BRISBANE TECHNOLOGY PARK LEASE DATED 08/05/2003

Exhibit 10.6

 

BRISBANE TECHNOLOGY PARK

 

LEASE

 

by and between

 

GAL-BRISBANE, L.P., a California limited partnership

 

as Landlord

 

and

 

ALTUS MEDICAL, INC.

 

as Tenant

TABLE OF CONTENTS

 

 

i

 

ii

 

iii

 

iv

 

 

V

LEASE SUMMARY

 

 

vi.

 

vii

 

BRISBANE TECHNOLOGY PARK

 

LEASE

 

THIS LEASE (this “Lease”), dated as of August 5, 2003, is entered into by and between GAL-BRISBANE, L.P. , a California limited partnership (“Landlord”), and ALTUS MEDICAL, INC. , a Delaware corporation (“Tenant”).

 

1. PREMISES

 

(a) Leased Premises . Landlord hereby leases to Tenant, and Tenant hereby leases from Landlord, those certain premises (the “Premises”) located in the Project (defined below) consisting of approximately sixty-six thousand and two (66,002) rentable square feet of space, as shown on Exhibit A attached hereto, in that certain building (the “Building”) located at 3240 Bayshore Boulevard in Brisbane, California. The Premises are located within that certain office and research and development business park commonly known as Brisbane Technology Park (the “Project”), and more particularly described in Exhibit B attached hereto. The Project consists of the Building, two (2) other office buildings located at 3260 and 3280 Bayshore Boulevard (collectively, the “Other Buildings”), adjacent parking areas, landscaping and related improvements. The total rentable square footage of the Project is approximately one hundred eighty-three thousand three hundred forty-four (183,344) rentable square feet.

 

(b) Project Common Areas . Tenant’s right to use the Project Common Areas (as hereinafter defined) is a right in common with other tenants of the Project, if any. For purposes of this Lease, the term “Project Common Areas” shall mean all areas and facilities within the Project provided and designated by Landlord for the general use, convenience or benefit of Tenant and other tenants and occupants of the Project (excluding space in the Building and the Other Buildings), including, but not limited to, parking areas, access and perimeter roads, sidewalks, landscaped areas, service areas, trash disposal facilities and similar areas. Tenant’s right to use the Project Common Areas is subject to the reasonable rules and regulations and reasonable changes therein from time to time made by Landlord governing the use of the Project Common Areas. Landlord shall at all times have exclusive control of the Project Common Areas and may at any time temporarily close any part thereof, exclude and restrain anyone from any part thereof, and/or temporarily or permanently change the size, configuration, composition and/or location of the Project Common Areas. Specifically, Landlord shall have the right from time to time during the Lease Term (as hereinafter defined) to (a) grant easements within the boundaries of the Project, (b) modify the parking areas and ingress and egress to and from the parking areas and the buildings located within the Project, (c) modify the directional flow of traffic in the Project, (d) make alterations or additions to the Building, the Other Buildings and any other buildings located within the Project, (e) install, maintain, use, repair and replace pipes, ducts, conduits and wires, leading through, under or over the Premises to locations serving other parts of the Project and (f) subdivide the Project into two or more legal parcels and enter into and record against the Project covenants, conditions and restrictions (the “CC&Rs”) and/or easement agreements (the “Easement Agreements”). Tenant’s right to occupy and use the Premises pursuant to this Lease and Tenant’s interest in the Project shall be subject and subordinate to any CC&Rs and Easement Agreements entered into by Landlord; provided, however, Tenant shall have the right to review and approve (which approval shall not be unreasonably withheld) such

 

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CC&Rs and/or Easements Agreements prior to this Lease and Tenant’s interest in the Project becoming subject and subordinate to such CC&Rs and/or Easement Agreements. Landlord also reserves the right to expand or contract the area of the Project, to make alterations thereof or additions thereto and to construct and install additional buildings and other improvements within the Project; provided, however that in such case, Tenant’s Project Percentage (as hereinafter defined) shall be proportionately adjusted. The preceding to the contrary notwithstanding, Landlord agrees that it shall not make any changes, alterations or improvements to the Project Common Areas or any other portion of the Project as provided above if the same would (i) materially impair or adversely affect Tenant’s access to or use of the Premises, or any portion thereof, (ii) reduce the number of parking spaces allocated to Tenant for Tenant’s use or reduce the number of parking spaces in the Project Common Areas below those required by local ordinance or code, or (iii) result in any increased costs on Tenant.

 

2. LEASE TERM

 

(a) Term . The term of this Lease shall be a period of approximately ten (10) years, commencing on the Commencement Date (defined in Section 2(b) ) and ending, unless earlier terminated pursuant to the terms of this Lease, on the last day of the one hundred twentieth (120th) full calendar month after the Commencement Date (the “Expiration Date”). Such period, as the same may be extended pursuant to the terms hereof, shall be referred to hereinafter as the “Lease Term.”

 

(b) Commencement Date; Delivery Dates .

 

(i) Commencement Date . For purposes of this Lease, the “Commencement Date” shall be October 15, 2003 (the “Estimated Delivery Date”); provided, however, if Landlord fails to substantially complete Landlord’s Work (as defined in the Work Letter Agreement attached hereto as Exhibit C ) and deliver possession of the Premises to Tenant by the Estimated Delivery Date, then the Commencement Date shall be the later to occur of (i) January 1, 2004 (the “Alternate Delivery Date”) or (ii) the date on which Landlord substantially completes Landlord’s Work and delivers possession of the Premises to Tenant.

 

(ii) Delay in Delivery . If Landlord has not substantially completed Landlord’s Work and delivered possession of the Premises to Tenant by the Alternate Delivery Date for any reason other than a Tenant Delay (as defined in the Work Letter Agreement), then this Lease shall remain in effect and Tenant shall receive a credit against the Base Rent otherwise payable under the Lease from and after the Commencement Date in an amount equal to $1,333.33 per day for each day of the delay in delivering the Premises in the required condition beyond the Alternate Delivery Date. The parties agree that such amount represents a fair and reasonable estimate of the damages that Tenant will incur by reason of the late completion of the Landlord’s Work. Except as otherwise provided in this Section 2 , Landlord shall not be liable to Tenant for any loss or damage resulting from any failure of Landlord to substantially completed Landlord’s Work and deliver possession of the Premises to Tenant by the Estimated Delivery Date or Alternate Delivery Date and this Lease shall remain in effect.

 

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(iii) Tenant Delay . Notwithstanding anything to the contrary contained in this Lease, if Landlord is delayed in substantially completing Landlord’s Work as a result of a Tenant Delay, then this Lease shall commence (and Tenant shall be obligated to commence paying Rent) on the day that Landlord would have substantially completed Landlord’s Work absent the Tenant Delay as reasonably determined by Landlord. Landlord shall not be entitled to claim a Tenant Delay in substantially completing the Landlord’s Work unless Landlord notifies Tenant in writing of such Tenant Delay (describing in detail the nature of such Tenant Delay) within three (3) business days following the date such Tenant Delay commences.

 

(iv) Force Majeure . If Landlord is delayed in substantially completing Landlord’s Work as a result of an event of Force Majeure (as defined in the Work Letter Agreement) and, as a result, Landlord fails to substantially complete Landlord’s Work and deliver possession of the Premises to Tenant by the Alternate Delivery Date, then the Alternate Delivery Date shall be extended one day for each day that Landlord is delayed in substantially completing Landlord’s Work as a result of an event of Force Majeure. Landlord shall not be entitled to claim a Force Majeure Delay in substantially completing the Landlord’s Work unless Landlord notifies Tenant in writing of such Force Majeure Delay (describing in detail the nature of such Force Majeure Delay) within three (3) business days following the date such Force Majeure Delay commences.

 

(v) Commencement Date Memorandum . Within ten (10) days after the determination of the Commencement Date, Landlord shall prepare and deliver to Tenant a commencement date memorandum (the “Commencement Date Memorandum”) in the form of Exhibit D , attached hereto, subject to such changes in the form as may be required to insure the accuracy thereof. The Commencement Date Memorandum shall certify the date on which Landlord delivered possession of the Premises to Tenant and the dates upon which the Lease Term commences and expires. Tenant’s failure to execute and deliver to Landlord the Commencement Date Memorandum within ten (10) business days after Tenant’s receipt of the Commencement Date Memorandum shall be conclusive upon Tenant as to the matters set forth in the Commencement Date Memorandum.

 

(vi) Termination Date . If for any reason (including, without limitation, any Force Majeure event(s), but not including any Tenant Delays) the Commencement Date has not occurred by March 31, 2004, then Tenant may elect, in its sole discretion, to terminate this Lease by delivery of written notice of termination prior to the occurrence of the Commencement Date. In the event of such termination, all rights and obligations under this Lease shall cease and Landlord shall promptly return to Tenant all prepaid Base Rent and the Security Deposit.

 

(vii) Outside Termination Date . If for any reason the Commencement Date has not occurred within two (2) years after the date of this Lease, then this Lease shall automatically terminate and be of no further force or effect and Landlord shall promptly return to Tenant all prepaid Base Rent and the Security Deposit.

 

(c) Tenant’s Early Access . Tenant shall be allowed to enter the Premises during the thirty (30) day period immediately prior to the Commencement Date (as reasonably determined by Landlord) for the purpose of installing Tenant’s telephone lines, cabling, furniture, computers and other personal property (hereinafter referred to as the “Installation Work”) provided that Tenant provides Landlord with twenty-four (24) hours’ prior written notice of its intent to enter the Building. Landlord shall notify Tenant in writing on or about the thirty-fifth

 

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(35 ^th ) day prior to the date Landlord reasonably believes the Commencement Date will occur and the Landlord’s Work will be substantially completed. Tenant shall not interfere with Landlord’s completion of Landlord’s Work during Tenant’s early occupancy of the Premises; provided, however, Landlord shall reasonably cooperate with Tenant in scheduling and performing Landlord’s Work in a manner that enables Tenant to perform the Installation Work during the early entry period. Tenant assumes all risk of loss or damage to Tenant’s machinery, equipment, fixtures and other personal property installed or placed in the Premises during the early occupancy period stated above and agrees to waive and release Landlord from any loss or damage to such machinery, equipment, fixtures and personal property except for liability, loss or damage caused by or resulting from the gross negligence or willful misconduct of Landlord or any of its agents, employees, contractors, subcontractors or other representatives. Tenant’s early occupancy of the Premises shall be subject to all of the terms and conditions of this Lease except that Tenant shall not be obligated to pay any Base Rent, Operating Expenses, Real Property Taxes or Project Property Insurance during the early occupancy period.

 

3. RENT

 

(a) Base Rent .

 

(i) Initial Base Rent . Commencing on the Commencement Date, and continuing thereafter until the Expiration Date or earlier termination of this Lease, Tenant shall pay to Landlord, subject to Section 2(b)(ii) above and subject to adjustment as provided in Section 3(a)(ii) below, base rent (the “Base Rent”) for the Premises in the amount of Forty Thousand Dollars ($40,000) per month. Base Rent shall be paid in advance on the first day of each calendar month, in lawful money of the United States, without abatement, deduction, claim, offset, prior notice or demand except as otherwise specifically provided in this Lease. Tenant shall pay to Landlord the first month’s Base Rent upon execution of this Lease and such payment shall be applied by Landlord to the first months’ Base Rent due hereunder.

 

(ii) Adjustments . On the first (1st) day of the third Lease Year and on the first day of each Lease Year thereafter (each, an “Adjustment Date”) the Base Rent shall be increased to the amount set forth in Section 1 of the Addendum to this Lease, attached hereto and incorporated herein by reference. For purposes of this Lease, the first “Lease Year” shall be the period commencing on the Commencement Date and ending on the last day of the twelfth (12 ^th ) full calendar month of this Lease; provided, however, if the Commencement Date occurs on or between the second (2 ^nd ) day and the fifteenth (15 ^th ) day of a calendar month, then the first Lease Year shall be the period commencing on the Commencement Date and ending on the last day of the eleventh (11 ^th ) full calendar month of this Lease. Thereafter, the term “Lease Year” shall mean a period of twelve (12) full calendar months commencing upon the expiration of the prior Lease Year.

 

(b) Additional Rent . All monies other than Base Rent that Tenant is required to pay under this Lease, including, without limitation, a portion of repair and maintenance charges pursuant to Section 8 , Real Property Taxes pursuant to Section 10 , insurance premiums pursuant to Section 11 and Operating Expenses pursuant to Section 12 , shall be deemed “Additional Rent” and shall be paid to Landlord as provided in this Lease. The term “Rent” as used herein shall refer to Base Rent plus any Additional Rent. All Rent shall be paid to Landlord at Landlord’s address set forth in the Lease Summary or at such other place designated by Landlord in a written notice to Tenant. No Additional Rent shall accrue under this Lease until on and after the Commencement Date.

 

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(c) Prorations . If the Commencement Date is not the first (1st) day of a calendar month, or if the expiration date of this Lease is not the last day of a calendar month, Base Rent due for the fractional month during which this Lease commences or expires shall be prorated on the basis of the number of days in such calendar month.

 

4. CONDITION OF PREMISES

 

Landlord shall deliver possession of the Premises to Tenant in the condition required pursuant to the Work Letter Agreement. In addition, Landlord represents and warrants to Tenant that, as of the Commencement Date, the Premises (including, without limitation, all improvements and building systems therein), the Tenant Improvements (as defined in the Work Letter Agreement) and the Project Common Areas will be in compliance with all applicable Laws (including, without limitation, the Accessibility Requirements described in Section 5(b)(i)(A) below and Title 24 of the California Code of Regulations) and the Building systems and equipment shall be in good working order and repair. In the event of any breach by Landlord of the representation or warranty set forth in the immediately preceding sentence, in addition to all other rights and remedies available to Tenant at law or in equity or under this Lease, Landlord shall diligently undertake to cure such breach at Landlord’s sole cost (and without any reimbursement by Tenant or pass-through of such cost to Tenant). Tenant acknowledges that, except as expressly provided in this Lease and the Work Letter Agreement attached hereto, neither Landlord nor Landlord’s authorized agents, partners, members, subsidiaries, directors, officers and/or employees (collectively, “Landlord’s Agents”) have made any representations or warranties as to the suitability or fitness of the Premises for the conduct of Tenant’s business or for any other purpose, nor has Landlord or Landlord’s Agents agreed to undertake any Alterations (defined below in Section 7 ) or construct any improvements in the Premises.

 

5. USE

 

(a) Tenant’s Use . Tenant may use the Premises solely for office, administration, and research and development purposes and for other legal related uses including, without limitation, assembling, manufacturing, final testing, shipping and receiving of medical device related products, and shall not use the Premises for any other use or purpose. Landlord shall provide Tenant with access to the Building twenty-four hours per day, seven days per week.

 

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(b) Compliance with Laws and Project Rules and Regulations .

 

(i) Laws .

 

(A) Tenant’s Compliance . Tenant shall not use the Premises or suffer or permit anything to be done in or about the Premises which shall in any way conflict with the requirements of any covenants, conditions and/or restrictions of record as of the date of execution of this Lease, or with any law, statute, zoning restriction, ordinance, order, rule, regulation or requirement of any duly constituted public authorities (including, without limitation, state, municipal, county and federal governments and their departments, bureaus, boards and officials), whether now in force or which may hereafter be in force, applicable to Tenant’s use or occupancy of the Premises (collectively, “Laws”), including, without limitation, (i) the San Bruno Mountain Area Habitat Conservation Plan, as amended (the “HCP”), and (ii) that certain Declaration of Covenants and Restrictions on Real Property on San Bruno Mountain. Throughout the Lease Term, Tenant shall, at its own cost and expense, promptly and properly observe and comply with all Laws applicable to Tenant’s use or occupancy of the Premises, including, without limitation, the making by Tenant of any Alteration (as defined in Section 7 ) to the Premises. The preceding to the contrary notwithstanding, Tenant shall not be required or obligated to construct or install (or contribute to the cost of constructing or installing) any capital improvements that may be required by Laws, including, without limitation, applicable building codes, Title III of the Americans with Disabilities Act and/or state and local accessibility requirements (collectively, the “Accessibility Requirements”) and Title 24 of the California Code of Regulations, as such may be amended from time to time, except to the extent required by Tenant’s specific manner of use of the Premises or because of Alterations performed by Tenant. In addition, Tenant shall not be required to make any modifications or additions to the structure of the Building or basic Building systems or equipment except to the extent required by Tenant’s specific manner of use of the Premises or because of Alterations performed by Tenant.

 

(B) Landlord’s Compliance . Landlord shall maintain the Project Common Areas in good, safe and clean order, condition and repair and perform Landlord’s maintenance and repair obligations pursuant to Section 8(a) of this Lease in compliance with all Laws, including, without limitation, all applicable building codes, Accessibility Requirements and Title 24 of the California Code of Regulations, as such may be amended from time to time.

 

(ii) Rules and Regulations . Tenant shall comply with the Rules and Regulations of the Project which are attached hereto as Exhibit E , as the same may be reasonably modified and amended from time to time by Landlord in its reasonable discretion (the “Rules and Regulations”). Landlord shall provide Tenant with any and amendments to the Rules and Regulations not less than thirty (30) days prior to the date such amendments are to go into effect. In the event of any conflict between the Rules and Regulations and this Lease, this Lease shall control. Landlord agrees to enforce the Rules and Regulations against Tenant and the other tenants within the Project in a non-discriminatory manner.

 

(c) Hazardous Materials .

 

(i) Definition . As used herein, the term “Hazardous Material” shall mean any substance: (i) the presence of which requires investigation or remediation under any federal, state or local statute, regulation, ordinance, order, action, policy or common law; (ii) which is or becomes defined as a “hazardous waste,” “hazardous substance,” pollutant or contaminant under any federal, state or local statute, regulation, ordinance, rule, directive or order or any amendments thereto (hereinafter referred to as “Environmental Laws”) including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. Section 9601 et seq.) and/or the Resource Conservation and Recovery Act (41 U.S.C. Section 6901 et seq.); (iii) which is toxic, explosive, corrosive, flammable, infectious, radioactive, carcinogenic, mutagenic or otherwise hazardous and is or becomes regulated by any governmental authority, agency, department, commission, board, agency or instrumentality of the United States, the State of California or any political subdivision thereof; (iv) which contains gasoline, diesel fuel or other petroleum hydrocarbons; (v) which contains polychlorinated biphenyls (PCBs), asbestos or urea formaldehyde foam insulation; or (vi) radon gas.

 

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(ii) Existing Environmental Condition . Except as otherwise noted in that certain report entitled “Updated Level One Environmental Site Assessment” dated August 16, 2000, prepared by Lumina Technologies, Landlord represents to Tenant that, to Landlord’s actual knowledge, (i) there are no Hazardous Materials located on, under or in the Project, and (ii) there are no underground storage tanks located in the Project.

 

(iii) Tenant’s Covenants . Tenant shall not store, use, generate, transport, dispose or release any Hazardous Materials on, in, under or about the Premises, or any portion of the Project without the prior written consent of Landlord, which consent may not be unreasonably withheld, conditioned or delayed; provided, however, as a condition to Landlord approving Tenant’s storage, use, generation, transport, disposal or release of Hazardous Materials in or on the Premises and/or the Project, Tenant must satisfy and/or comply with the following conditions: (i) Tenant’s request to store and use Hazardous Materials must be approved by Landlord’s lender, (ii) Tenant may only use and store quantities of Hazardous Materials on the Premises that are necessary for the conduct of Tenant’s business, (iii) Tenant must store, use and dispose of all Hazardous Materials in compliance with all Environmental Laws and all other applicable laws and regulations, (iv) Tenant must arrange for only qualified and trained personnel to handle, use, store and dispose of the Hazardous Materials, (v) Tenant must designate an area(s) within the Premises for storage of the Hazardous Materials, (vi) Tenant must adopt a compliance monitoring program with respect to the Hazardous Materials, which program must be approved by Landlord, which approval shall not be unreasonably withheld, conditioned or delayed, and (vii) Landlord shall have the right, upon reasonable prior notice and at reasonable times, to conduct tests or periodic investigations (“Haz Mat Investigations”) of the Premises and the Project to determine Tenant’s compliance with the provisions contained in this Section or to determine whether Tenant has released or disposed of Hazardous Materials on or under the Premises in violation of this Lease. Tenant shall pay for the reasonable cost incurred by Landlord in performing not more than two (2) Haz Mat Investigations per year unless it is determined that Tenant has caused any Hazardous Materials to be released, discharged or emitted on, in or under or about the Premises or on or under any portion of the Project in violation of applicable Environmental Laws or any other applicable laws or regulations in which event Tenant shall pay the cost of the additional Haz Mat Investigations. Notwithstanding the foregoing, Tenant shall not be allowed to place underground storage tanks in the Premises or on the Project. In addition, Tenant shall have the right to use and store on the Premises (i) limited quantities of commonly used standard office and janitorial supplies containing chemicals categorized as Hazardous Materials and (ii) reasonable quantities of the Hazardous Materials listed on Exhibit I used in connection with Tenant’s business, so long as Tenant uses, stores and disposes of all such Hazardous Materials in strict compliance with all Environmental Laws and prudent business practices. In addition, Tenant shall comply with all guidelines contained in the HCP with respect to the use, storage and release of pesticides in or on the Project. If at any time during or after the Lease Term Tenant becomes aware of any inquiry, investigation, administrative proceeding or judicial proceeding by any governmental agency regarding the storage, use or disposition of any Hazardous Materials by Tenant or Tenant’s Agents in, on, under or about the Premises or the Project, Tenant shall, within five (5) days after first learning of such inquiry, investigation or proceeding, give Landlord written notice advising Landlord of the same.

 

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If Landlord withholds its consent to any request by Tenant to store, use, generate, transport, dispose or release any Hazardous Materials on, in, under or about the Premises, or any portion of the Project and Tenant objects to Landlord’s decision on the basis that Landlord has unreasonably withheld its consent, then either party may submit the matter as to whether Landlord has reasonably withheld its consent to binding arbitration before a single neutral arbitrator having experience in environmental law or Hazardous Materials or, alternatively, the arbitrator may be a retired judge or justice of a California Superior Court or Court of Appeal. The matter shall be decided by arbitration in accordance with the applicable arbitration statutes and the then existing Commercial Arbitration Rules of the American Arbitration Association. Any party may initiate the arbitration procedure by delivering a written notice of demand for arbitration to the other party. Within thirty (30) days after the other party’s receipt of the written notice of demand for arbitration, the parties shall attempt to select a qualified arbitrator who is acceptable to all parties. If the parties are unable to agree upon an arbitrator who is acceptable to all parties, either party may request the American Arbitration Association to appoint the arbitrator in accordance with its Commercial Arbitration Rules. The provisions of California Code of Civil Procedure Section 1283.05 or its successor section(s) are incorporated in and made a part of this Lease with respect to any arbitration requested in accordance with the provisions contained in this Section. Depositions may be taken and discovery may be obtained in any arbitration proceeding requested pursuant to this Section in accordance with the provisions of California Code of Civil Procedure Section 1283.05 or its successor section(s). Arbitration hearing(s) shall be conducted in San Mateo County California. Any relevant evidence, including hearsay, shall be admitted by the arbitrator if it is the sort of evidence upon which responsible persons are accustomed to rely in the conduct of serious affairs, regardless of the admissibility of such evidence in a court of law; however, the arbitrator shall apply California law relating to privileges and work product. In rendering his or her award, the arbitrator shall set forth the reasons for his or her decision. The fees and expenses of the arbitrator shall be paid in the manner allocated by the arbitrator. This agreement to arbitrate any dispute concerning Landlord’s failure to approve Tenant’s request shall be specifically enforceable under the prevailing arbitration law. Judgment on the award rendered by the award may be entered in any court having jurisdiction thereof.

 

(iv) Tenant’s Indemnity . Tenant shall be solely responsible for and shall indemnify, defend and hold harmless Landlord and Landlord’s Agents from and against all claims, demands, judgments, losses, expenses, costs and liabilities, including reasonable fees and costs of attorneys and consultants and engineers (collectively, “Liabilities”), arising out of or in any way relating to the storage, use, generation, transportation, disposal or release of any Hazardous Material by Tenant and/or Tenant’s affiliates (defined as any entity which controls, is controlled by or under common control with Tenant), subsidiaries, divisions, officers, directors, partners, employees, agents, contractors, invitees, tenants or assignees (collectively, “Tenant’s Agents”) in, on or under the Premises or any portion of the Project, including, without limitation, any Liabilities arising out of or in any way relating to any reasonable investigation, testing, removal, clean-up and/or restoration services, work, materials and equipment necessary to return the Project (or any part thereof) to its condition existing prior to the use, storage, generation, transport, disposal or release by Tenant or Tenant’s Agents of any Hazardous Material in, on, under or about the Premises or the Project, and to otherwise reasonably and satisfactorily investigate and remediate the contamination arising therefrom. Notwithstanding any provision in this Lease to the contrary, Tenant shall not be liable to Landlord for, and shall have no indemnification obligation with respect to, any Hazardous Materials which were on the Project or in the Building and/or Premises prior to the date the Premises were delivered to Tenant in the required condition or which were subsequently placed thereon by anyone other than Tenant or Tenant’s Agents.

 

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(v) Landlord’s Indemnity . Landlord shall be solely responsible for and shall indemnify, defend and hold harmless Tenant and Tenant’s Agents from and against all Liabilities arising out of or in any way relating to (A) any breach by Landlord of its representation or warranty set forth in Section 5(c)(ii) above and/or (B) the storage, use, generation, transportation, disposal or release of any Hazardous Material by Landlord and/or Landlord’s Agents in, on or under the Project.

 

(vi) Survival . Landlord’s and Tenant’s obligations under this Section 5 shall survive the expiration and/or earlier termination of this Lease.

 

6. ASSIGNMENT AND SUBLETTING

 

(a) Landlord’s Consent . Tenant shall not assign this Lease, sublease all or any portion of the Premises or mortgage or hypothecate this Lease or all or any portion of Tenant’s interest in this Lease or the Premises (each, a “Transfer”) without Landlord’s prior written consent, which consent shall not be unreasonably withheld, delayed or conditioned. Any attempted or purported Transfer without Landlord’s prior written consent (where such written consent is required) shall be void and confer no rights upon any third party. If Tenant effects a Transfer without Landlord’s prior written consent, Landlord may (i) terminate this Lease (provided Tenant does not rescind such Transfer within five (5) business days following receipt of written notice from Landlord of such Transfer made without Landlord’s required consent) or (ii) accept rent from the purported Tenant or assignee (each, a “Transferee”) and apply such rent against Tenant’s Base Rent and Additional Rent obligations under this Lease. No such acceptance of rent shall be deemed an express or implied waiver of Tenant’s breach of this Section 6(a) unless such waiver is in writing and signed by Landlord, and Landlord reserves all rights and remedies arising with respect to such breach by Tenant, including, without limitation, the right to terminate this Lease if such Transfer in violation of the terms hereof is not rescinded by Tenant within five (5) business days following receipt of written notice from Landlord as provided above. Such acceptance of rent from a purported Transferee shall not be construed to constitute a consent to the purported Transfer or to give the purported Transferee a right of possession with respect to the Premises.

 

(b) Transferee Form . Each Transfer shall be by an instrument in writing in a form reasonably satisfactory to Landlord, and shall be executed by Tenant and Transferee. Each Transferee that is an assignee of this Lease shall agree in writing, for the benefit of Landlord, to assume, to be bound by and to perform the terms, conditions and covenants of this Lease to be performed by Tenant. Each Transferee that is a subtenant of Tenant hereunder shall agree in writing, for the benefit of Landlord, to perform the terms, conditions and covenants of this Lease to be performed by Tenant to the extent incorporated into such sublease. Notwithstanding anything contained herein, Tenant shall not be released from personal liability for the performance of each term, condition and covenant of this Lease by reason of Landlord’s consent to a Transfer unless Landlord specifically grants such release in writing.

 

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(c) No Waiver . Consent by Landlord to one Transfer shall not be deemed to be a consent to any subsequent Transfer.

 

(d) Information to be Furnished . If Tenant desires at any time to Transfer the Premises or any portion thereof, it shall first notify Landlord of its desire to do so and shall submit in writing to Landlord: (i) the name of the proposed Transferee; (ii) the nature of the proposed Transferee’s business to be carried on in the Premises; (iii) the terms and provisions of the proposed Transfer and a copy of the proposed Transfer agreement and related agreements; and (iv) such financial information, including financial statements, as Landlord may reasonably request concerning the proposed Transferee (except that such Transferee shall not be obligated to produce or deliver to Landlord audited financial statements unless the same are available). Tenant shall reimburse Landlord, as Additional Rent, for all reasonable legal and other expenses incurred by Landlord in connection with any request by Tenant for consent to a Transfer.

 

(e) Landlord’s Alternatives . At any time within fifteen (15) days after Landlord’s receipt of all of the information specified in Section 6(d), Landlord may, by written notice to Tenant, elect: (i) to terminate this Lease and recapture the entire Premises, in the event of an assignment, or the portion of the Premises that Tenant proposes to sublease, in the event of a sublease, which, when taken together with all other existing subleases, covers more than fifty percent (50%) of the rentable area of the Premises, in which event this Lease shall terminate as to, and Tenant shall surrender to Landlord, the portion of the Premises that Landlord has elected to recapture as of the date specified in Landlord’s election notice (which in no event shall be less than thirty (30) days nor more than one hundred twenty (120) days following the date of Landlord’s election notice); (ii) to consent to the Transfer by Tenant; or (iii) to reasonably refuse its consent to the Transfer, in which case Landlord shall specify the reasons for its refusal in Landlord’s election notice. Notwithstanding the foregoing, Landlord shall not have the alternative set forth in Section 6(e)(i) in connection with a permitted Transfer described in Section 6(g). Landlord may withhold its consent to any Transfer pursuant to clause (iii) above with respect to any proposed Transfer by Tenant during the first three (3) years of the Lease Term if the Subrent is less than ninety percent (90%) of fair market rent. If Landlord fails to elect any of the alternatives set forth in Section 6(e)(i) through Section 6(e)(iii) above within the fifteen (15) day period, Tenant may send a second written request (the “Second Request”) to Landlord and any other party designated by Landlord pursuant to Section 14. The Second Request shall expressly state in bold type that “Landlord will be deemed to have consented to the proposed Transfer if Landlord fails to respond to Tenant’s request for approval of the proposed Transfer within five (5) days.” If Landlord fails to notify Tenant of its election of any of the alternatives set forth in Section 6(e)(i) through Section 6(e)(iii) above within five (5) days after Landlord’s (and any other party designated by Landlord to receive notice pursuant to Section 14’s) receipt of the Second Request, then it shall be deemed that Landlord has consented to the Transfer. If Landlord consents or is deemed to have consented to the Transfer, Tenant may thereafter enter into a valid Transfer of the Premises or portion thereof, upon the terms and conditions and with the proposed Transferee set forth in the information furnished by Tenant to Landlord pursuant to Section 6(d), subject, however, to the condition that Tenant shall pay to Landlord fifty percent (50%) of any excess of the Subrent (defined below) over the Rent required to be paid by Tenant hereunder, less Tenant’s reasonable Transfer Costs (the “Bonus Rent”). For the purposes of the foregoing, (i) the term “Subrent” shall mean any consideration of any kind received, or to be received, by Tenant from a sublessee if such sums are related to Tenant’s interest in this Lease or in the Premises, and (ii) the term “Transfer Costs” shall mean all actual costs and expenses paid by Tenant to effect the Transfer, including brokerage fees, attorneys’ fees, architectural fees, the cost of any alterations or leasehold improvements made by Tenant at the request of the transferee that would not have been constructed for Tenant’s occupancy of the subject portion of the Premises, and any leasing commissions paid by Tenant incidental to such Transfer, but not including vacancy costs or the cost of any alterations or leasehold improvements made to the Premises other than those performed to effect the Transfer. Any such Subrent to be paid to Landlord pursuant hereto shall be payable to Landlord as and with the Base Rent payable to Landlord hereunder pursuant to Section 3(a).

 

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(f) Executed Counterpart . No Transfer shall be valid nor shall any Transferee take possession of the Premises until an executed counterpart of the Transfer agreement has been delivered to Landlord.

 

(g) Permitted Assignments . Notwithstanding anything to the contrary contained in this Lease, Tenant shall not be required to obtain Landlord’s prior consent or obligated to pay 50% of any Bonus Rent to Landlord in connection with any Transfer by Tenant to (i) an entity resulting from a merger or consolidation with, or reorganization (other than in connection with any bankruptcy filing) by, Tenant, (ii) an entity which acquires all or part of Tenant, or which is acquired in whole or in part by Tenant, (iii) an entity which acquires all or substantially all of the assets of Tenant, or (iv) a Tenant Affiliate. For purposes of this Lease, a “Tenant Affiliate” is defined as (x) any entity that controls, is controlled by or under common control with Tenant, and (y) any entity at least twenty-five percent (25%) of whose economic interest is owned by Tenant; and “control” means the power to direct the management of such entity through voting rights, ownership or contractual obligations. In the event Tenant is a publicly traded company, the sale or transfer of Tenant’s stock shall not be deemed a Transfer for purposes of this Lease. In addition, Landlord shall not have the alternative set forth in Section 6(e)(i) in connection with a permitted Transfer described in this Section 6(g).

 

7. ALTERATIONS

 

(a) Consent to Alterations . Tenant shall not make or permit any modifications, additions or improvements in, on or about the Premises, including, but not limited to, lighting, heating, ventilating, air conditioning, electrical, partitioning, fixtures, window and wall covering and carpentry installations (collectively, “Alterations”), without the prior written consent of Landlord. Notwithstanding the foregoing, Tenant shall have the right to make nonstructural Alterations costing in the aggregate not more than Fifty Thousand Dollars ($50,000) in any twelve (12) month period without Landlord’s prior consent, provided that such Alterations (i) are not visible from any point outside of the Building, and (ii) will not materially affect the systems or structure of the Building. Landlord shall not unreasonably withhold its consent to any nonstructural Alterations provided that the nonstructural Alterations (i) are not visible from any point outside of the Building and (ii) do not materially affect the building systems or structural components of the Building. In no event may Tenant modify any building systems or structural components of the Building without Landlord’s consent, which consent may be withheld by Landlord in its sole and absolute discretion. Tenant shall request Landlord’s consent in writing and shall deliver Tenant’s written request to Landlord with reasonably detailed plans and specifications for the proposed Alterations prepared at Tenant’s expense by a licensed architect

 

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or engineer, together with a list of the contractors that Tenant would like to use to install the subject Alteration(s). Landlord shall consent to or disapprove the Alterations proposed by Tenant within ten (10) business days after Landlord’s receipt of Tenant’s written request and a copy of Tenant’s proposed plans and specifications and list of proposed contractors. If Landlord fails to respond to Tenant’s written request for Landlord’s consent to Tenant’s proposed Alterations within the above-referenced ten (10) business day period, Landlord shall be deemed to have approved Tenant’s request. Without limiting the foregoing, Landlord agrees that Landlord shall tentatively consent to or disapprove (but not give final consent to or disapproval of) any Alterations proposed by Tenant that require Landlord’s consent within five (5) business days after Landlord’s receipt of Tenant’s written request therefor (but subject to Landlord’s further review and approval of Tenant’s proposed plans and specifications for such Alterations and proposed general contractor). Additionally, for all Alterations for which Landlord’s prior written consent is required, Landlord shall have the right to pre-approve (which shall not be unreasonably withheld, conditioned or delayed) the general contractor retained by Tenant to perform such Alterations. Tenant shall reimburse Landlord for Landlord’s reasonable charges for reviewing and approving or disapproving any request for an Alteration, including the plans and specifications thereof proposed by Tenant.

 

(b) General Conditions for Alterations . All Alterations shall be installed at Tenant’s sole expense, in compliance with all applicable Laws and in accordance with the plans and specifications delivered to and approved by Landlord; provided, however, that neither Landlord’s acceptance nor approval of any such plans and specifications shall imply that Landlord in any way covenants or warrants that the same are safe or that they comply with applicable Laws. All Alterations shall be performed in a good and workmanlike manner conforming in quality and design with the Premises existing as of the Commencement Date, and shall not diminish the value of the Premises or the Project. The workmanship and materials used in all Alterations shall be of a quality equal to or exceeding that used generally throughout the Project. Tenant shall indemnify and hold harmless Landlord and Landlord’s Agents from any and all Liabilities incurred by Landlord and/or Landlord’s Agents as a result of any defects in the materials or workmanship of the Alterations, and/or failure of Tenant or Tenant’s Agents to comply with applicable Laws, including, without limitation, all applicable Accessibility Requirements.

 

(c) Notice and Liens . Tenant shall notify Landlord in writing at least five (5) business days prior to the commencement of any work on Alterations approved by Landlord, and Landlord shall be entitled to post and record Notices of Nonresponsibility or other notices deemed proper before the commencement of such work. If Tenant fails to cause any lien filed against the Premises in connection with any work performed or claimed to have been performed by or at the direction of Tenant to be released of record by payment or posting of a proper bond acceptable to Landlord within ten (10) days from after (i) the date of such filing and (ii) written notice from Landlord, then Landlord may do so at Tenant’s expense and Tenant shall reimburse Landlord as Additional Rent. Such reimbursement shall include all sums reasonably disbursed, incurred or deposited by Landlord, including Landlord’s reasonable costs, expenses and reasonable attorneys’ fees, with interest thereon at an interest rate of ten percent (10%) per annum from the date of payment by Landlord.

 

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(d) Removal of Alterations . Landlord shall notify Tenant within ten (10) days after Landlord receives Landlord’s request for consent to Alterations or, if Tenant is not required to obtain Landlord’s consent to the Alteration, within ten (10) days after Tenant notifies Landlord in writing of its intent to make an Alteration, as to whether Tenant will be required to remove the proposed Alteration upon the termination of Tenant’s lease of that portion of the Premises in which the Alteration is to be constructed. If Landlord so notifies Tenant within said ten (10)-day period, then Tenant shall remove the proposed Alteration and repair or restore any damage caused by the installation and removal of such Alteration at the expiration or earlier termination of Tenant’s lease of that portion of the Premises in which the Alteration is constructed, all at Tenant’s sole cost and expense; provided, however, Tenant shall only be required to remove those Alterations which are specified in Landlord’s notice. Tenant shall fully and promptly repair all damage caused by the removal of Alterations from the Premises. If Landlord fails, within the time period prescribed above, to notify Tenant in writing of Tenant’s obligation to remove any Alterations from the Premises at the expiration or earlier termination of the Lease term, then Tenant shall have no obligation to remove such Alterations.

 

(e) Maintenance of Alterations . Notwithstanding any other provision of this Lease, Tenant shall be solely responsible for the maintenance and repair of any and all Alterations to the Premises made by Tenant, or by Landlord at Tenant’s expense.

 

8. REPAIR AND MAINTENANCE

 

(a) Landlord . Landlord, at its expense (and without reimbursement as an Operating Expense), shall keep in good order, condition and repair the foundations of the Building, the structural components of the Building, subfloors, the structural portions of the exterior walls and the roof structures and membranes on the Building; provided, however, that any damage thereto caused by the negligence or willful acts or omissions of Tenant or Tenant’s Agents, or by reason of the failure of Tenant to perform or comply with any terms, conditions or covenants in this Lease, or caused by any Alterations made by or for Tenant, shall be at Tenant’s sole expense (except to the extent covered by insurance maintained by Landlord). In addition, Landlord shall be responsible for maintaining the non-structural portions of the exterior walls (e.g., repainting) of the Building (excluding the interior finish surface thereof) and the outside landscaping of the Project in good condition and repair, the costs of which shall constitute an Operating Expense under this Lease. Landlord, at Tenant’s sole cost and expense, shall enter into regularly scheduled maintenance/service contracts for servicing the elevators within the Building. Also at Tenant’s cost and expense, Landlord shall enter into regularly scheduled preventive maintenance/service contracts with maintenance contractors acceptable to Landlord for servicing all hot water and heating and air conditioning (the “HVAC”) systems and equipment in the Premises unless Landlord elects for Tenant to do so pursuant to Section 8(b) below. It is an express condition precedent to all obligations of Landlord to repair and maintain the Building that Tenant shall have notified Landlord in writing of the need for any such repairs or maintenance. There shall be no abatement of Rent during the performance of Landlord’s obligations under this Section 8(a) (except as provided in Section 9(a) below). In addition, Landlord shall not be liable to Tenant for any damage that may result from interruption of Tenant’s use of the Premises during the period that Landlord is performing the maintenance and repairs required hereunder (unless and to the extent such damage is caused by the gross negligence or willful misconduct of Landlord). Landlord shall use commercially reasonable efforts in the performance of its obligations pursuant to this Section 8(a) to minimize any interference with Tenant’s normal business operations.

 

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(b) Tenant . Except for the portions of the Premises expressly required to be maintained by Landlord under Section 8(a), Tenant, at Tenant’s sole cost and expense, shall maintain the Premises and the Building in which the Premises is located in good order, condition and repair, including, without limitation, floor coverings, walls and wall coverings, exposed portions of the mechanical, electrical and plumbing systems within the Building, doors and windows. In addition, if Tenant leases all of the rentable space located within the Building, Landlord may require Tenant to enter into regularly scheduled preventive maintenance/service contracts with maintenance contractors acceptable to Landlord for servicing the HVAC systems and equipment in the Building and provide to Landlord a copy of the current maintenance/services contract and written service reports on the HVAC systems and equipment on a quarterly basis. Tenant shall not enter onto the roof area of the Building, except for the purpose of maintaining the heating, ventilating, and air conditioning equipment to the extent Tenant is required to do so under the terms of this Lease. Tenant shall repair any damage to the roof area caused by its entry. If, in the reasonable judgment of Landlord, Tenant fails, within the notice and cure period set forth in Section 15(a)(ii) below, to maintain the Premises and the Building in which the Premises is located in good order, condition and repair, Landlord shall have the right, upon not less than five (5) days’ written notice to Tenant, to perform such maintenance, repairs or refurbishing at Tenant’s expense. In addition, Tenant shall, at its own expense, provide, install and maintain in good condition all of its trade fixtures, furniture, equipment and other personal property (“Tenant’s Personal Property”) required in the conduct of its business in the Premises. If any condition arises in the Premises or the Project which may be unsafe or dangerous to persons or property in the Project, Tenant shall, promptly following Tenant becoming aware of such condition, notify Landlord of such condition.

 

(c) Tenant Cure Rights . If Tenant provides written notice to Landlord of an event or circumstance that requires the action of Landlord with respect to the repairs or maintenance to the Premises or basic Building systems servicing the Premises as set forth in Section 8(a) of this Lease, and Landlord fails to provide such action as required by the terms of this Lease within thirty (30) days following receipt of such written notice, then Tenant may take the required action if: (i) Tenant delivers to Landlord an additional written notice advising Landlord that Tenant intends to take the required action if Landlord does not commence the required repair or maintenance within five (5) days after the receipt of such additional written notice; and (ii) Landlord fails to commence the required work within the five (5) day period or thereafter fails to diligently prosecute such required work to completion. If Tenant takes action to perform the repair or maintenance work required to be performed by Landlord as provided above, then, in addition to any other rights or remedies available to Tenant at law or in equity or under this Lease, Tenant shall be entitled to prompt reimbursement by Landlord of Tenant’s reasonable costs and expenses in taking such action plus interest at the rate of ten percent (10%) per annum from the date Tenant’s costs are incurred until the date of Landlord’s repayment. Landlord’s obligation to reimburse Tenant shall survive expiration or earlier termination of this Lease. If any action taken by Tenant will affect any portion of the basic Building systems, structural integrity of the Building, or exterior appearance of the Building, then Tenant will use the contractor used by Landlord in the Building for such work, unless that contractor is unwilling or unable to perform the work, in which event Tenant may use the services of another qualified and licensed contractor.

 

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(d) Wavier . Tenant waives the provisions of Sections 1941 and 1942 of the California Civil Code and any similar or successor Laws regarding Tenant’s right to make repairs and deduct the expenses of such repairs from the Rent due under this Lease.

 

9. UTILITIES AND SERVICES

 

(a) Tenant’s Obligations . Landlord agrees to furnish to the Premises at all times during the term of the Lease, air conditioning and heat, elevator service, and water for lavatory purposes, all in such reasonable quantities as in the reasonable judgment of Landlord is necessary for the comfortable occupancy and use of the Premises; provided, however, Tenant shall contract directly with the applicable utility or service provider for gas, water, electricity and refuse pickup. Tenant shall provide, or cause to be provided, janitorial service with respect to the Premises. Tenant shall pay all charges for gas, electricity, water, telephone and telephone cabling, HVAC, refuse pickup, janitorial service and all other utilities, materials and services furnished directly to or used by Tenant in the Premises during the Lease Term, together with any and all taxes thereon. Landlord shall not be liable in damages or otherwise for any failure or interruption of any utility service or other service furnished to the Premises, except to the extent resulting from the gross negligence or willful misconduct of Landlord. Except as provided below, no such failure or interruption shall entitle Tenant to terminate this Lease or withhold Rent due hereunder. Notwithstanding the foregoing, to the extent that Landlord receives insurance proceeds under its insurance policy as a result of the interruption in utilities to compensate Landlord for lost Rent under this Lease, then the Rent due hereunder will be abated by such amount.

 

The preceding notwithstanding, if an interruption in utilities or services occurs as the result of the negligence or willful misconduct of Landlord or its agents or employees and the interruption in utilities or services substantially interferes with Tenant’s use of the Premises or Tenant’s conduct of business for more than five (5) continuous business days, then Rent shall abate until such time as all of the utilities and services are restored. If an interruption in utilities or services occurs which is not the result of the negligence or willful misconduct of Landlord or its agents or employees and the interruption in utilities or services substantially interferes with Tenant’s use of the Premises or Tenant’s conduct of business for more than thirty (30) continuous business days, then Rent shall abate until such time as all of the utilities and services are restored.

 

(b) Tenant to Pay Share of Expenses . If any utilities or services described in Section 9(a) above are not separately metered to Tenant or are contracted for by Landlord, then Tenant shall pay, as Additional Rent, a portion of the costs of such utilities and services, excluding the cost of installing metering devices (which cost of such installation shall be borne solely by Landlord and without reimbursement from Tenant), as reasonably determined by Landlord. Tenant shall pay such amount of such costs on the first day of the calendar month following receipt of Landlord’s itemized bill therefor.

 

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10. REAL PROPERTY TAXES

 

(a) Payment by Tenant . Commencing with the Commencement Date, Tenant shall pay to Landlord, as Additional Rent, Tenant’s Project Percentage of all Real Property Taxes (as hereinafter defined). Tenant shall pay Tenant’s Project Percentage of such Real Property Taxes in the manner provided in Section 12 below. Tenant shall only be obligated to pay its Project Percentage of Real Property Taxes accruing during or attributable to the Lease Term.

 

(b) Real Property Taxes . For purposes of this Lease, “Real Property Taxes” shall mean any form of assessment, license, fee, rent tax, levy, penalty (if a result of and directly attributable to Tenant’s delinquency), or tax of any nature imposed upon or with respect to the Premises or the Project or any part thereof (other than net income, estate, succession, inheritance, transfer or franchise taxes of Landlord) (collectively, “tax”), imposed by any authority having the direct or indirect power to tax, or by any city, county, state or federal government or any improvement or other district or division thereof, whether such tax is: (i) determined by the area of the Premises or Project or any part thereof or the rent and other sums payable hereunder by Tenant or by other tenants, including, but not limited to, any gross income or excise tax levied by any of the foregoing authorities with respect to receipt of such rent or other sums due under this Lease; (ii) levied or assessed upon any legal or equitable interest of Landlord in the Project or the Premises or any part thereof; (iii) levied or assessed upon this transaction or any document to which Tenant is a party creating or transferring any interest in the Premises; (iv) levied or assessed in lieu of, in substitution for, or in addition to, existing or additional taxes imposed on or with respect to the Project or the Premises, whether or not now customary or within the contemplation of the parties; or (v) surcharged against the parking area. The cost and expenses of contesting the amount or validity of any of the foregoing taxes shall be included in Real Property Taxes. Real Property Taxes shall also include all new and increased assessments, taxes, fees, levies and charges which may be imposed by governmental agencies for such purposes as fire protection, street, sidewalk, road, utility construction and maintenance, refuse removal, libraries, street lighting, police services, and for other governmental services.

 

(c) Tax on Improvements . Without limiting the generality of Section 10(b), Tenant shall pay any increase in Real Property Taxes resulting from any and all Alterations placed in, on or about the Premises for the benefit of, at the request of, or by Tenant.

 

(d) Proration . Tenant’s liability to pay Real Property Taxes shall be prorated on the basis of a 365-day year to account for any fractional portion of a fiscal tax year included at the commencement or expiration of the Lease Term. With respect to any assessments which may be levied against or upon the Premises, or which under the Laws then in force may be evidenced by improvement bonds or other bonds or may be paid in annual installments, only the amount of the annual installment due each year (with appropriate proration for any partial year) and interest due thereon shall be included within the computation of the annual Real Property Taxes levied against the Premises for such year.

 

(e) Personal Property Taxes . Tenant shall pay prior to delinquency all taxes assessed or levied against Tenant’s Personal Property. When possible, Tenant shall cause Tenant’s Personal Property to be assessed and billed separately from the real and/or personal property of Landlord.

 

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(f) Exclusions . Notwithstanding anything to the contrary contained in this Lease, the following shall not constitute Real Property Taxes for purposes of this Lease (i) any estate, inheritance taxes or gross receipts tax, (ii) any increase in taxes attributable to change of ownership of all or any part of the Project, and (iii) any increase in real estate taxes attributable to interior improvements made in the Other Buildings after July 15, 2003.

 

(g) Real Property Taxes Following Parcelization of Project . In the event Landlord separates the Project into three (3) separate legal parcels for each building currently located within the Project and a Common Area parcel, then during the balance of the term of this Lease, Tenant shall be responsible only for the Real Property Taxes attributable to the real property beneath the Building (and the Real Property Taxes attributable to the Building leased by Tenant) plus a proportionate share of the Real Property Taxes attributable to the Common Area parcel. If the Building and the land underlying the Building are separately assessed, then Tenant shall have the right to contest or review the amount or validity of any Real Property Taxes allocated thereto by appropriate legal proceedings; however, as a condition of Tenant’s right to contest, if such contested Real Property Taxes are not paid before such contest and if the legal proceedings shall not operate to prevent or stay the collection of the Real Property Taxes so contested, Tenant shall, before instituting such proceedings, protect the Premises and the interest of Landlord therein against any lien upon the Premises by a surety bond, issued by an insurance company reasonably acceptable to Landlord, and in an amount equal to the 150% of the amount contested. Any contest by Tenant as to the validity or amount of the Real Property Tax allocable to the Building and/or land underlying the Building shall be made by Tenant in its own name, or, if required by law, in the name of Landlord or both Landlord and Tenant. Tenant shall be entitled to retain any refund of any such contested Real Property Taxes and penalties and interest thereon to the extent the refunded amount previously had been paid by Tenant. Nothing contained herein shall be construed as affecting or limiting Landlord’s right to contest any Real Property Taxes at Landlord’s expense.

 

11. INSURANCE

 

(a) Indemnification .

 

(i) Tenant’s Indemnification of Landlord . Tenant hereby agrees to indemnify, defend (with attorneys reasonably acceptable to Landlord) and hold harmless the Premises, Landlord, Landlord’s Agents and Landlord’s lenders, from and against any and all Liabilities arising out of or in any way relating to all activities in the Premises during the Lease Term, the conduct of Tenant’s business in the Premises and the Project, any default or breach by Tenant in the performance in a timely manner of any obligation on Tenant’s part to be performed under this Lease, the use or occupancy of the Premises or any part of the Project by Tenant, or by the acts or omissions of Tenant or Tenant’s Agents, except to the extent caused by the negligence or willful misconduct of Landlord and any of Landlord’s Agents. Tenant’s indemnification obligations with respect to Hazardous Materials shall be pursuant to Section 5(c) of this Lease. To the extent any damage or repair obligation is covered by insurance obtained by Landlord as part of Operating Expenses, but is not covered by insurance obtained by Tenant, then Tenant shall be relieved of its indemnity obligation up to the amount of the insurance proceeds which Landlord receives.

 

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(ii) Landlord’s Indemnification of Tenant . Landlord hereby agrees to indemnify, defend and hold harmless Tenant from any and all Liabilities arising out of or in any way relating to, involving, or in dealing with, any part of the Project, to the extent such Liabilities are caused by the gross negligence or willful misconduct of Landlord or any of Landlord’s Agents or any default or breach by Landlord in the performance in a timely manner of any obligation on Landlord’s part to be performed under this Lease.

 

(b) Tenant’s Insurance . Tenant agrees to maintain in full force and effect at all times during the Lease Term, at its own expense, for the protection of Tenant and Landlord, as their interests may appear, policies of insurance issued by a responsible carrier or carriers reasonably acceptable to Landlord which afford the following coverages:

 

(i) Worker’s Compensation . Worker’s compensation in an amount equal to the statutory requirements then in effect.

 

(ii) Employer’s Liability . Employer’s liability in an amount not less than One Million Dollars ($1,000,000) per accident for bodily injury or disease.

 

(iii) Automobile Liability . Automobile liability insurance (ISO form CA 0001 (Ed. 1/87), code 1 or substantially equivalent form) for each vehicle owned, leased or rented by Tenant in connection with its business, in an amount not less than One Million Dollars ($1,000,000) per accident for bodily injury and property damage.

 

(iv) General Liability . Commercial General Liability insurance (ISO occurrence form CG 0001 or substantially equivalent form), including premises operations, in an amount not less than Three Million Dollars ($3,000,000) (which may include taking into consideration umbrella coverage), combined single limit for both bodily injury and property damage, naming Landlord as additional insured.

 

(v) Property . Property insurance on Tenant’s Personal Property located on or in the Premises and on any Alterations made by Tenant in the Premises. Such insurance shall be in an amount of one hundred percent (100%) of the replacement cost of the insured items. Such property insurance shall exclude earthquake coverage unless such earthquake insurance coverage is maintained by Tenant in its sole discretion. Such policy shall be endorsed, as necessary, to provide coverage for boilers and machinery and sprinkler leakage. As long as this Lease is in effect, the proceeds of such policy shall be used for the repair or replacement of such items so insured. Landlord shall have no interest in the insurance upon Tenant’s Personal Property.

 

(vi) Business Income . Business Income/Extra Expense Insurance at a minimum of six (6) months continued normal operating expenses, including payroll, including coverage for loss of Business Income due to damage to Tenant’s Personal Property and Alterations arising from insured perils covered under such policy, excluding earthquake unless such earthquake insurance coverage is maintained by Tenant in its sole discretion.

 

(vii) Products and Completed Operations . Products and completed operations insurance in an amount not less than Two Million Dollars ($2,000,000) (which may include taking into consideration umbrella coverage).

 

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(c) Landlord’s Insurance . During the Lease Term Landlord shall maintain commercial general liability insurance, and “All Risk” or ISO Special Form property insurance (the “Project Property Insurance”) including, at Landlord’s option, earthquake and flood coverage, inflation endorsement, sprinkler leakage endorsement, and boiler and machinery coverage, covering the full replacement cost of the Premises, including the Tenant Improvements but excluding any Alterations made by Tenant and the foundations of the Building. The Project Property Insurance shall also include insurance against loss of rents in an amount equal to the Base Rent, Additional Rent, and any other sums payable to Landlord by the tenants of the Project under their respective leases for a period of at least twelve (12) months. The Project Property Insurance shall name Landlord as named insured and include a lender’s loss payable endorsement in favor of Landlord’s lender. Tenant shall reimburse Landlord, as Additional Rent, for Tenant’s Project Percentage of the costs of such policy or policies. Tenant shall pay Tenant’s Project Percentage of the Project Property Insurance in the manner provided in Section 12.

 

(d) Certificates . Tenant shall deliver to Landlord at least thirty (30) days prior to the time such insurance is first required to be carried by Tenant, and thereafter at least ten (10) days prior to expiration of each such policy, certificates of insurance and endorsements or copies of portions of the insurance policies evidencing the above coverage with limits not less than those specified above and naming Landlord as additional insured on Tenant’s commercial general liability insurance policy.

 

(e) Increased Coverage . Landlord, by written notice to Tenant, may reasonably require Tenant to increase the amount of insurance maintained by Tenant in accordance with this Lease to such amounts as are generally and reasonably required by landlords of similar properties located in the Brisbane-San Francisco area; provided, however, Landlord shall not increase the amount of liability insurance (taking into consideration umbrella coverage) during the first three (3) years of the Lease Term unless required by Landlord’s lender.

 

(f) Intentionally Omitted .

 

(g) Insurance Requirements . All of Tenant’s insurance shall be in a form reasonably satisfactory to Landlord and shall be carried with companies that have a current A.M. Best’s rating of no less than A-:IX or A:VII, except for the company providing products and completed operations insurance which must have a current A.M. Best’s rating of no less than A-:VII; shall provide that such policies shall not be subject to material alteration or cancellation except after at least thirty (30) days’ prior written notice to Tenant; and shall be primary as to Landlord and Landlord’s Agents. The duly executed certificates and endorsements (or copies of portions of the insurance policies as provided above) for the Tenant’s policies shall be deposited with Landlord prior to the Commencement Date, and upon renewal of such policies, not less than ten (10) days prior to the expiration of the term of such coverage. If Tenant fails to procure and maintain the insurance required hereunder, or fails to provide Landlord with the duly executed certificates and endorsements (or copies of portions of the insurance policies as provided above) of Tenant’s policies required hereunder, Landlord may, but shall not be required to, following not less than five (5) days prior written notice to Tenant, order such insurance at Tenant’s expense and Tenant shall reimburse Landlord for such reasonable amounts as Additional Rent. Such reimbursement shall include all sums reasonably disbursed, incurred or deposited by Landlord, including Landlord’s reasonable costs, expenses and reasonable attorneys’ fees, with interest thereon at an interest rate of ten percent (10%) per annum from the date of payment by Landlord.

 

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(h) Landlord’s Disclaimer . Subject to Landlord’s insurance obligations under Section 11(c) above and Landlord’s indemnification obligations under Section 11(a)(ii) above, neither Landlord nor Landlord’s Agents shall be liable to Tenant for any loss or damage to persons or property resulting from fire, explosion, falling plaster, glass, tile or sheetrock, steam, gas, electricity, water or rain which may leak from any part of the Premises or the Project, or from the pipes, appliances or plumbing works therein or from the roof, street or subsurface or whatsoever, unless caused by the gross negligence or willful misconduct of Landlord or any of Landlord’s agents, employees, contractors or other representatives or breach by Landlord of any of its obligations under this Lease.

 

(i) Waiver of Subrogation . Landlord and Tenant each hereby waive