LEASE
(Parcel 3: 9865 Towne Centre Drive, San Diego,
California)
BMR-9885 TOWNE CENTRE DRIVE
LLC ,
a Delaware limited liability company
ILLUMINA, INC.,
a Delaware corporation
LEASE
(Parcel 3: 9865 Towne Centre Drive, San Diego,
California)
THIS LEASE (this
“ Lease ”) is entered into as of this 26
th day of January, 2007 (the “ Execution
Date ”), by and between BMR-9885 Towne Centre Drive LLC,
a Delaware limited liability company (“ Landlord
”), and Illumina, Inc., a Delaware corporation (“
Tenant ”).
A. WHEREAS,
Landlord is the owner of three (3) parcels of real property
located in the City of San Diego, County of San Diego, State of
California, legally described as Parcels 1, 2 and 3 of Parcel Map
18286 filed with the San Diego County Recorder on June 21,
1999 (together with any easements and appurtenances thereto, the
“ Initial Illumina Lease Land ”). The Original
Illumina Lease Land consists of approximately 10.781 gross acres
and is improved with two (2) buildings and an atrium on Parcels 1
and 2 (the “ Existing Parcel 1 and Parcel 2 Buildings
”) and one (1) building on Parcel 3 (the “
Diversified Building ” and, collectively with the
Existing Parcel 1 and Parcel 2 Buildings, the “ Original
Illumina Lease Buildings ”) consisting of 115,870 square
feet of space and commonly known as 9855 through 9885 (and
consecutive addresses), Towne Centre Drive, San Diego, California.
The Original Illumina Lease Land and the Original Illumina Lease
Buildings are shown on the site plan attached hereto as
Exhibit A and made a part of this Lease. The Original
Illumina Lease Land and the Original Illumina Lease Buildings are
collectively referred to as the “ Original Illumina Lease
Premises .”
B. WHEREAS,
On July 6, 2000, Landlord (as successor in interest to Tenant)
and Diversified Eastgate Pointe, LLC, a California limited
liability company (as successor in interest to Matsix Investments,
Inc., “ Diversified ”), entered into that
certain Eastgate Pointe Building “D” Lease (the “
Diversified Lease ”), pursuant to which Diversified
leases approximately 6,600 rentable square feet of space located in
the Diversified Building (the “ Diversified Space
”);
C. WHEREAS,
On August 18, 2004, Tenant and Landlord entered into that
certain Single Tenant Lease (the “ Original Illumina
Lease ”), pursuant to which Landlord leases the Original
Illumina Lease Premises to Tenant;
D. WHEREAS,
Concurrently herewith, Landlord and Tenant are amending and
restating the Original Illumina Lease (such amended and restated
lease, the “ Illumina Lease ”) to, among other
things, (i) exclude the Parcel 3 Land (including the
Diversified Building) from the “Premises” covered by
the Illumina Lease; (ii) eliminate Tenant’s right of
first refusal to lease space in the Building (as defined below);
(iii) eliminate the development fee; and (iv) extend the
term of the Original Illumina Lease to be co-terminous with the
term of this Lease;
E. WHEREAS,
Landlord intends to construct an additional building totaling
approximately 83,866 rentable square feet on the Property (the
“ Expansion Building ” and, together with the
Diversified Building, the “ Buildings
”);
F. WHEREAS,
Landlord may subdivide (the “ Subdivision ”)
Parcel 3 so that it will consist of two lots that may be legally
conveyed in accordance with California’s Subdivision Map Act
as follows: (a) the portion of Parcel 3 on which the Expansion
Building is located, and to be more particularly defined by
Landlord in connection with the Subdivision (the “
Subdivided Property ”), and (b) the portion of
Parcel 3 excluding the Subdivided Property. The term “
Property ” shall mean Parcel 3, together with all
landscaping, parking facilities and other improvements and
appurtenances related thereto, including the Buildings, the Common
Areas, the Premises (as defined below) and the Diversified Space;
and
G. WHEREAS,
Landlord wishes to lease to Tenant, and Tenant desires to lease
from Landlord, the Premises (as defined below) pursuant to the
terms and conditions of this Lease, as detailed below.
NOW, THEREFORE,
Landlord and Tenant, in consideration of the mutual promises
contained herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and
intending to be legally bound, agree as follows:
1.1. Effective on
the Execution Date, Landlord hereby leases to Tenant, and Tenant
hereby leases from Landlord, (a)approximately 4,400 rentable square
feet of space located in the Diversified Building (the “
Diversified Building Premises ”), and (b) upon
the satisfaction of the conditions set forth in this
Section 1.1 , the interior portion of the Expansion
Building described below (the “ Expansion Premises
” and, together with the Diversified Building Premises, the
“ Premises ”): (a) from and after the Phase
1 Commencement Date (as defined below), 40,866 rentable square feet
located in the Expansion Building (the “ Phase 1
Premises ”), (b) from and after the Phase 2
Commencement Date (as defined below), 21,500 rentable square feet
located in the Expansion Building (the “ Phase 2
Premises ”), and (c) from and after the Phase 3
Commencement Date (as defined below), the remainder of the interior
space located in the Expansion Building (including all elevator
shafts and stairwells) (the “ Phase 3 Premises
”), subject to and with the benefit of the terms, covenants,
conditions and provisions of this Lease. The term “
Phase ” shall mean and refer to each of the Phase 1
Premises, the Phase 2 Premises and the Phase 3 Premises. On or
before Substantial Completion of the Landlord’s Construction
Work (as defined below), Tenant and Landlord shall mutually agree
to: (1) the location of the Phase 1 Premises, and shall attach
a diagram of its location to this Lease as Exhibit C ;
(2) the location of the Phase 2 Premises, and shall attach a
diagram of its location to this Lease as Exhibit D ;
and (3) the location of the Phase 2 Premises, and shall attach
a diagram of its location to this Lease as Exhibit E.
In the event the parties are unable to agree on the location of
each of the Phase 1 Premises, the Phase 2 Premises and the Phase 3
Premises by the Substantial Completion of the Landlord’s
Construction Work, Landlord shall reasonably designate the location
of each of the Phase 1 Premises and the Phase 2 Premises, and shall
attach: (x) a diagram of the location of the Phase 1 Premises
to this Lease as Exhibit C , (y) a diagram of the
location of the Phase 2 Premises to this Lease as
Exhibit D , and (z) a diagram of the location of
the Phase 3 Premises to this Lease as Exhibit E
.
1.2. Tenant shall
have, as appurtenant to the Premises, the exclusive right of
tenants of the Buildings (including any assignees, sublessee and
assigns) to use, and permit its invitees to use in common with
Landlord and others, the elevators, walkways, access roads, and
driveways necessary for access to the Premises and the parking
areas, loading areas, pedestrian sidewalks, landscaped areas, trash
enclosures, recreation areas and other areas and facilities, if
any, which are located on the Property (the “ Common
Areas ”). Tenant’s use of the Common Areas shall at
all times be in compliance with all Applicable Laws and shall be
consistent with and in connection with Tenant’s Permitted Use
as set forth in Section 2.8 . Tenant shall use the
Common Areas only in such a manner as will not interfere with the
use of, and access to, the Diversified Space and the parking spaces
to be provided to the occupants thereof under the Diversified
Lease.
1.3. This Lease
and all rights and remedies of Tenant hereunder are subject and
subordinate to Section 2(e) (Common Areas),
Section 2(j) (Parking), Section 2(k)
(Premises), Section 9 (Services and Utilities),
Article 30 (Quiet Enjoyment) and Article 32
(Signage & Sign Control) of the Diversified Lease.
2. Basic
Lease Provisions . For convenience of the parties, certain
basic provisions of this Lease are set forth herein. The provisions
set forth herein are subject to the remaining terms and conditions
of this Lease and are to be interpreted in light of such remaining
terms and conditions.
2.1.
Binding . This Lease shall take effect upon the Execution
Date and, except as specifically otherwise provided within this
Lease, each of the provisions hereof shall be binding upon and
inure to the benefit of Landlord and Tenant from the Execution
Date.
2.2. Rentable
Areas of the Premises . The term “ Rentable Area
” of (i) the Diversified Building Premises shall be
deemed to be 4,400 square feet; (ii) the Phase 1 Premises
shall be deemed to be 40,866 square feet, (iii) the Phase 2
Premises shall be deemed to be 21,500 square feet, (iv) the
Phase 3 Premises shall be deemed to be 21,500 square feet, and
(v) the Expansion Premises shall be deemed to be 83,866 square
feet, even if it is determined upon final measurement of the
Diversified Building Premises, such Phase or the Expansion Premises
that the Rentable Area of the Diversified Building Premises, such
Phase or the Expansion Premises is smaller or larger than the
amount set forth in this Section 2.2 .
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2.3.1
Diversified Building Premises . Initial monthly and annual
installment of Basic Annual Rent for the Diversified Building
Premises (the “ Diversified Building Premises Basic Annual
Rent ”) as of the Execution Date is set forth on
Schedule 1 attached hereto.
2.3.2
Expansion Premises . Initial monthly and annual installments
of Basic Annual Rent for the Expansion Premises (the “
Expansion Premises Basic Annual Rent ” and, together
with the Diversified Building Premises Basic Annual Rent, the
“ Basic Annual Rent ”) as of the Phase 1
Commencement Date, subject to adjustment in accordance with
Section 6.1 , shall be as follows:
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Per Rentable
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S.F. of
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Rentable S.F. of
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Phase 1
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Total
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Phase 1 Premises
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Premises
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Total Annual
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Monthly
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40,866
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$
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2.80
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$
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1,373,097.60
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$
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114,424.80
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2.4. Estimated
Delivery Dates . The Estimated Delivery Dates for each Phase of
the Premises are as follows:
2.4.1
Phase 1 Estimated Delivery Date . October 1,
2008.
2.4.2
Phase 2 Estimated Delivery Date . Twelve (12) months
after the Phase 1 Commencement Date.
2.4.3
Phase 3 Estimated Delivery Date . Twelve (12) months
after the Phase 2 Commencement Date.
2.5.
Commencement Date : Subject to Section 5.2 , the
Commencement Date shall be determined as follows:
2.5.1
Diversified Building Premises Commencement Date : The
Execution Date;
2.5.2
Phase 1 Commencement Date : Thirty (30) days after the
later of: (a) the Phase 1 Estimated Delivery Date, or
(b) Substantial Completion of Landlord’s Construction
Work and the Tenant Improvements (each as defined
below);
2.5.3
Phase 2 Commencement Date : Thirty (30) days after the
earlier of: (a) the Phase 2 Estimated Delivery Date, or
(b) the date Tenant actually occupies any portion of the Phase
2 Premises to conduct business therein (including storage);
and
2.5.4
Phase 3 Commencement Date : Thirty (30) days after the
earlier of: (a) the Phase 3 Estimated Delivery Date, or
(b) the date Tenant actually occupies any portion of the Phase
3 Premises to conduct business therein (including
storage).
2.6. Expiration
Date : Fifteen (15) years from the Phase 1 Commencement
Date; provided , however , Tenant shall have the
option to extend this Lease as provided in Article 42
.
2.7. Security
Deposit : An amount equal to $40,836.75, which amount shall be
increased accordingly as occupancy of the Expansion Building by
Tenant is increased as provided in Article 10
.
2.8. Permitted
Use : (a) Laboratory research, administration,
pharmaceutical, diagnostic, office, manufacturing and related
health care and research uses in conformity with Applicable Laws
(as defined below); and (b) such other legally permitted uses
as are approved by Landlord, which approval shall not be
unreasonably withheld or delayed.
2.9. Address
for Rent Payment :
BMR-9885 Towne
Centre Drive LLC
Unit E
P.O. Box 51918
Los Angeles, CA 90051-6218
3
2.10. Address
for Notices to Landlord :
BMR-9885 Towne
Centre Drive LLC
17140 Bernardo Center Drive, Suite 222
San Diego, California 92128
Attn: General Counsel/Real Estate
2.11. Address
for Notices to Tenant :
Illumina,
Inc.
9885 Towne Centre Drive
San Diego, CA 92121
Attn: Christian Henry
2.12. The
following Exhibits are attached hereto and incorporated herein by
reference:
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Original
Illumina Lease Premises
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Intentionally
Omitted
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Phase 1
Premises
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Phase 2
Premises
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Phase 3
Premises
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Acknowledgement
of Commencement Date and Expiration Date
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Tenant’s
Personal Property
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Rules and
Regulations
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Form of
Estoppel Certificate
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Work
Letter
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Form of Letter
of Credit
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Reciprocal
Easement Agreement
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Form of
Subordination, Non-Disturbance and Attornment Agreement
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Diversified
Building Premises Rent Schedule
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3. Term
. The actual term of this Lease (the “ Term ”)
shall be the period from the Execution Date through the Expiration
Date, subject to earlier termination of this Lease as provided
herein.
4.
Landlord’s Construction Work and Tenant Improvements
.
4.1. Shell and
Core Construction of Expansion Building .
4.1.1
Commencement of Landlord’s Construction Work . On or
before June 1, 2007, Landlord shall, at Landlord’s sole
cost and expense, cause Landlord’s contractor, Reno
Contracting or such replacement thereof as Landlord may make from
time to time with Tenant’s approval, which approval shall not
be unreasonably withheld or delayed (“ Contractor
”), to commence and thereafter diligently prosecute the
construction of the shell and core of the Expansion Building to
completion pursuant to the Approved CW Plans (as defined in the
Work Letter), subject only to CW Permitted Changes (as defined in
the Work Letter), (all such construction, collectively, “
Landlord’s Construction Work ”).
Landlord’s Construction Work shall be performed in a
workmanlike manner, and in compliance with all Applicable Laws. The
commencement and completion of Landlord’s Construction Work
shall be subject to delays resulting from acts of Tenants, acts of
God; acts of terrorism; adverse weather conditions; war; invasion;
insurrection; acts of a public enemy; terrorism; riot; mob
violence; civil commotion; sabotage; labor disputes; general
shortage of labor, materials, facilities, equipment or supplies on
the open market; delay in transportation; delays caused by new, or
changes to existing, laws, rules, regulations or orders of any
Governmental Authority; moratorium or other governmental action;
inability to obtain permits or approvals, including, without
limitation, city and public utility approvals beyond the time
periods that generally prevail for obtaining such permits and
approvals; the acts or inaction of the contractor and
subcontractors, if any; or any other cause beyond the reasonable
control of Landlord, financial ability excepted, whether similar or
dissimilar to the foregoing (collectively, “ Force
Majeure ”).
4
4.1.2
Completion of Construction . Landlord’s Construction
Work shall be deemed “ Substantially Complete ”
or there shall be “ Substantial Completion ” if
Landlord has (a) completed all of Landlord’s
Construction Work identified on the Approved CW Plans (subject only
to such incomplete or defective work as will not materially or
adversely impact Tenant’s continuous and uninterrupted use of
the Expansion Premises for its Permitted Use (collectively, the
“ Punchlist Items ”)) and (b) received a
temporary or permanent certificate of occupancy from the applicable
municipal authority(ies) and a certificate of substantial
completion from the architect.
4.1.3
Warranties . Landlord shall use commercially reasonable
efforts (but without any obligation to commence or pursue any
litigation) to cause Contractor to complete with reasonable
promptness the Punchlist Items and repair with reasonable
promptness all defects in the construction of Landlord’s
Construction Work in accordance with the Approved CW Plans as to
which Tenant notifies Landlord in writing (which notice Tenant
shall give within thirty (30) days following the Phase 1
Commencement Date). Notwithstanding the foregoing, Landlord shall
cause all Punchlist Items that reasonably can be completed within
thirty (30) days after Substantial Completion of the
Landlord’s Construction Work to be completed within thirty
(30) days after Substantial Completion of the Landlord’s
Construction Work. Except for such Punchlist Items and except for
latent defects and non-compliance of Landlord’s Construction
Work with Applicable Laws, Tenant shall, subject to the terms
hereof, be deemed to have accepted the Expansion Premises in the
condition delivered to it “As Is,” provided ,
however , except as to those items that Landlord is required
to correct pursuant to this Section, Landlord shall partially
assign to Tenant (but without prejudice to any of Landlord’s
rights of enforcement) all warranties that it has received under
the construction contract, any subcontract, or from any material
supplier. Notwithstanding the foregoing, if Tenant notifies
Landlord within the period beginning on Substantial Completion of
the Landlord’s Construction Work and continuing through the
date that is twelve (12) months thereafter (the “ CW
Warranty Period ”), of (a) latent defects in the
construction of the Landlord’s Construction Work; or
(b) non-compliance of Landlord’s Construction Work with
Applicable Laws, then as Landlord’s sole and exclusive
obligation with respect thereto, Landlord shall cause such latent
defect or non-compliance promptly to be remedied. All warranty
claims shall be barred and shall lapse unless such claim is made in
writing to Landlord, with a description of the claim made, on or
before the expiration of the CW Warranty Period.
4.2. Tenant
Improvements .
4.2.1
Tenant Improvements . Landlord shall cause the Contractor to
commence and thereafter diligently prosecute the construction of
the tenant improvements in the Expansion Building pursuant to the
Work Letter (the “ Tenant Improvements ”). The
Tenant Improvements shall be performed in a workmanlike manner and
in compliance with all Applicable Laws and substantially in
compliance with the Approved TI Plans (as defined in the Work
Letter), subject to minor deviations that do not alter the type,
scope and quality of the Tenant Improvements depicted on the
Approved TI Plans. The portion of the TI Costs for which Landlord
is responsible (the “ TI Allowance ”) shall not
exceed (subject to the terms hereof) the TI Allowance Amount (as
defined below). “TI Costs” means all Tenant Delay Costs
(as defined below) and costs of the Tenant Improvements (the
“ TI Costs ”), including the costs of
(i) construction, (ii) construction management by
Landlord (which costs shall be stipulated to equal one and one-half
percent (1.5%) of the cost of the Tenant Improvements, including
the Excess Cost (as defined below)) (the “ Construction
Management Fee ”), (iii) space planning, architect,
engineering and other related services, (iv) costs and
expenses for labor, material, equipment and fixtures, and (v)
building permits and other taxes, fees, charges and levies by
governmental and quasi-governmental agencies for permits or for
inspections of the Tenant Improvements. Notwithstanding the
foregoing, in no event shall the TI Allowance be used for:
(w) the purchase of any furniture, personal property or other
non-building system equipment, (x) the cost of work that is
not authorized by the Approved TI Plans (subject to any TI Change)
or otherwise approved in writing by Landlord, (y) costs resulting
from any default by Tenant of its obligations under this Lease, or
(z) costs that are recoverable or reasonably recoverable by
Tenant from a third party (e.g., insurers, warrantors or
tortfeasors). The “ TI Allowance Amount ” shall
be Forty-Seven and 15/100 Dollars ($47.15) per rentable square foot
of the Expansion Building, plus the amount of any Additional
Allowance that Tenant elects to use to pay the cost of the Tenant
Improvements.
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4.2.2
In the event the estimated total TI Costs (the “ Estimated
TI Costs ”) exceeds the TI Allowance Amount, Tenant shall
pay such overage, as reasonably estimated by Landlord from time to
time (the “ Excess Cost ”), as the work
progresses as follows: on or before the tenth (10
th ) day of each month, Landlord shall deliver to
Tenant an application for reimbursement, accompanied by reasonable
documentary evidence of the construction costs of such Tenant
Improvements incurred since the last application for reimbursement.
On or before the tenth (10 th )
day following delivery of such application for reimbursement,
Tenant shall pay to Landlord an amount that (when added to any
prior reimbursements of Excess Costs by Tenant) will equal
(a) a fraction, the numerator of which is the amount of TI
Costs incurred prior to the date of the application for
reimbursement, and the denominator of which is the Estimated TI
Costs, times (b) the Excess Cost (the “ Tenant
Reimbursement ”). In the event the TI Allowance and the
estimated Excess Cost are not sufficient to cover the actual TI
Costs, including all approved change orders, Landlord shall adjust
the Excess Cost accordingly.
4.2.3
Architects and Consultants . The architect, engineering
consultants, design team, general contractor and subcontractors
responsible for the construction of the Tenant Improvements shall
be selected pursuant to the procedures set forth in the Work
Letter. Subject to the terms of the Work Letter, Tenant hereby
approves of Ferguson Pape Baldwin Architects as Landlord’s
architect and Reno Contracting as Landlord’s general
contractor.
4.2.4
Completion of Tenant Improvements . The Tenant Improvements
shall be deemed “ Substantially Complete ” or
there shall be “Substantial Completion” if
(i) Landlord has completed, in compliance with all Applicable
Laws, all of the Tenant Improvements identified on and
substantially in accordance with the Approved TI Plans (subject
only to the Punchlist Items and minor deviations that do not alter
the type, scope and quality of the Tenant Improvements depicted on
the Approved TI Plans) and Tenant is provided with continuous and
uninterrupted use of the applicable portion of the Expansion
Premises and the Expansion Building for Tenant’s Permitted
Use (including Tenant’s parking), except to the extent
reasonably necessary for Landlord’s Contractor to complete
the Punchlist Items in accordance with Section 4.1.2 ,
and (ii) Landlord has obtained a certificate of occupancy or
temporary certificate of occupancy (or its equivalent) allowing
Tenant to legally occupy the Expansion Premises.
4.2.5
Warranties . Landlord shall use commercially reasonable
efforts (but without obligation to commence or pursue any
litigation) to cause Contractor to complete with reasonable
promptness the Punchlist Items and repair with reasonable
promptness all defects in the construction of the Tenant
Improvements in accordance with the Work Letter as to which Tenant
notifies Landlord in writing (which notice Tenant shall give within
thirty (30) days following the Phase 1 Commencement Date).
Notwithstanding the foregoing, Landlord shall cause all Punchlist
Items that reasonably can be completed within sixty (60) days
after Substantial Completion of the Tenant Improvements to be
completed within sixty (60) days after Substantial Completion
of the Tenant Improvements. Except for such Punchlist Items and
except for latent defects and non-compliance of Tenant Improvements
with Applicable Laws, Tenant shall, subject to the terms hereof, be
deemed to have accepted the Expansion Premises in the condition
delivered to it “As Is,” provided ,
however , except as to those items that Landlord is required
to correct pursuant to this Section, Landlord shall partially
assign to Tenant (but without prejudice to any of Landlord’s
rights of enforcement) all warranties that it has received under
the construction contract, any subcontract, or from any material
supplier. Notwithstanding the foregoing, if Tenant notifies
Landlord within the period beginning on Substantial Completion of
the Tenant Improvements and continuing through the date that is
twelve (12) months thereafter (the “ TI Warranty
Period ”), of (a) latent defects in the construction
of the Tenant Improvements; or (b) non-compliance of Tenant
Improvements with Applicable Laws, then as Landlord’s sole
and exclusive obligation with respect thereto, Landlord shall cause
such latent defects or non-compliance promptly to be remedied. All
warranty claims shall be barred and shall lapse unless such claim
is made in writing to Landlord, with a description of the claim
made, on or before the expiration of the TI Warranty
Period.
4.3. Additional
Allowance . Landlord shall, at Tenant’s request, provide
an additional tenant improvement allowance not to exceed
Thirty-Five Dollars ($35.00) per rentable square foot of the
Expansion Premises (the “ Additional Allowance
”), which amount may be used by Tenant to increase the scope
of Landlord’s Construction Work or the Tenant Improvements
pursuant to the terms and conditions contained in the Work Letter
and/or pay for any other costs payable by Tenant pursuant to the
Work Letter. In the event Tenant elects to use all or
any
6
portion of the
Additional Allowance, Tenant shall pay to Landlord, as Rent, an
amount equal to the Additional Allowance disbursed by Landlord,
together with interest thereon at the rate of nine percent (9%) per
annum. Tenant shall make payments in respect of the Additional
Allowance plus interest thereon in equal monthly installments so
that the full amount shall be paid on or before the expiration of
the initial Term. Tenant shall pay such amounts with the payment of
Basic Annual Rent for each month. If Tenant has not paid the full
amount of the Additional Allowance plus interest thereon at the
expiration or earlier termination of this Lease, then upon the
expiration or termination of this Lease, Tenant shall, within
thirty (30) days thereafter, pay the unpaid portion of such
amount to Landlord. The payments Tenant is requested to make in
respect of the Additional Allowance shall constitute
“Additional Rent.”
5.
Possession and Commencement Date .
5.1.
Tenant’s Access . So long as Tenant does not (in
Landlord’s reasonable judgment) unreasonably or unnecessarily
interfere with Landlord’s Construction Work or the Tenant
Improvements, upon reasonable prior written notice to Landlord,
Tenant may enter upon any Phase prior to the respective
Commencement Date for the purpose of, among other things,
installing improvements (including cabling) or the placement of
personal property; provided , however , that Tenant
shall furnish to Landlord evidence satisfactory to Landlord that
insurance coverages required of Tenant under the provisions of
Article 23 are in effect, and such entry shall be
subject to all the terms and conditions of this Lease other than
the payment of Rent. Tenant shall reimburse Landlord for all actual
documented incremental costs that result from such entry and
indemnify, defend and hold harmless Landlord from and against any
loss, cost, claim, lawsuit, liability or expense (including
reasonable attorneys’ fees and disbursements) arising out of
any entry and/or activities upon the Expansion Premises by Tenant
or Tenant’s Agents.
5.2. Possession
and Commencement Date .
5.2.1
Diversified Building Premises . Tenant hereby acknowledges
that immediately prior to the Diversified Building Premises
Commencement Date, Tenant occupied the Diversified Building
Premises and that Tenant is in possession of the Diversified
Building Premises, and is familiar with the condition thereof and
accepts the Diversified Building Premises in its “as
is” condition with all faults, and Landlord makes no
representation or warranty of any kind with respect the Diversified
Building Premises, and Landlord will have no obligation to improve,
alter or repair the Diversified Building Premises, except as
specifically set forth herein. Tenant acknowledges that Tenant was
the prior owner of the Diversified Building and as such is fully
aware of the current conditions of the Diversified
Building.
(a) Landlord
shall endeavor to tender possession of the Phase 1 Premises to
Tenant on or before the Phase 1 Estimated Delivery Date. If
Landlord’s Construction Work or the Tenant Improvements as
required pursuant to the terms of the Work Letter are not
Substantially Complete on or before the Phase 1 Estimated Delivery
Date for any reason whatsoever, then, except as provided below,
this Lease shall not be void or voidable, Landlord shall not be
liable to Tenant for any loss or damage resulting therefrom and the
Phase 1 Commencement Date shall not occur until Substantial
Completion of Landlord’s Construction Work and the Tenant
Improvements occurs; provided , however , if the
satisfaction of the requirements for Substantial Completion of
Landlord’s Construction Work or the Tenant Improvements have
been actually delayed by any Tenant Delay, then, subject to the
terms hereof, Substantial Completion of Landlord’s
Construction Work and the Tenant Improvements shall be deemed to
occur when (as reasonably determined by Landlord) Substantial
Completion of Landlord’s Construction Work and the Tenant
Improvements would have occurred if such Tenant Delay had not
occurred. Within thirty (30) days after Substantial Completion
of Landlord’s Construction Work and the Tenant Improvements,
Landlord’s architect shall calculate and certify in writing
to Landlord and Tenant the Rentable Area of the Phase 1 Premises in
accordance with Article 9 . “ Tenant Delay
” shall mean: (1) delays or failure of Tenant or
Tenant’s architect to deliver items in accordance with the
Work Letter attached hereto as Exhibit J ;
(2) Tenant’s failure to timely fulfill its obligations
as set forth in the Work Letter within the time periods set forth
therein; (3) delays caused by CW Tenant Change Order Requests
(as defined in the Work Letter) or TI Tenant Change Order Requests
(as defined in the Work Letter); 4) unavailability of materials,
components or finishes for the Tenant Improvements that have an
unusually long lead-time for delivery; (5) a willful or
negligent act or
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omission of
Tenant, Tenant’s Agents that interferes with the progress of
the work, (6) any delay that results from Tenant’s use
of an architect other than Ferguson Pape Baldwin Architects for
purposes of the TI Program and the Schematic TI Plans, or
(7) any other event or circumstance described as a Tenant
Delay in the Work Letter. Landlord shall not assess any day towards
a Tenant Delay for delays caused solely by Landlord’s
contractors, Landlord or any third parties or due to Force Majeure.
Notwithstanding anything above to the contrary, (i) the first
ten (10) days of Tenant Delays (if any) associated with any CW
Tenant Change Order Request or TI Tenant Change Order Request shall
not be deemed a Tenant Delay, (ii) no delay shall be
considered a Tenant Delay unless Landlord provides Tenant written
notice of such Tenant Delay, to the extent Landlord and/or
management personnel of Landlord’s contractor(s) are aware of
such Tenant Delay, and Tenant fails to cure such delay within one
(1) business day; provided that no such notice and cure period
shall be required if such delay is with respect to interference
with the Landlord’s construction activities and Landlord has
previously notified Tenant of similar Tenant Delays, (iii) no
delay shall be considered a Tenant Delay in the event Substantial
Completion of Landlord’s Construction Work and the Tenant
Improvements occurs on or before the Phase 1 Estimated Delivery
Date. Landlord and Contractor shall take commercially reasonable
actions, remedial or otherwise, to complete the Landlord’s
Construction Work and the Tenant Improvements by the Phase 1
Estimated Delivery Date notwithstanding any Tenant Delay. All
additional cost and expense payable by Landlord, if any, to
complete the Landlord’s Construction Work or the Tenant
Improvements due to Tenant Delay (“ Tenant Delay Costs
”), shall constitute TI Costs, and to the extent the TI Costs
exceed the TI Allowance Amount, Tenant shall pay such actual and
documented additional costs and expenses as “Excess
Costs” in accordance with Section 4.2.2 of this
Lease.
(b) Landlord
and Tenant shall each execute and deliver to the other a factually
correct written acknowledgment of the actual Phase 1 Commencement
Date and the Expiration Date when such is established in the form
of Exhibit F , and shall attach it to this Lease as
Exhibit F-1 . Failure to execute and deliver such
acknowledgement, however, shall not affect the Phase 1 Commencement
Date or Landlord’s or Tenant’s liability hereunder.
Failure by Tenant to obtain validation by any medical review board
or other similar governmental licensing of the Expansion Premises
required for the Permitted Use by Tenant shall not serve to extend
the Phase 1 Commencement Date.
(a) In
the event Tenant elects to occupy the Phase 2 Premises before the
Phase 2 Estimated Delivery Date, then Tenant shall deliver to
Landlord at least five (5) business days before the date
Tenant elects to occupy the Phase 2 Premises a written notice
setting forth the date Tenant intends to occupy the Phase 2
Premises (collectively, the “ Phase 2 Commencement Date
Notice ”).
(b) Landlord
shall tender possession of the Phase 2 Premises to Tenant upon the
Phase 2 Commencement Date. On the Phase 2 Commencement Date,
Landlord and Tenant shall each execute and deliver to the other a
factually correct written acknowledgement of the actual Phase 2
Commencement Date and the Expiration Date when established, in the
form Exhibit F , and shall attach it to this Lease as
Exhibit F-2 . Failure to execute and deliver such
acknowledgement, however, shall not affect the Phase 2 Commencement
Date or Tenant’s liability hereunder.
(a) In
the event Tenant elects to occupy the Phase 3 Premises (which shall
include all, and not less than all, of the remainder unoccupied
portion of the Expansion Building) before the Phase 3 Estimated
Delivery Date, Tenant shall deliver to Landlord at least five
(5) business days a written notice setting forth the date that
Tenant intends to occupy the Phase 3 Premises (collectively, the
“ Phase 3 Commencement Date Notice
”).
(b) Landlord
shall tender possession of the Phase 3 Premises to Tenant upon the
Phase 3 Commencement Date. On the Phase 3 Commencement Date,
Landlord and Tenant shall each execute and deliver to the other
factually correct written acknowledgement of the actual Phase 3
Commencement Date and the Expiration Date when established, in the
form Exhibit F , and shall attach it to this Lease as
Exhibit F-3 . Failure to execute and deliver
such
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acknowledgement, however, shall not affect the
Phase 3 Commencement Date or Tenant’s liability
hereunder.
5.2.5
Tenant’s Termination and Abatement Rights.
(a)
First Milestone Termination Right . Notwithstanding the
foregoing, in the event Landlord has not commenced the grading of
the land where the Expansion Building will be located (“
Grading Work ”) by September 1, 2007, as such
date may be equitably extended to reflect any Tenant Delay and any
Force Majeure delays (“ Outside Date Termination Date
”), then Tenant shall have the right to terminate this Lease
by notice to Landlord given no later than thirty (30) days
following such date, at which time neither party shall have any
further right or obligation hereunder (except for those terms and
provisions which expressly survive the expiration or sooner
termination of this Lease).
(b)
Second Milestone Abatement and Termination Right .
Notwithstanding the foregoing, in the event that Substantial
Completion of the Tenant Improvements has not occurred by
October 1, 2008 , as such date may be equitably
extended to reflect any Tenant Delay and any Force Majeure delays
(the “ TI Completion Outside Date ”), then
Tenant shall be entitled to one (1) day of abatement of
Expansion Premises Basic Annual Rent for the Phase 1 Premises for
every day past the applicable TI Completion Outside Date that
Substantial Completion of the Tenant Improvements has not occurred.
In the event that Substantial Completion of the Tenant Improvements
has not occurred by October 1, 2009, as such date may be
equitably extended to reflect any Tenant Delay and any Force
Majeure delays (the “ TI Completion Termination Date
”), then Tenant shall have the right to terminate this Lease
by notice to Landlord given no later than thirty (30) days
following such date, at which time neither party shall have any
further right or obligation hereunder (except for those terms and
provisions which expressly survive the expiration or sooner
termination of this Lease); provided , however , for
purposes of this Section 5.2.5(b) , in no event shall
the period of excused delay for Force Majeure exceed ninety
(90) days in the aggregate.
6.1.
Diversified Building Premises . Starting on the Execution
Date, Tenant shall pay to Landlord as Basic Annual Rent for the
Diversified Building Premises, the rent set forth on the rent
schedule attached hereto as Schedule 1 , subject to
adjustments in accordance with Article 7 . The
Diversified Building Premises Basic Annual Rent shall be paid in
equal monthly installments on or before the first day of the
applicable month.
6.2. Expansion
Premises . Starting on the Phase 1 Commencement Date, Tenant
shall pay to Landlord as Basic Annual Rent for the Expansion
Premises, the product of (a) the rate per rentable square feet
set forth in Section 2.3 (as adjusted in accordance
with Article 7 ), and (b) the rentable square feet of
the Phases that are included in the Expansion Premises from time to
time, subject to adjustment pursuant to the terms of this Lease,
including, without limitation: (i) the Expansion Premises
Basic Annual Rent shall increase on the Phase 2 Commencement Date
by the product of (1) the number of rentable square feet of
the Phase 2 Premises and (2) the same Expansion Premises Basic
Annual Rent rate per rentable square foot that applies to the
Expansion Premises from time to time; (ii) the Expansion
Premises Basic Annual Rent shall increase on the Phase 3
Commencement Date by the product of (1) the number of rentable
square feet of the Phase 3 Premises and (2) the same Expansion
Premises Basic Annual Rent rate per rentable square foot that
applies to the Expansion Premises from time to time; and
(iii) the biennial rent adjustments in accordance the
provisions of Article 7 hereof. Expansion Premises
Basic Annual Rent and the TI Allowance Amount shall be paid in
equal monthly installments on or before the first day of the
applicable month.
6.3. In addition
to Basic Annual Rent, from and after the Commencement Date, Tenant
shall pay to Landlord as additional rent (“ Additional
Rent ”) at times hereinafter specified in this Lease
(a) amounts related to Insurance Costs, Utility Costs and
Taxes (each as defined below) and (b) any other amounts that
Tenant agrees to pay under the provisions of this Lease that are
owed to Landlord, including, without limitation, any and all other
sums that may become due by reason of any default of Tenant or
failure on Tenant’s part to comply with the agreements,
terms, covenants and conditions of this Lease to be performed by
Tenant, after notice and the lapse of any applicable cure
periods.
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6.4. Basic Annual
Rent (including the Diversified Building Premises Basic Annual Rent
and the Expansion Premises Basic Annual Rent) and Additional Rent
shall together be denominated “ Rent .” Rent
shall be paid to Landlord, without, except as otherwise provided
herein, abatement, deduction or offset, in lawful money of the
United States of America at the office of Landlord as set forth in
Section 2.10 or to such other person or at such other
place as Landlord may from time designate in writing. In the event
the Commencement Date for any Phase commences or ends on a day
other than the first day of a calendar month, then the Rent for
such fraction of a month shall be prorated for such period on the
basis of a thirty (30) day month and shall be paid at the
then-current rate for such fractional month.
7.1.1
Diversified Building Premises . The Diversified Building
Premises Basic Annual Rent per rentable square foot of the
Diversified Building Premises shall be increased in accordance with
Schedule 1 attached hereto.
7.1.2
Expansion Premises . The Expansion Premises Basic Annual
Rent per rentable square foot of the Expansion Premises shall be
increased on every other anniversary (i.e., the second anniversary,
the fourth anniversary, the sixth anniversary, etc.) of the Phase 1
Commencement Date by five percent (5%) of the Expansion Premises
Basic Annual Rent per rentable square foot of the Expansion
Premises immediately preceding such increase. The monthly
installment of Expansion Premises Basic Annual Rent that is due for
the month in which each such adjustment occurs (the installment due
immediately before such month) shall be the first installment that
will be increased to reflect such increase in Expansion Premises
Basic Annual Rent.
7.2.1
Diversified Building Premises . The Diversified Building
Premises Basic Annual Rent for the Diversified Building Premises
shall be adjusted on the first (1 st )
day of each Extended Term to the amount calculated in accordance
with Section 42.1 , and shall be adjusted every
twenty-four (24) months thereafter by five percent (5%) of the
Diversified Building Premises Basic Annual Rent per rentable square
foot of the Diversified Building Premises immediately preceding
such increase. The monthly installment of the Diversified Building
Premises Basic Annual Rent that is due for the month in which each
such adjustment occurs (the installment due immediately before such
month) shall be the first installment that will be increased to
reflect such increase in the Diversified Building Premises Basic
Annual Rent.
7.2.2
Expansion Premises . The Expansion Premises Basic Annual
Rent for the Expansion Premises shall be adjusted on the first
(1 st
) day of each Extended Term to the
amount calculated in accordance with Section 42.1 , and
shall be adjusted every twenty-four (24) months thereafter by five
percent (5%) of the Expansion Premises Basic Annual Rent per
rentable square foot of the Expansion Premises immediately
preceding such increase. The monthly installment of the Expansion
Premises Basic Annual Rent that is due for the month in which each
such adjustment occurs (the installment due immediately before such
month) shall be the first installment that will be increased to
reflect such increase in the Expansion Premises Basic Annual
Rent.
8.1. Commencing
with the Commencement Date and continuing for each calendar year
or, at Landlord’s option, tax year (each such “tax
year” being a period of twelve (12) consecutive calendar
months for which the applicable taxing authority levies or assesses
Taxes), for the balance of the Term, Tenant shall pay to Landlord
the amount of all Taxes levied and assessed for any such year upon
the Property (including the Diversified Space). “
Taxes ” shall mean all government impositions
including, without limitation, property tax costs consisting of
real and personal property taxes and assessments (including amounts
due under any improvement bond upon the Property or any portion
thereof, including the Parcel or parcels of real property upon
which the Buildings are located or assessments levied in lieu
thereof) imposed by any federal, state, regional, local or
municipal governmental authority, agency or subdivision (each, a
“ Governmental Authority ”) on the Property or
improvements thereon, any tax on or
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measured by
gross rentals received from the rental of space in the Buildings,
or tax based on the square footage of the Premises or the Buildings
as well as any parking charges, utilities surcharges, or any other
costs levied, assessed or imposed by, or at the direction of, or
resulting from statutes or regulations, or interpretations thereof,
promulgated by any Governmental Authority in connection with the
use or occupancy of the Premises or the parking facilities
exclusively serving the Premises; any tax on this transaction or
this Lease; provided , however , that “
Taxes ” shall in no event include any franchise or
federal or state income tax, excess profit taxes, gift taxes,
capital stock taxes, inheritance and succession taxes, estate taxes
or any tax based on net rentals received from the rental of space
in the Buildings. Any amount paid by Tenant for any partial year of
the Term shall be prorated on the basis of the number of days of
such partial year. Payment shall be made in the following manner:
Tenant shall pay to Landlord the amounts owed under this
Article 8 within thirty (30) days after Landlord
gives notice to Tenant of the amount of such Taxes payable by
Tenant (or not less than fifteen (15) days prior to
delinquency, whichever is later). Landlord also shall provide
Tenant with a copy of the applicable tax bill or tax statement from
the relevant taxing authority. Notwithstanding the foregoing, if
Applicable Laws allow any such Taxes to be paid in installments,
then Tenant may make such payments to Landlord in installments,
provided that each such installment shall be payable to Landlord
not less than ten (10) days prior to the date upon which
payment of the applicable installment to the taxing authority
becomes delinquent. In addition to any other amounts due from
Tenant to Landlord, if Tenant fails to pay Taxes to Landlord as
herein required, Tenant shall pay to Landlord the amount of any
interest, penalties or late charges imposed by any governmental
authority for late payment. “ Applicable Laws ”
means all federal, state, municipal and local laws, codes,
ordinances, rules and regulations of Governmental Authorities,
committees, associations, or other regulatory committees, agencies
or governing bodies having jurisdiction over the Property, Landlord
or Tenant, including both statutory and common law and hazard waste
rules and regulations.
8.1.1
Tenant shall have the right, by appropriate proceedings, to protest
or contest in good faith any assessment or reassessment of Taxes,
any special assessment, or the validity of any Taxes or of any
change in assessment or tax rate; provided , however
, that prior to any such challenge Tenant must either (a) pay
the Taxes alleged to be due in their entirety and seek a refund
from the appropriate authority or (b) post a bond in an amount
sufficient to ensure full payment of the Taxes, including any
potential interest, late charge and penalties. Upon a final
determination with respect to any such contest or protest, Tenant
shall promptly pay to the appropriate Governmental Authority all
sums found to be due with respect thereto. In any such protest or
contest, Tenant may act in its own name, and at the request of
Tenant, Landlord shall cooperate with Tenant in any way Tenant may
reasonably require in connection with such contest or protest,
including signing such documents as Tenant reasonably shall
request, provided that such cooperation shall be at no
expense to Landlord and shall not require Landlord to attend any
appeal or other hearing. Any such contest or protest shall be at
Tenant’s sole expense, and if any penalties, interest or late
charges become payable with respect to the Taxes as a result of
such contest or protest, Tenant shall pay the same.
8.1.2
If Tenant obtains a refund as the result of Tenant’s protest
or contest, and subject to Tenant’s obligation to pay
Landlord’s costs (if any) associated therewith, Tenant shall
be entitled to such refund to the extent it relates to the Property
during the Term.
8.2. If, at any
time during the Term under the laws of any Governmental Authority,
a tax or excise on rent or any other tax howsoever described is
levied or assessed by any such political body against Landlord on
account of rentals payable to Landlord hereunder, such tax or
excise shall be considered “ Taxes ” for the
purposes of this Article 8 , although any amount
assessed against Landlord as state or federal income tax shall not
be deemed “ Taxes .”
8.3. To the extent
Landlord is required by a lender, Tenant shall timely pay all tax
and insurance impound payments due on the Property.
8.4. Taxes on
Tenant’s Property .
8.4.1
Tenant shall pay at least twenty (20) days prior to
delinquency any and all taxes levied against any personal property
or trade fixtures placed by Tenant in or about the
Property.
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8.4.2
If any such taxes on Tenant’s personal property or trade
fixtures are levied against Landlord or Landlord’s property
or, if the assessed valuation of the Buildings is increased by
inclusion therein of a value attributable to Tenant’s
personal property or trade fixtures, and if Landlord, after written
notice to Tenant, pays the taxes based upon any such increase in
the assessed valued of the Buildings, then Tenant shall, upon
demand, repay to Landlord the taxes so paid by Landlord.
8.5. Cut-Off
Date . Notwithstanding anything herein to the contrary, Tenant
shall not be responsible for Taxes attributable to any calendar
year which are first billed to Tenant more than eighteen
(18) months after the expiration of the applicable calendar
year, except with respect to supplemental Taxes.
9.
[Intentionally Omitted] .
10.1. Pursuant to
the Original Illumina Lease, Tenant has deposited with Landlord an
amount equal to $1,911,855 as the security deposit under the
Original Illumina Lease (the “ Original Illumina Lease
Security Deposit ”), and (a) from and after the
Execution Date, Landlord shall continue to hold a portion of the
Original Illumina Lease Security Deposit in an amount equal to
$40,836.75 (the “ Security Deposit ”), in
accordance with the terms and conditions of this
Section 10 , (b) from and after the Execution
Date, Landlord shall hold a portion of Original Illumina Lease
Security Deposit equal to $865,177.50 in accordance with the terms
and conditions of Section 8 of the Illumina Lease, and
(c) Landlord shall return the remaining portion of the
Original Illumina Lease Security Deposit in an amount equal to
$1,005,840.75 to Tenant.
10.2. The Security
Deposit shall be held by Landlord as security for the faithful
performance by Tenant of all of the terms, covenants and conditions
of this Lease to be kept and performed by Tenant during the period
commencing on the Execution Date and ending upon the expiration or
termination of this Lease. In addition, Tenant shall deposit the
following amounts with Landlord and the Security Deposit shall be
increased by such amounts: (a) a sum equal to $343,274.40 upon
commencement of construction of the Landlord’s Construction
Work, (b) a sum equal to $180,600.00 on the Phase 2
Commencement Date, and (c) a sum equal to $189,630.00 on the
Phase 3 Commencement Date. If Tenant defaults with respect to any
provision of this Lease, including, but not limited to, any
provision relating to the payment of Rent, then Landlord may (but
shall not be required to) use, apply or retain all or any part of
the Security Deposit for the payment of any Rent or any other sum
in default, or to compensate Landlord for any other loss or damage
that Landlord may suffer by reason of Tenant’s default. If
any portion of the Security Deposit is so used or applied, then
Tenant shall, within twenty (20) days following 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 this Security Deposit
separate from its general fund, and Tenant shall not be entitled to
interest on the Security Deposit. The provisions of this
Article 10 shall survive the expiration or earlier
termination of this Lease.
10.3. In the event
Landlord receives documentation from Tenant that demonstrates to
Landlord’s reasonable satisfaction that Tenant has achieved a
rating of “BBB” or better from Standard &
Poor’s Corporation (“ S&P ”), or
“Baa” or better from Moody’s Investors Service,
Inc. (“ Moody’s ”)(or in each case any
successor thereof), and Tenant is not then in Default, Landlord
shall return a portion of the Security Deposit so that the
remaining Security Deposit equals one (1) month of Basic
Annual Rent for the entire Premises to Tenant; provided ,
however , in the event (a) Tenant subsequently has
neither a S&P rating of “BBB” or better nor a
Moody’s rating of “Baa” or better, or
(b) Tenant assigns its interest in this Lease to another
person or entity in accordance with Section 27 hereof,
unless such assignee satisfies the requirements set forth in this
Section 10.3 , Tenant shall, within fifteen
(15) days after written notice thereof, deposit an amount with
Landlord sufficient to restore said Security Deposit to the amount
set forth in Section 2.7 and Tenant’s failure to
do so shall constitute a Default of this Lease.
10.4. In the event
of bankruptcy or other debtor-creditor proceedings against Tenant,
the Security Deposit shall be deemed to be applied first to the
payment of Rent and other charges due Landlord for all periods
prior to the filing of such proceedings.
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10.5. Landlord may
deliver to any purchaser of Landlord’s interest in the
Property the funds deposited hereunder by Tenant, and thereupon
Landlord shall be discharged from any further liability with
respect to such deposit. This provision shall also apply to any
subsequent transfers.
10.6. If Tenant is
not then in Default under this Lease nor is any event then
occurring which with the giving of notice or the passage of time,
or both, would constitute a Default hereunder, then 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) within thirty (30) days after the
expiration or earlier termination of this Lease.
10.7. The Security
Deposit may be in the form of cash, a letter of credit or any other
security instrument acceptable to Landlord in its sole discretion.
Tenant may at any time, except during Default, deliver a letter of
credit (“ L/C Security ”) as the entire Security
Deposit, as follows.
10.7.1
If Tenant elects to deliver L/C Security, then Tenant shall provide
Landlord, and maintain in full force and effect throughout the
Term, a letter of credit in substantially the form of
Exhibit K issued by an issuer reasonably satisfactory
to Landlord, in the amount of the Security Deposit, with an initial
term of at least one year. If, at the Expiration Date, any Rent
remains uncalculated or unpaid, then: (a) Landlord shall with
reasonable diligence complete any necessary calculations;
(b) Tenant shall extend the expiry date of such L/C Security
from time to time as Landlord reasonably requires; and (c) in
such extended period, Landlord shall not unreasonably refuse to
consent to an appropriate reduction of the L/C Security. Tenant
shall reimburse Landlord’s legal costs (as estimated by
Landlord’s counsel) in handling Landlord’s acceptance
of L/C Security or its replacement or extension
10.7.2
If Tenant delivers to Landlord satisfactory L/C Security in place
of the entire Security Deposit, Landlord shall promptly remit to
Tenant any cash Security Deposit Landlord previously
held.
10.7.3
Landlord may draw upon the L/C Security, and hold and apply the
proceeds in the same manner and for the same purposes as the
Security Deposit, if: (a) an uncured Default exists; (b) as of
the date thirty (30) days before any L/C Security expires
(even if such scheduled expiry date is after the Expiration Date)
Tenant has not delivered to Landlord an amendment or replacement
for such L/C Security, reasonably satisfactory to Landlord,
extending the expiry date to the earlier of (i) six
(6) months after the then-current Expiration Date or
(ii) the date one year after the then-current expiry date of
the L/C Security; (c) the L/C Security provides for automatic
renewals, Landlord asks the issuer to confirm the current L/C
Security expiry date, and the issuer fails to do so within ten
(10) business days; (d) Tenant fails to pay (when and as
Landlord reasonably requires) any bank charges for Landlord’s
transfer of the L/C Security; or (e) the issuer of the L/C
Security ceases, or announces that it will cease, to maintain an
office in the city where Landlord may present drafts under the L/C
Security. This Section does not limit any other provisions of this
Lease allowing Landlord to draw the L/C Security under specified
circumstances.
10.7.4
Tenant shall not seek to enjoin, prevent, or otherwise interfere
with Landlord’s draw under L/C Security, even if it violates
this Lease. Tenant acknowledges that the only effect of a wrongful
draw would be to substitute a cash Security Deposit for L/C
Security, causing Tenant no legally recognizable damage. Landlord
shall hold the proceeds of any draw in the same manner and for the
same purposes as a cash Security Deposit. In the event of a
wrongful draw, the parties shall cooperate to allow Tenant to post
replacement L/C Security simultaneously with the return to Tenant
of the wrongfully drawn sums, and Landlord shall upon request
confirm in writing to the issuer of the L/C Security that
Landlord’s draw was erroneous.
10.7.5
If Landlord transfers its interest in the Property, then Tenant
shall at Tenant’s expense, within ten (10) business days
after receiving a request from Landlord, deliver (and, if the
issuer requires, Landlord shall consent to) an amendment to the L/C
Security naming Landlord’s grantee as substitute beneficiary;
provided , however , in the event Landlord transfers
its interest in the Property more than once in a twelve
(12) month period, Landlord shall pay any fee owed to the
issuing bank in connection with any such additional transfer. If
the required Security changes while L/C Security is in force, then
Tenant shall deliver (and, if the issuer requires, Landlord shall
consent to) a corresponding amendment to the L/C
Security.
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11.1. Tenant shall
use the Premises for the purpose set forth in
Section 2.8 , and shall not use the Premises, or permit
or suffer the Premises to be used, for any other purpose without
Landlord’s prior written consent, which consent Landlord may
withhold in its reasonable discretion.
11.2. Tenant shall
not use or occupy the Property in violation of Applicable Laws;
zoning ordinances; or the certificate of occupancy issued for the
Buildings, and shall, upon five (5) days’ written notice from
Landlord, discontinue any use of the Property that is declared or
claimed by any Governmental Authority having jurisdiction to be a
violation of any of the above, or that Landlord has a reasonable
basis to believe that such use violates any of the above and
Landlord identifies such basis in its notice to Tenant. Tenant
shall comply with any direction of any Governmental Authority
having jurisdiction that shall, by reason of the nature of
Tenant’s use or occupancy of the Property, impose any duty
upon Tenant with respect to the Property or with respect to the use
or occupation thereof.
11.3. Tenant shall
not do or permit to be done anything that will invalidate or
increase the cost of any fire, environmental, extended coverage or
any other insurance policy covering the Property, and shall comply
with all rules, orders, regulations and requirements of the
insurers of the Property, and Tenant shall promptly, upon demand,
reimburse Landlord for any additional premium charged for such
policy by reason of Tenant’s failure to comply with the
provisions of this Article 11 .
11.4. Tenant
shall, at its sole cost and expense, promptly and properly observe
and comply with all present and future orders, regulations,
directions, rules, laws, ordinances, and requirements of all
Governmental Authorities (including, without limitation, state,
municipal, county and federal governments and their departments,
bureaus, boards and officials) arising from the use or occupancy of
the Property, including, without limitation, the requirements of
Americans with Disabilities Act of 1990 (together with regulations
promulgated pursuant thereto, the “ ADA ”).
Tenant’s obligations under this Section 11.4
shall include any Alterations to the Property (including
(a) the Diversified Building and, (b) from and after the
Phase 1 Commencement Date, the Expansion Building) that Tenant is
required or elects to make pursuant to the terms of this Lease;
provided , however , Landlord shall be responsible
for ADA compliance of the Landlord’s Construction Work and
the Tenant Improvements.
11.5. Tenant shall
keep all doors opening onto public corridors closed, except when in
use for ingress and egress.
11.6. No
additional locks or bolts of any kind shall be placed upon any of
the doors or windows by Tenant, nor shall any changes be made to
existing locks or the mechanisms thereof without Landlord’s
prior written consent. Tenant shall, upon termination of this
Lease, return to Landlord all keys to offices and restrooms either
furnished to or otherwise procured by Tenant. In the event any key
so furnished to Tenant is lost, Tenant shall pay to Landlord the
cost of replacing the same or of changing the lock or locks opened
by such lost key if Landlord shall deem it necessary to make such
change
11.7. No awnings
or other projections shall be attached to any outside wall of the
Buildings. No curtains, blinds, shades or screens shall be attached
to or hung in, or used in connection with, any window or door of
the Buildings other than Landlord’s standard window
coverings. Neither the interior nor exterior of any windows shall
be coated or otherwise sunscreened without Landlord’s prior
written consent, nor shall any bottles, parcels or other articles
be placed on the windowsills. No equipment, furniture or other
items of personal property shall be placed on any exterior balcony
without Landlord’s prior written consent.
11.8. Subject to
Diversified’s right to place signs on the Property in
accordance with Section 32 of the Diversified Lease, Tenant shall,
at Tenant’s sole cost and expense, have the exclusive right
to install the maximum amount of any legally permitted signage on
the Property (including any building thereon) (“
Signage ”), which Signage shall be subject to
Landlord’s prior written consent, which consent shall not be
unreasonably withheld, conditioned or delayed. Tenant shall keep
the Signage in good condition and repair. The size, design, and
other physical aspects of any sign shall be subject to
Landlord’s written approval prior to installation, which
approval will not unreasonably be withheld, any covenants,
conditions, or restrictions
14
encumbering the
Property and, any Applicable Laws. The cost of the sign(s),
including but not limited to the permitting, installation,
maintenance and removal thereof shall be at Tenant’s sole
cost and expense. If Tenant fails to maintain its sign(s), or if
Tenant fails to remove such sign(s) upon termination of this Lease,
or fails to repair any damage caused by such removal (including
without limitation, painting the damaged portions of the Buildings
and any other portions of the Buildings that Landlord reasonably
determines in good faith shall be painted so that repainting the
damaged portion of the Buildings does not adversely affect the
visual appearance of the Buildings, if required by Landlord;
provided , however , in no event shall Landlord
require Tenant to repaint an entire Building), Landlord may do so
at Tenant’s expense. Tenant shall on demand reimburse
Landlord for all costs incurred by Landlord to effect such removal,
which amounts shall be deemed Additional Rent and shall include
without limitation, all sums disbursed, incurred or deposited by
Landlord, including Landlord’s costs, expenses and actual
attorneys’ fees with interest thereon. Tenant shall
indemnify, defend and hold harmless Landlord from and against any
loss, cost, claim, lawsuit, liability or expense (including
reasonable attorneys’ fees and disbursements) arising
directly or indirectly out of Tenant’s failure to perform any
of its obligations under this Section 11.8 .
11.9. Tenant shall
only place equipment within the Premises with floor loading
consistent with the structural design of the Buildings without
Landlord’s prior written approval, and such equipment shall
be placed in a location designed to carry the weight of such
equipment.
11.10. Tenant
shall not (a) use or allow the Property to be used for any
unlawful or reasonably objectionable purposes or (b) cause,
maintain or permit any nuisance or waste in, on or about the
Property (other than the Diversified Space).
11.11. Except for
Landlord’s Construction Work and Tenant Improvement work,
Tenant shall be responsible for all liabilities, costs and expenses
arising out of or in connection with the compliance of the Property
(other than the Diversified Space) with the ADA, and Tenant shall
indemnify, defend and hold harmless Landlord from and against any
loss, cost, claim, lawsuit, liability or expense (including
reasonable attorneys’ fees and disbursements) arising out of
any failure of the Property (other than the Diversified Space) to
comply with the ADA. Notwithstanding the foregoing, Landlord
represents and warrants that upon Substantial Completion of
Landlord’s Construction Work and the Tenant Improvement work,
the Expansion Building shall comply with all Applicable Laws,
including the ADA and any compliance costs as a result of a breach
of this representation and warranty shall be at Landlord’s
sole cost and expense and Landlord shall indemnify, defend and hold
harmless Tenant from and against any loss, cost, claim, lawsuit,
liability or expense (including reasonable attorneys’ fees
and disbursements) arising out of any failure of the
Landlord’s Construction Work or the Tenant Improvements to
comply with the ADA. The provisions of this
Section 11.11 shall survive the expiration or earlier
termination of this Lease.
12.
Diversified Lease and Subdivision .
12.1.
Diversified Lease . From and after the Commencement Date,
(a) Tenant shall be responsible for paying all amounts with
respect to Taxes, Insurance Costs, Utility Costs and any other
costs and expenses Landlord is required to pay in connection with
the Diversified Space in accordance with Article 9 of the
Diversified Lease, and (b) Landlord assumes, and is
responsible for performing, all of the obligations of the landlord
under and related to the Diversified Lease (other than the payment
of expenses in accordance with Section 12.1(a) above).
Notwithstanding the foregoing, (x) Tenant is solely
responsible for maintaining the Property (other than the
Diversified Space) in accordance with the terms and conditions of
this Lease, and (y) Diversified is solely responsible for
maintaining the Diversified Space pursuant to Section 11(b) of the
Diversified Lease.
12.2.
Estoppel . Tenant certifies that (a) the Diversified
Lease is unmodified and in full force and effect and (b) to
Tenant’s knowledge, there are not any uncured defaults on the
part of landlord or the tenant under the Diversified
Lease.
12.3.
Recreation Facilities . Tenant acknowledges that Diversified
has certain rights to the Property (excluding the Expansion
Building) pursuant to the Diversified Lease, including, without
limitation, the right to use: (a) the Diversified Building
lobby, utility room, common corridors and hallways, 5 covered
reserved parking spaces, uncovered parking areas, stairways &
elevators and access to other generally understood public or common
areas (“ Diversified
15
Building
Common Areas ”),
and (b) the full court basketball/sports courts, outdoor
seating areas, dressing, locker and working rooms, restrooms, and
showers located on the Property (collectively, the “
Recreation Facilities ” and, together with the
Diversified Building Common Areas, the “ Diversified
Areas ”). Diversified shall have the non-exclusive right
to use the Diversified Areas 24 hours a day, 7 days a week
other than Diversified’s exclusive right to use the 5 covered
reserved parking spaces pursuant to the Diversified Lease. Tenant
hereby agrees that it shall not regulate, restrict or charge any
fees in connection with Diversified’s use of the Diversified
Areas.
12.4.
Subdivision . Landlord may subdivide Parcel 3 so that it
will consist of two lots that may be legally conveyed in accordance
with California’s Subdivision Map Act. At Landlord’s
request, Tenant shall execute, acknowledge and deliver such further
instruments and do such further acts as may be necessary to modify
the subdivision of such property. Tenant shall not oppose or object
to any changes or modifications to the subdivision for such
property.
13.1. Tenant
represents and warrants that it has had no dealings with any real
estate broker or agent in connection with the negotiation of this
Lease other than Steve Rosetta and Ted Simpson, Cushman &
Wakefield (“ Tenant’s Broker ”), and that
it knows of no other real estate broker or agent that is or might
be entitled to a commission in connection with this Lease. Landlord
shall compensate Tenant’s Broker in relation to this Lease
pursuant to a separate agreement between Landlord and
Landlord’s Broker (the “ Commission Agreement
”).
13.2. Landlord
represents and warrants that it has had no dealings with any real
estate broker or agent in connection with the negotiation of this
Lease other than Doug Lozier at CB Richard Ellis, Inc. (“
Landlord’s Broker ”), and that it knows of no
other real estate broker or agent that is or might be entitled to a
commission in connection with this Lease. Landlord shall compensate
Landlord’s Broker in relation to this Lease pursuant to the
Commission Agreement.
13.3. Tenant
acknowledges and agrees that the employment of brokers by Landlord
is for the purpose of solicitation of offers of leases from
prospective tenants and that no authority is granted to any broker
to furnish any representation (written or oral) or warranty from
Landlord unless expressly contained within this Lease. Landlord is
executing this Lease in reliance upon Tenant’s
representations, warranties and agreements contained within
Section 13.1 .
13.4. Tenant
agrees to indemnify, defend and hold Landlord harmless from any and
all cost or liability for compensation claimed by any other broker
or agent, other than Tenant’s Broker, employed or engaged by
it or claiming to have been employed or engaged by Tenant. Landlord
agrees to indemnify, defend and hold Tenant harmless from any and
all cost or liability for compensation claimed by any other broker
or agent, other than Landlord’s Broker, employed or engaged
by it or claiming to have been employed or engaged by
Landlord.
14.1. If, with
Landlord’s prior written consent, Tenant holds possession of
all or any part of the Property after the Term, Tenant shall become
a tenant from month to month after the expiration or earlier
termination of the Term, and in such case Tenant shall continue to
pay (a) the Basic Annual Rent in accordance with
Article 6 , as adjusted in accordance with
Article 7 , and (b) any amounts for which Tenant
would otherwise be liable under this Lease if this Lease were still
in effect, including, without limitation, payments for Taxes and
insurance. Any such month-to-month tenancy shall be subject to
every other term, covenant and agreement contained
herein.
14.2.
Notwithstanding the foregoing, if Tenant remains in possession of
the Property after the expiration or earlier termination of the
Term without Landlord’s prior written consent, Tenant shall
become a tenant at sufferance subject to the terms and conditions
of this Lease, except that the per diem Basic Annual Rent shall be
equal to: (a) for the first three (3) months that Tenant
remains in possession of the Property after the expiration or
earlier termination of this Lease, one hundred twenty-five percent
(125%) of the Basic Annual Rent in effect during the last thirty
(30) days of the Term; and (b) for any time thereafter
that Tenant remains in possession of the Property after the
expiration or earlier termination of this Lease, one
hundred
16
fifty percent
(150%) of the Basic Annual Rent in effect during the last thirty
(30) days of the Term.
14.3. Acceptance
by Landlord of Rent after the expiration or earlier termination of
the Term shall not result in an extension, renewal or reinstatement
of this Lease.
14.4. The
foregoing provisions of this Article 14 are in addition
to and do not affect Landlord’s right of reentry or any other
rights of Landlord hereunder or as otherwise provided by Applicable
Laws.
15. Property
Management Fee . Tenant shall pay to Landlord on the first day
of each calendar month of the Term, as Additional Rent, the “
Property Management Fee ,” which shall equal one
percent (1%) of the Basic Annual Rent due from Tenant.
16.
Condition of Premises and the Property . Except as otherwise
provided herein, Tenant acknowledges that neither Landlord nor any
agent of Landlord has made any representation or warranty with
respect to the condition of the Premises, the Property or with
respect to the suitability of the Premises for the conduct of
Tenant’s business.
17.
Regulations and Parking and Recreation Facilities
.
17.1. Tenant shall
faithfully observe and comply with the rules and regulations
adopted by Landlord and attached hereto as Exhibit H ,
together with such other reasonable and nondiscriminatory rules and
regulations as are hereafter promulgated by Landlord in its
reasonable discretion (the “ Rules and Regulations
”).
17.2. Subject to
Diversified’s rights under Section 12.3 , Tenant
shall have the right to use, at no additional cost, the parking
facilities serving the Premises. As part of Landlord’s
Construction Work, the Property shall contain sufficient parking to
comply with applicable zoning requirements.
17.3. Tenant
shall, at Tenant’s sole cost and expense, comply with the
terms and conditions set forth in, and perform each of the
obligations of the Parcel 3 Owner (as defined in the REA) described
in, Sections 3 , 4.1 , 4.2 , 4.3 ,
4. 4, 4.8 , 7 , 8 , 9 ,
11.3 , 11.10 , 11.11 and 11.12 of the
Reciprocal Easement Agreement attached hereto as
Exhibit L (the “ REA ”), in
accordance with the terms of conditions of the REA as if Tenant
were the Parcel 3 Owner.
17.4. Subject to
Section 18.5 and provided there is no material adverse
impact on Tenant’s Permitted Use and access to the Premises
(including the parking facilities), Landlord reserves the right to
subdivide the real property; provided , however ,
that such right shall be exercised in a way that does not
materially adversely affect Tenant’s beneficial use and
occupancy of the Premises, including Tenant’s Permitted Use
and Tenant’s access to the Premises (including the parking
facilities).
17.5. Tenant
shall, and shall cause Tenant’s Agents to, faithfully observe
and comply with any rules and regulations adopted pursuant to
Section 4.7 of the REA (the “ Recreation
Facilities Rules and Regulations ”). Landlord has the
right to refuse to allow Tenant’s Agents to access the
Recreation Facilities if such Tenant’s Agent has not complied
with the applicable Recreation Facilities Rules and Regulations
after receiving written notice of such failure to
comply.
17.6. Tenant shall
have the right to use the Recreation Facilities during the hours
reasonably established by Landlord as the operating hours of the
Recreation Facilities. Notwithstanding anything to the contrary in
this Lease, Landlord shall have no responsibility to Tenant or
Tenant’s Agents (as defined below), for any accidents,
claims, demands, liabilities, causes of action, judgments, costs,
liens, damages, injuries, suits, losses or expenses, including
attorneys’ fees, of any nature, kind or description, arising
out of, caused by, or resulting from Tenant or Tenant’s
Agent’s use of the Recreational Facilities or the negligence
of Landlord Parties (as defined in Section 22.3 ) or
Tenant’s Agents in connection with the operation and
maintenance of such Recreational Facilities.
17.7. So long as
this Lease is in full force and effect, Landlord shall not amend or
modify the REA without first obtaining: (a) the prior written
consent of the original Tenant hereunder (but not any assignee or
subtenant), which consent shall not be unreasonably
withheld,
17
conditioned or
delayed, and (b) solely with respect to amendments or
modifications that could reasonably be expected to have a material
adverse effect on obligations assumed by any successors and assigns
of Tenant under the REA, the prior written consent of any such
successors and assigns, which consent shall not be unreasonably
withheld, conditioned or delayed. All amendments or modifications
which result in an increase of the costs and expenses to be
incurred by Tenant under Section 17.3 shall be deemed
material and adverse.
18.
Utilities and Services .
18.1. Tenant
shall, at Tenant’s sole cost and expense, procure and
maintain contracts, with copies furnished promptly to Landlord
after execution thereof, in customary form and substance for, and
with contractors specializing and experienced in, the maintenance
of the following equipment and improvements, if any, if and when
installed on the Property: (a) HVAC equipment,
(b) boilers and pressure vessels, (c) fire extinguishing
systems, including fire alarm and smoke detection devices,
(d) landscaping and irrigation systems, (e) roof
coverings and drains, (f) clarifiers, (g) basic utility feeds
to the perimeter of the Buildings, and (h) any other equipment
reasonably required by Landlord. Notwithstanding the foregoing, in
the event Tenant fails to maintain the contracts required under
this Section 18.1 within one (1) business day
after Landlord provides Tenant written notice of such failure,
Landlord reserves the right, upon notice to Tenant, to procure and
maintain any or all of such contracts, and if Landlord so elects,
Tenant shall reimburse Landlord, upon demand, for the actual
documented costs thereof .
18.2. Within sixty
(60) days after the Commencement Date, and within sixty
(60) days after the beginning of each calendar year during the
Term, Landlord shall give Tenant a written estimate for such
calendar year of the cost of utilities for the Property (including
the Diversified Space), if not separately metered (“
Utility Costs ”), and insurance provided by Landlord
for the Property (including the Diversified Space) (“
Insurance Costs ”). Tenant shall pay such estimated
amount to Landlord in advance in equal monthly installments. Within
ninety (90) days after the end of each calendar year, Landlord
shall furnish to Tenant a statement showing in reasonable detail
the costs incurred by Landlord for Utility Costs and Insurance
Costs for the Property (including the Diversified Space) during
such year (the “ Annual Statement ”), and Tenant
shall pay to Landlord the costs incurred in excess of the payments
previously made by Tenant within thirty (30) days of receipt
of the Annual Statement. In the event that the payments previously
made by Tenant for Utility Costs and Insurance Costs for the
Property (including the Diversified Space) exceed Tenant’s
obligation, such excess amount shall be credited by Landlord to the
Rent or other charges next due and owing, provided that, if
the Term has expired, Landlord shall remit such excess amount to
Tenant. In the event Tenant disputes the amounts of any Annual
Statement for the particular calendar year delivered by Landlord to
Tenant and Tenant is not in Default hereunder, Tenant shall have
the right, at Tenant’s cost, after reasonable notice to
Landlord, to have Tenant’s authorized employees inspect, at
Landlord’s office in San Diego County during normal business
hours, Landlord’s books, records and supporting documents
concerning the expenses set forth in such Annual Statement;
provided , however , Tenant shall have no right to
conduct such inspection, have an audit performed by the Accountant
as described below, or object to or otherwise dispute the amount of
the expenses set forth in any such Annual Statement unless Tenant
notifies Landlord of such objection and dispute, completes such
inspection, and has the Accountant commence and complete such audit
within one hundred and eighty (180) days immediately following
Landlord’s delivery of the particular Annual Statement in
question (the “ Review Period ”); provided,
further, that notwithstanding any such timely objection, dispute,
inspection, and/or audit, and as a condition precedent to
Tenant’s exercise of its right of objection, dispute,
inspection and/or audit as set forth in this
Section 18.2 , Tenant shall not be permitted to
withhold payment of, and Tenant shall timely pay to Landlord, the
full amounts as required by the provisions of this Lease in
accordance with such Annual Statement. However, such payment may be
made under protest pending the outcome of any audit which may be
performed by the Accountant as described below. In connection with
any such inspection by Tenant, Landlord and Tenant shall reasonably
cooperate with each other so that such inspection can be performed
pursuant to a mutually acceptable schedule. If after such
inspection and/or request for documentation, Tenant still disputes
the amount of the expenses set forth in the Annual Statement,
Tenant shall have the right, within the Review Period, to cause an
independent certified public accountant selected by Tenant and
compensated on a non-contingency fee basis (the “
Accountant ”) to complete an audit of Landlord’s
books and records to determine the proper amount of the expenses
incurred and amounts payable by Tenant for the calendar year which
is the subject of such Annual Statement. Such audit by the
Accountant shall be final and binding upon Landlord and Tenant. If
such audit reveals that Landlord has
18
over-charged
Tenant, then within thirty (30) days after the results of such
audit are made available to Landlord, Landlord shall reimburse to
Tenant the amount of such over-charge. If the audit reveals that
the Tenant was under-charged, then within thirty (30) days
after the results of such audit are made available to Tenant,
Tenant shall reimburse to Landlord the amount of such under-charge.
Tenant agrees to pay the cost of such audit unless it is
subsequently determined that Landlord’s original Annual
Statement which was the subject of such audit overstated expenses
by five percent (5%) or more of the actual expenses which were the
subject of such audit. The payment by Tenant of any amounts
pursuant to this Section 18.2 shall not preclude Tenant
from questioning, during the Review Period, the correctness of the
particular Annual Statement in question provided by Landlord, but
the failure of Tenant to object thereto, conduct and complete its
inspection and have the Accountant conduct the audit as described
above prior to the expiration of the Review Period for such Annual
Statement shall be conclusively deemed Tenant’s approval of
the Annual Statement in question and the amount of expenses shown
thereon. If following Tenant’s delivery to Landlord of a
written request to make Landlord’s books and records
regarding the expenses reasonably available to Tenant and/or the
Accountant to conduct any such inspection and/or audit described
above in this Section 18.2 , Landlord fails to make
Landlord’s books reasonably available for such purposes
during Landlord’s normal business hours, and such failure
continues for five (5) business days after Tenant notifies
Landlord thereof, then the Review Period shall be extended one
(1) day for each such additional day that Tenant and/or the
Accountant, as the case may be, is so prevented from accessing such
books and records. In connection with any inspection and/or audit
conducted by Tenant pursuant to this Section 18.2 ,
Tenant agrees to keep, and to cause all of Tenant’s employees
and consultants and the Accountant to keep, all of Landlord’s
books and records and the audit, and all information pertaining
thereto and the results thereof, strictly confidential (except if
required by any court to disclose such information or if such
information is available from an inspection of public
records).
18.3. Tenant shall
make all arrangements for and pay for all water, sewer, gas, heat,
light, power, telephone service and any other service or utility
Tenant required at the Property (including the Diversified Space).
Landlord shall not be liable for, nor shall any eviction of Tenant
result from, the failure to furnish any utility or service, whether
or not such failure is caused by Force Majeure or Landlord’s
inability, despite the exercise of reasonable diligence, to furnish
any such utility or service. Except as provided in
Section 18.5 , in the event of such failure, Tenant
shall not be entitled to termination of this Lease, any abatement
or reduction of Rent, or relief from the operation of any covenant
or agreement of this Lease. Tenant shall pay for, prior to
delinquency of payment therefor, any utilities and services that
may be furnished to the Property (including the Diversified Space)
during or, if Tenant occupies any portion of the Premises after the
expiration or earlier termination of the Term, after the
Term.
18.4. From and
after the Commencement Date, Tenant shall be responsible for paying
all amounts with respect to Insurance Costs, Utility Costs, Taxes
and other amounts for which Tenant is responsible under this Lease
(other than Expansion Premises Basic Annual Rent) for the Expansion
Premises as if it was part of the Expansion Premises on the
Commencement Date.
18.5.
Notwithstanding the foregoing and subject to
Sections 17 and 35 , if because of (i) any
repair, maintenance, alteration, development or construction
performed by Landlord after the Commencement Date, which
substantially interferes with Tenant’s use of the Premises
and which was not caused by Tenant, (ii) any material
interference by Landlord with Tenant’s access to the Premises
(including the parking facilities) that is not caused by Tenant, or
(iii) the presence of Hazardous Materials in, on or around the
Premises in connection with the Landlord’s Construction Work
or the Tenant Improvements which (a) is not caused by Tenant,
and (b) poses a health risk to occupants of the Premises (each, an
“ Adverse Condition ”), Tenant is unable to
conduct its business in a reasonable manner in a material portion
of the Premises as a direct result of the Adverse Condition and
Tenant therefore actually does not occupy or use such portion of
the Premises, as the case may be, and such condition persists for
more than the “Interruption Period” (as defined below),
then following the Interruption Period, Tenant shall be entitled to
an abatement of Rent for the portion of the Premises rendered
untenantable. However, in the event that the remaining portion of
the Premises is not sufficient to allow Tenant to conduct its
business therein, and if Tenant does not conduct its business from
such remaining portion, then for such time after expiration of the
Interruption Period during which Tenant is so prevented from
effectively conducting its business therein, the Rent for the
entire Premises shall be abated; provided , however ,
if Tenant continues to occupy any portion of the Premises, or
reoccupies and conducts its business from any portion of the
Premises, during such period, the
19
Rent allocable
to such reoccupied portion, based on the proportion that the
rentable area of such reoccupied portion of the Premises bears to
the total rentable area of the Premises, shall be payable by Tenant
from the date such business operations commence. Such abatement
shall commence as of the first day after the expiration of the
“Interruption Period” and terminate upon the cessation
of such Adverse Condition. As used herein, the term “
Interruption Period ” shall mean seven
(7) consecutive business days after written notice thereof to
Landlord, or such shorter period as applicable under the coverage
which is or would be covered by rental abatement insurance required
to be carried by Landlord.
19.1. Tenant shall
make no alterations, additions or improvements in or to the
Property or engage in any construction, demolition, reconstruction,
renovation, or other work of any kind in, at, or serving the
Premises (“ Alterations ”) without
Landlord’s prior written approval, which approval Landlord
may withhold in its sole and absolute discretion; provided ,
however , that Landlord’s approval shall not be
unreasonably withheld, conditioned or delayed in connection with
any Alteration that does none of the following (i) adversely
affects the exterior appearance of a Building or the Premises,
(ii) adversely affects the structural aspects of a Building,
including, without limitation, the roof, foundation, load bearing
walls and structural elements of a Building or the Premises,
(iii) adversely affects any base-building system or equipment,
including, without limitation, the base building HVAC, mechanical,
electrical, plumbing or life safety systems; (iv) creates a
foreseeable risk of violating any Applicable Law or increasing
insurance premiums; (v) violates any recorded document
affecting the Property; (vi) causes a Building to be inconsistent
with the quality and scope of a class “A” office
buildings in the vicinity of the Buildings; (vii) involves a
use of the Premises that is inconsistent with the current use of
the Premises; nor (viii) in Landlord’s reasonable
judgment, reduces the quality or value of a Building or the
Property (each, a “ Design Problem ”). In
seeking Landlord’s approval, Tenant shall provide Landlord,
at least ten (10) business days in advance of any proposed
construction, with plans, specifications, bid proposals, work
contracts, requests for laydown areas and such other information
concerning the nature and cost of the Alterations as Landlord may
reasonably request.
19.2.
Notwithstanding the provisions of Section 19.1 , Tenant
may make non-structural Alterations to the Premises (“
Acceptable Changes ”) upon at least ten
(10) business days prior written notice to Landlord but
without Landlord’s prior consent provided (a) the
Acceptable Changes do not involve Design Problems; and (b) the
cost of such Acceptable Changes do not exceed Fifty Thousand
Dollars ($50,000) per occurrence or an aggregate amount of One
Hundred Thousand Dollars ($100,000) in any twelve (12) month
period.
19.3. All
Alterations made by Tenant shall be: (a) performed in a good
and workmanlike manner and in conformance with any and all
Applicable Laws and CC&Rs; and (b) shall be made only by a
licensed, bonded contractor and such architects, suppliers and
mechanics approved in advance by Landlord (which shall not be
unreasonably withheld, conditioned or delayed); provided ,
however , that such contractor need not be bonded or
approved and such architects, suppliers and mechanics need not be
approved by Landlord in connection with Acceptable
Changes.
19.4. Tenant shall
not construct or permit to be constructed partitions or other
obstructions that will interfere with free access to mechanical
installation or service facilities of the Buildings, or interfere
with the moving of Landlord’s equipment to or from the
enclosures containing such installations or facilities.
19.5. Tenant shall
accomplish any work performed on the Property in such a manner as
to permit any fire sprinkler system and fire water supply lines to
remain fully operable at all times.
19.6. Tenant
covenants and agrees that all work done by Tenant or Tenant’s
contractors shall be performed in full compliance with Applicable
Laws. Within thirty (30) days after completion of any
Alterations, Tenant shall provide Landlord with complete
“as-built” drawing print sets and electronic CADD files
on disc (or files in such other current format in common use as
Landlord reasonably approves or requires) showing any changes in
the Property (but only if drawings and plans were required by this
Lease or were prepared in connection with any such
Alterations).
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19.7. Before
commencing any work, Tenant shall give Landlord at least ten
(10) business days’ prior written notice of the proposed
commencement of such work.
19.8. Except for
those items listed on Exhibit G , all Alterations,
attached equipment, decorations, fixtures, trade fixtures,
additions and improvements, subject to Section 19.8 ,
attached to or built into the Property, made by either of the
Parties, including, without limitation, all floor and wall
coverings, built-in cabinet work and paneling, sinks and related
plumbing fixtures, laboratory benches, exterior venting fume hoods
and walk-in freezers and refrigerators, ductwork, conduits,
electrical panels and circuits shall (unless, prior to such
construction or installation, Landlord elects otherwise) become the
property of Landlord upon the expiration or earlier termination of
the Term, and shall remain upon and be surrendered with the
Property as a part thereof. The Property shall at all times remain
the property of Landlord and shall be surrendered to Landlord upon
the expiration or earlier termination of this Lease. Except for
those items on Exhibit G , all trade fixtures, Tenant
Improvements, Alterations and Signage installed by or under Tenant
shall be the property of Landlord. Notwithstanding the foregoing,
at any time during the Term, subject to Landlord’s prior
written approval, which approval shall not be unreasonably
withheld, conditioned or delayed, Tenant shall have the right to
update Exhibit G .
19.9. Tenant shall
repair any damage to the Property caused by Tenant’s removal
of any property from the Property. During any such restoration
period, Tenant shall pay Rent to Landlord as provided herein as if
the affected portion of the Premises were otherwise occupied by
Tenant. The provisions of this Section shall survive the expiration
or earlier termination of this Lease.
19.10. Except as
to those items listed on Exhibit G attached hereto, all
business and trade fixtures, machinery and equipment, built-in
furniture and cabinets, together with all additions and accessories
thereto, attached to or built into the Property shall be and remain
the property of Landlord and shall not be moved by Tenant at any
time during the Term. If Tenant shall fail to remove any of its
effects from the Property within ten (10) days after the
termination of this Lease, then Landlord may, at its option, remove
the same in any manner that Landlord shall choose and store said
effects without liability to Tenant for loss thereof or damage
thereto, and Tenant shall pay Landlord, upon demand, any actual,
documented and reasonable costs and expenses incurred due to such
removal and storage or Landlord may, at its sole option and upon
notice to Tenant, sell such property or any portion thereof at
private sale and without legal process for such price as Landlord
may obtain and apply the proceeds of such sale against any
(a) amounts due by Tenant to Landlord under this Lease and
(b) any actual and documented expenses incident to the
removal, storage and sale of said personal property.
19.11.
Notwithstanding any other provision of this Article 19
to the contrary, in no event shall Tenant remove any improvement
from the Property as to which Landlord contributed payment,
including, without limitation, the Tenant Improvements made
pursuant to the Work Letter without Landlord’s prior written
consent, which consent Landlord may withhold in its sole and
absolute discretion.
19.12. Tenant
shall pay to Landlord the Construction Management Fee on the Tenant
Improvements. In addition, Tenant shall pay to Landlord an amount
equal to one and one-half percent (1.5%) of the cost to Tenant of
all Alterations (other than Tenant Improvements) installed by
Tenant or its contractors or agents to cover Landlord’s
overhead and expenses for plan review, coordination, scheduling and
supervision thereof but only for those Alterations requiring
Landlord’s consent. For purposes of payment of such sum,
Tenant shall submit to Landlord copies of all bills, invoices and
statements covering the costs of such charges, accompanied by
payment to Landlord of the fee set forth in this Section. Tenant
shall reimburse Landlord for any extra expenses incurred by
Landlord by reason of faulty work done by Tenant or its
contractors.
19.13. Upon
Landlord’s written request, within sixty (60) days after
final completion of any Alterations performed by Tenant with
respect to the Property, Tenant shall submit to Landlord
documentation showing the amounts expended by Tenant with respect
to such Alterations, together with supporting documentation
reasonably acceptable to Landlord.
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19.14. Tenant
shall require its contractors and subcontractors performing work on
the Property to name Landlord and its affiliates and lenders as
additional insureds on their respective insurance
policies.
20. Repairs
and Maintenance .
20.1. Subject to
Landlord’s obligations hereunder, Tenant, at its sole cost
and expense, shall maintain and keep the Property (other than the
Diversified Space), all improvements thereon, and all appurtenances
thereto, including but not limited to sidewalks, parking areas,
curbs, roads, driveways, lighting standards, landscaping, sewers,
water, gas and electrical distribution systems and facilities,
drainage facilities, and all signs, both illuminated and
non-illuminated that are now or hereafter on the Property, in good
condition and in a manner consistent with the Permitted Use. Tenant
shall make all repairs, replacements and improvements, including,
without limitation, all HVAC, plumbing and electrical repairs,
replacements and improvements required, and shall keep the same
free and clear from all rubbish and debris, excluding, however, the
foundation, slab, structural portions of the walls and roof (not
including the membrane), and structural steel aspects of the
Buildings. All repairs made by Tenant shall be at least equal in
quality to the original work, and shall be made only by a licensed,
bonded contractor approved in advance by Landlord (which shall not
be unreasonably withheld, conditioned or delayed); provided
, however , that such contractor need not be bonded or
approved by Landlord if the non-structural alterations, repairs,
additions or improvements to be performed do not exceed Fifty
Thousand Dollars ($50,000) per occurrence or an aggregate amount of
One Hundred Thousand Dollars ($100,000) in any twelve
(12) month period. Tenant shall not take or omit to take any
action, the taking or omission of which shall cause waste, damage
or injury to the Property. Tenant shall indemnify, defend (by legal
counsel acceptable to Landlord) and hold harmless Landlord from and
against any and all Claims (as defined below) arising out of the
failure of Tenant or Tenant’s Agents to perform the covenants
contained in this Section. “ Tenant’s Agents
” shall be defined to include Tenant’s officers,
employees, agents, contractors, invitees, customers and
subcontractors. For the avoidance of doubt, as used in this
Article 20 and in Section 11.1 , the Diversified
Space shall exclude all building systems within the Diversified
Space and any demising, exterior or load bearing walls (other than
the interior surface of such walls within the Diversified
Space).
20.2. Tenant shall
maintain the lines designating the parking spaces in good condition
and paint the same as often as may be necessary, so that they are
easily discernable at all times; resurface the parking areas as
necessary to maintain them in good condition; paint any exterior
portions of the Buildings as necessary to maintain them in good
condition; maintain the roof and landscaping in good condition;
maintain sightly screens, barricades or enclosures around any waste
or storage areas; and take all reasonable precautions to insure
that the drainage facilities of the roof are not clogged and are in
good and operable condition at all times
20.3. There shall
be no abatement of Rent and no liability of Landlord by reason of
any injury to or interference with Tenant’s business arising
from the Tenant’s making of any repairs, alterations or
improvements in or to any portion of the Property, or in or to
improvements, fixtures, equipment and personal property therein
(unless the necessity for any of the same is due to
Landlord’s gross negligence or willful
misconduct).
20.4. During the
Term, Landlord shall, at Landlord’s sole cost and expense, be
responsible for any and all repairs and replacements to the
foundation, slab, structural portions of the walls and roof (not
including the membrane), and structural steel aspects of the
Buildings only. Notwithstanding the foregoing, Tenant shall be
responsible for, and shall pay, all costs and expenses of such
repair and replacement if such repair or replacement results from
anything done by Tenant or Tenant’s Agents or any breach by
Tenant under this Lease. For purposes of clarity, except as
provided in the preceding sentence, Landlord shall not be
responsible for any repairs or replacements to the roof, the
exterior walls or any other portions of the Property. Except for
the foregoing and except as otherwise provided in this Lease,
Landlord shall not be required to maintain or make any repairs or
replacements of any nature or description whatsoever to the
Property unless the necessity for such repairs or replacements is
due to Landlord’s gross negligence or willful misconduct.
Except as otherwise provided in this Lease, Tenant hereby expressly
waives the right to make repairs at the expense of Landlord as
provided for in any Applicable Laws in effect at the time of
execution of this Lease, or in any other Applicable Laws that may
hereafter be enacted, and waives its rights under Applicable Laws
relating to a landlord’s duty to maintain its premises in a
tenantable condition. Notwithstanding the
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foregoing, if
Tenant shall fail, where such failure shall continue for a period
of ten (10) days after written notice thereof from Landlord to
Tenant, to maintain or to commence and thereafter to proceed with
diligence to make any repair required of it pursuant to the terms
of this Lease, Landlord, without being under any obligation to do
so and without thereby waiving such default by Tenant, may so
maintain or make such repair and may charge Tenant for the actual
and documented costs thereof. Any expense reasonably incurred by
Landlord in connection with the making of such repairs may be
billed by Landlord to Tenant monthly or, at Landlord’s
option, immediately, and shall be due and payable within thirty
(30) days after such billing.
20.5. Landlord and
Landlord’s agents shall have the right to enter upon the
Property or any portion thereof in accordance with the terms and
conditions of Section 34.2 , for the purposes of
performing any repairs or maintenance Landlord is permitted or
required to make pursuant to this Lease, and of ascertaining the
condition of the Property or whether Tenant is observing and
performing Tenant’s obligations hereunder, all without
unreasonable interference from Tenant or Tenant’s
Agents.
20.6. Tenant
shall, upon the expiration or sooner termination of the Term,
surrender the Property (other than the Diversified Space) to
Landlord in as good of a condition as when received, ordinary wear
and tear and damage by casualty excepted. Landlord shall have no
obligation to alter, remodel, improve, repair, decorate or paint
the Property (other than the Diversified Space) or any part
thereof, other than pursuant to the terms and provisions of this
Lease.
20.7. Tenant
shall, at its sole cost and expense, perform the maintenance and
repair obligations of the Parcel 3 Owner (as defined in the REA)
pursuant to, and in accordance with, Section 4.1 of the
REA.
20.8. Landlord
shall not be liable for any failure to make any repairs or to
perform any maintenance that is an obligation of Landlord unless
such failure shall persist for an unreasonable time after Tenant
provides Landlord with written notice of the need of such repairs
or maintenance. Notwithstanding any provision in this Lease to the
contrary, if Tenant provides notice to Landlord of an event or
circumstance which requires the action of Landlord with respect to
the provision of repairs as set forth in Section 20.4
of this Lease, and Landlord fails to provide such action as
required by the terms of this Lease within thirty (30) days
after the date of such notice from Tenant (or if such repair is
reasonably expected to require longer than thirty (30) days to
complete, if Landlord shall fail to commence in a meaningful way
such repair within said thirty (30) day period and diligently
prosecutes such repair to completion), then Tenant may provide
Landlord with a second written notice stating in bold and all caps
12 point font that “Landlord’s failure to commence
repair of the damage described below within ten (10) business
days after Landlord’s receipt of this second notice shall
entitle Tenant to repair such damage.” If Landlord does not
commence in a meaningful way such repair within such ten
(10) business day period, then Tenant shall have the right to
take such action, and if such action was required under the terms
of this Lease to be taken by Landlord, then Tenant shall be
entitled to reimbursement by Landlord of Tenant’s reasonable
actual and documented costs and expenses in taking such action.
Notwithstanding the foregoing, in case of an emergency (where there
is an imminent threat of injury to persons or damage to property),
Tenant shall only be required to provide Landlord five (5) business
days notice of the need to make such repairs stating in bold and
all caps 12 point font that “EMERGENCY: Landlord’s
failure to commence its repairs of such damage within five
(5) business days after Landlord’s receipt of this
notice shall entitle Tenant to repair such damage,” and if
Landlord does not commence in a meaningful way such repair within
such five (5) business day period, then Tenant shall have the
right to take such action. In the event Tenant takes such action,
and such work will affect the building systems and equipment,
structural integrity of the Buildings or exterior appearance of the
Buildings, Tenant shall use only those contractors used by Landlord
in connection with the Landlord’s Construction Work for such
work unless such contractors are unwilling or unable to perform
such work or their pricing is unreasonable, in which event Tenant
may utilize the services of any other qualified contractor which
normally and regularly performs similar work in comparable
first-class, institutional quality, office buildings in the San
Diego, California area whose pricing is reasonable. If Tenant is
entitled to reimbursement by Landlord of Tenant’s reasonable
actual and documented costs and expenses in taking any action
pursuant to this Section 20.8 , Tenant shall so notify
Landlord in writing (the “ Reimbursement Notice
”), which Reimbursement Notice shall specify in detail such
costs and expenses. Within thirty (30) days after
Landlord’s receipt of a Reimbursement Notice, Landlord shall
pay to Tenant any undisputed portion of such costs and
23
expenses and
shall notify Tenant in writing of those costs and expenses
specified by Tenant in the Reimbursement Notice which Landlord
disputes (the “ Disputed Amounts ”) and the
reasons for such dispute. Any amounts which are not so identified
by Landlord as Disputed Amounts within said thirty (30) day
period shall be considered to be undisputed. To the extent Landlord
fails to reimburse Tenant for the actual and documented costs and
expenses specified in the Reimbursement Notice within thirty
(30) days after demand therefor, Tenant shall be entitled to
offset the sum of the amount of any undisputed portion of such
costs and expenses against Basic Annual Rent payable by Tenant
under this Lease together with interest at the interest rate of
eight percent (8%) per annum from the date of expiration of said
thirty (30) day period until the earlier of (a) the date that
Landlord reimburses Tenant such amount and (b) the date of offset
(up to a maximum offset each month of fifteen percent (15%) of the
Basic Annual Rent payable for the Premises) until the full
pre-judgment offset amount (plus such interest) has been so offset.
If Tenant obtains a final judgment against Landlord for the
Disputed Amount and if Landlord fails to pay such judgment within
thirty (30) days after the date such judgment is rendered,
Tenant shall be entitled to offset such judgment against Basic
Annual Rent payable by Tenant under this Lease together with
interest at the interest rate of eight percent (8%) per annum from
the date Landlord failed to timely reimburse Tenant for such costs
and expenses until the earlier of (x) the date that Landlord
has reimburses Tenant such amount and (y) the date of offset
(up to a maximum offset each month of fifteen percent (15%) of the
Basic Annual Rent payable for the Premises) until the full amount
of such judgment (plus such interest) has been so offset. If
Landlord obtains a final judgment against Tenant for the Disputed
Amount, Tenant shall pay to Landlord such judgment within thirty
(30) days after the date such judgment is rendered.
20.9. This
Article 20 relates to repairs and maintenance arising
in the ordinary course of operation of the Property (other than the
Diversified Space) and any related facilities. In the event of
fire, earthquake, flood, vandalism, war, terrorism, natural
disaster or similar cause of damage or destruction,
Article 24 shall apply in lieu of this
Article 20 .
20.10.
Notwithstanding anything above to the contrary, if during the Term,
any portion of the Property which is Tenant’s responsibility
hereunder to repair cannot be repaired other than at a cost which
is in excess of fifty percent (50%) of the cost of replacing such
item(s), then such item(s) shall be replaced by Tenant (subject to
Landlord’s prior approval of the plans and specifications and
the cost of any such replacement), and Landlord shall reimburse
Tenant a prorata share of the cost thereof based upon a fraction,
the numerator of which is the number of months of the useful life
of such replacement item beyond the expiration of the Term
(including any Extended Term, if applicable), and the denominator
of which is the total number of months of the useful life of such
replacement (as such useful life is specified pursuant to Federal
income tax regulations or guidelines for depreciation thereof);
provided , however , for purposes of calculating the
useful life of such replacement, the useful life of such
replacement shall not exceed seven (7) years from the date
that such replacement is made.
21.1. Subject to
the immediately succeeding sentence, Tenant shall keep the Property
free from any liens arising out of work performed, materials
furnished or obligations incurred by Tenant. Tenant further
covenants and agrees that any mechanic’s lien filed against
the Property for work claimed to have been done for, or materials
claimed to have been furnished to, shall be discharged or bonded by
Tenant within ten (10) days after the filing thereof, at
Tenant’s sole cost and expense.
21.2. Should
Tenant fail to discharge or bond against any lien of the nature
described in Section 21.1 , Landlord may, at
Landlord’s election, pay such claim or post a bond or
otherwise provide security to eliminate the lien as a claim against
title, and Tenant shall immediately reimburse Landlord for the
actual, documented and reasonable costs thereof as Additional
Rent.
21.3. In the event
that Tenant leases or finances the acquisition of office equipment,
furnishings or other personal property of a removable nature
utilized by Tenant in the operation of Tenant’s business
(which Tenant shall have the right to do), Tenant warrants that any
Uniform Commercial Code financing statement executed by Tenant
shall, upon its face or by Exhibit thereto, indicate that such
financing statement is applicable only to removable personal
property of Tenant located within the Premises. In no event shall
the address of the Property be furnished on a financing statement
without qualifying language as to applicability of the lien only to
removable personal property located in an identified suite leased
by Tenant. Should any
24
holder of a
financing statement executed by Tenant record or place of record a
financing statement that appears to constitute a lien against any
interest of Landlord, Tenant shall, within ten (10) days after
filing such financing statement, cause (a) a copy of the
lender security agreement or other documents to which the financing
statement pertains to be furnished to Landlord to facilitate
Landlord’s ability to demonstrate that the lien of such
financing statement is not applicable to Landlord’s interest
and (b) Tenant’s lender to amend such financing
statement and any other documents of record to clarify that any
liens imposed thereby are not applicable to any interest of
Landlord in the Property.
22.
Indemnification and Exculpation .
22.1. Subject to
Section 22.6 below, Tenant agrees to indemnify, defend
and save Landlord harmless from and against any and all demands,
claims, liabilities, losses, costs, expenses, actions, causes of
action, damages or judgments, and all reasonable expenses
(including, without limitation, reasonable attorneys’ fees,
charges and disbursements) incurred in investigating or resisting
the same (collectively, “ Claims ”) arising from
injury to or death of any person or damage to any property
occurring within or about the Property arising directly or
indirectly out of Tenant’s or Tenant’s
employees’, agents’ or guests’ use or occupancy
of the Property or a breach or default by Tenant in the performance
of any of its obligations hereunder, unless caused solely by
Landlord’s willful misconduct or gross negligence.
22.2. Landlord
agrees to indemnify, defend and save Tenant harmless from and
against any and all Claims arising from injury to or death of any
person or damage to any property occurring within or about the
Diversified Space that arise directly out of Landlord’s
obligations under the Diversified Lease after the Effective Date,
unless (a) caused by Tenant’s acts or omissions, or (b)
arising from Tenant’s performance, or Tenant’s failure
to perform, any of Tenant’s obligations under this
Lease.
22.3.
Notwithstanding any provision of Section 22.1 to the
contrary, but subject to Section 22.5 below, Landlord
shall not be liable to Tenant for, and Tenant assumes all risk of,
damage to personal property or scientific research, including,
without limitation, loss of records kept by Tenant within the
Property and damage or losses caused by fire, electrical
malfunction, gas explosion or water damage of any type (including,
without limitation, broken water lines, malfunctioning fire
sprinkler systems, roof leaks or stoppages of lines), unless any
such loss is due to Landlord’s gross negligence, willful
misconduct and/or willful disregard of written notice by Tenant of
need for a repair that Landlord is responsible to make for an
unreasonable period of time. Tenant further waives any claim for
injury to Tenant’s business or loss of income relating to any
such damage or destruction of personal property as described in
this Section 22.2 .
22.4. Landlord
shall not be liable for any damages arising from any act, omission
or neglect of any third party other than the gross negligence or
willful misconduct of any of Landlord’s officers, employees,
agents, general partners, members, and Lenders (“ Landlord
Parties ”).
22.5. Tenant
acknowledges that security devices and services, if any, while
intended to deter crime, may not in given instances prevent theft
or other criminal acts. Landlord shall not be liable for injuries
or losses caused by criminal acts of third parties, and Tenant
assumes the risk that any security device or service may
malfunction or otherwise be circumvented by a criminal. If Tenant
desires protection against such criminal acts, then Tenant shall,
at Tenant’s sole cost and expense, obtain appropriate
insurance coverage. Notwithstanding any contrary provision of this
Lease, neither Landlord nor Tenant shall be liable to the other
party for any consequential damages, loss of business or profit for
a breach or default under this Lease; provided that this sentence
shall not limit Landlord’s damages if, as a result of
Tenant’s breach of this Lease: (a) Landlord does not or is
unable to lease the Premises to another party, or (b) a third
party is unable to occupy the Premises on the date specified in
such third party’s lease.
22.6. Tenant shall
not be required to indemnify and hold Landlord harmless from any
Claim to any person, property or entity resulting from the grossly
negligent acts or omissions or willful misconduct of the Landlord
Parties in connection with the Landlord Parties’ activities
in, on or about the Property, and Landlord hereby agrees to so
indemnify and holds Tenant harmless from any such
Claims.
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22.7. The
provisions of this Article 22 shall survive the
expiration or earlier termination of this Lease.
23.
Insurance; Waiver of Subrogation .
23.1. Landlord
shall maintain insurance for the Property (including the
Diversified Space) in amounts equal to full replacement cost
(exclusive of the costs of excavation, foundations and footings,
and without reference to depreciation taken by Landlord upon its
books or tax returns) or such lesser coverage as Landlord may
elect, provided that such coverage shall not be less than
ninety percent (90%) of such full replacement cost or the amount of
such insurance Landlord’s lender, mortgagee or beneficiary
(each, a “ Lender ”), if any, requires Landlord
to maintain, providing protection against any peril generally
included within the classification “Fire and Extended
Coverage,” together with insurance against sprinkler damage
(if applicable), vandalism and malicious mischief. Landlord,
subject to availability thereof, shall further insure, if Landlord
deems it appropriate, coverage against flood, environmental hazard,
earthquake, loss or failure of building equipment, rental loss
during the period of repairs or rebuilding, workmen’s
compensation insurance and fidelity bonds for employees employed to
perform services. Notwithstanding the foregoing, Landlord may, but
shall not be deemed required to, provide insurance for any
improvements installed by Tenant or that are in addition to the
standard improvements customarily furnished by Landlord, without
regard to whether or not such are made a part of or are affixed to
the Buildings. Any costs incurred by Landlord pursuant to this
Section 23.1 shall constitute a portion of Insurance
Costs.
23.2. In addition,
Landlord shall carry public liability insurance with a single limit
of not less than Ten Million Dollars ($10,000,000) for death or
bodily injury, or property damage with respect to the Property
(including the Diversified Space). Any costs incurred by Landlord
pursuant to this Section 23.2 shall constitute a
portion of Insurance Costs.
23.3. Tenant
shall, at its own cost and expense, procure and maintain in effect,
beginning on the Commencement Date or the date of occupancy,
whichever occurs first, and continuing throughout the Term (and
occupancy by Tenant, if any, after termination of this Lease)
comprehensive public liability insurance with limits of not less
than Five Million Dollars ($5,000,000) per occurrence for death or
bodily injury and not less than Two Million Dollars ($2,000,000)
for property damage with respect to the Property (including the
Diversified Space).
23.4. Tenant
shall, at its sole cost and expense, procure and maintain in
effect, beginning on the Commencement Date or the date of
occupancy, whichever occurs first, and continuing throughout the
Term all insurance required to be maintained by the Parcel 3 Owner
(as defined in the REA) in connection with the Parcel 3 Land (as
defined in the REA) pursuant to Section 6 of the
REA.
23.5. The
insurance required to be purchased and maintained by Tenant
pursuant to this Lease shall show, as an additional insured in
respect of the Property, Landlord, BioMed Realty, L.P., BioMed
Realty Trust, Inc., Tenant, any management company retained by
Landlord to manage the Property, any ground lessor and any
mortgagee of Landlord required to be named pursuant to its mortgage
documents. All public liability and property damage policies shall
contain a provision that Landlord, although named as an insured,
nevertheless shall be entitled to recovery under said policies for
any loss occasioned to it, its servants, agents and employees by
reason of the negligence of Tenant. Said insurance shall be with
companies having a rating of not less than policyholder rating of A
and financial category rating of at least Class XII in
“Best’s Insurance Guide.” Tenant shall obtain for
Landlord from the insurance companies or cause the insurance
companies to furnish certificates of coverage to Landlord. No such
policy shall be cancelable or subject to reduction of coverage or
other modification or cancellation except after thirty (30)
days’ prior written notice to Landlord from the insurer. All
such policies shall be written as primary policies, not
contributing with and not in excess of the coverage that Landlord
may carry. Tenant’s policy may be a “blanket
policy” that specifically provides that the amount of
insurance shall not be prejudiced by other losses covered by the
policy. Tenant shall, at least twenty (20) days prior to the
expiration of such policies, furnish Landlord with renewals or
binders. Tenant agrees that if Tenant does not take out and
maintain such insurance, Landlord may (but shall not be required
to) procure said insurance on Tenant’s behalf and at its cost
to be paid by Tenant as Additional Rent.
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23.6. Tenant
assumes the risk of damage to any fixtures, goods, inventory,
merchandise, equipment and leasehold improvements, and Landlord
shall not be liable for injury to Tenant’s business or any
loss of income therefrom, relative to such damage, all as more
particularly set forth within this Lease unless caused by
Landlord’s gross negligence or willful misconduct. Tenant
shall, at Tenant’s sole cost and expense, carry such
insurance as Tenant desires for Tenant’s protection with
respect to personal property of Tenant or business
interruption.
23.7. In each
instance where Tenant’s insurance is to name additional
insureds, Tenant shall, upon Landlord’s written request, also
designate and furnish certificates evidencing the same to (a) any
Lender of Landlord holding a security interest in the Property or
any portion thereof, (b) the landlord under any lease
whereunder Landlord is a tenant of the real property upon which the
Buildings are located if the interest of Landlord is or shall
become that of a tenant under a ground lease rather than that of a
fee owner, and (c) any management company retained by Landlord
to manage the Property.
23.8. Landlord and
Tenant each hereby waive any and all rights of recovery against the
other or against the officers, directors, employees, agents and
representatives of the other on account of loss or damage
occasioned by such waiving party or its property or the property of
others under such waiving party’s control, in each case to
the extent that such loss or damage is insured against under any
fire and extended coverage insurance policy that either Landlord or
Tenant may have in force at the time of such loss or damage. Such
waivers shall continue so long as their respective insurers so
permit. Any termination of such a waiver shall be by written notice
to the other party, containing a description of the circumstances
hereinafter set forth in this Section 23.8 . Landlord
and Tenant, upon obtaining the policies of insurance required or
permitted under this Lease, shall give notice to the insurance
carrier or carriers that the foregoing mutual waiver of subrogation
is contained in this Lease. If such policies shall not be
obtainable with such waiver or shall be so obtainable only at a
premium over that chargeable without such waiver, then the party
seeking such policy shall notify the other of such conditions, and
the party so notified shall have ten (10) days thereafter to
either (a) procure such insurance with companies reasonably
satisfactory to the other party or (b) agree to pay such
additional premium. If the parties do not accomplish either
(a) or (b), then this Section 23.8 shall have no
effect during such time as such policies shall not be obtainable or
the party in whose favor a waiver of subrogation is desired refuses
to pay the additional premium. If such policies shall at any time
be unobtainable, but shall be subsequently obtainable, then neither
party shall be subsequently liable for a failure to obtain such
insurance until a reasonable time after notification thereof by the
other party. If the release of either Landlord or Tenant, as set
forth in the first sentence of this Section 23.8 ,
shall contravene Applicable Laws, then the liability of the party
in question shall be deemed not released but shall be secondary to
the other party’s insurer.
24. Damage
or Destruction .
24.1. Subject to
Section 24.2 , In the event of a partial or complete
destruction of the Premises or a Building by fire or other perils,
Landlord shall commence and proceed diligently with the work of
repair, reconstruction and restoration of the Premises and such
Building, as applicable, and this Lease shall continue in full
force and effect.
24.2.
Notwithstanding the terms of this Article 24 , Landlord
may elect not to rebuild and/or restore the Premises and the
Buildings and instead terminate this Lease by notifying Tenant in
writing of such termination within sixty (60) days after the
date of damage, such notice to include a termination date giving
Tenant ninety (90) days to vacate the Premises, but Landlord
may so elect only if the Premises or any Building shall be damaged
by fire or other casualty or cause or be subject to a condition
existing as a result of such a fire or other casualty or cause, and
one or more of the following conditions is present: (i) in the
reasonable judgment of a contractor selected by Landlord and
reasonably approved by Tenant, repairs cannot reasonably be
completed within one hundred eighty (180) days of the date of
damage (when such repairs are made without the payment of overtime
or other premiums); (ii) the holder of any mortgage on the
Premises or the Buildings, or ground or underlying lessor with
respect to the Premises or the Buildings (a) shall require
that the insurance proceeds or any portion thereof be used to
retire the mortgage debt due to an impairment of such
holder’s collateral, and the remaining proceeds are
insufficient to repair the damage and as a result thereof the
deficiency of insurance proceeds exceeds the “Maximum
Amount,” as that term is defined below, and Landlord elects
not to commence repair to the Premises or the Buildings within one
(1) year of such damage or
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destruction, or
(b) shall terminate the ground or underlying lease, as the case may
be; (iii) the dollar amount of the damage or condition arising
as a result of such damage which is not fully covered by
Landlord’s insurance policies (and that would not be fully
covered by Landlord’s insurance policies if Landlord had
carried the coverage required under this Lease) including any
deductible amount, is equal to or greater than Two Hundred and
Fifty Thousand Dollars ($250,000) (the “ Maximum
Amount ”), which Maximum Amount shall, as of the date of
termination of this Lease, be equal to the product of (a) the
Maximum Amount and (b) a fraction, the numerator of which is
the number of full months remaining in the Term, or when
appropriate the Extended Term then applicable, as of the date of
the termination of this Lease, and the denominator of which is 180
(or, if applicable, 60 during an Extended Term) and Landlord elects
not to commence repair to the Premises or the Buildings within one
(1) year of such damage or destruction; or (iv) the
damage occurs during the last twenty-four (24) months of the
Term, as such Term may have been extended by Tenant pursuant to
this Lease; provided , however , that if Landlord
does not elect to terminate this Lease pursuant to Landlord’s
termination right as provided above, and the repairs of such damage
cannot, in the reasonable opinion of a contractor selected by
Landlord and reasonably approved by Tenant, be completed within
twelve (12) months after being commenced, Tenant may elect,
not later than ten (10) business days after the date of such
damage, to terminate this Lease by written notice to Landlord
effective as of the date specified in the notice. At any time, from
time to time, after the date occurring thirty (30) days after
the date of the damage, but in no event more than once every
forty-five (45) days, Tenant may request that Landlord provide
Tenant with a certificate from the architect or contractor
described above setting forth such architect’s or
contractors’ reasonable opinion of the date of completion of
the repairs and Landlord shall respond to such request within
fifteen (15) business days.
24.3. Landlord
shall give written notice to Tenant of its election not to repair,
reconstruct or restore the Premises or the Buildings within sixty
(60) days following the date of damage or
destruction.
24.4. Upon any
termination of this Lease under any of the provisions of this
Article 24 , the parties shall be released thereby without
further obligation to the other from the date possession of the
Premises is surrendered to Landlord, except with regard to
(a) items occurring prior to the damage or destruction and
(b) provisions of this Lease that, by their express terms,
survive the expiration or earlier termination hereof.
24.5. In the event
of repair, reconstruction and restoration as provided in this
Article 24 , all Rent to be paid by Tenant under this Lease
shall be abated proportionately based on the extent to which
Tenant’s use of the Premises is impaired during the period of
such repair, reconstruction or restoration, unless Landlord
provides Tenant with other space during the period of repair that,
in Tenant’s reasonable discretion, is suitable for the
temporary conduct of Tenant’s business; provided ,
however , that the amount of such abatement shall be reduced
by the proceeds of lost rental income insurance actually received
by Tenant with respect to the Premises.
24.6.
Notwithstanding anything to the contrary contained in this
Article 24 , should Landlord be delayed or prevented
from completing the repair, reconstruction or restoration of the
damage or destruction to the Premises or the Buildings after the
occurrence of such damage or destruction by Force Majeure, then the
time for Landlord to commence or complete repairs shall be extended
on a day-for-day basis.
24.7. If Landlord
is obligated to or elects to repair, reconstruct or restore as
herein provided, then Landlord shall be obligated to make such
repair, reconstruction or restoration only with regard to those
portions of the Premises and the Buildings that were originally
provided at Landlord’s expense. The repair, reconstruction or
restoration of improvements not originally provided by Landlord or
at Landlord’s expense shall be the obligation of Tenant. In
the event Tenant has elected to upgrade certain improvements,
Landlord shall, upon the need for replacement due to an insured
loss, construct the improvements to the standard that existed prior
to such damage, unless Tenant again elects to upgrade such
improvements and pay any incremental costs related thereto, except
to the extent that excess insurance proceeds, if received, are
adequate to provide such upgrades, in addition to providing for
basic repair, reconstruction and restoration of the Premises and
the Buildings.
24.8. In addition
to its termination right in Section 24.2 above, Tenant
shall have the right to terminate this Lease if any damage to the
Buildings or the Premises: (a) occurs during
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the last twelve
(12) months of the Term of this Lease (including the last
twelve (12) months of any Extended Term, if applicable);
(b) Tenant is unable to occupy more than twenty-five percent
(25%) of the Premises; and (c) in the reasonable judgment of a
contractor selected by Landlord and reasonably approved by Tenant,
such repairs cannot reasonably be completed within twenty-five
percent (25%) of the remaining term of this Lease (including any
Extended Term, if applicable).
25.1. Total
Taking — Termination . In the event the whole of the
Premises, or such part thereof so that reconstruction of the
Premises will not result in the Premises being reasonably suitable
(as reasonably determined by Landlord and Tenant) for
Tenant’s continued occupancy for the uses and purposes
permitted by this Lease, shall be taken for any public or
quasi-public purpose by any lawful power or authority by exercise
of the right of appropriation, condemnation or eminent domain, or
sold to prevent such taking, Tenant or Landlord may terminate this
Lease effective as of the date possession is required to be
surrendered to said authority.
25.2. Partial
Taking . In the event of a partial taking of the Premises, or
of drives, walkways or parking areas serving the Premises for any
public or quasi-public purpose by any lawful power or authority by
exercise of right of appropriation, condemnation, or eminent
domain, or sold to prevent such taking, then, without regard to
whether any portion of the Premises occupied by Tenant was so
taken, Landlord may elect to terminate this Lease as of such taking
if such taking is, in Landlord’s sole opinion, of a material
nature such as to make it uneconomical to continue use of the
unappropriated portion for purposes of renting office or laboratory
space.
25.3. Tenant shall
be entitled to any award that is specifically awarded as
compensation for (a) the taking of Tenant’s personal
property that was installed at Tenant’s expense and
(b) the costs of Tenant moving to a new location. Except as
set forth in this Article 25 , any award for such
taking shall be the property of Landlord.
25.4. If, upon any
taking of the nature described in Sections 25.1 and
25.2 , this Lease continues in effect, then
(a) Landlord shall promptly proceed to restore the Premises to
substantially their same condition prior to such partial taking and
this Lease shall, as to the part so taken terminate as of the date
that possession of such part of the Premises is taken and the Basic
Annual Rent shall be reduced in the same proportion that the floor
area of the portion of the Buildings so taken (less any addition
thereto by reason of any reconstruction) bears to the original
floor area of the Buildings, and (b) in the event of a partial
taking of the Diversified Space, (i) Tenant agrees to sublease
to Diversified, at no cost to Diversified, up to 6,600 rentable
square feet in the Expansion Premises or in the Existing Parcel 1
and Parcel 2 Buildings in accordance with Diversified’s
rights under Article 20 of the Diversified Lease, (ii)
Tenant shall be entitled to (1) an abatement of fifty percent
(50%) of the Expansion Premises Basic Annual Rent for the portion
of the Expansion Premises (if any) occupied by Diversified, and
(2) an abatement of fifty percent (50%) of the Basic Annual
Rent under the Illumina Lease for the portion of the Premises (as
defined in the Illumina Lease) (if any) occupied by Diversified,
(iii) Landlord shall pay all costs associated with the
relocation of Diversified, including, but not limited to, costs of
tenant improvements and moving costs, and (iv) Tenant shall
not be entitled to an abatement of any of the operating expenses,
including Taxes, Insurance Costs, Utility Costs and all other
insurance and utility costs and expenses in connection with the
portion of the Expansion Premises or the Premises (as defined in
the Illumina Lease) occupied by Diversified
26. Defaults
and Remedies .
26.1. Late payment
by Tenant to Landlord of Rent and other sums due shall cause
Landlord to incur costs not contemplated by this Lease, the exact
amount of which shall be extremely difficult and impracticable to
ascertain. Such costs include, but are not limited to, processing
and accounting charges and late charges that may be imposed on
Landlord by the terms of any mortgage or trust deed covering the
Property. Therefore, if any installment of Rent due from Tenant is
not received by Landlord within five (5) days after written
notice that such payment is due, Tenant shall pay to Landlord an
additional sum of three percent (3%) of the overdue Rent as a late
charge. The parties agree that this late charge represents a fair
and reasonable estimate of the costs that Landlord shall incur by
reason of late payment by Tenant. Notwithstanding the foregoing,
Landlord shall waive the imposition of such late charge for
the
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first late
payment of Rent due hereunder in any calendar year of the Term. In
addition to the late charge, Rent not paid when due shall bear
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