenant shall give prompt notice to Landlord of any casualty or
accident in, on or about the Property.
(b) Landlord shall indemnify, defend and hold Tenant and its
partners, shareholders, officers, directors, agents and employees harmless from
any and all liability for injury to or death of any person, or loss of or damage
to the property of any person, and all actions, claims, demands, costs
(including, without limitation, reasonable attorneys' fees), damages or expenses
of any kind arising therefrom which may be brought or made against Tenant or
which Tenant may pay or incur, to the extent such liabilities or other matters
arise in, on or about the Property by reason of any negligence or willful
misconduct or omission by Landlord, its agents or employees.
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12.7 BLANKET POLICY. Any policy required to be maintained hereunder may be
maintained under a so-called "blanket policy" insuring other parties and other
locations so long as the amount of insurance required to be provided hereunder
is not thereby diminished.
13. SUBLEASE AND ASSIGNMENT
13.1 ASSIGNMENT AND SUBLEASE OF BUILDING. Except in the case of a Permitted
Transfer, Tenant shall not have the right or power to assign its interest in
this Lease, or make any sublease of the Building or any portion thereof, nor
shall any interest of Tenant under this Lease be assignable involuntarily or by
operation of law, without on each occasion obtaining the prior written consent
of Landlord, which consent shall not be unreasonably withheld or delayed. Any
purported sublease or assignment of Tenant's interest in this Lease requiring
but not having received Landlord's consent thereto (to the extent such consent
is required hereunder) shall be void. Without limiting the generality of the
foregoing, Landlord may withhold consent to any proposed subletting or
assignment solely on the ground, if applicable, that the use by the proposed
subtenant or assignee is reasonably likely to. be incompatible with Landlord's
use of any adjacent property owned or operated by Landlord, unless the proposed
use is within the permitted uses specified in Section 11.1, in which event it
shall not be reasonable for Landlord to object to the proposed use. Except in
the case of a Permitted Transfer, any dissolution, consolidation, merger or
other reorganization of Tenant, or any sale or transfer of substantially all of
the stock or assets of Tenant in a single transaction or series of related
transactions, shall be deemed to be an assignment hereunder and shall be void
without the prior written consent of Landlord as required above. Notwithstanding
the foregoing, (i) an initial public offering of the common stock of Tenant
shall not be deemed to be an assignment hereunder; and (ii) Tenant shall have
the right to assign this Lease or sublet the Building, or any portion thereof,
without Landlord's consent (but with prior or concurrent written notice by
Tenant to Landlord), to any Affiliate of Tenant, or to any entity which results
from a merger or consolidation with Tenant, or to any entity which acquires
substantially all of the stock or assets of Tenant as a going concern
(hereinafter each a "PERMITTED TRANSFER"). For purposes of the preceding
sentence, an "AFFILIATE" of Tenant shall mean any entity in which Tenant owns at
least a twenty percent (20%) equity interest, any entity which owns at least a
twenty percent (20%) equity interest in Tenant, and/or any entity which is
related to Tenant by a chain of ownership interests involving at least a twenty
percent (20%) equity interest at each level in the chain. Landlord shall have no
right to terminate this Lease in connection with, and shall have no right to any
sums or other economic consideration resulting from, any Permitted Transfer.
Except as expressly set forth in this Section 13.1, however, the provisions of
Section 13.2 shall remain applicable to any Permitted Transfer and the
transferee under such Permitted Transfer shall be and remain subject to all of
the terms and provisions of this Lease.
13.2 RIGHTS OF LANDLORD. Consent by Landlord to one or more assignments
of this Lease, or to one or more sublettings of the Building or any portion
thereof, or collection of rent by Landlord from any assignee or sublessee,
shall not operate to exhaust Landlord's rights under this Article 13, nor
constitute consent to any subsequent assignment or subletting. No assignment
of Tenant's interest in this Lease and no sublease shall relieve Tenant of
its obligations hereunder, notwithstanding any waiver or extension of time
granted by Landlord to any assignee or sublessee, or the failure of Landlord
to assert its rights against any assignee or sublessee, and regardless of
whether Landlord's consent thereto is given or required to be given
hereunder. In the event of a default by any assignee, sublessee or other
successor of Tenant in the performance of any of the terms or obligations of
Tenant under this Lease, Landlord may proceed directly against Tenant without
the necessity of exhausting remedies against any such assignee, sublessee or
other successor. In addition, Tenant immediately and irrevocably assigns to
Landlord, as security for Tenant's obligations under this Lease, all rent
from any subletting of all or a part of the Building as permitted under this
Lease, and Landlord, as Tenant's assignee and as attorney-in-fact for Tenant,
or any receiver for Tenant appointed on Landlord's application, may collect
such rent and apply it toward Tenant's obligations under this Lease; except
that, until the occurrence of an act of default by Tenant, Tenant shall have
the right to collect such rent and to retain all sublease profits.
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14. RIGHT OF ENTRY AND QUIET ENJOYMENT
14.1 RIGHT OF ENTRY. Landlord and its authorized representatives shall
have the right to enter the Building at any time during the term of this
Lease during normal business hours and upon not less than twenty-four (24)
hours prior notice, except in the case of emergency (in which event no notice
shall be required and entry may be made at any time), for the purpose of
inspecting and determining the condition of the Building or for any other
proper purpose including, without limitation, to make repairs, replacements
or improvements which Landlord may deem necessary, to show the Building to
prospective purchasers, to show the Building to prospective tenants (but only
during the final year of the term of this Lease), and to post notices of
nonresponsibility. Landlord shall not be liable for inconvenience, annoyance,
disturbance, loss of business, quiet enjoyment or other damage or loss to
Tenant by reason of making any repairs or performing any work upon the
Building or the Property or by reason of erecting or maintaining any
protective barricades in connection with any such work, and the obligations
of Tenant under this Lease shall not thereby be affected in any manner
whatsoever, PROVIDED, however, Landlord shall use reasonable efforts to
minimize the inconvenience to Tenant's normal business operations caused
thereby.
14.2 QUIET ENJOYMENT. Landlord covenants that Tenant, upon paying the rent
and performing its obligations hereunder and subject to all the terms and
conditions of this Lease, shall peacefully and quietly have, hold and enjoy the
Building and the Property throughout the term of this Lease, or until this Lease
is terminated as provided by this Lease.
15. CASUALTY AND TAKING
15.1 DAMAGE OR DESTRUCTION.
(a) If the Building, or the Common Areas of the Property necessary
for Tenant's use and occupancy of the Building, are damaged or destroyed in
whole or in part under circumstances in which (i) repair and restoration is
permitted under applicable governmental laws, regulations and building codes
then in effect and (ii) repair and restoration reasonably can be completed
within a period of one (1) year (or, in the case of an occurrence during the
last year of the term of this Lease, within a period of sixty (60) days)
following the date of the occurrence, then Landlord, as to the Common Areas of
the Property and the Building Shell, and Tenant, as to the Tenant Improvements
constructed by Tenant, shall commence and complete, with all due diligence and
as promptly as is reasonably practicable under the conditions then existing, all
such repair and restoration as may be required to return the affected portions
of the Property to a condition comparable to that existing immediately prior to
the occurrence. In the event of damage or destruction the repair of which is not
permitted under applicable governmental laws, regulations and building codes
then in effect, if such damage or destruction (despite being corrected to the
extent then permitted under applicable governmental laws, regulations and
building codes) would still materially impair Tenant's ability to conduct its
business in the Building, then either party may terminate this Lease as of the
date of the occurrence by giving written notice to the other within thirty (30)
days after the date of the occurrence; if neither party timely elects such
termination, or if such damage or destruction does not materially impair
Tenant's ability to conduct its business in the Building, then this Lease shall
continue in full force and effect, except that there shall be an equitable
adjustment in monthly minimum rental and of Tenant's Operating Cost Share of
Operating Expenses, based upon the extent to which Tenant's ability to conduct
its business in the Building is impaired, and Landlord and Tenant respectively
shall restore the Common Areas and Building Shell and the Tenant Improvements to
a complete architectural whole and to a functional condition. In the event of
damage or destruction which cannot reasonably be repaired within one (1) year
(or, in the case of an occurrence during the last year of the term of this
Lease, within a period of sixty (60) days) following the date of the occurrence,
then either Landlord or Tenant, at its election, may terminate this Lease as of
the date of the occurrence by giving written notice to the other within thirty
(30) days after the date of the occurrence; if neither party timely elects such
termination, then this Lease shall continue in full force and effect and
Landlord and Tenant
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shall each repair and restore applicable portions of the Property in accordance
with the first sentence of this Section 15.1.
(b) The respective obligations of Landlord and Tenant pursuant to
Section 15.1(a) are subject to the following limitations:
(i) If the occurrence results from a peril which is required
to be insured pursuant to Section 12.1(c) and (d) above, the obligations of
either party shall not exceed the amount of insurance proceeds received from
insurers (or, in the case of any failure to maintain required insurance,
proceeds that reasonably would have been available if the required insurance had
been maintained) by reason of such occurrence, plus the amount of the party's
permitted deductible (PROVIDED that each party shall be obligated to use its
best efforts to recover any available proceeds from the insurance which it is
required to maintain pursuant to the provisions of Section 12.1(c) or (d), as
applicable), and, if such proceeds (including, in the case of a failure to
maintain required insurance, any proceeds that reasonably would have been
available) are insufficient, either party may terminate file Lease unless the
other party promptly elects and agrees, in writing, to contribute the amount of
the shortfall; and
(ii) If the occurrence results from a peril which is not
required to be insured pursuant to Section 12.1(c) and (d) above and is not
actally insured, Landlord shall be required to repair and restore the Building
Shell and Common Areas to the extent necessary for Tenant's continued use and
occupancy of the Building, and Tenant shall be required to repair and restore
the Tenant Improvements to the extent necessary for Tenant's continued use and
occupancy of the Building, provided that each party's obligation to repair and
restore shall not exceed an amount equal to five percent (5 %) of the
replacement cost of the Building Shell and Common Area improvements, as to
Landlord, or five percent (5 %) of the replacement cost of the Tenant
Improvements, as to Tenant; if the replacement cost as to either party exceeds
such amount, then the party whose limit has been exceeded may terminate this
Lease unless the other party promptly elects and agrees, in writing, to
contribute the amount of the shortfall.
(c) If this Lease is terminated pursuant to the foregoing provisions
of this Section 15.1 following an occurrence which is a peril actually insured
or required to be insured against pursuant to Section 12.1(c) and (d), Landlord
and Tenant agree (and any Lender shall be asked to agree) that such insurance
proceeds shall be allocated between Landlord and Tenant in a manner which fairly
and reasonably reflects their respective ownership rights under this Lease, as
of the termination or expiration of the term of this Lease, with respect to the
improvements, fixtures, equipment and other items to which such insurance
proceeds are attributable.
(d) From and after the date of an occurrence resulting in damage to
or destruction of the Building or of the Common Areas necessary for Tenant's use
and occupancy of the Building, and continuing until repair and restoration
thereof are completed, there shall be an equitable abatement of minimum rental
and of Tenant's Operating Cost Share of Operating Expenses based upon the degree
to which Tenant's ability to conduct its business in the Building is impaired.
15.2 CONDEMNATION.
(a) If during the term of this Lease the Property or Improvements, or
any substantial part of either, is taken by eminent domain or by reason of any
public improvement or condemnation proceeding, or in any manner by exercise of
the right of eminent domain (including any transfer in avoidance of an exercise
of the power of eminent domain), or receives irreparable damage by reason of
anything lawfully done under color of public or other authority, then (i) this
Lease shall terminate as to the entire Building at Landlord's election by
written notice given to Tenant within sixty (60) days after the taking has
occurred, and (ii) this Lease shall terminate as to the entire Building at
Tenant's election, by written notice given to Landlord within thirty (30) days
after the nature and extent of the taking have been finally determined, if the
portion of the Building taken is of such extent and
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nature as substantially to handicap, impede or permanently impair Tenant's use
of the balance of the Building. If Tenant elects to terminate this Lease, Tenant
shall also notify Landlord of the date of termination, which date shall not be
earlier than thirty (30) days nor later than ninety (90) days after Tenant has
notified Landlord of Tenant's election to terminate, except that this Lease
shall terminate on the date of taking if such date falls on any date before the
date of termination designated by Tenant. If neither party elects to terminate
this Lease as hereinabove provided, this Lease shall continue in full force and
effect (except that there shall be an equitable abatement of minimum rental and
of Tenant's Operating Cost Share of Operating Expenses based upon the degree to
which Tenant's ability to conduct its business in the Building is impaired),
Landlord shall restore the Building Shell and Common Area improvements to a
complete architectural whole and a functional condition and as nearly as
reasonably possible to the condition existing before the taking, and Tenant
shall restore the Tenant Improvements and Tenant's other alterations, additions
and improvements to a complete architectural whole and a functional condition
and as nearly as reasonably possible to the condition existing before the
taking. In connection with any such restoration, each party shall use its
respective best efforts (including, without limitation, any necessary
negotiation or intercession with its respective lender, if any) to ensure that
any severance damages or other condemnation awards intended to provide
compensation for rebuilding or restoration costs are promptly collected and made
available to Landlord and Tenant in portions reasonably corresponding to the
cost and scope of their respective restoration obligations, subject only to such
payment controls as either party or its lender may reasonably require in order
to ensure the proper application of such proceeds toward the restoration of the
Improvements. Each party waives the provisions of Code of Civil Procedure
Section 1265.130, allowing either party to petition the Superior Court to
terminate this Lease in the event of a partial condemnation of the Building or
Property.
(b) The respective obligations of Landlord and Tenant pursuant to
Section 15.2(a) are subject to the following limitations:
(i) Each party's obligation to repair and restore shall not
exceed, net of any condemnation awards or other proceeds available for and
allocable to such restoration as contemplated in Section 15.2(a), an amount
equal to five percent (5 %) of the replacement cost of the Building Shell and
Common Area improvements, as to Landlord, or five percent (5 %) of the
replacement cost of the Tenant Improvements, as to Tenant; if the replacement
cost as to either party exceeds such amount, then the party whose limit has been
exceeded may terminate this Lease unless the other party promptly elects and
agrees, in writing, to contribute the amount of the shortfall; and
(ii) If this Lease is terminated pursuant to the foregoing
provisions of this Section 15.2, or if this Lease remains in effect but any
condemnation awards or other proceeds become available as compensation for the
loss or destruction of any of the Improvements, then Landlord and Tenant agree
(and any Lender shall be asked to agree) that such proceeds shall be allocated
between Landlord and Tenant, respectively, in the respective proportions in
which Landlord and Tenant would have shared, under Section 15.1 (c), the
proceeds of any insurance proceeds following loss or destruction of the
applicable improvements by an insured casualty.
15.3 RESERVATION OF COMPENSATION. Landlord reserves, and Tenant waives and
assigns to Landlord, all rights to any award or compensation for damage to the
Improvements, the Property and the leasehold estate created hereby, accruing by
reason of any taking in any public improvement, condemnation or eminent domain
proceeding or in any other manner by exercise of the right of eminent domain or
of anything lawfully done by public authority, except that (a) Tenant shall be
entitled to any and all compensation or damages paid for or on account of
Tenant's moving expenses, trade fixtures and equipment and any leasehold
improvements installed by Tenant in the Building at its own sole expense, but
only to the extent Tenant would have been entitled to remove such items at the
expiration of the term of this Lease and then only to the extent of the then
remaining unamortized value of such improvements computed on a straight-line
basis over the term of this Lease, and (b) any condemnation awards or proceeds
described in Section 15.2(b)(ii) shall be allocated
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and disbursed in accordance with the provisions of Section 15.2(b)(ii),
notwithstanding any contrary provisions of this Section 15.3.
15.4 RESTORATION OF IMPROVEMENTS. In connection with any repair or
restoration of Improvements by either party following a casualty or taking as
hereinabove set forth, the party responsible for such repair or restoration
shall, to the extent possible, return such Improvements to a condition
substantially equal to that which existed immediately prior to the casualty or
taking. To the extent such party wishes to make material modifications to such
Improvements, such modifications shall be subject to the prior written approval
of the other party (not to be unreasonably withheld or delayed), except that no
such approval shall be required for modifications that are required by
applicable governmental authorities as a condition of the repair or restoration,
unless such required modifications would impair or impede Tenant's conduct of
its business in the Building (in which case any such modifications in Landlord's
work shall require Tenant's consent, not unreasonably withheld or delayed) or
would materially and adversely affect the exterior appearance, the structural
integrity or the mechanical or other operating systems of the Building (in which
case any such modifications in Tenant's work shall require Landlord's consent,
not unreasonably withheld or delayed).
16. DEFAULT
16.1 EVENTS OF DEFAULT. The occurrence of any of the following shall
constitute an event of default on the part of Tenant:
(a) [Omitted.]
(b) NONPAYMENT. Failure to pay, when due, any amount payable to
Landlord hereunder, such failure continuing for a period of five (5) business
days after written notice of such failure; PROVIDED, however, that any such
notice shall be in lieu of, and not in addition to, any notice required under
California Code of Civil Procedure Section 1161 ET SEQ., as amended from time to
time;
(c) OTHER OBLIGATIONS. Failure to perform any obligation, agreement
or covenant under this Lease other than those matters specified in subsection
(b) hereof, such failure continuing for thirty (30) days after written notice of
such failure; PROVIDED, however, that if such failure is curable in nature but
cannot reasonably be cured within such 30-day period, then Tenant shall not be
in default if, and so long as, Tenant promptly (and in all events within such
30-day period) commences such cure and thereafter diligently pursues such cure
to completion; and PROVIDED FURTHER, however, that any such notice shall be in
lieu of, and not in addition to, any notice required under California Code of
Civil Procedure Section 1161 ET SEQ., as amended from time to time;
(d) GENERAL ASSIGNMENT. A general assignment by Tenant for the
benefit of creditors;
(e) BANKRUPTCY. The filing of any voluntary petition in bankruptcy by
Tenant, or the filing of an involuntary petition by Tenant's creditors, which
involuntary petition remains undischarged for a period of thirty (30) days. In
the event that under applicable law the trustee in bankruptcy or Tenant has the
right to affirm this Lease and continue to perform the obligations of Tenant
hereunder, such trustee or Tenant shall, in such time period as may be permitted
by the bankruptcy court having jurisdiction, cure all defaults of Tenant
hereunder outstanding as of the date of the affirmance of this Lease and provide
to Landlord such adequate assurances as may be necessary to ensure Landlord of
the continued performance of Tenant's obligations under this Lease.
Specifically, but without limiting the generality of the foregoing, such
adequate assurances must include assurances that the Building continues to be
operated only for the use permitted hereunder. The provisions hereof are to
assure that the basic understandings between Landlord and Tenant with respect to
Tenant's use of the Property and the benefits to Landlord therefrom are
preserved, consistent with the purpose and intent of applicable bankruptcy laws;
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(f) RECEIVERSHIP. The employment of a receiver appointed by court
order to take possession of substantially all of Tenant's assets or the
Building, if such receivership remains undissolved for a period of thirty (30)
days;
(g) ATTACHMENT. The attachment, execution or other judicial seizure
of all or substantially all of Tenant's assets or the Building, if such
attachment or other seizure remains undismissed or undischarged for a period of
thirty (30) days after the levy thereof; or
(h) INSOLVENCY. The admission by Tenant in writing of its inability
to pay its debts as they become due, the filing by Tenant of a petition seeking
any reorganization or arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any present or future statute, law or
regulation, the filing by Tenant of an answer admitting or failing timely to
contest a material allegation of a petition filed against Tenant in any such
proceeding or, if within thirty (30) days after the commencement of any
proceeding against Tenant seeking any reorganization or arrangement,
composition, readjustment, liquidation, dissolution or similar relief under any
present or future statute, law or regulation, such proceeding shall not have
been dismissed.
16.2 REMEDIES UPON TENANT'S DEFAULT.
(a) Upon the occurrence of any event of default described in Section
16.1 hereof, Landlord, in addition to and without prejudice to any other rights
or remedies it may have, shall have the immediate right to re-enter the Building
or any part thereof and repossess the same, expelling and removing therefrom all
persons and property (which property may be stored in a public warehouse or
elsewhere at the cost and risk of and for the account of Tenant), using such
force as may be necessary to do so (as to which Tenant hereby waives any claim
for loss or damage that may thereby occur). In addition to or in lieu of such
re-entry, and without prejudice to any other rights or remedies it may have,
Landlord shall have the right either (i) to terminate this Lease and recover
from Tenant all damages incurred by Landlord as a result of Tenant's default, as
hereinafter provided, or (ii) to continue this Lease in effect and recover rent
and other charges and amounts as they become due.
(b) Even if Tenant has breached this Lease and abandoned the
Building, this Lease shall continue in effect for so long as Landlord does not
terminate Tenant's right to possession under subsection (a) hereof and Landlord
may enforce all of its rights and remedies under this Lease, including the right
to recover rent as it becomes due, and Landlord, without terminating this Lease,
may exercise all of the rights and remedies of a lessor under California Civil
Code Section 1951.4 (lessor may continue lease in effect after lessee's breach
and abandonment and recover rent as it becomes due, if lessee has right to
sublet or assign, subject only to reasonable limitations), or any successor Code
section. Acts of maintenance, preservation or efforts to relet the Building or
the appointment of a receiver upon application of Landlord to protect Landlord's
interests under this Lease shall not constitute a termination of Tenant's right
to possession.
(c) If Landlord terminates this Lease pursuant to this Section 16.2,
Landlord shall have all of the rights and remedies of a landlord provided by
Section 1951.2 of the Civil Code of the State of California, or any successor
Code section, which remedies include Landlord's right to recover from Tenant (i)
the worth at the time of award of the unpaid rent and additional 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 and additional rent which would have been
earned after termination until the time of award exceeds the amount of such
rental loss that Tenant proves could have been reasonably avoided, (iii) the
worth at the time of award of the amount by which the unpaid rent and additional
rent for the balance of the term after the time of award exceeds the amount of
such rental loss that Tenant proves could be reasonably avoided, and (iv) any
other amount necessary to compensate Landlord for all the detriment proximately
caused by Tenant'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 Building, expenses
of
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reletting, including necessary repair, renovation and alteration of the
Building, reasonable attorneys' fees, and other reasonable costs. The "WORTH AT
THE TIME OF AWARD" of the amounts referred to in clauses (i) and (ii) above
shall be computed by allowing interest at ten percent (10%) per annum from the
date such amounts accrued to Landlord. The "WORTH AT THE TIME OF AWARD" of the
amounts referred to in clause (iii) above shall be computed by discounting such
amount at one percentage point above the discount rate of the Federal Reserve
Bank of San Francisco at the time of award.
16.3 REMEDIES CUMULATIVE. All rights, privileges and elections or remedies
of Landlord contained in this Article 16 are cumulative and not alternative to
the extent permitted by law and except as otherwise provided herein.
17. SUBORDINATION, ATTORNMENT AND SALE
17.1 SUBORDINATION TO MORTGAGE. This Lease, and any sublease entered into
by Tenant under the provisions of this Lease, shall be subject and subordinate
to any ground lease, mortgage, deed of trust, sale/leaseback transaction or any
other hypothecation for security now or hereafter placed upon the Building, the
Property, the Center, or any of them, and the rights of any assignee of Landlord
or of any ground lessor, mortgagee, trustee, beneficiary or leaseback lessor
under any of the foregoing, and to any and all advances made on the security
thereof and to all renewals, modifications, consolidations, replacements and
extensions thereof; PROVIDED, however, that such subordination in the case of
any future ground lease, mortgage, deed of trust, sale/leaseback transaction or
any other hypothecation for security placed upon the Building, the Property, the
Center, or any of them shall be conditioned on Tenant's receipt from the ground
lessor, mortgagee, trustee, beneficiary or leaseback lessor of a Non-Disturbance
Agreement in a form reasonably acceptable to Tenant (i) confirming that so long
as Tenant is not in material default hereunder beyond any applicable cure period
(for which purpose the occurrence of any event of default under Section 16.1
hereof shall be deemed to be "material"), Tenant's rights hereunder shall not be
disturbed by such person or entity and (ii) agreeing that the benefit of such
Non-Disturbance Agreement shall be transferable to any transferee under a
Permitted Transfer and to any other assignee or subtenant that is acceptable to
the ground lessor, mortgagee, trustee, beneficiary or leaseback lessor at the
time of transfer. Moreover, Tenant's obligations under this Lease shall be
conditioned on Tenant's receipt within thirty (30) days after mutual execution
of this Lease, from (x) Slough Estates USA Inc. (as successor to Slough Parks
Incorporated), the beneficiary under an existing deed of trust on the Property,
and (y) any other ground lessor, mortgagee, trustee, beneficiary or leaseback
lessor currently owning or holding a security interest in the Property, of a
Non-Disturbance Agreement in a form reasonably acceptable to Tenant confirming
(i) that so long as Tenant is not in material default hereunder beyond any
applicable cure period (for which purpose the occurrence of any event of default
under Section 16.1 hereof shall be deemed to be "material"), Tenant's rights
hereunder shall not be disturbed by such person or entity and (ii) agreeing that
the benefit of such Non-Disturbance Agreement shall be transferable to any
transferee under a Permitted Transfer and to any other assignee or subtenant
that is acceptable to the ground lessor, mortgagee, trustee, beneficiary or
leaseback lessor at the time of transfer. If any mortgagee, trustee,
beneficiary, ground lessor, sale/leaseback lessor or assignee elects to have
this Lease be an encumbrance upon the Property prior to the lien of its
mortgage, deed of trust, ground lease or leaseback lease or other security
arrangement and gives notice thereof to Tenant, this Lease shall be deemed prior
thereto, whether this Lease is dated prior or subsequent to the date thereof or
the date of recording thereof. Tenant, and any sublessee, shall execute such
documents as may reasonably be requested by any mortgagee, trustee, beneficiary,
ground lessor, sale/leaseback lessor or assignee to evidence the subordination
herein set forth, subject to the conditions set forth above, or to make this
Lease prior to the lien of any mortgage, deed of trust, ground lease, leaseback
lease or other security arrangement, as the case may be. Upon any default by
Landlord in the performance of its obligations under any mortgage, deed of
trust, ground lease, leaseback lease or assignment, Tenant (and any sublessee)
shall, notwithstanding any subordination hereunder, attorn to the mortgagee,
trustee, beneficiary, ground lessor, leaseback lessor or assignee thereunder
upon demand and become the tenant of the successor in interest to Landlord, at
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the option of such successor in interest, and shall execute and deliver any
instrument or instruments confirming the attornment herein provided for.
17.2 SALE OF LANDLORD'S INTEREST. Upon sale, transfer or assignment of
Landlord's entire interest in the Building and the Property, Landlord shall be
relieved of its obligations hereunder with respect to liabilities accruing from
and after the date of such sale, transfer or assignment.
17.3 ESTOPPEL CERTIFICATES. Tenant or Landlord (the "RESPONDING PARTY"), as
applicable, shall at any time and from time to time, within ten (10) days after
written request by the other party (the "REQUESTING PARTY"), execute,
acknowledge and deliver to the requesting party a certificate in writing
stating: (i) that this Lease is unmodified and in full force and effect, or if
there have been any modifications, that this Lease is in full force and effect
as modified and stating the date and the nature of each modification; (ii) the
date to which rental and all other sums payable hereunder have been paid; (iii)
that the requesting party is not in default in the performance of any of its
obligations under this Lease, that the certifying party has given no notice of
default to the requesting party and that no event has occurred which, but for
the expiration of the applicable time period, would constitute an event of
default hereunder, or if the responding party alleges that any such default,
notice or event has occurred, specifying the same in reasonable detail; and (iv)
such other matters as may reasonably be requested by the requesting party or by
any institutional lender, mortgagee, trustee, beneficiary, ground lessor,
sale/leaseback lessor or prospective purchaser of the Property, or prospective
sublessee or assignee of this Lease. Any such certificate provided under this
Section 17.3 may be relied upon by any lender, mortgagee, trustee, beneficiary,
assignee or successor in interest to the requesting party, by any prospective
purchaser, by any purchaser on foreclosure or sale, by any grantee under a deed
in lieu of foreclosure of any mortgage or deed of trust on the Property, by any
subtenant or assignee, or by any other third party. Failure to execute and
return within the required time any estoppel certificate requested hereunder, if
such failure continues for five (5) days after a second written request by the
requesting party for such estoppel certificate, shall be deemed to be an
admission of the truth of the matters set forth in the form of certificate
submitted to the responding party for execution.
17.4 SUBORDINATION TO CC&R'S. This Lease, and any permitted sublease
entered into by Tenant under the provisions of this Lease, and the interests in
real property conveyed hereby and thereby shall be subject and subordinate (a)
to any declarations of covenants, conditions and restrictions affecting the
Property or the Center from time to time, PROVIDED that the terms of such
declarations are reasonable, do not materially impair Tenant's ability to
conduct the uses permitted hereunder on the Property, and do not discriminate
against Tenant relative to other similarly situated tenants occupying portions
of the Center, (b) to the Declaration of Covenants, Conditions and Restrictions
for Pointe Grand Business Park dated November 4, 1991 and recorded on February
25, 1992 as Instrument No. 92025214, Official Records of San Mateo County, as
amended from time to time (the "MASTER DECLARATION"), the provisions of which
Master Declaration are an integral part of this Lease, (c) to the Declaration of
Covenants, Conditions and Restrictions dated November 23, 1987 and recorded on
November 24, 1987 as Instrument No. 87177987, Official Records of San Mateo
County, which declaration imposes certain covenants, conditions and restrictions
on the Property, and (d) to the Environmental Restriction and Covenant (Pointe
Grand) dated as of April 16, 1997 and recorded on April 16, 1997 as Instrument
No. 97-043682, Official Records of San Mateo County, which declaration imposes
certain covenants, conditions and restrictions on the Center. Tenant agrees to
execute, upon request by Landlord, any documents reasonably required from time
to time to evidence such subordination.
17.5 MORTGAGEE PROTECTION. If, following a default by Landlord under any
mortgage, deed of trust, ground lease, leaseback lease or other security
arrangement covering the Building, the Property, the Center, or any of them, the
Building, the Property and/or the Center, as applicable, is acquired by the
mortgagee, beneficiary, master lessor or other secured party, or by any other
successor owner, pursuant to a foreclosure, trustee's sale, sheriffs sale, lease
termination or other-similar procedure (or deed in lieu thereof), then any such
person or entity so acquiring the Building, the Property and/or the Center shall
not be:
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(a) liable for any act or omission of a prior landlord or owner of
the Property (including, but not limited to, Landlord);
(b) subject to any offsets or defenses that Tenant may have against
any prior landlord or owner of the Property and/or the Center (including, but
not limited to, Landlord);
(c) bound by any rent or additional rent that Tenant may have paid in
advance to any prior landlord or owner of the Property and/or the Center
(including, but not limited to, Landlord) for a period in excess of one month,
or by any security deposit, cleaning deposit or other prepaid charge that Tenant
may have paid in advance to any prior landlord or owner (including, but not
limited to, Landlord), except to the extent such deposit or prepaid amount has
been expressly turned over to or credited to the successor owner thus acquiring
the Property and/or the Center, as applicable:
(d) liable for any warranties or representations of any nature
whatsoever, whether pursuant to this Lease or otherwise, by any prior landlord
or owner of the Property and/or the Center (including, but not limited to,
Landlord) with respect to the use, construction, zoning, compliance with laws,
title, habitability, fitness for purpose or possession, or physical condition
(including, without limitation, environmental matters) of the Property, the
Building or the Center; or
(e) liable to Tenant in any amount beyond the interest of such
mortgagee, beneficiary, master lessor or other secured party or successor owner
in the Property and the Center as they exist from time to time, it being the
intent of this provision that Tenant shall look solely to the interest of any
such mortgagee, beneficiary, master lessor or other secured party or successor
owner in the Property and Center for the payment and discharge of the landlord's
obligations under this Lease and that such mortgagee, beneficiary, master lessor
or other secured party or successor owner shall have no separate personal
liability for any such obligations.
18. SECURITY
18.1 DEPOSIT. Within ten (10) days after mutual execution of this Lease,
Tenant shall deposit with Landlord the sum of One Hundred Twenty-One Thousand
Nine Hundred Twenty-Eight and No/100 Dollars ($121,928.00), which sum (the
"SECURITY DEPOSIT" shall be held by Landlord as security for the faithful
performance of all of the terms, covenants, and conditions of this Lease to be
kept and performed by Tenant during the term hereof. If Tenant defaults with
respect to any provision of this Lease, including, without limitation, the
provisions relating to the payment of rental and other sums due hereunder,
Landlord shall have the right, but shall not be required, to use, apply or
retain all or any part of the Security Deposit for the payment of rental or any
other amount which Landlord may spend or become obligated to spend by reason of
Tenant's default or to compensate Landlord for any other loss or damage which
Landlord may suffer by reason of Tenant's default. If any portion of the
Security Deposit is so used or applied, Tenant shall, within ten (10) days after
written demand therefor, deposit cash with Landlord in an amount sufficient to
restore the Security Deposit to its original amount and Tenant's failure to do
so shall be a material breach of this Lease. Landlord shall not be required to
keep any deposit under this Section separate from Landlord's general funds, and
Tenant shall not be entitled to interest thereon. If Tenant fully and faithfully
performs every provision of this Lease to be performed by it, the Security
Deposit, or any balance thereof, shall be returned to Tenant or, at Landlord's
option, to the last assignee of Tenant's interest hereunder, at the expiration
of the term of this Lease and after Tenant has vacated the Property. In the
event of termination of Landlord's interest in this Lease, Landlord shall
transfer all deposits then held by Landlord under this Section to Landlord's
successor in interest, whereupon Tenant agrees to release Landlord from all
liability for the return of such deposit or the accounting thereof.
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19. MISCELLANEOUS
19.1 NOTICES. All notices, consents, waivers and other communications
which this Lease requires or permits either party to give to the other shall
be in writing and shall be deemed given when delivered personally (including
delivery by private courier or express delivery service) or four (4) days
after deposit in the United States mail, registered or certified mail,
postage prepaid, addressed to the parties at their respective addresses as
follows:
To Tenant: (until Rent Commencement Date)
Rigel, Inc.
772 Lucerne Drive
Sunnyvale, CA 94086
Attn: James M. Gower
(after Rent Commencement Date)
Rigel, Inc.
[street address to be determined]
South San Francisco, CA 94080
Attn: James M. Gower
with copy to: Cooley Godward LLP
Five Palo Alto Square, 4th Floor
Palo Alto, CA 94306-2155
Attn: Anna B. Pope, Esq.
To Landlord: Britannia Pointe Grand Limited Partnership
1939 Harrison Street, Suite 715
Park Plaza Building
Oakland, CA 94612
Attn: T. J. Bristow
with copy to: Folger Levin & Kahn LLP
Embarcadero Center West
275 Battery Street, 23rd Floor
San Francisco, CA 94111
Attn: Donald E. Kelley, Jr.
and copy to: Slough Estates USA Inc.
33 West Monroe Street, Suite 2000
Chicago, IL 60603
Attn: William Rogalla
or to such other address as may be contained in a notice at least fifteen
(15) days prior to the address change from either party to the other given
pursuant to this Section. Rental payments and other sums required by this
Lease to be paid by Tenant shall be delivered to Landlord at Landlord's
address provided in this Section, or to such other address as Landlord may
from time to time specify in writing to Tenant, and shall be deemed to be
paid only upon actual receipt.
19.2 SUCCESSORS AND ASSIGNS. The obligations of this Lease shall run
with the land, and this Lease shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns, except
that the original Landlord named herein and each successive Landlord under
this Lease shall be liable only for obligations accruing during the period of
its ownership of the Property, and any liability for obligations accruing
after termination Of such ownership shall terminate as of the date of such
termination of ownership and shall pass to the successor lessor.
19.3 NO WAIVER. The failure of Landlord to seek redress for violation, or
to insist upon the strict performance, of any covenant or condition of this
Lease shall not be deemed at
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waiver of such violation, or prevent a subsequent act which would originally
have constituted a violation from having all the force and effect of an
original violation.
19.4 SEVERABILITY. If any provision of this Lease or the application
thereof is held to be invalid or unenforceable, the remainder of this Lease
or the application of such provision to persons or circumstances other than
those as to which it is invalid or unenforceable shall not be affected
thereby, and each of the provisions of this Lease shall be valid and
enforceable, unless enforcement of this Lease as so invalidated would be
unreasonable or grossly inequitable under all the circumstances or would
materially frustrate the purposes of this Lease.
19.5 LITIGATION BETWEEN PARTIES. In the event of any litigation or other
dispute resolution proceedings between the parties hereto arising out of or
in connection with this Lease, the prevailing party shall be reimbursed for
all reasonable costs, including, but not limited to, reasonable accountants'
fees and attorneys' fees, incurred in connection with such proceedings
(including, but not limited to, any appellate proceedings relating thereto)
or in connection with the enforcement of any judgment or award rendered in
such proceedings. "PREVAILING PARTY" within the meaning of this Section shall
include, without limitation, a party who dismisses an action for recovery
hereunder in exchange for payment of the sums allegedly due, performance of
covenants allegedly breached or consideration substantially equal to the
relief sought in the action.
19.6 SURRENDER. A voluntary or other surrender of this Lease by Tenant,
or a mutual termination thereof between Landlord and Tenant, shall not result
in a merger but shall, at the option of Landlord, operate either as an
assignment to Landlord of any and all existing subleases and subtenancies, or
a termination of all or any existing subleases and subtenancies. This
provision shall be contained in any and all assignments or subleases made
pursuant to this Lease.
19.7 INTERPRETATION. The provisions of this Lease shall be construed as
a whole, according to their common meaning, and not strictly for or against
Landlord or Tenant. The captions preceding the text of each Section and
subsection hereof are included only for convenience of reference and shall be
disregarded in the construction or interpretation of this Lease.
19.8 ENTIRE AGREEMENT. This written Lease, together with the exhibits
hereto, contains all the representations and the entire understanding between
the parties hereto with respect to the subject matter hereof. Any prior
correspondence, memoranda or agreements are replaced in total by this Lease
and the exhibits hereto. This Lease may be modified only by an agreement in
writing signed by each of the parties.
19.9 GOVERNING LAW. This Lease and all exhibits hereto shall be
construed and interpreted in accordance with and be governed by all the
provisions of the laws of the State of California.
19.10 NO PARTNERSHIP. The relationship between Landlord and Tenant
is solely that of a lessor and lessee. Nothing contained in this Lease shall
be construed as creating any type or manner of partnership, joint venture or
joint enterprise with or between Landlord and Tenant.
19.11 FINANCIAL INFORMATION. From time to time Tenant shall promptly
provide directly to prospective lenders and purchasers of the Property and/or
Center designated by Landlord such financial information pertaining to the
financial status of Tenant as Landlord may reasonably request; PROVIDED, Tenant
shall be permitted to provide such financial information in a manner which
Tenant deems reasonably necessary to protect the confidentiality of such
information. In addition, from time to time, Tenant shall provide Landlord with
such financial information pertaining to the financial status of Tenant as
Landlord may reasonably request. Landlord agrees that all financial information
supplied to Landlord by Tenant shall be treated as confidential material, and
shall not be disseminated to any party or entity (including any entity
affiliated with Landlord) without Tenant's prior
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written consent, except that Landlord shall be entitled to provide such
information, subject to reasonable precautions to protect the confidential
nature thereof, (i) to Landlord's partners and professional advisors, solely
to use in connection with Landlord's execution and enforcement of this Lease,
and (ii) to prospective lenders and/or purchasers of the Property and/or
Center, solely for use in connection with their bona fide consideration of a
proposed financing or purchase of the Property and/or Center, PROVIDED that
such prospective lenders and/or purchasers are not then engaged in businesses
directly competitive with the business then being conducted by Tenant. For
purposes of this Section, without limiting the generality of the obligations
provided herein, it shall be deemed reasonable for Landlord to request copies
of Tenant's most recent audited annual financial statements, or, if audited
statements have not been prepared, unaudited financial statements for
Tenant's most recent fiscal year, accompanied by a certificate of Tenant's
chief financial officer that such financial statements fairly present
Tenant's financial condition as of the date(s) indicated. Notwithstanding any
other provisions of this Section 19.11, during any period in which Tenant has
outstanding a class of publicly traded securities and is filing with the
Securities and Exchange Commission, on a regular basis, Forms 10Q and 10K and
any other periodic filings required under the Securities Exchange Act of
1934, as amended, it shall constitute sufficient compliance under this
Section 19.11 for Tenant to furnish Landlord with copies of such periodic
filings substantially concurrently with the filing thereof with the
Securities and Exchange Commission.
Landlord and Tenant recognize the need of Tenant to maintain the
confidentiality of information regarding its financial status and the need of
Landlord to be informed of, and to provide to prospective lenders and
purchasers of the Property and/or Center financial information pertaining to,
Tenant's financial status. Landlord and Tenant agree to cooperate with each
other in achieving these needs within the context of the obligations set
forth in this Section.
19.12 COSTS. If Tenant requests the consent of Landlord under any
provision of this Lease for any act that Tenant proposes to do hereunder,
including, without limitation, assignment or subletting of the Building,
Tenant shall, as a condition to doing any such act and the receipt of such
consent, reimburse Landlord promptly for any and all reasonable costs and
expenses incurred by Landlord in connection therewith, including, without
limitation, reasonable attorneys' fees, up to a maximum of $2,500.00 per
request.
19.13 TIME. Time is of the essence of this Lease, and of every term
and condition hereof.
19.14 RULES AND REGULATIONS. Tenant shall observe, comply with and
obey, and shall cause its employees, agents and, to the best of Tenant's
ability, invitees to observe, comply with and obey such rules and regulations
as Landlord may promulgate from time to time for the safety, care,
cleanliness, order and use of the Improvements, the Property and the Center.
19.15 BROKERS. Landlord agrees to pay a brokerage commission to
Catalyst Real Estate Group and to Cornish & Carey Commercial in connection
with the consummation of this Lease in accordance with a separate agreement.
Each party represents and warrants that no other broker participated in the
consummation of this Lease and agrees to indemnify, defend and hold the other
party harmless against any liability, cost or expense, including, without
limitation, reasonable attorneys' fees, arising out of any claims for
brokerage commissions or other similar compensation in connection with any
conversations, prior negotiations or other dealings by the indemnifying party
with any other broker.
19.16 MEMORANDUM OF LEASE. At any time during the term of this
Lease, either party, at its sole expense, shall be entitled to record a
memorandum of this Lease and, if either party so elects, both parties agree
to cooperate in the preparation, execution, acknowledgement and recordation
of such document in reasonable form.
19.17 CORPORATE AUTHORITY. The- person signing this Lease on behalf
of Tenant warrants that he or she is fully authorized to do so and, by so
doing, to bind Tenant.
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19.18 EXECUTION AND DELIVERY. This Lease may be executed in one or
more counterparts and by separate parties on separate counterparts, but each
such counterpart shall constitute an original and all such counterparts
together shall constitute one and the same instrument.
19.19 SURVIVAL. Without limiting survival provisions which would
otherwise be implied or construed under applicable law, the provisions of
Sections 2.6, 7.4, 9.2, 9.3, 9.4, 11.6, 12.6 and 19.5 hereof shall survive
the termination of this Lease with respect to matters occurring prior to the
expiration of this Lease.
IN WITNESS WHEREOF, the parties hereto have executed this Lease as of
the day and year first set forth above.
"Landlord" "Tenant"
BRITANNIA POINTE GRAND LIMITED RIGEL, INC., a Delaware corporation
PARTNERSHIP, a Delaware limited
partnership
By: BRITANNIA POINTE GRAND, By: /s/ James M. Gower
LLC, a California limited liability ---------------------------
company, General Partner Its: CEO
---------------------------
By: /s/T. J. Bristow By: /s/ Brian C. Cunningham
------------------------------- ---------------------------
Its Manager, President and Its: Secretary
Chief Financial Officer ---------------------------
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EXHIBITS
EXHIBIT A Real Property Description
EXHIBIT B Site Plan
EXHIBIT C Workletter
EXHIBIT D Estimated Construction Schedule
EXHIBIT E Acknowledgement of Rent Commencement Date
EXHIBIT A
REAL PROPERTY DESCRIPTION
All that certain real property in the City of South San Francisco, County of
San Mateo, State of California, more particularly described as follows:
Lots 1, 2, 3 and 4, inclusive, as shown on Parcel Map No. 91-284, "Being a
resubdivision of the parcels described in the deeds to Metal and Thermit
Corporation, recorded in Book 293, at Page 394 of Deeds; in Book 49, at Page
490, Official Records; in Book 77, at Page 41:5, Official Records; and,
except that parcel described in Book 1352, at Page 373, Official Records,"
filed on February 25, 1992, in Book 65 of Parcel Maps, in the Office of the
Recorder of the County of San Mateo, California.
EXHIBIT B
SITE PLAN
[PLAN]
EXHIBIT C
WORKLETTER
This Workletter ("WORKLETTER") constitutes part of the Build-to-Suit
Lease dated as of June 2, 1998 (the "LEASE") between BRITANNIA POINTE GRAND
LIMITED PARTNERSHIP, a Delaware limited partnership ("LANDLORD"), and RIGEL,
INC., a Delaware corporation ("TENANT"). The terms of this Workletter are
incorporated in the Lease for all purposes.
1. DEFINED TERMS. As used in this Workletter, the following capitalized
terms have the following meanings:
(a) APPROVED PLANS: Plans and specifications prepared by the applicable
Architect for the respective Improvements and approved by both Landlord and
Tenant in accordance with Paragraph 2 of this Workletter (subject to further
modification in accordance with such Paragraph 2).
(b) ARCHITECT: Chamorro Design Group, or any other architect selected
by Landlord in its sole discretion, with respect to the Building Shell, the
Site Improvements and any other Improvements which Landlord is to design
pursuant to this Workletter; any architect selected by Tenant with the
written approval of Landlord (which approval shall not be unreasonably
withheld or delayed), with respect to the Tenant Improvements and any other
Improvements which Tenant is to design pursuant to this Workletter.
(c) BUILDING SHELL: The shell of the Building, as more fully defined in
SCHEDULE C-1 attached to this Workletter.
(d) CHANGE ORDER: See definition in Paragraph 2(e)(ii) hereof.
(e) COST OF IMPROVEMENT: See definition in Paragraph 2(c) hereof.
(f) FINAL COMPLETION CERTIFICATE: See definition in Paragraph 3(0)
hereof.
(g) FINAL WORKING DRAWINGS: See definition in Paragraph 2(a) hereof.
(h) GENERAL CONTRACTOR: Concrete Shell Structures, Inc., or any other
general contractor selected by Landlord in its sole discretion, with respect
to Landlord's Work. The General Contractor with respect to Tenant's Work
shall be selected by Tenant, subject to Landlord's approval (not to be
unreasonably withheld or delayed), as contemplated in Paragraph 5(a) hereof.
(i) IMPROVEMENTS: The Building Shell, Site Improvements, Tenant
Improvements and other improvements shown on the Approved Plans from time to
time and to be constructed on the Property pursuant to the Lease and this
Workletter.
(j) LANDLORD DELAY: Any of the following types of delay in the
completion of construction of the Tenant Improvements:
(i) Any delay resulting from Landlord's failure to furnish, in a
timely manner, information requested by Tenant or by the Architect or General
Contractor for Tenant's Work in connection with the design or construction of
Tenant's Work, or from Landlord's failure to approve in a timely manner any
matters requiring approval by Landlord; or
(ii) Any delay of any other kind or nature caused by Landlord (or
Landlord's contractors, agents or employees) or resulting from the
performance of Landlord's Work.
(k) LANDLORD'S WORK: The Building Shell and Site Improvements, and any
other Improvements which Landlord is to construct or install pursuant to this
Workletter or by mutual agreement of Landlord and Tenant from time to time.
(l) PUNCH LIST WORK: Minor corrections of construction or decoration
details, and minor mechanical adjustments, that are required in order to
cause any applicable portion of the Improvements as constructed to conform to
the Approved Plans in all material respects and that do not materially
interfere with Tenant's use or occupancy of the Building and the Property.
(m) SITE IMPROVEMENTS: The parking areas, driveways, landscaping and
other improvements to the Common Areas of the Property that are depicted on
EXHIBIT B to the Lease (as the same may be modified pursuant to the process
of development and approval of the Approved Plans) and more specifically
described in SCHEDULE C-1 attached to this Workletter.
(n) STRUCTURAL COMPLETION CERTIFICATE: See definition in Paragraph 3(a)
hereof.
(o) TENANT DELAY: Any of the following types of delay in the completion
of construction of the Building Shell:
(i) Any delay resulting from Tenant's failure to furnish, in a
timely manner, information requested by Landlord or by the Architect or
General Contractor for Landlord's Work in connection with the design or
construction of the Building Shell, or from Tenant's failure to approve in a
timely manner any matters requiring approval by Tenant;
(ii) Any delay attributable to any request by Tenant to construct
the Building Shell in an "above standard" manner, or to any use of "above
standard" Building Shell components that is necessitated by Tenant's
particular use requirements or by the contemplated Tenant's Work;
(iii) Any delay resulting from Change Orders, including any delay
resulting from the need to revise any drawings or obtain further governmental
approvals as a result of any Change Order; or
(iv) Any delay of any other kind or nature caused by Tenant (or
Tenant's contractors, agents or employees) or resulting from the performance
of Tenant's Work.
(p) TENANT IMPROVEMENTS: The improvements to or within the Building,
other than improvements constituting pan of the Building Shell, shown on the
Approved Plans from time to time and to be constructed by Tenant (except as
otherwise provided herein) pursuant to the Lease and this Workletter,
including (but not limited to) the improvements described on SCHEDULE C-2
attached to this Workletter (except to the extent any such SCHEDULE C-2
improvements constitute part of the Building Shell).
(q) TENANT'S WORK: All of the Improvements other than those
constituting Landlord's Work, and such other materials and improvements as
Tenant deems necessary or appropriate for Tenant's use and occupancy of the
Building.
(r) UNAVOIDABLE DELAYS: Delays due to acts of God, acts of public
agencies, labor disputes, strikes, fires, freight embargoes, rainy or stormy
weather, inability to obtain supplies, materials, fuels or permits, delays of
contractors or subcontractors, or other causes or contingencies beyond the
reasonable control of Landlord or Tenant, as applicable.
(s) WORK DEADLINES: The target dates for performance by the applicable
party of the steps listed in the Estimated Construction Schedule attached as
EXHIBIT D to the Lease.
(t) Capitalized terms not otherwise defined in this Workletter shall have
the definitions set forth in the Lease.
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2. PLANS, COST OF IMPROVEMENTS AND CONSTRUCTION. Landlord and Tenant shall
comply with the procedures set forth in this Paragraph 2 in preparing,
delivering and approving matters relating to the Improvements.
(a) APPROVED PLANS AND WORKING DRAWINGS FOR LANDLORD'S WORK. Landlord
shall promptly and diligently (and in all events prior to any applicable Work
Deadlines, subject to Tenant Delays and Unavoidable Delays) cause to be
prepared and delivered to Tenant, for approval, plans and specifications for
the Improvements constituting Landlord's Work. Following mutual approval of
such plans and specifications, Landlord shall then cause to be prepared and
delivered to Tenant, on or before the applicable Work Deadline (assuming
timely delivery by Tenant of all information, decisions and drawings required
to be furnished or made by Tenant in order to permit complete preparation of
plans and drawings), final working drawings and specifications for the
Improvements constituting Landlord's Work, including structural, fire
protection, life safety, mechanical and electrical working drawings and final
architectural drawings (collectively, "LANDLORD'S FINAL WORKING DRAWINGS").
Landlord's Final Working Drawings shall substantially conform to the Approved
Plans. Landlord's obligation to deliver Landlord's Final Working Drawings to
Tenant within the time period set forth above shall be extended for any delay
encountered by Landlord as a result of a request by Tenant for changes in
accordance with the procedure set forth below, any other Tenant Delays, or
any Unavoidable Delays. No later than the applicable Work Deadline (assuming
timely delivery of plans and drawings by Landlord), Tenant shall either
approve Landlord's Final Working Drawings or set forth in writing with
particularity any changes necessary to bring Landlord's Final Working
Drawings into substantial conformity with the Approved Plans or into a form
which will be acceptable to Tenant. In no event, however, shall Tenant have
the right to object to any aspect of the proposed plans and specifications or
proposed Landlord's Final Working Drawings for Landlord's Work (including,
but not limited to, any change from the Approved Plans) that is necessitated
by applicable law, or to any aspect of such proposed plans and specifications
or proposed Landlord's Final Working Drawings that relates to the Building
Shell or Site Improvements, although Landlord agrees to consult with Tenant
and to give reasonable consideration to Tenant's views regarding functional
characteristics of the Building Shell and Site Improvements. Failure of
Tenant to deliver to Landlord written notice of disapproval and specification
of required changes on or before the applicable Work Deadline shall
constitute and be deemed to be approval of Landlord's Final Working Drawings.
Upon approval, actual or deemed, of Landlord's Final Working Drawings by
Landlord and Tenant, Landlord's Final Working Drawings shall be deemed to be
incorporated in and considered part of the Approved Plans, superseding (to
the extent of any inconsistencies) any inconsistent features of the
previously existing Approved Plans.
(b) APPROVED PLANS AND WORKING DRAWINGS FOR TENANT'S WORK. Tenant shall
promptly and diligently (and in all events prior to any applicable Work
Deadlines, subject to Landlord Delays and Unavoidable Delays) cause to be
prepared and delivered to Landlord, for approval, plans and specifications
for the Improvements constituting Tenant's Work. Following mutual approval of
such plans and specifications, Tenant shall then cause to be prepared and
delivered to Landlord final working drawings and specifications for the
Improvements constituting Tenant's Work, including any applicable life
safety, mechanical and electrical working drawings and final architectural
drawings (collectively, "TENANT'S FINAL WORKING DRAWINGS"). Tenant's Final
Working Drawings shall substantially conform to the Approved Plans. Landlord
shall either approve Tenant's Final Working Drawings or set forth in writing
with particularity any changes necessary to bring Tenant's Final Working
Drawings into substantial conformity with the Approved Plans or into a form
which will be acceptable to Landlord. Upon approval of Tenant's Final Working
Drawings by Landlord and Tenant, Tenant's Final Working Drawings shall be
deemed to be incorporated in and considered part of the Approved Plans,
superseding (to the extent of any inconsistencies) any inconsistent features
of the previously existing Approved Plans.
(c) COST OF IMPROVEMENTS. "COST OF IMPROVEMENT" shall mean, with
respect to any item or component for which a cost must be determined in order
to allocate such cost, or an increase in such cost, to Landlord and/or Tenant
pursuant to this Workletter, the sum of the following (unless otherwise
agreed in writing by Landlord and Tenant with respect to any
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specific item or component or any category of items or components): (i) all
sums paid to contractors or subcontractors for labor and materials furnished
in connection with construction of such item or component; (ii) all costs,
expenses, payments, fees and charges (other than penalties) paid or incurred
to or at the direction of any city, county or other governmental or
quasi-governmental authority or agency which are required to be paid in order
to obtain all necessary governmental permits, licenses, inspections and
approvals relating to construction of such item or component;
(iii) engineering and architectural fees for services rendered in connection
with the design and construction of such item or component (including, but
not limited to, the applicable Architect for such item or component and an
electrical engineer, mechanical engineer and civil engineer); (iv) sales and
use taxes; (v) testing and inspection costs; (vi) the cost of power, water
and other utility facilities and the cost of collection and removal of debris
required in connection with construction of such item or component; and (vii)
all other "hard" costs incurred in the construction of such item or component
in accordance with the Approved Plans and this Workletter. Cost of
Improvement shall not include any project management fee relating to the
construction of such item or component.
(d) CONSTRUCTION OF LANDLORD'S WORK. Promptly. following approval of
Landlord's Final Working Drawings, Landlord shall apply for and use
reasonable efforts to obtain the necessary permits and approvals to allow
construction of all Improvements constituting Landlord's Work. Upon receipt
of such permits and approvals, Landlord shall, at Landlord's sole expense
(except as otherwise provided in the Lease or in this Workletter), diligently
construct and complete the Improvements constituting Landlord's Work
substantially in accordance with the Approved Plans, subject to Unavoidable
Delays and Tenant Delays (if any). Such construction shall be performed in a
neat and workmanlike manner and shall conform to all applicable governmental
codes, laws and regulations in force at the time such work is completed.
Landlord shall have the right, in its sole discretion, to decide whether and
to what extent to use union labor on or in connection with Landlord's Work
and shall use the General Contractor specified in Paragraph l(h) to construct
all Improvements constituting Landlord's Work.
(e) CHANGES.
(i) If Landlord determines at any time that changes in Landlord's
Final Working Drawings or in any other aspect of the Approved Plans relating
to any item of Landlord's Work are required as a result of applicable law or
governmental requirements, or at the insistence of any other third party
whose approval, may be required with respect to the Improvements, or as a
result of unanticipated conditions encountered in the course of construction,
then Landlord shall promptly (A) advise Tenant of such circumstances and (B)
cause revised Approved Plans and/or Landlord's Final Working Drawings, as
applicable, reflecting such changes to be prepared by Architect and, to the
extent such changes relate to items other than the Building Shell or Site
Improvements, submitted to Tenant for approval in accordance with the
procedure contemplated in Paragraph 2(a) hereof. Upon final approval of
revised drawings by Landlord and Tenant (if applicable), Landlord's Final
Working Drawings and/or Approved Plans shall be deemed to be modified
accordingly.
(ii) If Tenant at any time desires any changes, alterations or
additions to the Approved Plans or Landlord's Final Working Drawings with
respect to any of Landlord's Work, Tenant shall submit a detailed written
request to Landlord specifying such changes, alterations or additions (a
"CHANGE ORDER"). Upon receipt of any such request, Landlord shall promptly
notify Tenant of (A) whether the matters proposed in the Change Order are
approved by Landlord (which approval shall not be unreasonably withheld), (B)
Landlord's estimate of the number of days of delay, if any, which shall be
caused by such Change Order if implemented (including, without limitation,
delays due to the need to obtain any revised plans or drawings and any
governmental approvals), and (C) Landlord's estimate of the increase, if any,
which shall occur in the Cost of Improvement for the items or components
affected by such Change Order if such Change Order is implemented (including,
but not limited to, any costs of compliance with laws or governmental
regulations that become applicable because of the requested Change Order). If
Tenant notifies Landlord in writing, within five (5) business days after
receipt of such notice from Landlord, of Tenant's approval of the Change
Order (including
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the estimated delays and cost increases, if any, described in Landlord's
notice), then Landlord shall cause Such Change Order to be implemented and
Tenant shall be responsible for all costs or cost increases resulting from or
attributable to the Change Order, subject to the provisions of Paragraph 4
hereof. If Tenant fails to notify Landlord in writing of Tenant's approval of
such Change Order within said five (5) business day period, then such Change
Order shall be deemed to be withdrawn and shall be of no further effect.
3. COMPLETION.
(a) When Landlord receives written certification from Architect that
construction of the foundation, structural slab on grade, underslab plumbing
work, structural steel framework, decking and concrete on second floor, roof
structure and installation of main fire sprinkler lines in the Building have
been completed in accordance with the Approved Plans, Landlord shall prepare
and deliver to Tenant a certificate signed by both Landlord and Architect
(the "STRUCTURAL COMPLETION CERTIFICATE") certifying that the construction of
such portions of the Building has been substantially completed in accordance
with the Approved Plans in all material respects and specifying the date of
that completion. The delivery of such Structural Completion Certificate shall
commence the running of the 6-month time period until the Rent Commencement
Date under Section 2.1 of the Lease.
(b) When Landlord receives written certification from Architect that
construction of the remaining Improvements constituting Landlord's Work has
been completed in accordance with the Approved Plans (except for Punch List
Work), Landlord shall prepare and deliver to Tenant a certificate signed by
both Landlord and Architect (the "FINAL COMPLETION CERTIFICATE") certifying
that the construction of the remaining Improvements constituting Landlord's
Work has been substantially completed in accordance with the Approved Plans
in all material respects, subject only to completion of Punch List Work, and
specifying the date of that completion. Upon receipt by Tenant of the Final
Completion Certificate, the Improvements constituting Landlord's Work will be
deemed delivered to Tenant for all purposes of the Lease (subject to
Landlord's continuing obligations with respect to the Punch List Work).
(c) Notwithstanding any other provisions of this Workletter or of the
Lease, if Landlord is delayed in substantially completing any of Landlord's
Work necessary for issuance of the Structural Completion Certificate as a
result of any Tenant Delay, then the 6-month period between the delivery of
the Structural Completion Certificate and the Rent Commencement Date pursuant
to Section 2.1 of the Lease shall be reduced, day for day, by the number of
days by which such Tenant Delay delayed completion of the portions of
Landlord's Work necessary for issuance of the Structural Completion
Certificate, and Tenant shall reimburse Landlord in cash, within fifteen (15)
days after written demand by Landlord (accompanied by reasonable
documentation of the items claimed), for any increased construction-related
costs and expenses incurred by Landlord as a result of the Tenant Delay.
(d) At any time within thirty (30) days after delivery of the
Structural Completion Certificate or the Final Completion Certificate, as
applicable, Tenant shall be entitled to submit one or more lists to Landlord
specifying Punch List Work to be performed on the applicable Improvements
constituting Landlord's Work, and upon receipt of such list(s), Landlord
shall diligently complete such Punch List Work at Landlord's sole expense. In
the event of any dispute as to completion of any item or component of
Landlord's Work, the certificate of the applicable Architect shall be
conclusive. Promptly after Landlord provides Tenant with the Final Completion
Certificate, Landlord shall cause the recordation of a Notice of Completion
(as defined in Section 3093 of the California Civil Code) with respect to
Landlord's Work.
4. PAYMENT OF COSTS.
(a) LANDLORD'S WORK. Except as otherwise expressly provided in this
Workletter (including, but not limited to, the cost allocations set forth in
SCHEDULE C-2 attached hereto) or by mutual written agreement of Landlord and
Tenant, the cost of construction of Landlord's Work shall be borne by
Landlord at its sole cost and expense, including any costs or cost increases
incurred as a result of Unavoidable Delays, governmental requirements or
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unanticipated conditions; PROVIDED, however, that notwithstanding any other
provisions of this Paragraph 4(a), to the extent the Cost of Improvement
relating to the construction of any item or component of Landlord's Work is
increased as a result of any permitted Change Order or any Tenant Delay, or
as a result of any "above standard" Building Shell components requested by
Tenant or otherwise necessitated by Tenant's particular use requirements or
by the contemplated Tenant's Work, or as a result of any other plan changes
or compliance costs attributable to Tenant's particular use requirements or
to the contemplated Tenant's Work, the amount of the increase in the Cost of
Improvement with respect to such item or component shall be reimbursed by
Tenant to Landlord in cash or, by mutual agreement of Landlord and Tenant,
may be deducted from Landlord's maximum obligation under Paragraph 4(b) with
respect to the cost of Tenant's Work.
(b) TENANT'S WORK. Except as otherwise expressly provided in this
Workletter (including, but not limited to, the cost allocations set forth in
SCHEDULE C-2 attached hereto) or by mutual written agreement of Landlord and
Tenant, the cost of construction of the Tenant Improvements shall be borne
eighty percent (80%) by Landlord and twenty percent (20%) by Tenant, up to a
maximum Landlord's obligation of $115.00 per square foot of space in the
Building (measured in accordance with Section 3.l(d) of the Lease), equating
to a total Cost of Improvements for the Tenant Improvements of $143.75 per
square foot. Tenant shall be responsible, at its sole cost and expense, for
payment of twenty percent (20%) of the first $143.75 per square foot of the
Cost of Improvements of the Tenant Improvements, for the entire Cost of
Improvements of the Tenant Improvements in excess of $143.75 per square foot
(if any such excess occurs) and for the entire cost of any Tenant's Work that
is not part of the Tenant Improvements, including (but not limited to), in
each case, any costs or cost increases incurred as a result of Unavoidable
Delays, governmental requirements or unanticipated conditions. The rental
schedule set forth in Section 3.1(a) of the Lease is NOT subject to
adjustment based on the Cost of Improvements of the Tenant Improvements,
regardless of whether the final Cost of Improvements for the Tenant
Improvements uses the entire tenant improvement allowance of $115.00 per
square foot that Landlord has agreed to make available as set forth above or
is less than that amount. The timing, conditions and other procedures for
payment or disbursement of Landlord's share of the cost of the Tenant
Improvements (up to the maximum amount specified above) shall be subject to
mutual agreement of Landlord, Tenant and Landlord's lender (if any). To the
extent the Cost of Improvement with respect to the Tenant Improvements
exceeds $143.75 per square foot (reduced by 125% of any amounts deducted
from Landlord's maximum payment obligation as a result of the final sentence
of Paragraph 4(a) hereof), whether as a result of Change Orders, Tenant
Delays and/or Unavoidable Delays or otherwise, the amount of such excess
shall in all events be Tenant's sole responsibility and expense.
5. TENANT'S WORK. On or before the applicable Work Deadline (subject to
Landlord Delays and Unavoidable Delays, if any), Tenant shall construct and
install in the Building the Tenant's Work, substantially in accordance with
the Approved Plans or, with respect to Tenant's Work not shown on the
Approved Plans, substantially in accordance with plans and specifications
prepared by Tenant and approved in writing by Landlord (which approval shall
not be unreasonably withheld or delayed). Tenant's Work shall be performed in
accordance with, and shall in all respects be subject to, the terms and
conditions of the Lease (to the extent not inconsistent with this
Workletter), and shall also be subject to the following conditions:
(a) CONTRACTOR REQUIREMENTS. The contractor engaged by Tenant for
Tenant's Work, and any subcontractors, shall be duly licensed in California
and shall be subject to Landlord's prior written approval, which approval
shall not be unreasonably withheld or delayed. Tenant shall engage only union
contractors for the construction of Tenant's Work and for the installation of
Tenant's fixtures and equipment in the Building, and shall require all such
contractors engaged by Tenant, and all of their subcontractors, to use only
union labor on or in connection with such work, except to the extent Landlord
determines, in its reasonable discretion, that the use of non-union labor
would not create a material risk of labor disputes, picketing or work
interruptions at the Site, in which event Landlord shall, to that extent,
waive such union labor requirement.
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(b) COSTS AND EXPENSES OF TENANT'S WORK. Subject to Landlord's payment
or reimbursement obligations under Paragraph 4(b) hereof with respect to
Landlord's share of the Cost of Improvements for the Tenant Improvements,
Tenant shall promptly pay all costs and expenses arising out of the
performance of Tenant's Work (including the costs of permits) and shall
furnish Landlord with evidence of payment on request. Tenant shall provide
Landlord with ten (10) days' prior written notice before commencing any
Tenant's Work. On completion of Tenant's Work, Tenant shall deliver to
Landlord a release and waiver of lien executed by each contractor,
subcontractor and materialman involved in the performance of Tenant's Work.
(c) INDEMNIFICATION. Tenant shall indemnify, defend (with counsel
satisfactory to Landlord) and hold Landlord harmless from all suits, claims,
actions, losses, costs and expenses (including, but not limited to, claims
for workers' compensation, attorneys' fees and costs) based on personal
injury or property damage or contract claims (including, but not limited to,
claims for breach of warranty) arising from the performance of Tenant's Work.
Tenant shall repair or replace or, at Landlord's election, reimburse Landlord
for the cost of repairing or replacing) any portion of the Improvements
and/or any of Landlord's real or personal property or equipment that is
damaged, lost or destroyed in the course of or in connection with the
performance of Tenant's Work.
(d) INSURANCE. Tenant's contractors shall obtain and provide to
Landlord certificates evidencing workers' compensation, public liability and
property damage insurance in amounts and forms and with companies
satisfactory to Landlord.
(e) RULES AND REGULATIONS. Tenant and Tenant's contractors shall comply
with any other rules, regulations and requirements that Landlord or General
Contractor may reasonably impose with respect to the performance of Tenant's
Work. Tenant's agreement with Tenant's contractors shall require each
contractor to provide daily cleanup of the construction area to the extent
that such cleanup is necessitated by the performance of Tenant's Work.
(f) EARLY ENTRY. Landlord shall permit entry of contractors into the
Building for the purposes of performing Tenant's Work, subject to
satisfaction of the conditions set forth in the Lease. This license to enter
is expressly conditioned on the contractor(s) retained by Tenant working in
harmony with, and not interfering with, the workers, mechanics and
contractors of Landlord. If at any time the entry or work by Tenant's
contractor(s) causes any material interference with the workers, mechanics or
contractors of Landlord, permission to enter may be withdrawn by Landlord
immediately on written notice to Tenant.
(g) RISK OF LOSS. All materials, work, installations and decorations of
any nature brought onto or installed in the Building, by or at the direction
of Tenant or in connection with the performance of Tenant's Work, before the
commencement of the Term shall be at Tenant's risk, and neither Landlord nor
any party acting on Landlord's behalf shall be responsible for any damage,
loss or destruction thereof.
(h) CONDITION OF TENANT'S WORK. All work performed by Tenant shall be
performed in a good and workmanlike manner, shall be free from defects in
design, materials and workmanship, and shall be completed in compliance with
the plans approved by Landlord for such Tenant's Work in all material
respects and in compliance with all applicable governmental laws, ordinances,
codes and regulations in force at the time such work is completed.
6. NO AGENCY. Nothing contained in this Workletter shall make or constitute
Tenant as the agent of Landlord.
7. SURVIVAL. Without limiting survival provisions which would otherwise be
implied or construed under applicable law, the provisions of Paragraph 5(c)
of this Workletter shall survive the termination of the Lease with respect to
matters occurring prior to expiration of the Lease.
8. MISCELLANEOUS. All references in this Workletter to a number of days shall
be construed to refer to calendar days, unless otherwise specified herein. In
all instances where Tenant's approval is required, if no written notice of
disapproval is given within the applicable time
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period, at the end of that period Tenant shall be deemed to have given
approval and the next succeeding time period shall commence. If any item
requiring approval is disapproved by Tenant in a timely manner, the procedure
for preparation of that item and approval shall be repeated.
IN WITNESS WHEREOF, the parties have executed this Workletter
concurrently with and as of the date of the Lease.
"Landlord" "Tenant"
BRITANNIA POINTE GRAND LIMITED RIGEL, INC., a Delaware corporation
PARTNERSHIP, a Delaware limited
partnership
By: BRITANNIA POINTE GRAND, By: /s/ James M. Gower
LLC, a California limited liability -------------------------
company, General Partner James M. Gower
Its: CEO
-------------------------
By: /s/ T. J. Bristow
------------------------- By: /s/ Brian C. Cunningham
T. J. Bristow -------------------------
Its Manager, President and Its: Secretary
Chief Financial Officer -------------------------
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EXHIBIT E
ACKNOWLEDGEMENT OF RENT COMMENCEMENT DATE
This Acknowledgement is executed as of _______,1999, by BRITANNIA POINTE
GRAND LIMITED PARTNERSHIP a Delaware limited partnership ("LANDLORD"), and
RIGEL, INC., a Delaware corporation ("TENANT"), pursuant to Section 2.4 of
the Build-to-Suit Lease dated June 2, 1998 between Landlord and Tenant (the
"LEASE") covering premises located at ___________, South San Francisco, CA
94080 (the "PROPERTY")
Landlord and Tenant hereby acknowledge and agree as follows:
1. The Rent Commencement Date under the Lease is ___________, 1999.
2. The termination date under the Lease shall be ______ 2016, subject
to any applicable provisions of the Lease for extension or early termination
thereof.
3. The square footage of the Building, as finally designed and built,
measured in accordance with Section 3.1(d) of the Lease, is ________ square
feet.
4. Tenant accepts the Building and acknowledges the satisfactory
completion of all Improvements therein required to be made by Landlord,
subject only to (a) any applicable "punch list" or similar procedures
specifically provided under the Lease or under the Workletter governing such
work, and (b) Landlord's warranties and representations set forth in Section
5.2 of the Lease.
EXECUTED as of the date set forth above.
"Landlord" "Tenant"
BRITANNIA POINTE GRAND LIMITED RIGEL, INC., a Delaware corporation
PARTNERSHIP, a Delaware limited
partnership
By: BRITANNIA POINTE GRAND, By:
LLC, a California limited liability ------------------------
company, General Partner James M. Gower
Its: CEO
By: ------------------------
----------------------------- By:
T. J. Bristow -------------------------
Its Manager, President and Its:
Chief Financial Officer -----------------------