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EXHIBIT
10.6
SEAPORT
CENTRE
SEAPORT CENTRE
EAST
700 CHESAPEAKE
DRIVE
REDWOOD CITY,
CALIFORNIA
OFFICE LEASE
AGREEMENT
BETWEEN
CA-SEAPORT CENTRE LIMITED
PARTNERSHIP, a Delaware limited
partnership
(“LANDLORD”)
AND
EMPHASYS MEDICAL CENTER,
INC., a Delaware corporation
(“TENANT”)
OFFICE LEASE
AGREEMENT
THIS OFFICE LEASE
AGREEMENT (the “ Lease ”) is made and
entered into as of the 31st day of October, 2003, by and between
CA-SEAPORT CENTRE LIMITED PARTNERSHIP, a Delaware limited
partnership (“Landlord”) and EMPHASYS MEDICAL,
INC., a Delaware corporation (“Tenant”) . The
following exhibits and attachments are incorporated into and made a
part of the Lease: Exhibit A (Outline and Location of
Premises), Exhibit B (Expenses and Taxes),
Exhibit C (Work Letter), Exhibit D
(Commencement Letter), Exhibit E (Building Rules and
Regulations), Exhibit F (Additional Provisions),
Exhibit F-1 (Outline and Location of Refusal Space) and
Exhibit G (Parking Agreement).
| 1. |
Basic Lease Information. |
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1.01 |
“ Building ” shall mean the building located
at 700 Chesapeake Drive, Redwood City, California, commonly known
as 700 Chesapeake Drive—Building 19. “ Rentable
Square Footage of the Building ” is deemed to be
176,023 square feet based upon the combined rentable area of
the buildings described in Section 1.04 below. |
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1.02 |
“ Premises ” shall mean the area shown on
Exhibit A to this Lease. The Premises is located on the
first floor and known as Suite No. 100. If the Premises
include one or more floors in their entirety, all corridors and
restroom facilities located on such full floor(s) shall be
considered part of the Premises. The “ Rentable Square
Footage of the Premises ” is deemed to be 12,309 square
feet. Landlord and Tenant stipulate and agree that the Rentable
Square Footage of the Building and the Rentable Square Footage of
the Premises are correct. |
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Period
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Annual Rate
Per Square Foot
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Monthly Base Rent |
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12/15/03 – 12/14/05
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$ |
13.20 |
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$ |
13,539.90 1.10 |
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12/15/05 – 12/14/06
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$ |
13.80 |
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$ |
14,155.35 1.15 |
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12/15/06 – 12/14/07
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$ |
14.40 |
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$ |
14,770.80 |
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12/15/07 – 12/14/08
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$ |
15.60 |
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$ |
16,001.70 |
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12/15/08 – 12/14/07
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$ |
16.80 |
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$ |
17,232.60 |
Base Rent Abatement :
Notwithstanding anything in this Section of the Lease to the
contrary, so long as Tenant is not in Default under this Lease,
Tenant shall be entitled to an abatement of Base Rent in the amount
of $13,539.90 per month for 12 consecutive full calendar months of
the Term, beginning with the first full calendar month of the Term
(the “Base Rent Abatement Period”). The total amount of
Base Rent abated during the Base Rent Abatement Period shall equal
$162,478.80 (the “Abated Base Rent”). If Tenant is in
Default at any time during the Term and fails to cure such Default
within any applicable cure period under the Lease, all Abated Base
Rent shall immediately become due and payable. The payment by
Tenant of the Abated Base Rent in the event of a Default shall not
limit or affect any of Landlord’s other rights, pursuant to
this Lease or at Law or in equity. During the Base Rent Abatement
Period, only Base Rent shall be abated, and all Additional Rent and
other costs and charges specified in this Lease shall remain as due
and payable pursuant to the provisions of this Lease.
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1.04 |
“ Tenant’s Pro Rata Share ”: 6.9928%.
For purposes of determining Tenant’s Pro Rata Share, and as
used throughout Exhibit B of this Lease, the
“Building” shall mean, collectively, the 6 buildings
located at 200 Chesapeake Drive, 400 Chesapeake Drive,
600 Chesapeake Drive, 700 Chesapeake Drive,
800 Chesapeake Drive and 900 Chesapeake Drive, all
located in Redwood City, California, it being understood and agreed
that all of the foregoing buildings, collectively, are treated as a
single building for purposes of obtaining or providing services or
otherwise determining Expenses and/or Taxes. In calculating
Tenant’s Pro Rata Share of Expenses and/or Taxes with respect
to the Premises, the “Rentable Square Footage of the
Building” described in Section 1.01 above reflects the
combined rentable area in the foregoing buildings, collectively,
and “Tenant’s Pro Rata Share” with respect to the
Premises, as described above, is based upon the foregoing Rentable
Square Footage of the Building. However, notwithstanding the
foregoing, if one or more buildings are removed from the group of
buildings comprising the Building, as described above in this
Section, whether as a result of a sale or demolition of the
building(s) or otherwise, or if one or more buildings owned by
Landlord are added to the group of buildings comprising the
Building, as described above in this Section, then the definition
of “Building” and the “Rentable Square Footage of
the Building”, as described in this Section, whether as a
result of a sale or demolition of the group of buildings comprising
the Building, as described in this Section 1,
“Tenant’s Pro Rata Share” with respect to the
Premises, shall be appropriately modified or adjusted to reflect
the deletion or addition of such buildings, and, if Tenant’s
Pro Rata Share of Expenses and/or Taxes with respect to the
Premises is based upon increases in Expenses and/or Taxes over a
Base Year, then Expenses and/or Taxes for the Base Year shall be
restated on a going forward basis effective as of the date such
buildings are deleted or added to the definition of Building as
described in this Section. |
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1.06 |
“ Term ”: A period of 72 months.
Subject to Section 3, the Term shall commence on
December 15, 2003 (the “ Commencement Date
”) and, unless terminated early in accordance with this
Lease, end on December 14, 2009 (the “ Termination
Date ”). |
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1.07 |
“ Allowance ”: A Maximum Amount of
$209,253.00, as more fully described in Exhibit C. |
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1.08 |
“ Security Deposit ”: $50,000.00, as more
fully described in Section 6. |
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1.09 |
“ Guarantor(s) ”: None. |
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1.10 |
“ Broker(s) ”: Cornish & Carey
Commercial. |
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1.11 |
“ Permitted Use ”: general office use
(including, without limitation, research, development and assembly
of medical products), and for no other purpose. |
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1.12 |
“ Notice Address(es) :” |
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| Landlord: |
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Tenant: |
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| CA-Seaport
Centre Limited Partnership |
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| c/o Equity
Office Management, L.L.C. |
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| 950 Tower
Lane |
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| Suite
950 |
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| Foster City,
California 94404 |
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| Attn:
Property Manager |
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A copy of any notices to
Landlord shall be sent to Equity Office, One Market, Spear Tower,
Suite 600, San Francisco, CA, 94105, Attn: San Francisco Regional
Counsel.
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1.13 |
“ Business Day(s) ” are Monday through
Friday of each week, exclusive of New Year’s Day, Presidents
Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day
and Christmas Day (“ Holidays ”). Landlord may
designate additional Holidays that are commonly recognized by other
office buildings in the area where the Building is located. “
Building Service Hours ” are 6:00 a.m. to 6:00 p.m. on
Business Days. |
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1.14 |
“ Landlord Work ” means the work, if any,
that Landlord is obligated to perform in the Premises pursuant to a
separate agreement (the “ Work Letter ”), if
any, attached to this Lease as Exhibit C . |
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1.15 |
“ Property ” means the Building and the
parcel(s) of land on which it is located and, at Landlord’s
discretion, the parking facilities and other improvements, if any,
serving the Building and the parcel(s) of land on which they are
located. |
The Premises are hereby
leased to Tenant from Landlord, together with the right to use any
portions of the Property that are designated by Landlord for the
common use of tenants and others (the “ Common Areas
”).
| 3. |
Adjustment of Commencement Date; Possession. |
3.01 If Landlord is required
to perform Landlord Work prior to the Commencement Date:
(a) the date set forth in Section 1.06 as the
Commencement Date shall instead be defined as the “ Target
Commencement Date ”; (b) the actual Commencement
Date shall be the date on which the Landlord Work is Substantially
Complete (defined below); and (c) the Termination Date will be
the last day of the Term as determined based upon the actual
Commencement Date. Landlord’s failure to Substantially
Complete the Landlord Work by the Target Commencement Date shall
not be a default by Landlord or otherwise render Landlord liable
for damages. Promptly after the determination of the Commencement
Date, Landlord and Tenant shall enter into a commencement letter
agreement in the form attached as Exhibit D . If the
Termination Date does not fall on the last day of a calendar month,
Landlord and Tenant may elect to adjust the Termination Date to the
last day of the calendar month in which Termination Date occurs by
the mutual execution of a commencement letter agreement setting
forth such adjusted date. The Landlord Work shall be deemed to be
“ Substantially Complete ”
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on the date that all Landlord Work has
been performed, other than any details of construction, mechanical
adjustment or any other similar matter, the non-completion of which
does not materially interfere with Tenant’s use of the
Premises, and solely to the extent that such details can reasonably
be expected to be completed without interfering with Tenant’s
use of the Premises in any material respect. If Landlord is delayed
in the performance of the Landlord Work as a result of the acts or
omissions of Tenant, the Tenant Related Parties (defined in
Section 13) or their respective contractors or vendors,
including, without limitation, changes requested by Tenant to
approved plans, Tenant’s failure to comply with any of its
obligations under this Lease, or the specification of any materials
or equipment with long lead times (a “ Tenant Delay
”), the Landlord Work shall be deemed to be Substantially
Complete on the date that Landlord could reasonably have been
expected to Substantially Complete the Landlord Work absent any
Tenant Delay.
3.02 Subject to
Landlord’s obligation, if any, to perform Landlord Work, the
Premises are accepted by Tenant in “as is” condition
and configuration without any representations or warranties by
Landlord. By taking possession of the Premises, Tenant agrees that
the Premises are in good order and satisfactory condition. Landlord
shall not be liable for a failure to deliver possession of the
Premises or any other space due to the holdover or unlawful
possession of such space by another party, however Landlord shall
use reasonable efforts to obtain possession of the space. The
commencement date for the space, in such event, shall be postponed
until the date Landlord delivers possession of the Premises to
Tenant free from occupancy by any party. If Tenant takes possession
of the Premises before the Commencement Date, such possession shall
be subject to the terms and conditions of this Lease and Tenant
shall pay Rent (defined in Section 4.01) to Landlord for each
day of possession before the Commencement Date. However, except for
the cost of services requested by Tenant (e.g. freight elevator
usage), Tenant shall not be required to pay Rent for any days of
possession before the Commencement Date during which Tenant, with
the approval of Landlord, is in possession of the Premises for the
purpose of performing improvements or installing furniture,
equipment or other personal property or other similar activities
performed in preparation for Tenant’s possession of the
Premises upon the Commencement Date.
4.01 Tenant shall pay
Landlord, without any setoff or deduction, unless expressly set
forth in this Lease, all Base Rent and Additional Rent due for the
Term (collectively referred to as “ Rent ”).
“ Additional Rent ” means all sums (exclusive of
Base Rent) that Tenant is required to pay Landlord under this
Lease. Tenant shall pay and be liable for all rental, sales and use
taxes (but excluding income taxes), if any, imposed upon or
measured by Rent. Base Rent and recurring monthly charges of
Additional Rent shall be due and payable in advance on the first
day of each calendar month without notice or demand, provided that
the installment of Base Rent for the first full calendar month of
the Term, and the first monthly installment of Additional Rent for
Expenses and Taxes, shall be payable upon the execution of this
Lease by Tenant. All other items of Rent shall be due and payable
by Tenant on or before 30 days after billing by Landlord. Rent
shall be made payable to the entity, and sent to the address,
Landlord designates and shall be made by good and sufficient check
or by other means acceptable to Landlord. Tenant shall pay Landlord
an administration fee equal to 5% of all past due Rent, provided
that Tenant shall be entitled to a grace period of 5 days for the
first 2 late payments of Rent in a calendar year. In addition, past
due Rent shall accrue interest at 12% per annum.
Landlord’s acceptance of less than the correct amount of Rent
shall be considered a payment on account of the earliest Rent due.
Rent for any partial month during the Term shall be
4
prorated. No endorsement or statement on
a check or letter accompanying payment shall be considered an
accord and satisfaction. Tenant’s covenant to pay Rent is
independent of every other covenant in this Lease.
4.02 Effective upon the 91st
date from and including the Commencement Date, Tenant shall pay
Tenant’s Pro Rata Share of Taxes and Expenses in accordance
with Exhibit B of this Lease.
| 5. |
Compliance with Laws; Use. |
The Premises shall be used
for the Permitted Use and for no other use whatsoever. Tenant shall
comply with all statutes, codes, ordinances, orders, rules and
regulations of any municipal or governmental entity whether in
effect now or later, including the Americans with Disabilities Act
(“ Law(s) ”), regarding the operation of
Tenant’s business and the use, condition, configuration and
occupancy of the Premises. In addition, Tenant shall, at its sole
cost and expense, promptly comply with any Laws that relate to the
“Base Building” (defined below), but only to the extent
such obligations are triggered by Tenant’s use of the
Premises, other than for general office use, or Alterations or
improvements in the Premises performed or requested by Tenant.
“ Base Building ” shall include the structural
portions of the Building, the public restrooms and the Building
mechanical, electrical and plumbing systems and equipment located
in the internal core of the Building on the floor or floors on
which the Premises are located. Tenant shall promptly provide
Landlord with copies of any notices it receives regarding an
alleged violation of Law. Tenant shall comply with the rules and
regulations of the Building attached as Exhibit E and
such other reasonable rules and regulations adopted by Landlord
from time to time, including rules and regulations for the
performance of Alterations (defined in Section 9).
6.01 The Security Deposit, if
any, shall be delivered to Landlord upon the execution of this
Lease by Tenant and held by Landlord without liability for interest
(unless required by Law) as security for the performance of
Tenant’s obligations. The Security Deposit is not an advance
payment of Rent or a measure of damages. Landlord may use all or a
portion of the Security Deposit to satisfy past due Rent or to cure
any Default (defined in Section 18) by Tenant. If Landlord
uses any portion of the Security Deposit, Tenant shall, within 5
days after demand, restore the Security Deposit to its original
amount. Landlord shall return any unapplied portion of the Security
Deposit to Tenant within 45 days after the later to occur of:
(a) determination of the final Rent due from Tenant; or
(b) the later to occur of the Termination Date or the date
Tenant surrenders the Premises to Landlord in compliance with
Section 25. Landlord may assign the Security Deposit to a
successor or transferee and, following the assignment, Landlord
shall have no further liability for the return of the Security
Deposit. Landlord shall not be required to keep the Security
Deposit separate from its other accounts. Tenant hereby waives the
provisions of Section 1950.7 of the California Civil Code, or
any similar or successor Laws now or hereinafter in
effect.
6.02 Subject to the remaining
terms of this Article VI, and provided Tenant has timely paid
all Rent due under this Lease during the 12 month period
immediately preceding the effective date of any reduction of the
Security Deposit, Tenant shall have the right to reduce the amount
of the Security Deposit to $30,000.00 effective on the first day of
the 19th calendar month of the Term. Notwithstanding anything to
the contrary contained herein, if Tenant has been in Default under
this Lease at any time prior to the effective date of any reduction
of the
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Security Deposit and Tenant has failed
to cure such default within any applicable cure period, then Tenant
shall have no further right to reduce the amount of the Security
Deposit as described herein.
6.03 If Tenant is entitled to
a reduction in the Security Deposit, Tenant shall provide Landlord
with written notice requesting that the Security Deposit be reduced
as provided above (the “Reduction Notice”). If Tenant
provides Landlord with a Reduction Notice, and Tenant is entitled
to reduce the Security Deposit as provided herein, Landlord shall
refund the applicable portion of the Security Deposit to Tenant
within 45 days after the later to occur of
(a) Landlord’s receipt of the Reduction Notice, or
(b) the date upon which Tenant is entitled to a reduction in
the Security Deposit as provided above.
7.01 Landlord shall furnish
Tenant with the following services: (a) water for use in the
Base Building lavatories; (b) customary heat and air
conditioning in season during Building Service Hours. Tenant shall
have the right to receive HVAC service during hours other than
Building Service Hours by paying Landlord’s then standard
charge for additional HVAC service and providing such prior notice
as is reasonably specified by Landlord; (c) standard
janitorial service on Business Days; (d) Elevator service;
(e) Electricity in accordance with the terms and conditions in
Section 7.02; and (f) such other services as Landlord
reasonably determines are necessary or appropriate for the
Property.
7.02 Electricity used by
Tenant in the Premises shall, at Landlord’s option, be paid
for by Tenant either: (a) through inclusion in Expenses
(except as provided for excess usage); (b) by a separate
charge payable by Tenant to Landlord; or (c) by separate
charge billed by the applicable utility company and payable
directly by Tenant. Without the consent of Landlord, Tenant’s
use of electrical service shall not exceed, either in voltage,
rated capacity, use or overall load, that which Landlord reasonably
deems to be standard for the Building. Landlord shall have the
right to measure electrical usage by commonly accepted methods. If
it is determined that Tenant is using excess electricity, Tenant
shall pay Landlord for the cost of such excess electrical usage as
Additional Rent.
7.03 Landlord’s failure
to furnish, or any interruption, diminishment or termination of
services due to the application of Laws, the failure of any
equipment, the performance of repairs, improvements or alterations,
utility interruptions or the occurrence of an event of Force
Majeure (defined in Section 26.03) (collectively a “
Service Failure ”) shall not render Landlord liable to
Tenant, constitute a constructive eviction of Tenant, give rise to
an abatement of Rent, nor relieve Tenant from the obligation to
fulfill any covenant or agreement. However, if the Premises, or a
material portion of the Premises, are made untenantable for a
period in excess of 3 consecutive Business Days as a result of a
Service Failure that is reasonably within the control of Landlord
to correct, then Tenant, as its sole remedy, shall be entitled to
receive an abatement of Rent payable hereunder during the period
beginning on the 4th consecutive Business Day of the Service
Failure and ending on the day the service has been restored. If the
entire Premises have not been rendered untenantable by the Service
Failure, the amount of abatement shall be equitably
prorated.
| 8. |
Leasehold Improvements. |
8.01 All improvements in and
to the Premises, including any Alterations (collectively, “
Leasehold Improvements ”) shall remain upon the
Premises at the end of the Term without
6
compensation to Tenant. Landlord,
however, by written notice to Tenant at least 30 days prior to the
Termination Date, may require Tenant, at its expense, to remove
(a) any Cable (defined in Section 9.01) installed by or
for the benefit of Tenant, and (b) any Landlord Work or
Alterations that, in Landlord’s reasonable judgment, are of a
nature that would require removal and repair costs that are
materially in excess of the removal and repair costs associated
with standard office improvements (collectively referred to as
“ Required Removables ”). Required Removables
shall include, without limitation, internal stairways, raised
floors, personal baths and showers, vaults, rolling file systems
and structural alterations and modifications. The designated
Required Removables shall be removed by Tenant before the
Termination Date. Tenant shall repair damage caused by the
installation or removal of Required Removables. If Tenant fails to
perform its obligations in a timely manner, Landlord may perform
such work at Tenant’s expense. Tenant, at the time it
requests approval for a proposed Alteration, may request in writing
that Landlord advise Tenant whether the Alteration or any portion
of the Alteration is a Required Removable. Within 10 days after
receipt of Tenant’s request, Landlord shall advise Tenant in
writing as to which portions of the Alteration are Required
Removables. Notwithstanding anything contained herein to the
contrary, all of the improvements performed by Landlord as part of
the initial Landlord Work pursuant to Exhibit C of this Lease
shall not be Required Removables.
| 9. |
Repairs and Alternations. |
9.01 Tenant shall
periodically inspect the Premises to identify any conditions that
are dangerous or in need of maintenance or repair. Tenant shall
promptly provide Landlord with notice of any such conditions.
Tenant shall, at its sole cost and expense, perform all maintenance
and repairs to the Premises that are not Landlord’s express
responsibility under this Lease, and keep the Premises in good
condition and repair, reasonable wear and tear excepted.
Tenant’s repair and maintenance obligations include, without
limitation, repairs to: (a) floor covering; (b) interior
partitions; (c) doors; (d) the interior side of demising
walls; (e) electronic, phone and data cabling and related
equipment that is installed by or for the exclusive benefit of
Tenant (collectively, “ Cable ”);
(f) supplemental air conditioning units, kitchens, including
hot water heaters, plumbing, and similar facilities exclusively
serving Tenant; and (g) Alterations. To the extent Landlord is
not reimbursed by insurance proceeds, Tenant shall reimburse
Landlord for the cost of repairing damage to the Building caused by
the acts of Tenant, Tenant Related Parties and their respective
contractors and vendors. If Tenant fails to make any repairs to the
Premises for more than 15 days after notice from Landlord
(although notice shall not be required in an emergency), Landlord
may make the repairs, and Tenant shall pay the reasonable cost of
the repairs, together with an administrative charge in an amount
equal to 10% of the cost of the repairs.
9.02 Landlord shall keep and
maintain in good repair and working order and perform maintenance
upon the: (a) structural elements of the Building;
(b) mechanical (including HVAC), electrical (including
lighting in the Common Area), plumbing and fire/life safety systems
serving the Building in general; (c) Common Areas;
(d) roof of the Building; (e) exterior windows of the
Building; and (f) elevators serving the Building. Landlord
shall promptly make repairs for which Landlord is responsible.
Tenant hereby waives any and all rights under and benefits of
subsection 1 of Section 1932, and Sections 1941 and
1942 of the California Civil Code, or any similar or successor Laws
now or hereinafter in effect.
9.03 Tenant shall not make
alterations, repairs, additions or improvements or install any
Cable (collectively referred to as “ Alterations
”) without first obtaining the written consent of Landlord in
each instance, which consent shall not be unreasonably withheld or
delayed.
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However, Landlord’s consent shall
not be required for any Alteration that satisfies all of the
following criteria (a “ Cosmetic Alteration ”):
(a) is of a cosmetic nature such as painting, wallpapering,
hanging pictures and installing carpeting; (b) is not visible
from the exterior of the Premises or Building; (c) will not
affect the Base Building; and (d) does not require work to be
performed inside the walls or above the ceiling of the Premises.
Cosmetic Alterations shall be subject to all the other provisions
of this Section 9.03. Prior to starting work, Tenant shall
furnish Landlord with plans and specifications; names of
contractors reasonably acceptable to Landlord (provided that
Landlord may designate specific contractors with respect to Base
Building); required permits and approvals; evidence of
contractor’s and subcontractor’s insurance in amounts
reasonably required by Landlord and naming Landlord as an
additional insured; and any security for performance in amounts
reasonably required by Landlord. Changes to the plans and
specifications must also be submitted to Landlord for its approval.
Alterations shall be constructed in a good and workmanlike manner
using materials of a quality reasonably approved by Landlord.
Tenant shall reimburse Landlord for any sums paid by Landlord for
third party examination of Tenant’s plans for non-Cosmetic
Alterations. In addition, Tenant shall pay Landlord a fee for
Landlord’s oversight and coordination of any non-Cosmetic
Alterations equal to 10% of the cost of the Alterations. Upon
completion, Tenant shall furnish “as-built” plans for
non-Cosmetic Alterations, completion affidavits and full and final
waivers of lien. Landlord’s approval of an Alteration shall
not be deemed a representation by Landlord that the Alteration
complies with Law.
Landlord may enter the
Premises to inspect, show or clean the Premises or to perform or
facilitate the performance of repairs, alterations or additions to
the Premises or any portion of the Building. Except in emergencies
or to provide Building services, Landlord shall provide Tenant with
reasonable prior verbal notice of entry and shall use reasonable
efforts to minimize any interference with Tenant’s use of the
Premises. If reasonably necessary, Landlord may temporarily close
all or a portion of the Premises to perform repairs, alterations
and additions. However, except in emergencies, Landlord will not
close the Premises if the work can reasonably be completed on
weekends and after Building Service Hours. Entry by Landlord shall
not constitute a constructive eviction or entitle Tenant to an
abatement or reduction of Rent.
| 11. |
Assignment and Subletting. |
11.01 Except in connection
with a Permitted Transfer (defined in Section 11.04), Tenant
shall not assign, sublease, transfer or encumber any interest in
this Lease or allow any third party to use any portion of the
Premises (collectively or individually, a “ Transfer
”) without the prior written consent of Landlord, which
consent shall not be unreasonably withheld, conditioned or delayed
if Landlord does not exercise its recapture rights under
Section 11.02. If the entity which controls the voting
shares/rights of Tenant changes at any time, such change of
ownership or control shall constitute a Transfer unless Tenant is
an entity whose outstanding stock is listed on a recognized
securities exchange or if at least 80% of its voting stock is owned
by another entity, the voting stock of which is so listed. Tenant
hereby waives the provisions of Section 1995.310 of the
California Civil Code, or any similar or successor Laws, now or
hereinafter in effect, and all other remedies, including, without
limitation, any right at law or equity to terminate this Lease, on
its own behalf and, to the extent permitted under all applicable
Laws, on behalf of the proposed transferee. Any attempted Transfer
in violation of this Section is voidable by Landlord. In no event
shall any Transfer, including a Permitted Transfer, release or
relieve Tenant from any obligation under this Lease.
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11.02 Tenant shall provide
Landlord with financial statements for the proposed transferee, a
fully executed copy of the proposed assignment, sublease or other
Transfer documentation and such other information as Landlord may
reasonably request. Within 15 Business Days after receipt of
the required information and documentation, Landlord shall either:
(a) consent to the Transfer by execution of a consent
agreement in a form reasonably designated by Landlord;
(b) reasonably refuse to consent to the Transfer in writing;
or (c) in the event of an assignment of this Lease or
subletting of the entire Premises for more than 50% of the
remaining Term (excluding unexercised options), recapture the
Premises. If Landlord exercises its right to recapture, this Lease
shall automatically be terminated effective on the proposed
effective date of the Transfer. Tenant shall pay Landlord a review
fee of $1,500.00 for Landlord’s review of any Permitted
Transfer or requested Transfer.
11.03 Tenant shall pay
Landlord 50% of all rent and other consideration which Tenant
receives as a result of a Transfer that is in excess of the Rent
payable to Landlord for the portion of the Premises and Term
covered by the Transfer. Tenant shall pay Landlord for
Landlord’s share of the excess within 30 days after
Tenant’s receipt of the excess. Tenant may deduct from the
excess, on a straight-line basis, all reasonable and customary
expenses directly incurred by Tenant attributable to the Transfer.
If Tenant is in Default, Landlord may require that all sublease
payments be made directly to Landlord, in which case Tenant shall
receive a credit against Rent in the amount of Tenant’s share
of payments received by Landlord.
11.04 Tenant may assign this
Lease to a successor to Tenant by purchase, merger, consolidation
or reorganization (an “ Ownership Change ”) or
assign this Lease or sublet all or a portion of the Premises to an
Affiliate without the consent of Landlord, provided that all of the
following conditions are satisfied (a “ Permitted
Transfer ”): (a) Tenant is not in Default;
(b) in the event of an Ownership Change, Tenant’s
successor shall own substantially all of the assets of Tenant and
have a net worth which is at least equal to Tenant’s net
worth as of the day prior to the proposed Ownership Change;
(c) the Permitted Use does not allow the Premises to be used
for retail purposes; and (d) Tenant shall give Landlord
written notice at least 15 Business Days prior to the effective
date of the Permitted Transfer. Tenant’s notice to Landlord
shall include information and documentation evidencing the
Permitted Transfer and showing that each of the above conditions
has been satisfied. If requested by Landlord, Tenant’s
successor shall sign a commercially reasonable form of assumption
agreement. “ Affiliate ” shall mean an entity
controlled by, controlling or under common control with
Tenant.
Tenant shall not permit
mechanics’ or other liens to be placed upon the Property,
Premises or Tenant’s leasehold interest in connection with
any work or service done or purportedly done by or for the benefit
of Tenant or its transferees. Tenant shall give Landlord notice at
least 15 days prior to the commencement of any work in the
Premises to afford Landlord the opportunity, where applicable, to
post and record notices of non-responsibility. Tenant, within
10 days of notice from Landlord, shall fully discharge any
lien by settlement, by bonding or by insuring over the lien in the
manner prescribed by the applicable lien Law. If Tenant fails to do
so, Landlord may bond, insure over or otherwise discharge the lien.
Tenant shall reimburse Landlord for any amount paid by Landlord,
including, without limitation, reasonable attorneys’
fees.
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| 13. |
Indemnity and Waiver Claims. |
Tenant hereby waives all
claims against and releases Landlord and its trustees, members,
principals, beneficiaries, partners, officers, directors,
employees, Mortgagees (defined in Section 23) and agents (the
“ Landlord Related Parties ”) from all claims
for any injury to or death of persons, damage to property or
business loss in any manner related to (a) Force Majeure,
(b) acts of third parties, (c) the bursting or leaking of
any tank, water closet, drain or other pipe, (d) the
inadequacy or failure of any security services, personnel or
equipment, or (e) any matter not within the reasonable control
of Landlord. Except to the extent caused by the negligence or
willful misconduct of Landlord or any Landlord Related Parties,
Tenant shall indemnify, defend and hold Landlord and Landlord
Related Parties harmless against and from all liabilities,
obligations, damages, penalties, claims, actions, costs, charges
and expenses, including, without limitation, reasonable
attorneys’ fees and other professional fees (if and to the
extent permitted by Law) (collectively referred to as “
Losses ”), which may be imposed upon, incurred by or
asserted against Landlord or any of the Landlord Related Parties by
any third party and arising out of or in connection with any damage
or injury occurring in the Premises or any acts or omissions
(including violations of Law) of Tenant, the Tenant Related Parties
or any of Tenant’s transferees, contractors or licensees.
Except to the extent caused by the negligence or willful misconduct
of Tenant or any Tenant Related Parties, Landlord shall indemnify,
defend and hold Tenant, its trustees, members, principals,
beneficiaries, partners, officers, directors, employees and agents
(“ Tenant Related Parties ”) harmless against
and from all Losses which may be imposed upon, incurred by or
asserted against Tenant or any of the Tenant Related Parties by any
third party and arising out of or in connection with the acts or
omissions (including violations of Law) of Landlord or the Landlord
Related Parties.
Tenant shall maintain the
following insurance (“ Tenant’s Insuranc
e”): (a) Commercial General Liability Insurance
applicable to the Premises and its appurtenances providing, on an
occurrence basis, a minimum combined single limit of $2,000,000.00;
(b) Property/Business Interruption Insurance written on an All
Risk or Special Perils form, with coverage for broad form water
damage including earthquake sprinkler leakage, at replacement cost
value and with a replacement cost endorsement covering all of
Tenant’s business and trade fixtures, equipment, movable
partitions, furniture, merchandise and other personal property
within the Premises (“ Tenant’s Property
”) and any Leasehold Improvements performed by or for the
benefit of Tenant; (c) Workers’ Compensation Insurance
in amounts required by Law; and (d) Employers Liability
Coverage of at least $1,000,000.00 per occurrence. Any company
writing Tenant’s Insurance shall have an A.M. Best rating of
not less than A-VIII. All Commercial General Liability Insurance
policies shall name as additional insureds Landlord (or its
successors and assignees), the managing agent for the Building (or
any successor), EOP Operating Limited Partnership, Equity Office
Properties Trust and their respective members, principals,
beneficiaries, partners, officers, directors, employees, and
agents, and other designees of Landlord and its successors as the
interest of such designees shall appear. All policies of
Tenant’s Insurance shall contain endorsements that the
insurer(s) shall give Landlord and its designees at least 30
days’ advance written notice of any cancellation,
termination, material change or lapse of insurance. Tenant shall
provide Landlord with a certificate of insurance evidencing
Tenant’s Insurance prior to the earlier to occur of the
Commencement Date or the date Tenant is provided with possession of
the Premises, and thereafter as necessary to assure that Landlord
always has current certificates evidencing Tenant’s
Insurance. So long as the same is available at commercially
reasonable rates, Landlord shall maintain so called All Risk
property insurance on the Building at replacement cost value as
reasonably estimated by Landlord.
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Landlord and Tenant hereby
waive and shall cause their respective insurance carriers to waive
any and all rights of recovery, claims, actions or causes of action
against the other for any loss or damage with respect to
Tenant’s Property, Leasehold Improvements, the Building, the
Premises, or any contents thereof, including rights, claims,
actions and causes of action based on negligence, which loss or
damage is (or would have been, had the insurance required by this
Lease been carried) covered by insurance.
16.01 If all or any portion
of the Premises becomes untenantable by fire or other casualty to
the Premises (collectively a “ Casualty ”),
Landlord, with reasonable promptness, shall cause a general
contractor selected by Landlord to provide Landlord and Tenant with
a written estimate of the amount of time required using standard
working methods to Substantially Complete the repair and
restoration of the Premises and any Common Areas necessary to
provide access to the Premises (“ Completion Estimate
”). If the Completion Estimate indicates that the Premises or
any Common Areas necessary to provide access to the Premises cannot
be made tenantable within 270 days from the date the repair is
started, then either party shall have the right to terminate this
Lease upon written notice to the other within 10 days after receipt
of the Completion Estimate. Tenant, however, shall not have the
right to terminate this Lease if the Casualty was caused by the
negligence or intentional misconduct of Tenant or any Tenant
Related Parties. In addition, Landlord, by notice to Tenant within
90 days after the date of the Casualty, shall have the right to
terminate this Lease if: (1) the Premises have been materially
damaged and there is less than 2 years of the Term remaining
on the date of the Casualty; (2) any Mortgagee requires that
the insurance proceeds be applied to the payment of the mortgage
debt; or (3) a material uninsured loss to the Building
occurs.
16.02 If this Lease is not
terminated, Landlord shall promptly and diligently, subject to
reasonable delays for insurance adjustment or other matters beyond
Landlord’s reasonable control, restore the Premises and
Common Areas. Such restoration shall be to substantially the same
condition that existed prior to the Casualty, except for
modifications required by Law or any other modifications to the
Common Areas deemed desirable by Landlord. Upon notice from
Landlord, Tenant shall assign to Landlord (or to any party
designated by Landlord) all property insurance proceeds payable to
Tenant under Tenant’s Insurance with respect to any Leasehold
Improvements performed by or for the benefit of Tenant; provided if
the estimated cost to repair such Leasehold Improvements exceeds
the amount of insurance proceeds received by Landlord from
Tenant’s insurance carrier, the excess cost of such repairs
shall be paid by Tenant to Landlord prior to Landlord’s
commencement of repairs. Within 15 days of demand, Tenant shall
also pay Landlord for any additional excess costs that are
determined during the performance of the repairs. Landlord shall
not be liable for any inconvenience to Tenant, or injury to
Tenant’s business resulting in any way from the Casualty or
the repair thereof. Provided that Tenant is not in Default, during
any period of time that all or a material portion of the Premises
is rendered untenantable as a result of a Casualty, the Rent shall
abate for the portion of the Premises that is untenantable and not
used by Tenant.
16.03 The provisions of this
Lease, including this Section 16, constitute an express
agreement between Landlord and Tenant with respect to any and all
damage to, or destruction
11
of, all or any part of the Premises or
the Property, and any Laws, including, without limitation,
Sections 1932(2) and 1933(4) of the California Civil Code,
with respect to any rights or obligations concerning damage or
destruction in the absence of an express agreement between the
parties, and any similar or successor Laws now or hereinafter in
effect, shall have no application to this Lease or any damage or
destruction to all or any part of the Premises or the
Property.
Either party may terminate
this Lease if any material part of the Premises is taken or
condemned for any public or quasi public use under Law, by eminent
domain or private purchase in lieu thereof (a “ Taking
”). Landlord shall also have the right to terminate this
Lease if there is a Taking of any portion of the Building or
Property which would have a material adverse effect on
Landlord’s ability to profitably operate the remainder of the
Building. The terminating party shall provide written notice of
termination to the other party within 45 days after it first
receives notice of the Taking. The termination shall be effective
on the date the physical taking occurs. If this Lease is not
terminated, Base Rent and Tenant’s Pro Rata Share shall be
appropriately adjusted to account for any reduction in the square
footage of the Building or Premises. All compensation awarded for a
Taking shall be the property of Landlord. The right to receive
compensation or proceeds are expressly waived by Tenant, however,
Tenant may file a separate claim for Tenant’s Property and
Tenant’s reasonable relocation expenses, provided the filing
of the claim does not diminish the amount of Landlord’s
award. If only a part of the Premises is subject to a Taking and
this Lease is not terminated, Landlord, with reasonable diligence,
will restore the remaining portion of the Premises as nearly as
practicable to the condition immediately prior to the Taking.
Tenant hereby waives any and all rights it might otherwise have
pursuant to Section 1265.130 of the California Code of Civil
Procedure, or any similar or successor Laws.
Each of the following
occurrences shall be a “ Default ”:
(a) Tenant’s failure to pay any portion of Rent when
due, if the failure continues for 3 days after written notice
to Tenant (“ Monetary Default ”);
(b) Tenant’s failure (other than a Monetary
Default) to comply with any term, provision, condition or
covenant of this Lease, if the failure is not cured within
10 days after written notice to Tenant provided, however, if
Tenant’s failure to comply cannot reasonably be cured within
10 days, Tenant shall be allowed additional time (not to
exceed 60 days) as is reasonably necessary to cure the failure
so long as Tenant begins the cure within 10 days and
diligently pursues the cure to completion; (c) Tenant or any
Guarantor becomes insolvent, makes a transfer in fraud of
creditors, makes an assignment for the benefit of creditors, admits
in writing its inability to pay its debts when due or forfeits or
loses its right to conduct business; (d) the leasehold estate
is taken by process or operation of Law; (e) in the case of
any ground floor or retail Tenant, Tenant does not take possession
of or abandons or vacates all or any portion of the Premises; or
(f) Tenant is in default beyond any notice and cure period
under any other lease or agreement with Landlord at the Building or
Property. If Landlord provides Tenant with notice of Tenant’s
failure to comply with any specific provision of this Lease on
3 separate occasions during any 12 month period,
Tenant’s subsequent violation of such provision shall, at
Landlord’s option, be an incurable Default by Tenant. All
notices sent under this Section shall be in satisfaction of, and
not in addition to, notice required by Law.
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19.01 Upon the occurrence of
any Default under this Lease, whether enumerated in Section 18
or not, Landlord shall have the option to pursue any one or more of
the following remedies without any notice (except as expressly
prescribed herein) or demand whatsoever (and without limiting the
generality of the foregoing, Tenant hereby specifically waives
notice and demand for payment of Rent or other obligations, except
for those notices specifically required pursuant to the terms of
Section 18 or this Section 19, and waives any and all
other notices or demand requirements imposed by applicable
law):
(a) Terminate this Lease and
Tenant’s right to possession of the Premises and recover from
Tenant an award of damages equal to the sum of the
following:
(i) The Worth at the Time of
Award of the unpaid Rent which had been earned at the time of
termination;
(ii) The Worth at the Time of
Award of the amount by which the unpaid Rent which would have been
earned after termination until the time of award exceeds the amount
of such Rent loss that Tenant affirmatively proves could have been
reasonably avoided;
(iii) The Worth at the Time
of Award of the amount by which the unpaid Rent for the balance of
the Term after the time of award exceeds the amount of such Rent
loss that Tenant affirmatively proves could be reasonably
avoided;
(iv) Any other amount
necessary to compensate Landlord for all the detriment either
proximately caused by Tenant’s failure to perform
Tenant’s obligations under this Lease or which in the
ordinary course of things would be likely to result therefrom;
and
(v) All such other amounts in
addition to or in lieu of the foregoing as may be permitted from
time to time under applicable law.
The “ Worth at the
Time of Award ” of the amounts referred to in
parts (i) and (ii) above, shall be computed by allowing
interest at the lesser of a per annum rate equal to: (A) the
greatest per annum rate of interest permitted from time to time
under applicable law, or (B) the Prime Rate plus 5%. For
purposes hereof, the “ Prime Rate ” shall be the
per annum interest rate publicly announced as its prime or base
rate by a federally insured bank selected by Landlord in the State
of California. The “ Worth at the Time of Award
” of the amount referred to in part (iii), above, shall be
computed by discounting such amount at the discount rate of the
Federal Reserve Bank of San Francisco at the time of award plus
1%;
(b) Employ the remedy
described in California Civil Code § 1951.4 (Landlord may
continue this Lease in effect after Tenant’s breach and
abandonment and recover Rent as it becomes due, if Tenant has the
right to sublet or assign, subject only to reasonable limitations);
or
13
(c) Notwithstanding
Landlord’s exercise of the remedy described in California
Civil Code § 1951.4 in respect of an event or events of
default, at such time thereafter as Landlord may elect in writing,
to terminate this Lease and Tenant’s right to possession of
the Premises and recover an award of damages as provided above in
Paragraph 19.01(a).
19.02 The subsequent
acceptance of Rent hereunder by Landlord shall not be deemed to be
a waiver of any preceding breach by Tenant of any term, covenant or
condition of this Lease, other than the failure of Tenant to pay
the particular Rent so accepted, regardless of Landlord’s
knowledge of such preceding breach at the time of acceptance of
such Rent. No waiver by Landlord of any breach hereof shall be
effective unless such waiver is in writing and signed by
Landlord.
19.03 TENANT HEREBY WAIVES
ANY AND ALL RIGHTS CONFERRED BY SECTION 3275 OF THE CIVIL CODE
OF CALIFORNIA AND BY SECTIONS 1174(c) AND 1179 OF THE CODE OF
CIVIL PROCEDURE OF CALIFORNIA AND ANY AND ALL OTHER LAWS AND RULES
OF LAW FROM TIME TO TIME IN EFFECT DURING THE LEASE TERM PROVIDING
THAT TENANT SHALL HAVE ANY RIGHT TO REDEEM, REINSTATE OR RESTORE
THIS LEASE FOLLOWING ITS TERMINATION BY REASON OF TENANT’S
BREACH. TENANT ALSO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY LAW, THE RIGHT TO TRIAL BY JURY IN ANY LITIGATION ARISING OUT OF
OR RELATING TO THIS LEASE.
19.04 No right or remedy
herein conferred upon or reserved to Landlord is intended to be
exclusive of any other right or remedy, and each and every right
and remedy shall be cumulative and in addition to any other right
or remedy given hereunder or now or hereafter exis
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