Exhibit 10.2

INDUSTRIAL/COMMERCIAL MULTI-TENANT LEASE – GROSS MODIFIED DATED FEBRUARY 19,
2019 BY AND BETWEEN TANDEM DIABETES CARE, INC., A DELAWARE CORPORATION AND R. E.
HAZARD CONTRACTING COMPANY, A CALIFORNIA CORPORATION

 

 

 

 

 

 

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TABLE OF CONTENTS

 

 

 

1.

BASIC PROVISIONS

1

 

1.1

Parties

1

 

1.2

Premises and Parking

1

 

1.3

Term

1

 

1.4

Early Possession

1

 

1.5

Base Rent

1

 

1.6

Lessee’s Share of Common Area Operating Expenses

2

 

1.7

Lessee’s Base Year

2

 

1.8

Base Rent and Other Monies Payable Upon Execution

2

 

1.9

Agreed Use

2

 

1.10

Insuring Party

2

 

1.11

Guarantor

2

 

1.12

Options

2

 

1.13

Attachments

3

2.

PREMISES

3

 

2.1

Letting

3

 

2.2

Condition

3

 

2.3

Compliance

4

 

2.4

Acknowledgements

4

 

2.5

Lessee as Prior Owner/Occupant

5

 

2.6

Vehicle Parking

5

 

2.7

Common Areas – Definition

5

 

2.8

Common Areas - Lessee’s Rights

5

 

2.9

Common Areas - Rules and Regulations

6

 

2.10

Common Areas – Changes

6

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3.

TERM

7

 

3.1

Term

7

 

3.2

Early Possession

7

 

3.3

Delay In Possession

7

 

3.4

Lessee Compliance

7

4.

RENT

7

 

4.1

Rent Defined

7

 

4.2

Common Area Operating Expenses

8

 

4.3

Credit to Base Rent

11

 

4.4

Payment

11

5.

SECURITY DEPOSIT

12

6.

USE

12

 

6.1

Use

12

 

6.2

Hazardous Substances

12

 

6.3

Lessee’s Compliance with Applicable Requirements

14

 

6.4

Inspection; Compliance

15

7.

TENANT IMPROVEMENTS

15

8.

MAINTENANCE; REPAIRS; UTILITY INSTALLATIONS; TRADE FIXTURES AND ALTERATIONS

15

 

8.1

Lessee’s Obligations

15

 

8.2

Lessor’s Obligations

16

 

8.3

Utility Installations; Trade Fixtures; Alterations

16

 

8.4

Ownership; Removal; Surrender; and Restoration

17

9.

INSURANCE; INDEMNITY

18

 

9.1

Payment of Premium Increases

18

 

9.2

Liability Insurance

18

 

9.3

Property Insurance - Building, Improvements and Rental Value

19

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9.4

Lessee’s Property; Business Interruption Insurance; Worker’s Compensation
Insurance

20

 

9.5

Insurance Policies

20

 

9.6

Waiver of Subrogation

20

 

9.7

Indemnity

21

 

9.8

Exemption of Lessor and its Agents from Liability

21

 

9.9

Failure to Provide Insurance

21

10.

DAMAGE OR DESTRUCTION

21

 

10.1

Definitions

21

 

10.2

Partial Damage - Insured Loss

22

 

10.3

Partial Damage - Uninsured Loss

23

 

10.4

Total Destruction

23

 

10.5

Damage Near End of Term

23

 

10.6

Abatement of Rent; Lessee’s Remedies

23

 

10.7

Termination; Advance Payments

24

11.

REAL PROPERTY TAXES

24

 

11.1

Definitions

24

 

11.2

Payment of Taxes

24

 

11.3

Additional Improvements

24

 

11.4

Joint Assessment

25

 

11.5

Personal Property Taxes

25

12.

UTILITIES AND SERVICES

25

13.

ASSIGNMENT AND SUBLETTING

26

 

13.1

Lessor’s Consent Required

26

 

13.2

Terms and Conditions Applicable to Assignment and Subletting

26

 

13.3

Additional Terms and Conditions Applicable to Subletting

28

14.

DEFAULT; BREACH; REMEDIES

28

 

14.1

Default; Breach

28

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14.2

Remedies

29

 

14.3

Inducement Recapture

30

 

14.4

Late Charges

30

 

14.5

Interest

31

 

14.6

Breach by Lessor

31

15.

CONDEMNATION

31

 

15.1

Effect on Lease

31

 

15.2

Allocation of Condemnation Award

32

16.

CONFIDENTIAL INFORMATION, INDEMNITIES OF RELATIONSHIPS

32

 

16.1

Confidential Information

32

 

16.2

Indemnities

33

17.

ESTOPPEL CERTIFICATES AND FINANCIAL STATEMENTS

33

 

17.1

Obligation to Provide Estoppel Certificate

33

 

17.2

Remedies for Failure to Provide Estoppel Certificate.

33

 

17.3

Additional Provisions Regarding Lessor Finance, Refinance or Sale of Premises

33

18.

SUBORDINATION; ATTORNMENT; NON-DISTURBANCE

33

 

18.1

Subordination

33

 

18.2

Attornment

34

 

18.3

Non-Disturbance

34

 

18.4

Self-Executing

34

19.

OPTIONS

34

 

19.1

General Provisions Applicable to Options

34

 

19.2

Effect of Default on Options

35

 

19.3

Option Exercise Procedures

35

20.

MISCELLANEOUS PROVISIONS

36

 

20.1

Definition of Lessor

36

 

20.2

Severability

36

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20.3

Days

36

 

20.4

Limitation on Liability

36

 

20.5

Time of Essence

36

 

20.6

No Prior or Other Agreements

37

 

20.7

Notices

37

 

20.8

Waivers

37

 

20.9

No Right To Holdover

38

 

20.10

Cumulative Remedies

38

 

20.11

Covenants and Conditions; Construction of Agreement

38

 

20.12

Binding Effect; Choice of Law

38

 

20.13

Attorneys’ Fees

38

 

20.14

Lessor’s Access; Showing Premises; Repairs

39

 

20.15

Auctions

39

 

20.16

Signs

39

 

20.17

Termination; Merger

39

 

20.18

Consents

39

 

20.19

Quiet Possession

40

 

20.20

Security Measures

40

 

20.21

Reservations

40

 

20.22

Performance Under Protest

40

 

20.23

Authority; Multiple Parties; Execution

40

 

20.24

Offer

41

 

20.25

Amendments

41

 

20.26

Waiver of Trial By Jury

41

 

20.27

Accessibility; Americans with Disabilities Act

41

 

 

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INDUSTRIAL/COMMERCIAL MULTI-TENANT LEASE –

GROSS MODIFIED

 

1.

BASIC PROVISIONS

 

1.1

Parties

This Lease (“Lease”), dated for reference purposes only February 19, 2019, is
made by and between R. E. Hazard Contracting Company, a California corporation
(“Lessor”) and Tandem Diabetes Care, Inc., a Delaware corporation (“Lessee”),
(collectively the “Parties”, or individually a “Party”).

 

1.2

Premises and Parking

1.2.1That certain portion of the Project (as defined below), including all
improvements therein or to be provided by Lessor under the terms of this Lease,
commonly known by the street address of 6495 Marindustry Place, San Diego, CA,
located in the County of San Diego, State of California, as outlined on Exhibit
A attached hereto (“Premises”), and which is comprised of an agreed upon 40,490
rentable square feet.

1.2.2In addition to Lessee’s rights to use and occupy the Premises as
hereinafter specified, Lessee shall have non-exclusive rights to the Common
Areas (as defined in Section 2.7 below), but shall not have any rights to the
roof, or exterior walls of any buildings in the Project. The Premises, the
Common Areas, the land upon which they are located, along with all buildings and
improvements thereon, are herein collectively referred to as the “Project,”
which is comprised of an agreed upon 96,150 rentable square feet (See also
Section 2.)

1.2.3Except as expressly provided herein, surface parking is provided free of
charge with unassigned parking spaces, on first come first served basis.  No
vehicle maintenance shall be performed in the Project. (See also Section 2.6.)  

 

1.3

Term

The term of the lease shall be eighty-four (84) months (“Original Term”)
commencing May 1, 2019 (“Commencement Date”) and ending April 30, 2026
(“Expiration Date”). (See also Section 3.)

 

1.4

Early Possession

Lessor shall deliver possession of the Premises to Lessee commencing thirty (30)
days following the full execution of this Lease, or upon the vacancy of the
Premises by the current lessee, whichever occurs later, for the installation of
Lessee’s furniture, fixtures, and equipment, and to perform any tasks related to
electrical and plumbing within the Premises with no obligation to pay Base Rent
or Common Area Operating Expenses (“Early Possession Date”).  (See also Sections
3.2 and 3.3.)

 

1.5

Base Rent

Lessee shall pay Lessor $46,563.50 per month (“Base Rent”), payable on the first
day of each month commencing May 1, 2019.   Base Rent shall be adjusted during
the Original Term as follows:

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Months 1 – 12 (May 1, 2019 – April 30, 2020)

$46,563.50

Months 13 – 24 (May 1, 2020 – April 30, 2021)

$47,960.41

Months 25 – 36 (May 1, 2021 – April 30, 2022)

$49,399.22

Months 37 – 48(May 1, 2022 – April 30, 2023)

$50,881.20

Months 49 – 60 (May 1, 2023 – April 30, 2024)

$52,407.64

Months 61 – 72 (May 1, 2024 – April 30, 2025)

$53,979.87

Months 73 – 84 (May 1, 2025 – April 30, 2026)

$55,599.27

Base Rent shall be payable as set forth in Section 4.

 

1.6

Lessee’s Share of Common Area Operating Expenses

“Lessee’s Share” of Common Area Operating Expenses pertaining to the Project
shall be the percentage that the rentable square footage of the Premises is of
the total rentable square footage of the Project as set forth in Section 1.2.2
(currently 42.111%).  

 

1.7

Lessee’s Base Year

“Lessee’s Base Year” shall be 2019.

 

1.8

Base Rent and Other Monies Payable Upon Execution

a.Base Rent: $46,563.50 for the period of May 2019.

b.Security Deposit: $55,599.25 (“Security Deposit”). (See also Section 5)

c.Total Due Upon Full Execution of this Lease: $102,162.75.

 

1.9

Agreed Use

General office, warehouse, light industrial, machine shop and other related uses
permitted within the Project’s zoning. (See also Section 6)

 

1.10

Insuring Party

Lessor is the “Insuring Party.”  (See also Section 9)

 

1.11

Guarantor

[Not applicable – intentionally omitted.]

 

1.12

Options

Lessor hereby grants Lessee the Option to extend the term of this Lease for one
(1) term for a period of no less than three (3) years and no more than five (5)
years, provided that Lessee is not in Breach of this Lease either at the time it
elects to exercise an Option, or at the

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commencement date of the extension period as applicable. See also Section 19 for
additional Option terms.

 

1.13

Attachments

Attached hereto are the following, all of which constitute a part of this Lease:

Exhibit A – “Site Plan of the Premises”

Exhibit B – “Tenant Improvements” - [Not applicable – intentionally omitted.]

Exhibit C – “Guaranty”- [Not applicable – intentionally omitted.]

Exhibit D – “Estoppel Certificate”

Schedule 1 – “Lessee’s List of Permitted Hazardous Substances”

2.

PREMISES

 

2.1

Letting

Lessor hereby leases to Lessee, and Lessee hereby leases from Lessor, the
Premises, for the term, at the rental, and upon all of the terms, covenants and
conditions set forth in this Lease. The parties agree that the square footage of
the Premises is as set forth in Section 1.2.1 and will remain fixed as such
throughout the Original Term and any extension thereof.  From and after the
Commencement Date through the Expiration Date, Tenant shall have access to the
Premises 24 hours a day, 7 days a week, 365 days per year, subject to the terms
of this Lease.

 

2.2

Condition

Lessor shall deliver the Premises to Lessee broom clean and free of debris on
the Early Possession Date, and, so long as the required service contracts
described in Section 8.1.2 below are obtained by Lessee and in effect within
thirty days following the Early Possession Date, warrants that the existing
electrical, plumbing, fire sprinkler, lighting, heating, ventilating and air
conditioning systems (“HVAC”), loading doors, sump pumps, if any, and all other
such elements in the Premises, other than those constructed by Lessee, shall be
in good operating condition on said date, that the structural elements of the
roof, bearing walls and foundation of the Premises shall be free of material
defects, and that the Premises does not contain hazardous levels of any
substances, including mold or fungi defined as toxic under applicable state or
federal law. If a non-compliance with such warranty exists as of the Early
Possession Date, or if one of such systems or elements should malfunction or
fail within the appropriate warranty period, Lessor shall at Lessor’s sole cost
and expense, as Lessor’s sole obligation with respect to such matter, except as
otherwise provided in this Lease, promptly after receipt of written notice from
Lessee setting forth with specificity the nature and extent of such
non-compliance, malfunction or failure, rectify same at Lessor’s expense.  The
warranty periods shall be as follows: (i) twelve (12) months as to the HVAC
systems, and (ii) three (3) months as to the remaining systems and other
elements of the Premises.  If Lessee does not give Lessor the required notice
within the appropriate warranty period, correction of any such non-compliance,
malfunction or failure shall be governed by Section 8 of this Lease.

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2.3

Compliance

Lessor warrants that the improvements on the Premises comply with the building
codes that were in effect at the time that each such improvement, or portion
thereof, was constructed, and also with all applicable laws, covenants or
restrictions of record, regulations, and ordinances in effect on the
Commencement Date (“Applicable Requirements”).  Said warranty does not apply to
the use to which Lessee will put the Premises, modifications which may be
required by the Americans with Disabilities Act or any similar zoning or other
laws as a result of Lessee’s use (see Section 20.27), or to any Alterations or
Utility Installations (as defined in Section 8.3.1) made or to be made by
Lessee.  If the Premises do not comply with said warranty, Lessor shall, except
as otherwise provided, promptly after receipt of written notice from Lessee
setting forth with specificity the nature and extent of such non-compliance
rectify the same at Lessor’s sole cost and expense.  If the Applicable
Requirements are hereafter changed so as to require during the term of this
Lease the construction of an addition to or an alteration of the Premises, the
remediation of any Hazardous Substance, or the reinforcement or other physical
modification of the Premises (“Capital Expenditure”), Lessor and Lessee shall
allocate the cost of such work as set forth in this section.

NOTE: Lessee is responsible for determining whether or not the Applicable
Requirements and especially the zoning are appropriate for Lessee’s intended
use, and acknowledges that past uses of the Premises may no longer be allowed.

2.3.1Subject to Section 2.3.3 below, if such Capital Expenditures are required
as a result of the specific and unique use of the Premises by Lessee as compared
with uses by tenants in general, Lessee shall be fully responsible for the cost
thereof.  

2.3.2If such Capital Expenditure is not the result of the specific and unique
use of the Premises by Lessee (such as, governmentally mandated seismic
modifications), then Lessor shall pay for such Capital Expenditure and Lessee
shall only be obligated to pay, each month during the remainder of the term of
this Lease or any extension thereof, on the date that on which the Base Rent is
due, an amount equal to the Lessee’s Share of the costs multiplied by a
fraction, the numerator of which shall be one (1) and the denominator of which
shall be the number of months over which the capital expenditure may be
depreciated by the Lessor for income tax purposes, provided that the number of
months over which the item is depreciated shall be consistent with the
depreciation period utilized for similar capital expenditures incurred for other
properties owned by Lessor.

2.3.3Notwithstanding the above, the provisions concerning Capital Expenditures
are intended to apply only to non-voluntary, unexpected, and new Applicable
Requirements. If the Capital Expenditures are instead triggered by Lessee as a
result of an actual or proposed change in use, change in intensity of use, or
modification to the Premises then, and in that event, Lessee shall either: (i)
immediately cease such changed use or intensity of use and/or take such other
steps as may be necessary to eliminate the requirement for such Capital
Expenditure, or (ii) complete such Capital Expenditure at its own expense and
Lessee shall not have any right to terminate this Lease as a result thereof.

 

2.4

Acknowledgements

Lessee acknowledges that:  (a) it has been advised by Lessor to satisfy itself
with respect to the size and condition of the Premises (including but not
limited to the electrical, HVAC and fire sprinkler systems, security,
environmental aspects, and compliance with Applicable

4

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Requirements and the Americans with Disabilities Act), and their suitability for
Lessee’s intended use, (b) it is not relying on any representation as to the
size of the Premises made by Lessor, and (c) neither Lessor, Lessor’s agents,
nor Brokers have made any oral or written representations or warranties with
respect to said matters other than as set forth in this Lease.

 

2.5

Lessee as Prior Owner/Occupant

[Not applicable – intentionally omitted.]

 

2.6

Vehicle Parking

Lessee shall be entitled to use its pro-rata share of unreserved Parking Spaces
in the Common Areas designated from time to time by Lessor for parking, which
will be a minimum of 100 spaces during the Original Term and any extension
thereof.  Lessor agrees to monitor and enforce the Parking Spaces in the Common
Area to ensure that Lessee has adequate parking per its parking ratio.  Said
parking spaces shall be used for parking by vehicles no larger than full-size
passenger automobiles, pick-up trucks, or commercial transport vehicles used by
Lessee for the Agreed Use, herein called “Permitted Size Vehicles.”  Lessor may
regulate the loading and unloading of vehicles by adopting Rules and Regulations
as provided in Section 2.9, but will not do so in a manner that is
discriminatory against Lessee when compared with other tenants in the Project.
No vehicles other than Permitted Size Vehicles may be parked in the Common Area
without the prior written permission of Lessor. In addition:

2.6.1Lessee shall not permit or allow any vehicles that belong to or are
controlled by Lessee or Lessee’s employees, suppliers, shippers, customers,
contractors or invitees to be loaded, unloaded, or parked in areas other than
those designated by Lessor for such activities.

2.6.2Lessee shall not service or store any vehicles in the Common Areas.

2.6.3If Lessee permits or allows any of the prohibited activities described in
this Section 2.6, then Lessor shall have the right, without notice, in addition
to such other rights and remedies that it may have, to remove or tow away the
vehicle involved and charge the cost to Lessee, which cost shall be immediately
payable upon demand by Lessor.

 

2.7

Common Areas – Definition

The term “Common Areas” is defined as all areas and facilities outside the
Premises and within the exterior boundary line of the Project and interior
utility raceways and installations within the Unit that are provided and
designated by the Lessor from time to time for the general non-exclusive use of
Lessor, Lessee and other tenants of the Project and their respective employees,
suppliers, shippers, customers, contractors and invitees, including parking
areas, loading and unloading areas, trash areas, roadways, walkways, driveways
and landscaped areas, as indicated on Exhibit A attached hereto.

 

2.8

Common Areas - Lessee’s Rights

Lessor grants to Lessee, for the benefit of Lessee and its employees, suppliers,
shippers, contractors, customers and invitees, during the term of this Lease and
any extension thereof, the non-exclusive right to use, in common with others
entitled to such use, the Common Areas as they exist from time to time, subject
to any rights, powers, and privileges reserved by Lessor under the terms hereof
or under the terms of any rules and regulations or restrictions governing the
use of the Project.  Under no circumstances shall the right herein granted to
use the Common Areas

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be deemed to include the right to store any property, temporarily or
permanently, in the Common Areas. Any such storage shall be permitted only by
the prior written consent of Lessor or Lessor’s designated agent, which consent
may be revoked at any time. In the event that any unauthorized storage shall
occur, then Lessor shall have the right, without notice, in addition to such
other rights and remedies that it may have, to remove the property and charge
the cost to Lessee, which cost shall be immediately payable upon demand by
Lessor.  Lessee acknowledges that all driveways, parking and loading areas (not
including loading docks) in the Project are to be used in common with other
tenants in the Project, and their guests, customers, and suppliers, and that
none of said areas are for the exclusive use of Lessee.

 

2.9

Common Areas - Rules and Regulations

Lessor or such other person(s) as Lessor may appoint shall have the exclusive
control and management of the Common Areas and shall have the right, from time
to time, to establish, modify, amend and enforce reasonable rules and
regulations (“Rules and Regulations”) for the management, safety, care, and
cleanliness of the grounds, the parking and unloading of vehicles and the
preservation of good order, as well as for the convenience of other occupants or
tenants of the Project and their invitees.  Lessee agrees to abide by and
conform to all such Rules and Regulations, and shall use its best efforts to
cause its employees, suppliers, shippers, customers, contractors and invitees to
so abide and conform.  Lessor shall not be responsible to Lessee for the
non-compliance with said Rules and Regulations by other tenants of the Project.

 

2.10

Common Areas – Changes

Lessor shall have the right, in Lessor’s sole but commercially reasonable
discretion, from time to time, provided it does not interfere with Lessee’s use
or occupancy of the Premises in any material respect:

2.10.1To make changes to the Common Areas, including, without limitation,
changes in the location, size, shape and number of driveways, entrances, parking
spaces, parking areas, loading and unloading areas, ingress, egress, direction
of traffic, landscaped areas, walkways and utility raceways;

2.10.2To close temporarily any of the Common Areas for maintenance purposes so
long as reasonable access to the Premises remains available;

2.10.3To designate other land outside the boundaries of the Project to be a part
of the Common Areas;

2.10.4To add additional buildings and improvements to the Common Areas;

2.10.5To use the Common Areas while engaged in making additional improvements,
repairs or alterations to the Project, or any portion thereof; and

2.10.6To do and perform such other acts and make such other changes in, to or
with respect to the Common Areas and Project as Lessor may, in the exercise of
reasonable business judgment, deem to be appropriate.

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3.

TERM

 

3.1

Term

The Commencement Date, Expiration Date and Original Term of this Lease are as
specified in Section 1.3.

 

3.2

Early Possession

Any provision herein granting Lessee Early Possession of the Premises is subject
to and conditioned upon the Premises being available for such possession prior
to the Commencement Date.   If Lessee totally or partially occupies the Premises
prior to the Commencement Date, the obligation to pay Base Rent, Common Area
Operating Expenses, Real Property Taxes and insurance premiums shall be abated
for the period of such Early Possession. Any such Early Possession shall not
affect the Expiration Date.  Lessee shall be obligated to maintain the Premises
during any period of Early Possession.

 

3.3

Delay In Possession

Lessor agrees to use its best commercially reasonable efforts to deliver
possession of the Premises (including parking and access) to Lessee by the
Commencement Date. If, despite said efforts, Lessor is unable to deliver such
possession by such date, Lessor shall not be subject to any liability therefor,
nor shall such failure affect the validity of this Lease or change the
Expiration Date. Lessee shall not, however, be obligated to pay Rent or perform
its other obligations until Lessor delivers possession of the Premises and any
period of rent abatement that Lessee would otherwise have enjoyed shall run from
the date of delivery of possession (including parking and access) and continue
for a period equal to what Lessee would otherwise have enjoyed under the terms
hereof, but minus any days of delay caused by the acts or omissions of Lessee.
If possession is not delivered within 60 days after the Commencement Date,
Lessee may, at its option, by notice in writing within 10 days after the end of
such 60 day period, cancel this Lease, in which event the Parties shall be
discharged from all obligations hereunder. If such written notice is not
received by Lessor within said 10 day period, Lessee’s right to cancel shall
terminate.  If possession of the Premises is not delivered within 120 days after
the Commencement Date, this Lease shall terminate unless other agreements are
reached between Lessor and Lessee, in writing.

 

3.4

Lessee Compliance

Lessor shall not be required to tender possession of the Premises to Lessee
until Lessee complies with its obligation to provide evidence of insurance
(Section 9.5). Pending delivery of such evidence, Lessee shall be required to
perform all of its obligations under this Lease from and after the Commencement
Date, including the payment of Rent, notwithstanding Lessor’s election to
withhold possession pending receipt of such evidence of insurance.

4.

RENT

 

4.1

Rent Defined

All monetary obligations of Lessee to Lessor under the terms of this Lease
(except for the Security Deposit) are deemed to be rent (“Rent”).

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4.2

Common Area Operating Expenses

Subject to the provisions of Section 4.3 below, Lessee shall pay to Lessor
during the term hereof, in addition to the Base Rent, Lessee’s Share (as
specified in Section 1.6) of the increase in the total of all Common Area
Operating Expenses, as hereinafter defined, over and above the total Common Area
Operating Expenses paid by Lessor during Lessee’s Base Year, during each
calendar year of the term of this Lease, in accordance with the following:

4.2.1The following costs relating to the ownership and operation of the Project
are defined as “Common Area Operating Expenses”:

(a)Costs directly relating to and reasonably applied to the operation, repair
and maintenance, in neat, clean, good order and condition of the following:

(1)The Common Areas and Common Area improvements, including parking areas,
loading and unloading areas, trash areas, roadways, parkways, walkways,
driveways, landscaped areas, bumpers, irrigation systems, Common Area lighting
facilities, fences and gates, elevators, roofs, exterior walls of the buildings,
building systems and roof drainage systems.

(2)Exterior signs and any tenant directories.

(3)All other areas and improvements that are within the exterior boundaries of
the Project but outside of the Premises and/or any other space occupied by a
tenant provided the same constitute Common Areas.

(b)The cost of water, gas, electricity and telephone to service the Common Areas
and any utilities not separately metered.

(c)The cost of trash disposal, pest control services, property management,
security services, owners’ association dues and fees, the cost to repaint the
exterior of any structures and the cost of any environmental inspections.

(d)Reserves set aside for maintenance and repair of Common Areas and Common Area
equipment.

(e)Any increase above the Base Real Property Taxes (as defined in Section 11).

(f)Any “Insurance Cost Increase” (as defined in Section 9.1.1).

(g)Any deductible portion of an insured loss concerning the Project or the
Common Areas.

(h)Reasonable auditors’, accountants’ and attorneys’ fees and costs directly
related to the operation, maintenance, repair and replacement of the Project.

(i)The cost of any capital improvement to the Project not covered under the
provisions of Section 2.3, provided however, that the monthly amount payable
during the remainder of the term of this Lease or any extension thereof shall be
limited to Lessee’s Share of such capital expenditure, multiplied by a fraction,
the numerator of which shall be one (1) and

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the denominator of which shall be the number of months over which the capital
expenditure may be depreciated by the Lessor for income tax purposes.

(j)The cost of janitorial services for non-leasable areas.

(k)The costs of professional management, if any, including costs for Lessor’s
management, accounting, bookkeeping, payment of Common Area Operating Expenses,
collection of reimbursements and related services, which shall not cumulatively
exceed four percent (4%) of total Common Area Operating Expenses on an annual
basis.

4.2.2Any Common Area Operating Expenses and Real Property Taxes that are
specifically attributable to the Premises, or to any building in the Project or
to the operation, repair and maintenance thereof, shall be allocated entirely to
such Premises or other building. However, any Common Area Operating Expenses and
Real Property Taxes that are not specifically attributable to any building or to
the operation, repair and maintenance thereof, shall be equitably allocated by
Lessor to all buildings in the Project.  Lessee’s Share for any given year shall
be computed as though the Project had been 100% occupied on average during such
year.

4.2.3The inclusion of the improvements, facilities and services set forth in
Section 4.2.1 shall not be deemed to impose an obligation upon Lessor to either
have said improvements or facilities or to provide those services unless the
Project already has the same, Lessor already provides the services, or Lessor
has agreed elsewhere in this Lease to provide the same or some of them.

4.2.4Lessee’s Share of Common Area Operating Expenses exceeding Common Area
Operating Expenses incurred and included in Lessee’s Base Year is payable
monthly on the same day as the Base Rent is due hereunder. The amount of such
payments shall be based on Lessor’s estimate of the annual Common Area Operating
Expenses.  Within 60 days after the end of each calendar year during the term of
this Lease, Lessor shall deliver to Lessee a reasonably detailed statement (i.e.
line item description for all Common Area Operating Expenses) showing Lessee’s
Share of the actual Common Area Operating Expenses for the preceding year (the
“Reconciliation”).  If Lessee’s payments during such year exceed Lessee’s Share,
Lessor shall credit the amount of such over-payment against Lessee’s future
payments. If Lessee’s payments during such year were less than Lessee’s Share,
Lessee shall pay to Lessor the amount of the deficiency within 10 business days
after delivery by Lessor to Lessee of the statement. In the event of any dispute
as to any Lessee’s Share of Common Area Operating Expenses due under this
Section 4.2.4, Lessee, an officer of Lessee or Lessee’s certified public
accountant who shall have the right after reasonable notice and at reasonable
times to inspect Lessor’s accounting records at Lessor’s accounting office
(which shall be located in Southern California).  If, after such inspection,
Lessee still disputes such Lessee’s Share of Common Area Operating Expenses,
upon Lessee’s written request therefor, a certification as to the proper amount
of Lessee’s Share of Common Area Operating Expenses and the amount due to or
payable by Lessee shall be made by an independent (i.e. not utilized by either
party within the past three (3) years) certified public accountant mutually
agreed to by Lessor and Lessee.  If Lessor and Lessee cannot mutually agree to
an independent certified public accountant, then each party shall select an
independent certified public accountant, who then shall jointly select a third
independent certified public accountant (failing which agreement either party
may seek a judicial determination of such independent certified public
accountant). Each of the three (3) independent certified public accountants
shall, within forty-five (45) days after selection make a good faith
determination of Lessee’s Share of Common Area Operating Expenses then due and
shall notify Lessor, Lessee, and each other independent certified public
accountant of such

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determinations.  If all independent certified public accountants do not agree on
Lessee’s Share of Common Area Operating Expenses for the period in dispute, the
common decision of two (2) of them shall be determinative.  If two (2) of the
three (3) independent certified public accountant are unable to so agree, the
Lessee’s Share of Common Area Operating Expenses that is neither the highest nor
lowest of the three (3) determinations shall be the Lessee’s Share of Common
Area Operating Expenses for period in dispute. Such certification shall be final
and conclusive as to all parties.  If the certification reflects that Lessee has
overpaid Lessee’s Share of Common Area Operating Expenses for the period in
question, then Lessor shall credit such excess to Lessee’s next payment of
Operating Expenses or, at the request of Lessee, promptly refund such excess to
Lessee and conversely, if Lessee has underpaid Lessee’s Share of Common Area
Operating Expenses, Lessee shall promptly pay such additional Operating Expenses
to Lessor.  Each party shall be responsible for the cost of its independent
certified public accountant and the parties shall share in the costs of any
jointly appointed independent certified public accountant.

4.2.5Common Area Operating Expenses shall not include any expenses paid by any
tenant directly to third parties, or as to which Lessor is otherwise reimbursed
by any third party, other tenant, or insurance proceeds.  The following shall
also constitute exclusions from Common Area Operating Expenses:

A.leasing commissions, attorneys’ fees, costs and disbursements and other
expenses incurred in connection with leasing, renovating or improving vacant
space in the Project for tenants or prospective tenants of the Project;

B.costs (including permit, license and inspection fees) incurred in renovating
or otherwise improving or decorating, painting or redecorating space for tenants
or vacant space;

C.Lessor’s costs of any services sold to tenants for which Lessor is entitled to
be reimbursed by such tenants as an additional charge or rental over and above
the Base Rent and Common Area Operating Expenses payable under the lease with
such tenant or other occupant;

D.any depreciation or amortization of the Project except as expressly permitted
herein;

E.costs incurred due to a violation of Rules and Regulations by Lessor relating
to the Project;

F.interest on debt or amortization payments on any mortgages or deeds of trust
or any other debt for borrowed money;

G.repairs or other work occasioned by fire, windstorm or other work paid for
through insurance or condemnation proceeds (excluding any deductible);

H.legal expenses incurred for (i) negotiating lease terms for prospective
tenants, (ii) negotiating termination or extension of leases with existing
tenants, (iii) proceedings against any other specific tenant relating solely to
the collection of rent or other sums due to Lessor from such tenant, or (iv) the
development and/or construction of the Project;

I.repairs resulting from any defect in the original design or construction of
the Project or the Premises;

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J.costs of items considered capital improvements, capital repairs or capital
expenditures under GAAP, except as expressly otherwise provided in Section 2.3
of this Lease;

K.costs and expenses incurred with respect to the removal of Hazardous
Substances (defined below) not attributable to Lessee’s, or Lessee’s
representative’s, contractor’s, or other persons’ permitted in or invited to the
Premises or the Project by Lessee, acts or omissions;

L.costs and expenses (including penalties) incurred with respect to compliance
with applicable laws and other legal requirements in effect prior to the
Commencement Date;

M.costs to the extent arising from the gross negligence or willful misconduct of
Lessor or its agents, employees, vendors, contractors, or providers of materials
or services (including Lessor’s failure to maintain the insurance it is required
to maintain under this Lease);

N.costs related to the operation of the business of the entity which constitutes
Lessor as the same are distinguished from the costs of operating the Premises
and the Project;

O.any excess profits taxes, franchise taxes, gift taxes, capital stock taxes,
inheritance and succession taxes, estate taxes, federal and state income taxes,
and other taxes applied or measured by Lessor’s general or net income (as
opposed to rents, receipts, or income directly attributable to operation of the
Project); and

P.any costs expressly excluded from Common Area Operating Expenses elsewhere in
this Lease.

 

4.3

Credit to Base Rent

Lessor shall grant a one-time credit to the Lessee for Lessee’s Share of any
Common Area Operating Expenses included in Lessee’s Reconciliation for Year
2020, that were incurred during the period beginning on January 1, 2020, and
ending on the one-year anniversary of the Commencement Date of the Lease.  Such
credit shall be applied towards Base Rent in the month immediately following the
month in whcih the Reconcilation is provided to Lessee.  

 

4.4

Payment

Lessee shall cause payment of Rent to be received by Lessor in lawful money of
the United States, without offset or deduction (except as specifically permitted
in this Lease), on or before the day on which it is due.  In the event that any
statement or invoice prepared by Lessor is inaccurate such inaccuracy shall not
constitute a waiver and Lessee shall be obligated to pay the amount set forth in
this Lease. Rent for any period during the term hereof which is for less than
one full calendar month shall be prorated based upon the actual number of days
of said month. Payment of Rent shall be made to Lessor at its address stated
herein or to such other persons or place as Lessor may from time to time
designate in writing.  Acceptance of a payment which is less than the amount
then due shall not be a waiver of Lessor’s rights to the balance of such Rent,
regardless of Lessor’s endorsement of any check so stating.  In the event that
any check, draft, or other instrument of payment given by Lessee to Lessor is
dishonored for any reason, Lessee agrees to pay to Lessor the sum of $25 in
addition to any Late Charge and Lessor,

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at its option, may require all future Rent be paid by cashier’s check.  Payments
will be applied first to accrued late charges and attorney’s fees, second to
accrued interest, then to Base Rent and Common Area Operating Expenses, and any
remaining amount to any other outstanding charges or costs.

5.

SECURITY DEPOSIT

Lessee shall deposit with Lessor upon execution hereof the Security Deposit
(“Security Deposit”) as security for Lessee’s faithful performance of its
obligations under this Lease.  If Lessee fails to pay Rent, or otherwise
Breaches this Lease, Lessor may use, apply or retain all or any portion of said
Security Deposit for the payment of any amount already due Lessor, for Rents
which will be due in the future, and/ or to reimburse or compensate Lessor for
any liability, expense, loss or damage which Lessor may suffer or incur by
reason thereof which application shall cure the subject Default to the extent of
such application.  If Lessor uses or applies all or any portion of the Security
Deposit, Lessee shall within 20 days after written request therefor deposit
monies with Lessor sufficient to restore said Security Deposit to the full
amount required by this Lease.  Should the Agreed Use be amended to accommodate
a material change in the business of Lessee or to accommodate a sublessee or
assignee, Lessor shall have the right to increase the Security Deposit to the
extent necessary, in Lessor’s reasonable judgment, to account for any increased
wear and tear that the Premises may suffer as a result thereof. Lessor shall not
be required to keep the Security Deposit separate from its general accounts.
Within forty-five (45) days after the expiration or termination of this Lease,
Lessor shall return that portion of the Security Deposit not used or applied by
Lessor. No part of the Security Deposit shall be considered to be held in trust,
to bear interest or to be prepayment for any monies to be paid by Lessee under
this Lease.

6.

USE

 

6.1

Use

Lessee shall use and occupy the Premises only for the Agreed Use, or any other
legal use which is reasonably comparable thereto, and for no other
purpose.  Lessee shall not use or permit the use of the Premises in a manner
that is unlawful, creates damage, waste or a nuisance, or that disturbs
occupants of or causes damage to neighboring premises or properties. Other than
guide, signal, therapy and Seeing Eye dogs, Lessee shall not keep or allow in
the Premises any pets, animals, birds, fish, or reptiles.  

 

6.2

Hazardous Substances

6.2.1The term “Hazardous Substance” as used in this Lease shall mean any
product, substance, or waste whose presence, use, manufacture, disposal,
transportation, or release, either by itself or in combination with other
materials expected to be on the Premises, is either: (i) potentially injurious
to the public health, safety or welfare, the environment or the Premises, (ii)
regulated or monitored by any governmental authority, or (iii) a basis for
potential liability of Lessor to any governmental agency or third party under
any applicable statute or common law theory.  Hazardous Substances shall
include, but not be limited to, hydrocarbons, petroleum, gasoline, and/or crude
oil or any products, by-products or fractions thereof. Lessee shall not engage
in any activity in or on the Premises which constitutes a Reportable Use of
Hazardous Substances without the express prior written consent of Lessor and
timely compliance (at Lessee’s expense) with all Applicable Requirements.
“Reportable Use” shall mean (i) the installation or use of any above or below
ground storage tank, (ii) the generation, possession,

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storage, use, transportation, or disposal of a Hazardous Substance that requires
a permit from, or with respect to which a report, notice, registration or
business plan is required to be filed with, any governmental authority, and/or
(iii) the presence at the Premises of a Hazardous Substance with respect to
which any Applicable Requirements requires that a notice be given to persons
entering or occupying the Premises or neighboring properties. Notwithstanding
the foregoing, Lessee may use any ordinary and customary materials reasonably
required to be used in the normal course of the Agreed Use, ordinary office
supplies (copier toner, liquid paper, glue, etc.) and common household cleaning
materials, so long as such use is in compliance with all Applicable
Requirements, is not a Reportable Use, and does not expose the Premises or
neighboring property to any meaningful risk of contamination or damage or expose
Lessor to any liability therefor. In addition, Lessor may condition its consent
to any Reportable Use upon receiving such additional assurances as Lessor
reasonably deems necessary to protect itself, the public, the Premises and/or
the environment against damage, contamination, injury and/or liability,
including, but not limited to, the installation (and removal on or before Lease
expiration or termination) of protective modifications (such as concrete
encasements) and/or increasing the Security Deposit. Lessor shall promptly
inform Lessee of any Reportable Use of which it becomes aware arising from the
acts or omissions of Lessor or any other tenant of the Project. Lessor hereby
consents to Lessee’s use of the Hazardous Substances set forth on the attached
Schedule 1.

6.2.2If Lessee knows, or has reasonable cause to believe, that a Hazardous
Substance has come to be located in, on, under or about the Premises, other than
as previously consented to or otherwise known by Lessor, Lessee shall
immediately give written notice of such fact to Lessor, and provide Lessor with
a copy of any report, notice, claim or other documentation which it has
concerning the presence of such Hazardous Substance.

6.2.3Lessee shall not cause or permit any Hazardous Substance to be spilled or
released in, on, under, or about the Premises (including through the plumbing or
sanitary sewer system) and shall promptly, at Lessee’s expense, comply with all
Applicable Requirements and take all investigatory and/or remedial action
reasonably recommended, whether or not formally ordered or required, for the
cleanup of any contamination of, and for the maintenance, security and/or
monitoring of the Premises or neighboring properties, that was caused or
materially contributed to by Lessee, or pertaining to or involving any Hazardous
Substance brought onto the Premises during the term of this Lease, by or for
Lessee, or any third party.

6.2.4Lessee shall indemnify, defend and hold Lessor, its agents, employees,
lenders and ground lessor, if any, harmless from and against any and all loss of
rents and/or damages, liabilities, judgments, claims, expenses, penalties, and
attorneys’ and consultants’ fees arising out of or involving any Hazardous
Substance brought onto the Premises by or for Lessee, or any third party
(provided, however, that Lessee shall have no liability under this Lease with
respect to underground migration of any Hazardous Substance under the Premises
from areas outside of the Project not caused or contributed to by Lessee subject
to Section 6.2.5 hereof).  Lessee’s obligations shall include, but not be
limited to, the effects of any contamination or injury to person, property or
the environment created or suffered by Lessee, and the cost of investigation,
removal, remediation, restoration and/or abatement, and shall survive the
expiration or termination of this Lease.  No termination, cancellation or
release agreement entered into by Lessor and Lessee shall release Lessee from
its obligations under this Lease with respect to Hazardous Substances, unless
specifically so agreed by Lessor in writing at the time of such agreement.

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6.2.5Except as otherwise provided in Section 9.7, Lessor and its successors and
assigns shall indemnify, defend, reimburse and hold Lessee, its employees and
lenders, harmless from and against any and all environmental damages, including
the cost of remediation, which suffered as a direct result of Hazardous
Substances on the Premises prior to Lessee taking possession or which are caused
by the gross negligence or willful misconduct of Lessor, its agents or
employees. Lessor’s obligations, as and when required by the Applicable
Requirements, shall include, but not be limited to, the cost of investigation,
removal, remediation, restoration and/or abatement, and shall survive the
expiration or termination of this Lease.

6.2.6Lessor shall retain the responsibility and pay for any investigations or
remediation measures required by governmental entities having jurisdiction with
respect to the existence of Hazardous Substances on the Premises prior to Lessee
taking possession, unless such remediation measure is required as a result of
Lessee’s use (including “Alterations”, as defined in Section 8.3.1 below) of the
Premises, in which event Lessee shall be responsible for such payment.  Lessee
shall cooperate fully in any such activities at the request of Lessor, including
allowing Lessor and Lessor’s agents to have reasonable access to the Premises at
reasonable times in order to carry out Lessor’s investigative and remedial
responsibilities.

6.2.7If a Hazardous Substance Condition (see Section 10.1.5) occurs during the
term of this Lease, unless Lessee is legally responsible therefor (in which case
Lessee shall make the investigation and remediation thereof required by the
Applicable Requirements and this Lease shall continue in full force and effect,
but subject to Lessor’s rights under Section 6.2.4 and Section 14 and Lessee’s
rights under Section 6.2.5 hereof), Lessor may, at Lessor’s option, either (i)
investigate and remediate such Hazardous Substance Condition, if required, as
soon as reasonably possible at Lessor’s expense, in which event this Lease shall
continue in full force and effect, or (ii) give written notice to Lessee, within
60 days after receipt by Lessor of knowledge of the occurrence of such Hazardous
Substance Condition, of Lessor’s desire to terminate this Lease as of the date
60 days following the date of such notice. In the event Lessor elects to give a
termination notice, Lessee may, within 10 business days thereafter, give written
notice to Lessor of Lessee’s commitment to pay the cost of the remediation of
such Hazardous Substance Condition.  Lessee shall provide Lessor with said funds
or satisfactory assurance thereof within 30 days following such commitment.  In
such event, this Lease shall continue in full force and effect, and Lessor shall
proceed to make such remediation as soon as reasonably possible after the
required funds are available. If Lessee does not give such notice and provide
the required funds or assurance thereof within the time provided, this Lease
shall terminate as of the date specified in Lessor’s notice of termination.

 

6.3

Lessee’s Compliance with Applicable Requirements

Except as otherwise provided in this Lease, Lessee shall, at Lessee’s sole
expense, fully, diligently and in a timely manner, materially comply with all
Applicable Requirements, the requirements of any applicable fire insurance
underwriter or rating bureau, and the recommendations of Lessor’s engineers
and/or consultants which relate in any manner to such Requirements, without
regard to whether said Requirements are now in effect or become effective after
the Commencement Date. Lessee shall, within 10 business days after receipt of
Lessor’s written request, provide Lessor with copies of all permits and other
documents, and other information evidencing Lessee’s compliance with any
Applicable Requirements specified by Lessor, and shall immediately upon receipt,
notify Lessor in writing (with copies of any documents involved) of any
threatened or actual claim, notice, citation, warning, complaint or report
pertaining to or involving the failure of Lessee or the Premises to comply with
any Applicable Requirements. Likewise, Lessee shall immediately give written
notice to Lessor of: (i) any water damage to the

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Premises and any suspected seepage, pooling, dampness or other condition
conducive to the production of mold; or (ii) any mustiness or other odors that
might indicate the presence of mold in the Premises.

 

6.4

Inspection; Compliance

Lessor and Lessor’s “Lender” (as defined in Section 18.1) and consultants shall
have the right to enter into Premises at any time, in the case of an emergency
(i.e. imminent threat to life or property) upon such notice as is reasonable
under the circumstances, and otherwise upon not less than forty-eight (48) hours
prior written notice to Lessee, at reasonable times and in compliance with
Lessee’s reasonable workplace safety and security requirements, for the purpose
of inspecting the condition of the Premises.  The cost of any such inspections
shall be paid by Lessor, unless a violation of Applicable Requirements, or a
Hazardous Substance Condition (see Section 10.1), is found to exist or be
imminent, or the inspection is requested or ordered by a governmental
authority.  In such case, Lessee shall upon request reimburse Lessor for the
cost of such inspection, so long as such inspection is reasonably related to the
violation or contamination. In addition, Lessee shall provide copies of all
relevant material safety data sheets (MSDS) to Lessor within 10 business days of
the receipt of written request therefor.

7.

TENANT IMPROVEMENTS

[Not applicable – intentionally omitted.]  

8.

MAINTENANCE; REPAIRS; UTILITY INSTALLATIONS; TRADE FIXTURES AND ALTERATIONS

 

8.1

Lessee’s Obligations

8.1.1Subject to the provisions of Section 2.2 (Condition), 2.3 (Compliance),
Section 2.5 (Lessee as Prior Owner/Occupant) 6.3 (Lessee’s Compliance with
Applicable Requirements), 8.2 (Lessor’s Obligations), 10 (Damage or
Destruction), and 15 (Condemnation), Lessee shall, at Lessee’s sole expense,
keep the Premises, Utility Installations (intended for Lessee’s exclusive use,
no matter where located), and Alterations in substantially the same good order,
condition and repair (whether or not the portion of the Premises requiring
repairs, or the means of repairing the same, are reasonably or readily
accessible to Lessee, and whether or not the need for such repairs occurs as a
result of Lessee’s use, any prior use, the elements or the age of such portion
of the Premises) as received by Lessee on the Commencement Date, including, but
not limited to, all equipment or facilities, such as plumbing, HVAC equipment,
electrical, lighting facilities, boilers, pressure vessels, fixtures, interior
walls, interior surfaces of exterior walls, ceilings, floors, windows, doors,
plate glass, and skylights but excluding any items which are the responsibility
of Lessor pursuant to Section 8.2.  Lessee, in keeping the Premises in good
order, condition and repair, shall exercise and perform maintenance practices
consistent with maintenance practices typical for buildings similar to the
Premises, specifically including the procurement and maintenance of the service
contracts required by Section 8.1.2 below. Lessee’s obligations shall include
restorations, replacements or renewals when necessary to keep the Premises and
all improvements thereon or a part thereof in good order, condition and state of
repair.  Lessee’s obligations of repair and maintenance shall not extend to
ordinary wear and tear and events of casualty or condemnation.

8.1.2Lessee shall, at Lessee’s sole expense, procure and maintain contracts,
with copies to Lessor, in customary form and substance for, and with contractors
specializing and experienced in the maintenance of the following equipment and
improvements, if any, if and when

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installed on and solely serving the Premises: (i) HVAC equipment, (ii) boiler
and pressure vessels, and (iii) clarifiers. Following a Breach in Lessee’s
obligations under this Section 8.1.2, Lessor shall have the right, upon notice
to Lessee, to procure and maintain any or all of such service contracts, and
Lessee shall reimburse Lessor, upon demand, for the cost thereof.

8.1.3If Lessee fails to perform Lessee’s obligations under this Section 8.1,
Lessor may enter upon the Premises after 10 business days’ prior written notice
to Lessee (except in the case of an emergency (i.e. imminent threat to life or
property), in which case such notice as is reasonable under the circumstances
shall be required), perform such obligations on Lessee’s behalf, and put the
Premises in good order, condition and repair, and Lessee shall promptly pay to
Lessor a sum equal to 105% of the actual cost thereof.

8.1.4Subject to Lessee’s indemnification of Lessor as set forth in Section 9.7
below, and without relieving Lessee of liability resulting from Lessee’s failure
to exercise and perform maintenance practices consistent with maintenance
practices typical for buildings similar to the Premises, if an item described in
Section 8.1.2 cannot be repaired other than at a cost which is in excess of 50%
of the cost of replacing such item, then such item shall be replaced by Lessor,
and the cost thereof shall be prorated between the Parties as a Capital
Expenditure pursuant to Section 2.3.

 

8.2

Lessor’s Obligations

Subject to the provisions of Sections 2.2 (Condition), 2.3 (Compliance), 4.2
(Common Area Operating Expenses), 6 (Use), 8.1 (Lessee’s Obligations), 10
(Damage or Destruction) and 15 (Condemnation), Lessor, subject to reimbursement
pursuant to Section 4.2, shall keep in good order, condition and repair the
foundations, exterior walls, structural condition of interior bearing walls,
exterior roof, fire sprinkler system, Common Area fire alarm and/or smoke
detection systems, fire hydrants, parking lots, walkways, parkways, driveways,
landscaping, fences, signs and utility systems serving the Common Areas and all
parts thereof, as well as providing the services for which there is a Common
Area Operating Expense pursuant to Section 4.2.  Lessor shall not be obligated
to paint the exterior or interior surfaces of exterior walls nor shall Lessor be
obligated to maintain, repair or replace windows, doors or plate glass of the
Premises. Lessee expressly waives the benefit of any statute now or hereafter in
effect to the extent it is inconsistent with the terms of this Lease.

 

8.3

Utility Installations; Trade Fixtures; Alterations

8.3.1The term “Utility Installations” refers to all floor and window coverings,
air and/or vacuum lines, power panels, electrical distribution, security and
fire protection systems, communication cabling, lighting fixtures, HVAC
equipment, plumbing, and fencing in or on the Premises.  The term “Trade
Fixtures” shall mean Lessee’s machinery and equipment that can be removed
without doing material damage to the Premises.  The term “Alterations” shall
mean any modification of the improvements, other than Utility Installations or
Trade Fixtures, whether by addition or deletion. “Lessee Owned Alterations
and/or Utility Installations” are defined as Alterations and/or Utility
Installations made by Lessee that are not yet owned by Lessor pursuant to
Section 8.4.1.

8.3.2Lessee shall not make any Alterations or Utility Installations to the
Premises without Lessor’s prior written consent. Lessee may, however, make
non-structural Alterations or Utility Installations to the interior of the
Premises (excluding the roof) without such consent but upon notice to Lessor, as
long as they are not visible from the outside, do not involve

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puncturing, relocating or removing the roof or any existing walls, will not
affect the electrical, plumbing, HVAC, and/or life safety
systems.  Notwithstanding the foregoing, Lessee shall not make or permit any
roof penetrations and/or install anything on the roof without the prior written
approval of Lessor.  Lessor may, as a precondition to granting such approval,
require Lessee to utilize a contractor chosen and/or approved by Lessor. Any
Alterations or Utility Installations that Lessee shall desire to make and which
require the consent of the Lessor shall be presented to Lessor in written form
with detailed plans.  Consent shall be deemed conditioned upon Lessee’s: (i)
acquiring all applicable governmental permits, (ii) furnishing Lessor with
copies of both the permits and the plans and specifications prior to
commencement of the work, and (iii) compliance with all conditions of said
permits and other Applicable Requirements in a prompt and expeditious manner.
Any Alterations or Utility Installations shall be performed in a workmanlike
manner with good and sufficient materials.  Lessee shall promptly upon
completion furnish Lessor with as-built plans and specifications.
Notwithstanding the foregoing, Lessor hereby consents (subject to Lessor’s
review of Lessee’s construction plans and scope of work) to, and will not
require the removal at the end of the Original Term or any extension thereof of,
Lessee’s initial Alterations to the Premises to generally consist of installing
HVAC throughout the Premises, demising the Premises, removal of a portion of the
existing office areas, and installation of an emergency generator.

8.3.3Lessee shall pay, when due, all claims for labor or materials furnished or
alleged to have been furnished to or for Lessee at or for use on the Premises,
which claims are or may be secured by any mechanic’s or materialmen’s lien
against the Premises or any interest therein. Lessee shall give Lessor not less
than 10 days’ notice prior to the commencement of any work in, on or about the
Premises, and Lessor shall have the right to post notices of
non-responsibility.  If Lessee shall contest the validity of any such lien,
claim or demand, then Lessee shall, at its sole expense defend and protect
itself, Lessor and the Premises against the same and shall pay and satisfy any
such adverse judgment that may be rendered thereon before the enforcement
thereof. If Lessor shall require, Lessee shall furnish a surety bond in an
amount equal to 125% of the amount of such contested lien, claim or demand,
indemnifying Lessor against liability for the same.  If Lessor elects to
participate in any such action, Lessee shall pay Lessor’s attorneys’ fees and
costs.

 

8.4

Ownership; Removal; Surrender; and Restoration

8.4.1Subject to Lessor’s right to require removal or elect ownership as
hereinafter provided, all Alterations and Utility Installations made by Lessee
shall be the property of Lessee, but considered a part of the Premises.  Lessor
may, at any time, elect in writing to be the owner of all or any specified part
of the Lessee Owned Alterations and Utility Installations. Unless otherwise
instructed per Section 8.4.2 hereof, all Lessee Owned Alterations and Utility
Installations shall, at the expiration or termination of this Lease, become the
property of Lessor and be surrendered by Lessee with the Premises.

8.4.2Lessor, unless otherwise agreed in writing, may require at the time Lessor
grants its consent for such Alterations or Utility Installations, or upon notice
to Lessor of an Alteration that does not require Lessor’s consent that any or
all Lessee Owned Alterations or Utility Installations be removed by the
expiration or termination of this Lease. Lessor may require the removal at any
time of all or any part of any Lessee Owned Alterations or Utility Installations
made without the required consent or, if no consent of Lessor is required, upon
receipt of a notice from Lessee requesting Lessor’s determination of whether
such Alteration or Utility Installation will be required to be removed.

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8.4.3Lessee shall surrender the Premises by the Expiration Date or any earlier
termination date, with all of the improvements, parts and surfaces thereof broom
clean and free of debris, and in good operating order, condition and state of
repair, ordinary wear and tear, casualty and condemnation excepted.  “Ordinary
wear and tear” shall not include any damage or deterioration that would have
been prevented by maintenance practice consistent with maintenance practices
typical for buildings similar to the Premises.  Notwithstanding the foregoing,
if this Lease is for 12 months or less, then Lessee shall surrender the Premises
in the same condition as delivered to Lessee on the Commencement Date with NO
allowance for ordinary wear and tear.  Lessee shall repair any damage occasioned
by the installation, maintenance or removal of Trade Fixtures, Lessee owned
Alterations and/or Utility Installations, furnishings, and equipment as well as
the removal of any storage tank installed by or for Lessee.  Lessee shall also
completely remove from the Premises any and all Hazardous Substances brought
onto the Premises by or for Lessee, or any third party (except Hazardous
Substances which were deposited via underground migration from areas outside of
the Premises and subject to Section 6.2.5 hereof) even if such removal would
require Lessee to perform or pay for work that exceeds statutory requirements.
Trade Fixtures shall remain the property of Lessee and shall be removed by
Lessee. Any personal property of Lessee not removed on or before the Expiration
Date or any earlier termination date and is not thereafter removed following
thirty (30) days’ notice to Lessee thereof, shall be deemed to have been
abandoned by Lessee and may be disposed of or retained by Lessor as Lessor may
desire. The failure by Lessee to timely vacate the Premises pursuant to this
Section 8.4.3 without the express written consent of Lessor shall constitute a
holdover under the provisions of Section 20.9 below.

9.

INSURANCE; INDEMNITY

 

9.1

Payment of Premium Increases

9.1.1As used herein, the term “Insurance Cost Increase” is defined as any
increase in the actual cost of the insurance applicable to the Project and
required to be carried by Lessor, pursuant to Sections 9.2.2, 9.3.1 and 9.3.2,
over and above the Base Premium, as hereinafter defined, calculated on an annual
basis. Insurance Cost Increase shall include, but not be limited to,
requirements of the holder of a mortgage or deed of trust covering the Premises
and/or Project, increased valuation of the Premises and/or Project, and/or a
general premium rate increase.  The term Insurance Cost Increase shall not,
however, include any premium increases resulting from the nature of the
occupancy of any other tenant of the Project. The “Base Premium” shall be the
annual premium applicable to the Lessee’s Base Year.  If, however, the Project
was not insured for the entirety of such 12-month period, then the Base Premium
shall be the lowest annual premium reasonably obtainable for the Required
Insurance as of the Commencement Date, assuming the most nominal use possible of
the Project.

9.1.2Lessee shall pay any Insurance Cost Increase to Lessor pursuant to
Section 4.2.  Premiums for policy periods commencing prior to, or extending
beyond, the term of this Lease shall be prorated to coincide with the
corresponding Commencement Date or Expiration Date.

 

9.2

Liability Insurance

9.2.1Carried by Lessee. Lessee shall obtain and keep in force a Commercial
General Liability policy of insurance protecting Lessee and Lessor, as an
additional insured, against claims for bodily injury, personal injury and
property damage based upon or arising out of the ownership, use, occupancy or
maintenance of the Premises and all areas appurtenant thereto.

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Such insurance shall be on an occurrence basis providing single limit coverage
in an amount not less than $2,000,000 per occurrence with an annual aggregate of
not less than $2,000,000. Lessee shall add Lessor and Cypress View Properties,
Inc. as additional insureds by means of an endorsement at least as broad as the
Insurance Service Organization’s “Additional Insured-Managers or Lessors of
Premises” Endorsement. The policy shall not contain any intra-insured exclusions
as between insured persons or organizations, but shall include coverage for
liability assumed under this Lease as an “insured contract” for the performance
of Lessee’s indemnity obligations under this Lease.  The limits of said
insurance shall not, however, limit the liability of Lessee nor relieve Lessee
of any obligation hereunder. Lessee shall provide an endorsement on its
liability policy(ies) that provides that its insurance shall be primary to and
not contributory with any similar insurance carried by Lessor, whose insurance
shall be considered excess insurance only.

9.2.2Carried by Lessor. Lessor shall maintain liability insurance as described
in Section 9.2.1, in addition to, and not in lieu of, the insurance required to
be maintained by Lessee. Lessee shall not be named as an additional insured
therein.

9.2.3Carried by Lessee’s Contractors.  Unless otherwise agreed to in writing by
Lessor, if Lessee, with Lessor’s written approval, engages a contractor
(“Contractor”) to perform work on the Premises, whether such work is a Tenant
Improvement, Trade Fixture, Alteration or otherwise, the Contractor shall
procure and maintain for the duration of the contract, insurance against claims
for injuries to persons or damages to the Premises which may arise from or in
connection with the performance of the work hereunder by the Contractor, his
agents, representatives, employees, or subcontractors.  Such insurance shall
include Builder’s Risk (Course of Construction) insurance utilizing an “All
Risk” (Special Perils) coverage form, with limits equal to the completed value
of the project and no coinsurance penalty provisions.  The Lessor shall be named
as Loss Payee for the Builder’s Risk insurance.

 

9.3

Property Insurance - Building, Improvements and Rental Value

9.3.1Lessor shall obtain and keep in force a policy or policies of insurance in
the name of Lessor, with loss payable to Lessor, any ground-lessor, and to any
Lender insuring loss or damage to the Premises. The amount of such insurance
shall be equal to the full insurable replacement cost of the Premises, as the
same shall exist from time to time, or the amount required by any Lender, but in
no event more than the commercially reasonable and available insurable value
thereof.  If the coverage is available and commercially appropriate, such policy
or policies shall insure against all types of direct physical loss or damage
(except the perils of flood and/or earthquake unless required by a Lender),
including coverage for debris removal and the enforcement of any Applicable
Requirements requiring the upgrading, demolition, reconstruction or replacement
of any portion of the Premises as the result of a covered loss.  Said policy or
policies shall also contain an agreed valuation provision in lieu of any
coinsurance clause, waiver of subrogation, and inflation guard protection
causing an increase in the annual property insurance coverage amount by a factor
of not less than the adjusted U.S. Department of Labor Consumer Price Index for
All Urban Consumers for the city nearest to where the Premises are
located.  Lessee Owned Alterations and Utility Installations, Trade Fixtures,
and Lessee’s personal property shall be insured by Lessee not by Lessor unless
the item in question has become the property of Lessor under the terms of this
Lease.  

9.3.2Lessor shall also obtain and keep in force a policy or policies in the name
of Lessor with loss payable to Lessor and any Lender, insuring the loss of the
full Rent for one year (“Rental Value Insurance”).  Said insurance shall contain
an agreed valuation provision in

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lieu of any coinsurance clause, and the amount of coverage shall be adjusted
annually to reflect the projected Rent otherwise payable by Lessee, for the next
12-month period.

9.3.3Lessee shall pay for any increase in the premiums for the property
insurance of the Unit, and for the Common Areas or other buildings in the
Project if said increase is caused by Lessee’s acts, omissions, use or occupancy
of the Premises.

 

9.4

Lessee’s Property; Business Interruption Insurance; Worker’s Compensation
Insurance

9.4.1Lessee shall obtain and maintain insurance coverage on all of Lessee’s
personal property, Trade Fixtures, and Lessee Owned Alterations and Utility
Installations.  Such insurance shall be full replacement cost coverage with a
deductible of not to exceed $5,000 per occurrence.  The proceeds from any such
insurance shall be used by Lessee for the replacement of personal property,
Trade Fixtures and Lessee Owned Alterations and Utility Installations.

9.4.2Lessee shall obtain and maintain loss of income and extra expense insurance
in amounts as will reimburse Lessee for direct or indirect loss of earnings
attributable to all perils commonly insured against by prudent lessees in the
business of Lessee or attributable to prevention of access to the Premises as a
result of such perils.

9.4.3Lessee shall obtain and maintain Worker’s Compensation Insurance in such
amount as may be required by Applicable Requirements. Such policy shall include
a ‘Waiver of Subrogation’ endorsement.  Lessee shall provide Lessor with a copy
of such endorsement along with the certificate of insurance or copy of the
policy required by Section 9.5.

9.4.4Lessor makes no representation that the limits or forms of coverage of
insurance specified herein are adequate to cover Lessee’s property, business
operations or obligations under this Lease.

 

9.5

Insurance Policies

Insurance required herein shall be by companies maintaining during the policy
term a “General Policyholders Rating” of at least A-, VII, as set forth in the
most current issue of “Best’s Insurance Guide”, or such other rating as may be
required by a Lender. Lessee shall not do or permit to be done anything which
invalidates the required insurance policies. Lessee shall, prior to the Early
Possession Date, deliver to Lessor certified copies of policies of such
insurance or certificates with copies of the required endorsements evidencing
the existence and amounts of the required insurance. No such policy shall be
cancelable or subject to modification except after 30 days prior written notice
to Lessor. Lessee shall, at least 10 days prior to the expiration of such
policies, furnish Lessor with evidence of renewals or “insurance binders”
evidencing renewal thereof, or Lessor may order such insurance and charge the
cost thereof to Lessee, which amount shall be payable by Lessee to Lessor upon
demand.  Such policies shall be for a term of at least one year, or the length
of the remaining term of this Lease, whichever is less. If either Party shall
fail to procure and maintain the insurance required to be carried by it, the
other Party may, but shall not be required to, procure and maintain the same.

 

9.6

Waiver of Subrogation

Without affecting any other rights or remedies, Lessee and Lessor each hereby
release and relieve the other, and waive their entire right to recover damages
against the other, for loss of or damage to its property arising out of or
incident to the perils required to be insured against

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herein. The effect of such releases and waivers is not limited by the amount of
insurance carried or required, or by any deductibles applicable hereto.  The
Parties agree to have their respective property damage insurance carriers waive
any right to subrogation that such companies may have against Lessor or Lessee,
as the case may be, so long as the insurance is not invalidated thereby.

 

9.7

Indemnity

Except for Lessor’s gross negligence or willful misconduct, or Lessor’s breach
of this Lease, Lessee shall indemnify, protect, defend and hold harmless the
Premises, Lessor and its agents, Lessor’s master or ground lessor, partners and
Lenders, from and against any and all claims, loss of rents and/or damages,
liens, judgments, penalties, attorneys’ and consultants’ fees, expenses and/or
liabilities arising out of, involving, or in connection with, the use and/or
occupancy of the Premises by Lessee. If any action or proceeding is brought
against Lessor by reason of any of the foregoing matters, Lessee shall upon
notice defend the same at Lessee’s expense by counsel reasonably satisfactory to
Lessor and Lessor shall cooperate with Lessee in such defense. Lessor need not
have first paid any such claim in order to be defended or indemnified.

 

9.8

Exemption of Lessor and its Agents from Liability

Notwithstanding the negligence or breach of this Lease by Lessor or its agents,
neither Lessor nor its agents shall be liable under any circumstances for: (i)
injury or damage to the person or goods, wares, merchandise or other property of
Lessee, Lessee’s employees, contractors, invitees, customers, or any other
person in or about the Premises, whether such damage or injury is caused by or
results from fire, steam, electricity, gas, water or rain, indoor air quality,
the presence of mold or from the breakage, leakage, obstruction or other defects
of pipes, fire sprinklers, wires, appliances, plumbing, HVAC or lighting
fixtures, or from any other cause, whether the said injury or damage results
from conditions arising upon the Premises or upon other portions of the Project,
or from other sources or places, (ii) any damages arising from any act or
neglect of any other tenant of Lessor or from the failure of Lessor or its
agents to enforce the provisions of any other lease in the Project, or (iii)
injury to Lessee’s business or for any loss of income or profit therefrom.
Instead, it is intended that Lessee’s sole recourse in the event of such damages
or injury be to file a claim on the insurance policy(ies) that Lessee is
required to maintain pursuant to the provisions of Section 9 or the insurance of
Lessor included in Common Area Operating Expenses.

 

9.9

Failure to Provide Insurance

Lessee acknowledges that any failure on its part to obtain or maintain the
insurance required herein will constitute a Default, subject to applicable
notice and cure periods.

10.

DAMAGE OR DESTRUCTION

 

10.1

Definitions

10.1.1“Premises Partial Damage” shall mean damage or destruction to the
improvements on the Premises, other than Lessee Owned Alterations and Utility
Installations, which can reasonably be repaired in six months or less from the
date of the damage or destruction, and the cost thereof does not exceed a sum
equal to six month’s Base Rent.  Lessor shall notify Lessee in writing within 30
days from the date of the damage or destruction as to whether or not the damage
is Partial or Total.

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10.1.2 “Premises Total Destruction” shall mean damage or destruction to the
improvements on the Premises, other than Lessee Owned Alterations and Utility
Installations and Trade Fixtures, which cannot reasonably be repaired in six
months or less from the date of the damage or destruction and/or the cost
thereof exceeds a sum equal to one year’s Base Rent.  Lessor shall notify Lessee
in writing within 30 days from the date of the damage or destruction as to
whether or not the damage is Partial or Total.

10.1.3 “Insured Loss” shall mean damage or destruction to improvements on the
Premises, other than Lessee Owned Alterations and Utility Installations and
Trade Fixtures, which was caused by an event required to be covered by the
insurance described in Section 9.3.1, irrespective of any deductible amounts or
coverage limits involved.

10.1.4 “Replacement Cost” shall mean the cost to repair or rebuild the
improvements owned by Lessor at the time of the occurrence to their condition
existing immediately prior thereto, including demolition, debris removal and
upgrading required by the operation of Applicable Requirements, and without
deduction for depreciation.

10.1.5 “Hazardous Substance Condition” shall mean the occurrence or discovery of
a condition involving the presence of, or a contamination by, a Hazardous
Substance, in, on, or under the Premises which requires restoration.

 

10.2

Partial Damage - Insured Loss

If a Premises Partial Damage that is an Insured Loss occurs, then Lessor shall,
at Lessor’s expense, repair such damage (but not Lessee’s Trade Fixtures or
Lessee Owned Alterations and Utility Installations) as soon as reasonably
possible and this Lease shall continue in full force and effect; provided,
however, that Lessee shall, at Lessee’s election, make the repair of any damage
or destruction the total cost to repair of which is $10,000 or less, and, in
such event, Lessor shall make all applicable insurance proceeds available to
Lessee on a reasonable basis for that purpose.  Notwithstanding the foregoing,
if the required insurance was not in force or the insurance proceeds are not
sufficient to affect such repair, the Insuring Party shall promptly contribute
the shortage in proceeds as and when required to complete said repairs. In the
event, however, such shortage was due to the fact that, by reason of the unique
nature of the improvements, full replacement cost insurance coverage was not
commercially reasonable and available, Lessor shall have no obligation to pay
for the shortage in insurance proceeds or to fully restore the unique aspects of
the Premises unless Lessee provides Lessor with the funds to cover same, or
adequate assurance thereof, within 10 business days following receipt of written
notice of such shortage and request therefor. If Lessor receives said funds or
adequate assurance thereof within said 10 business day period, the party
responsible for making the repairs shall complete them as soon as reasonably
possible and this Lease shall remain in full force and effect. If such funds or
assurance are not received, Lessor may nevertheless elect by written notice to
Lessee within 10 business days thereafter to: (i) make such restoration and
repair as is commercially reasonable with Lessor paying any shortage in
proceeds, in which case this Lease shall remain in full force and effect, or
(ii) have this Lease terminate 30 days thereafter unless Lessee agrees to waive
restoration of such unique portions of the Premises. Lessee shall not be
entitled to reimbursement of any funds contributed by Lessee to repair any such
damage or destruction. Premises Partial Damage due to flood or earthquake shall
be subject to Section 10.3, notwithstanding that there may be some insurance
coverage, but the net proceeds of any such insurance shall be made available for
the repairs if made by either Party.

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10.3

Partial Damage - Uninsured Loss

If a Premises Partial Damage that is not an Insured Loss occurs, unless caused
by a negligent or willful act of Lessee (in which event Lessee shall make the
repairs at Lessee’s expense), Lessor may either: (i) repair such damage as soon
as reasonably possible at Lessor’s expense, in which event this Lease shall
continue in full force and effect, or (ii) terminate this Lease by giving
written notice to Lessee within 30 days after receipt by Lessor of knowledge of
the occurrence of such damage. Such termination shall be effective 60 days
following the date of such notice.  In the event Lessor elects to terminate this
Lease, Lessee shall have the right within 10 days after receipt of the
termination notice to give written notice to Lessor of Lessee’s commitment to
pay for the repair of such damage without reimbursement from Lessor. Lessee
shall provide Lessor with said funds or satisfactory assurance thereof within 30
days after making such commitment. In such event this Lease shall continue in
full force and effect, and Lessor shall proceed to make such repairs as soon as
reasonably possible after the required funds are available. If Lessee does not
make the required commitment, this Lease shall terminate as of the date
specified in the termination notice.

 

10.4

Total Destruction

Notwithstanding any other provision hereof, if a Premises Total Destruction
occurs, this Lease shall terminate 60 days following such Destruction. If the
damage or destruction was caused by the gross negligence or willful misconduct
of Lessee, Lessor shall have the right to recover Lessor’s damages from Lessee,
except as provided in Section 9.6.

 

10.5

Damage Near End of Term

If at any time during the last six months of this Lease there is damage for
which the cost to repair exceeds one month’s Base Rent, whether or not an
Insured Loss, Lessor may terminate this Lease effective 60 days following the
date of occurrence of such damage by giving a written termination notice to
Lessee within 30 days after the date of occurrence of such
damage.  Notwithstanding the foregoing, if Lessee at that time has an
exercisable option to extend this Lease or to purchase the Premises, then Lessee
may preserve this Lease by, (a) exercising such option in which the provisions
of Sections 10.2 and 10.3, as applicable, shall apply.

 

10.6

Abatement of Rent; Lessee’s Remedies

10.6.1In the event of Premises Partial Damage or Premises Total Destruction or a
Hazardous Substance Condition, the Rent payable by Lessee for the period
required for the repair, remediation or restoration of such damage shall be
abated in proportion to the degree to which Lessee’s use of the Premises is
impaired, but not to exceed the proceeds received from the Rental Value
Insurance. All other obligations of Lessee hereunder shall be performed by
Lessee, and Lessor shall have no liability for any such damage, destruction,
remediation, repair or restoration except as provided herein.

10.6.2If Lessor is obligated to repair or restore the Premises and does not
commence, in a substantial and meaningful way, such repair or restoration within
30 days after such obligation shall accrue, Lessee may, at any time prior to the
commencement of such repair or restoration, give written notice to Lessor and to
any Lenders of which Lessee has actual notice, of Lessee's election to terminate
this Lease on a date not less than 60 days following the giving of such notice.
If Lessee gives such notice and such repair or restoration is not commenced
within 30 days thereafter, this Lease shall terminate as of the date specified
in said notice. If the repair

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or restoration is commenced within such 30 days, this Lease shall continue in
full force and effect. "Commence" shall mean either the unconditional
authorization of the preparation of the required plans, or the beginning of the
actual work on the Premises, whichever first occurs.

 

10.7

Termination; Advance Payments

Upon termination of this Lease pursuant to Section 6.2.7 or Section 10, an
equitable adjustment shall be made concerning advance Base Rent and any other
advance payments made by Lessee to Lessor.  Lessor shall, in addition, return to
Lessee so much of Lessee’s Security Deposit as has not been, or is not then
required to be, used by Lessor in accordance with Section 5 of this Lease.

11.

REAL PROPERTY TAXES

 

11.1

Definitions

11.1.1“Real Property Taxes.” As used herein, the term “Real Property Taxes”
shall include any form of assessment; real estate, general, special, ordinary or
extraordinary, or rental levy or tax (other than inheritance, personal income or
estate taxes); improvement bond; and/or license fee imposed upon or levied
against any legal or equitable interest of Lessor in the Project, Lessor’s right
to other income therefrom, and/or Lessor’s business of leasing, by any authority
having the direct or indirect power to tax and where the funds are generated
with reference to the Project address and where the proceeds so generated are to
be applied by the city, county or other local taxing authority of a jurisdiction
within which the Project is located. The term “Real Property Taxes” shall also
include any tax, fee, levy, assessment or charge, or any increase therein: (i)
imposed by reason of events occurring during the term of this Lease, including
but not limited to, a change in the ownership of the Project, (ii) a change in
the improvements thereon, and/or (iii) levied or assessed on machinery or
equipment constituting personal property provided by Lessor to Lessee at
Lessee’s request pursuant to this Lease.  In calculating Real Property Taxes for
any calendar year, the Real Property Taxes for any real property tax year shall
be included in the calculation of Real Property Taxes for such calendar year
based upon the number of days which such calendar year and tax year have in
common.

11.1.2 “Base Real Property Taxes.”  As used herein, the term “Base Real Property
Taxes” shall be the amount of Real Property Taxes, which are paid on the
Premises, Project or Common Areas in the Lessee’s Base Year.

 

11.2

Payment of Taxes

Except as otherwise provided in Section 11.3, Lessor shall pay the Real Property
Taxes applicable to the Project, and said payments shall be included in the
calculation of Common Area Operating Expenses in accordance with the provisions
of Section 4.2.  

 

11.3

Additional Improvements

Common Area Operating Expenses shall not include Real Property Taxes specified
in the tax assessor’s records and work sheets as being caused by additional
improvements placed upon the Project by other lessees or by Lessor for the
exclusive enjoyment of such other lessees.  Notwithstanding Section 11.2 hereof,
Lessee shall, however, pay to Lessor at the time Common Area Operating Expenses
are payable under Section 4.2, the entirety of any increase in Real Property
Taxes if assessed solely by reason of Alterations, Trade Fixtures or Utility
Installations placed upon the Premises by Lessee or at Lessee’s request or by
reason of any alterations or

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improvements to the Premises made by Lessor subsequent to the execution of this
Lease by the Parties.

 

11.4

Joint Assessment

If the Premises is not separately assessed, Real Property Taxes allocated to the
Premises shall be an equitable proportion of the Real Property Taxes for all of
the land and improvements included within the tax parcel assessed, such
proportion to be determined by Lessor from the respective valuations assigned in
the assessor’s work sheets or such other information as may be reasonably
available.  Lessor’s reasonable determination thereof, in good faith, shall be
conclusive.

 

11.5

Personal Property Taxes

Lessee shall pay prior to delinquency all taxes assessed against and levied upon
Lessee Owned Alterations and Utility Installations, Trade Fixtures, furnishings,
equipment and all personal property of Lessee contained in the Premises. When
possible, Lessee shall cause its Lessee Owned Alterations and Utility
Installations, Trade Fixtures, furnishings, equipment and all other personal
property to be assessed and billed separately from the real property of
Lessor.  If any of Lessee’s said property shall be assessed with Lessor’s real
property, Lessee shall pay Lessor the taxes attributable to Lessee’s property
within 10 business days after receipt of a written statement setting forth the
taxes applicable to Lessee’s property.

12.

UTILITIES AND SERVICES

Lessee shall pay for all water, gas, heat, light, power, telephone, trash
disposal and other utilities and services supplied directly to the Premises,
together with any taxes thereon.    There shall be no abatement of Rent and
Lessor shall not be liable in any respect whatsoever for the inadequacy,
stoppage, interruption or discontinuance of any utility or service due to riot,
strike, labor dispute, breakdown, accident, repair or other cause beyond
Lessor’s reasonable control or in cooperation with governmental request or
directions.  Notwithstanding anything to the contrary set forth herein, (i) if a
stoppage of an Essential Service (as defined below) to the Premises shall occur,
and such stoppage is due to the negligence or willful misconduct of Lessor and
not due to any act or omission on the part of Lessee (any such stoppage of an
Essential Service being hereinafter referred to as a “Service Interruption”),
and (ii) such Service Interruption continues for more than five (5) consecutive
days after Lessor shall have received written notice thereof from Lessee, and
(iii) as a result of such Service Interruption, the conduct of Lessee’s normal
operations in the Premises are adversely affected in any material respect, then,
there shall be an abatement of one day’s Base Rent for each day during which
such Service Interruption continues after such five (5) day period; provided,
however, that if any part of the Premises is reasonably useable for Lessee’s
normal business operations or if Lessee conducts all or any part of its
operations in any portion of the Premises notwithstanding such Service
Interruption, then the amount of each daily abatement of Base Rent shall only be
proportionate to the nature and extent of the interruption of Lessee’s normal
operations or ability to use the Premises.  For purposes hereof, the term
“Essential Services” shall mean the following services:  HVAC service, water,
sewer and electricity and access to the Premises, but in each case only to the
extent that Lessor has an obligation to provide same to Lessee under this
lease.  

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13.

ASSIGNMENT AND SUBLETTING

 

13.1

Lessor’s Consent Required

13.1.1Lessee shall not voluntarily or by operation of law assign, transfer,
mortgage or encumber (collectively, “assign or assignment”) or sublet all or any
part of Lessee’s interest in this Lease or in the Premises without Lessor’s
prior written consent (which will not be unreasonably withheld, conditioned or
delayed), unless such assignment is to a related entity, subsidiary, parent
company or affiliate of Lessee, or to an acquiring entity with a Net Worth of
Lessee (as defined below) equal to or greater than Lessee’s as of the date of
this Lease (collectively, “Permitted Transfer”) provided, however, that in the
event of such an assignment, the provisions of Section 13.2 shall still be
applicable. Notwithstanding the foregoing, Lessor hereby consents to the
occupancy of a portion of the Premises by Lessee’s third-party logistics
provider.

13.1.2Unless Lessee is a corporation and its stock is publicly traded on a
national stock exchange, a change in the control of Lessee shall constitute an
assignment requiring consent. The transfer, on a cumulative basis, of 25% or
more of the voting control of Lessee shall constitute a change in control for
this purpose. The foregoing shall not apply to Permitted Transfers.

13.1.3Unless Lessee is a corporation and its stock is publicly traded on a
national stock exchange, the involvement of Lessee or its assets in any
transaction, or series of transactions (by way of merger, sale, acquisition,
financing, transfer, leveraged buy-out or otherwise), whether or not a formal
assignment or hypothecation of this Lease or Lessee’s assets occurs, which
results or will result in a reduction of the Net Worth of Lessee by an amount
greater than 25% of such Net Worth as it was represented at the time of the
execution of this Lease or at the time of the most recent assignment to which
Lessor has consented, or as it exists immediately prior to said transaction or
transactions constituting such reduction, whichever was or is greater, shall be
considered an assignment of this Lease to which Lessor may withhold its consent.
“Net Worth of Lessee” shall mean the net worth of Lessee (excluding any
guarantors) established under generally accepted accounting principles. The
foregoing shall not apply to Permitted Transfers.

13.1.4An assignment or subletting without consent (where such consent is
required hereunder) shall, at Lessor’s option, be a Default curable after notice
per Section 14.4.

13.1.5Lessee’s remedy for any breach of Section 13.1 by Lessor shall be limited
to compensatory damages and/or injunctive relief.

13.1.6Lessor may reasonably withhold consent to a proposed assignment or
subletting if Lessee is in Breach at the time consent is requested.

13.1.7Notwithstanding the foregoing, allowing a de minimis portion of the
Premises, i.e., 20 square feet or less, to be used by a third party vendor in
connection with the installation of a vending machine or payphone shall not
constitute a subletting.

 

13.2

Terms and Conditions Applicable to Assignment and Subletting

13.2.1Regardless of Lessor’s consent, no assignment or subletting shall: (i) be
effective without the express written assumption by such assignee or sublessee
of the obligations of Lessee under this Lease, (ii) release Lessee of any
obligations hereunder, or (iii) alter the

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primary liability of Lessee for the payment of Rent or for the performance of
any other obligations to be performed by Lessee.

13.2.2Lessor may accept Rent or performance of Lessee’s obligations from any
person other than Lessee pending approval or disapproval of an
assignment.  Neither a delay in the approval or disapproval of such assignment
nor the acceptance of Rent or performance shall constitute a waiver or estoppel
of Lessor’s right to exercise its remedies for Lessee’s Default or Breach.

13.2.3Lessor’s consent to any assignment or subletting shall not constitute a
consent to any subsequent assignment or subletting.

13.2.4In the event of any Default or Breach by Lessee, Lessor may proceed
directly against Lessee, any Guarantors or anyone else responsible for the
performance of Lessee’s obligations under this Lease, including any assignee or
sublessee, without first exhausting Lessor’s remedies against any other person
or entity responsible therefor to Lessor, or any security held by Lessor.

13.2.5Each request for consent to an assignment or subletting shall be in
writing, and in the case of assignment whereby Lessee is to be released from
further liability under this Lease, accompanied by information relevant to
Lessor’s determination as to the financial and operational responsibility and
appropriateness of the proposed assignee or sublessee, including but not limited
to the intended use and/or required modification of the Premises, if any,
together with a fee of $500 as consideration for Lessor’s considering and
processing said request.  Lessee agrees to provide Lessor with such other or
additional information and/or documentation as may be reasonably requested. (See
also Section 20.18)

13.2.6Any assignee of, or sublessee under, this Lease shall, by reason of
accepting such assignment, entering into such sublease, or entering into
possession of the Premises or any portion thereof, be deemed to have assumed and
agreed to conform and comply with each and every term, covenant, condition and
obligation herein to be observed or performed by Lessee during the term of said
assignment or sublease, other than such obligations as are contrary to or
inconsistent with provisions of an assignment or sublease to which Lessor has
specifically consented to in writing (where such consent is required hereunder).

13.2.7Other than Permitted Transfers, Lessor’s consent to any assignment or
subletting shall not transfer to the assignee or sublessee any Option granted to
the original Lessee by this Lease unless such transfer is specifically consented
to by Lessor in writing. (See Section 19.1.)

13.2.8If Lessee assigns and/or sublets any portion(s) of its interest in this
Lease or in the Premises with Lessor’s consent (where such consent is required
hereunder), any consideration received by Lessee for said assignment and/or
subletting, after deducting any real estate broker’s commissions, reasonable
marketing costs, and rental concessions, incurred solely for the purpose of and
in connection with the assignment or subletting, shall be divided equally with
Lessor to the extent it exceeds the consideration due Lessor from Lessee under
this Lease (“Net Rent Premium”). The amount due Lessor shall be paid to Lessor
within thirty (30) days after its receipt by Lessee.  Lessee shall act as
Lessor’s agent in collecting such amounts from any such assignee or sublessee.

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13.3

Additional Terms and Conditions Applicable to Subletting

The following terms and conditions shall apply to any subletting by Lessee of
all or any part of the Premises and shall be deemed included in all subleases
under this Lease whether or not expressly incorporated therein:

13.3.1Lessee hereby assigns and transfers to Lessor all of Lessee’s interest in
all Rent payable on any sublease, and Lessor may collect such Rent and apply
same toward Lessee’s obligations under this Lease; provided, however, that until
a Breach shall occur in the performance of Lessee’s obligations, Lessee may
collect said Rent. In the event that the amount collected by Lessor exceeds
Lessee’s then outstanding obligations any such excess shall be refunded to
Lessee. Lessor shall not, by reason of the foregoing or any assignment of such
sublease, nor by reason of the collection of Rent, be deemed liable to the
sublessee for any failure of Lessee to perform and comply with any of Lessee’s
obligations to such sublessee. Lessee hereby irrevocably authorizes and directs
any such sublessee, upon receipt of a written notice from Lessor stating that a
Breach exists in the performance of Lessee’s obligations under this Lease, to
pay to Lessor all Rent due and to become due under the sublease.  Sublessee
shall rely upon any such notice from Lessor and shall pay all Rents to Lessor
without any obligation or right to inquire as to whether such Breach exists,
notwithstanding any claim from Lessee to the contrary.

13.3.2In the event of a Breach by Lessee and the exercise of Lessor’s remedy of
termination of this Lease, Lessor may, at its option, require sublessee to
attorn to Lessor, in which event Lessor shall undertake the obligations of the
sublessor under such sublease from the time of the exercise of said option to
the expiration of such sublease; provided, however, Lessor shall not be liable
for any prepaid rents or security deposit paid by such sublessee to such
sublessor or for any prior Defaults or Breaches of such sublessor.

13.3.3Any matter requiring the consent of the sublessor under a sublease shall
also require the consent of Lessor if Lessee is otherwise required to obtain the
consent of Lessor hereunder to such matter.

13.3.4No sublessee shall further assign or sublet all or any part of the
Premises without Lessor’s prior written consent.

13.3.5Lessor shall deliver a copy of any notice of Breach by Lessee to the
sublessee, who shall have the right to cure the Breach of Lessee within the
grace period, if any, specified in such notice.  The sublessee shall have a
right of reimbursement and offset from and against Lessee for any such Breaches
cured by the sublessee.

14.

DEFAULT; BREACH; REMEDIES

 

14.1

Default; Breach

A “Default” is defined as a failure by the Lessee to comply with or perform any
of the terms, covenants, conditions or Rules and Regulations under this
Lease.  A “Breach” is defined as the occurrence of one or more of the following
Defaults, and the failure of Lessee to cure such Default within any applicable
grace period:

14.1.1The abandonment of the Premises; or the vacating of the Premises without
providing a commercially reasonable level of security, or where the coverage of
the property

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insurance described in Section 9.3 is jeopardized as a result thereof, or
without providing reasonable assurances to minimize potential vandalism.

14.1.2Lessee’s failure to pay Rent or any Security Deposit required to be made
by Lessee hereunder, or any other rental or sums payable by Lessee hereunder
within five (5) business days after Lessor notifies Lessee of such nonpayment;
provided, however, Lessor shall only be obligated to provide such written notice
to Lessee one (1) time within any calendar year and in the event Lessee fails to
timely pay Rent or such other sums for a second time during any calendar year,
then Lessee shall be in Breach for such late payment and Lessor shall have no
obligation or duty to provide notice of such non-payment to Lessee prior to
declaring a Breach under this Lease; or.

14.1.3The failure by Lessee to observe or perform any of the express or implied
covenants or provisions of this Lease to be observed or performed by Lessee,
other than monetary failures as specified in Paragraph 14.1.2 above, where such
failure shall continue for a period of thirty (30) days after written notice
thereof from Lessor to Lessee; provided, however, that if the nature of Lessee’s
Default is such that more than thirty (30) days are reasonably required for its
cure, then Lessee shall not be deemed to be in Breach if Lessee shall commence
such cure within said 30-day period and thereafter diligently prosecute such
cure to completion, which completion shall occur not later than ninety (90) days
from the date of such notice from Lessor.

THE ACCEPTANCE BY LESSOR OF A PARTIAL PAYMENT OF RENT OR SECURITY DEPOSIT SHALL
NOT CONSTITUTE A WAIVER OF ANY OF LESSOR’S RIGHTS, INCLUDING LESSOR’S RIGHT TO
RECOVER POSSESSION OF THE PREMISES.

Any notice sent by Lessor to Lessee pursuant to this Paragraph 14.1 shall be in
lieu of, and not in addition to, any notice required under California Code of
Civil Procedure Section 1161.

 

14.2

Remedies

If Lessee fails to perform any of its affirmative duties or obligations, within
10 business days after written notice (or in case of an emergency, i.e. imminent
threat to life or property, upon such notice as is reasonable under the
circumstances, Lessor may, at its option, perform such duty or obligation on
Lessee’s behalf, including but not limited to the obtaining of reasonably
required bonds, insurance policies, or governmental licenses, permits or
approvals. Lessee shall pay to Lessor an amount equal to 105% of the costs and
expenses incurred by Lessor in such performance upon receipt of an invoice
therefor. In the event of a Breach, Lessor may, with or without further notice
or demand, and without limiting Lessor in the exercise of any right or remedy
which Lessor may have by reason of such Breach:

14.2.1Terminate Lessee’s right to possession of the Premises by any lawful
means, in which case this Lease shall terminate and Lessee shall immediately
surrender possession to Lessor. In such event Lessor shall be entitled to
recover from Lessee: (i) the unpaid Rent which had been earned at the time of
termination; (ii) the worth at the time of award of the amount by which the
unpaid rent which would have been earned after termination until the time of
award exceeds the amount of such rental loss that the Lessee proves could have
been reasonably avoided; (iii) the worth at the time of award of the amount by
which the unpaid rent for the balance of the term after the time of award
exceeds the amount of such rental loss that the Lessee proves could be
reasonably avoided; and (iv) any other amount necessary to compensate Lessor for
all the detriment proximately caused by the Lessee’s failure to perform its
obligations under this Lease or which in the ordinary course of things would be
likely to result therefrom,

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including but not limited to the cost of recovering possession of the Premises,
expenses of reletting, including necessary renovation and alteration of the
Premises, reasonable attorneys’ fees, and that portion of any leasing commission
paid by Lessor in connection with this Lease applicable to the unexpired term of
this Lease. The worth at the time of award of the amount referred to in
provision (iii) of the immediately preceding sentence shall be computed by
discounting such amount at the discount rate of the Federal Reserve Bank of the
District within which the Premises are located at the time of award plus one
percent.  Efforts by Lessor to mitigate damages caused by Lessee’s Breach of
this Lease shall not waive Lessor’s right to recover any damages to which Lessor
is otherwise entitled.  If termination of this Lease is obtained through the
provisional remedy of unlawful detainer, Lessor shall have the right to recover
in such proceeding any unpaid Rent and damages as are recoverable therein, or
Lessor may reserve the right to recover all or any part thereof in a separate
suit. If a notice and grace period required under Section 14.1 was not
previously given, a notice to pay rent or quit, or to perform or quit given to
Lessee under the unlawful detainer statute shall also constitute the notice
required by Section 14.1. In such case, the applicable grace period required by
Section 14.1 and the unlawful detainer statute shall run concurrently, and the
failure of Lessee to cure the Default within the greater of the two such grace
periods shall constitute both an unlawful detainer and a Breach of this Lease
entitling Lessor to the remedies provided for in this Lease and/or by said
statute.

14.2.2Continue the Lease and Lessee’s right to possession and recover the Rent
as it becomes due, in which event Lessee may sublet or assign, subject only to
reasonable limitations.  Acts of maintenance, efforts to relet, and/or the
appointment of a receiver to protect the Lessor’s interests, shall not
constitute a termination of the Lessee’s right to possession.

14.2.3Pursue any other remedy now or hereafter available under the laws or
judicial decisions of the state wherein the Premises are located. The expiration
or termination of this Lease and/or the termination of Lessee’s right to
possession shall not relieve Lessee from liability under any indemnity
provisions of this Lease as to matters occurring or accruing during the term
hereof or by reason of Lessee’s occupancy of the Premises.

 

14.3

Inducement Recapture

[Intentionally Omitted]

 

14.4

Late Charges

Lessee hereby acknowledges that late payment by Lessee of Rent will cause Lessor
to incur costs not contemplated by this Lease, the exact amount of which will be
extremely difficult to ascertain. Such costs include, but are not limited to,
processing and accounting charges, and late charges which may be imposed upon
Lessor by any Lender. Accordingly, if any Rent shall not be received by Lessor
within five days after such amount shall be due, then without any requirement
for notice to Lessee, Lessee shall immediately pay to Lessor a one-time late
charge equal to 6% of each such overdue amount or $100, whichever is greater.
The parties hereby agree that such late charge represents a fair and reasonable
estimate of the costs Lessor will incur by reason of such late payment.
Acceptance of such late charge by Lessor shall in no event constitute a waiver
of Lessee’s Default or Breach with respect to such overdue amount, nor prevent
the exercise of any of the other rights and remedies granted hereunder.  In the
event that a late charge is payable hereunder, whether or not collected, for
three consecutive installments of Base Rent, then notwithstanding any provision
of this Lease to the contrary, Base Rent shall, at Lessor’s option, become due
and payable quarterly in advance.

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14.5

Interest

Any monetary payment due Lessor hereunder, other than late charges, not received
by Lessor when due shall bear interest from the 31st day after it was due. The
interest (“Interest”) charged shall be computed at the rate of the lesser of (A)
the rate announced from time to time by Wells Fargo Bank or, if Wells Fargo bank
ceases to exist or ceases to publish such rate, then the rate announced from
time to time by the largest (as measured by deposits) chartered bank operating
in the State, as its “prime rate” or “reference rate”, plus two percent (2%), or
(B) the maximum rate of interest permitted by law but shall not exceed the
maximum rate allowed by law.  Interest is payable in addition to the potential
late charge provided for in Section 14.4.

 

14.6

Breach by Lessor

14.6.1Lessor shall not be deemed in breach of this Lease unless Lessor fails
within a reasonable time to perform an obligation required to be performed by
Lessor. For purposes of this Section, a reasonable time shall in no event be
less than 30 days after receipt by Lessor, and any Lender whose name and address
shall have been furnished to Lessee in writing for such purpose, of written
notice specifying wherein such obligation of Lessor has not been performed;
provided, however, that if the nature of Lessor’s obligation is such that more
than 30 days are reasonably required for its performance, then Lessor shall not
be in breach if performance is commenced within such 30 day period and
thereafter diligently pursued to completion.

14.6.2In the event that neither Lessor nor Lender cures said breach within 30
days after receipt of said notice, or if having commenced said cure they do not
diligently pursue it to completion, then Lessee may elect to cure said breach at
Lessee’s expense and offset from Rent the actual and reasonable cost to perform
such cure, provided however, that such offset shall not exceed an amount equal
to the greater of one month’s Base Rent or the Security Deposit, reserving
Lessee’s right to reimbursement from Lessor for any such expense in excess of
such offset. Lessee shall document the cost of said cure and supply said
documentation to Lessor.

15.

CONDEMNATION

 

15.1

Effect on Lease

If all of the Premises, is taken under the power of eminent domain or sold under
the threat of the exercise of said power (“Condemnation”), this Lease shall
terminate as of the date the condemning authority takes title or possession,
whichever first occurs.  If title to a portion of the Premises or the land on
which the Premises are located is taken by Condemnation, and the remainder will
not, in Lessee’s reasonable judgment, be suitable for Lessee’s continued use for
the purposes permitted by this Lease, this Lease shall terminate as of the date
the condemning authority takes title or possession, whichever first occurs,
provided that Lessee gives written notice of such termination to Lessor no later
than thirty (30) days after the date of such taking.  If title to a portion of
the Premises or the land on which the Premises are located is taken by
Condemnation, and the remainder will, in Lessee’s reasonable judgment, be
suitable for Lessee’s continued use for the purposes permitted by this Lease,
then Lessor shall repair the damage caused by the partial taking, if any, and
this Lease shall not terminate and shall remain in full force and effect as to
the portion of the Premises remaining, except that the Base Rent payable
hereunder shall be reduced in proportion to the reduction in utility of the
Premises caused by such Condemnation.  Lessee acknowledges and agrees that a
change in access to the land on which the Premises are located or minor
adjustments to parking which do not adversely affect Tenant’s

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use or occupancy of the Premises in any material respect, shall not constitute a
taking and shall not entitle Lessee to any reduction in Base Rent.  

 

15.2

Allocation of Condemnation Award  

No award for any partial or total taking shall be apportioned.  Lessee hereby
assigns to Lessor its interest, if any, in any award which may be made as a
result of any Condemnation, without regard to whether this Lease is terminated,
except for any separate award made to Lessee for Lessee’s moving costs or loss
of Lessee’s business goodwill.  Any condemnation award(s) and/or payment(s) for
the taking or damaging of all or any portion of the Premises under the power of
eminent domain, or any payment made under threat of the exercise of such power,
shall be the sole and exclusive property of Lessor, whether such award shall be
made as compensation for the taking of all or any portion of the Premises or any
portion of the land on which the Premises are located, diminution in value of
the leasehold (including without limitation any “bonus value” of the Lease), the
value of the part taken, or for severance damages; provided, however, that
Lessee shall be entitled to compensation separately awarded to it, if any, for
Lessee’s relocation expenses and/or loss of business goodwill.  All
“improvements pertaining to the realty” as defined in the Eminent Domain Law
(Code of Civil Procedure sections 1230.10 et seq.), which Lessee specifically
acknowledges and agrees shall include without limitation Alterations and Utility
Installations made to the Premises by Lessee, and all fixtures that cannot be
removed without doing material damage to the Premises, shall, for purposes of
Condemnation, be considered the property of the Lessor and Lessor shall be
entitled to any and all compensation which is payable therefor; provided that in
no event shall any Trade Fixtures or other personal property of Lessee be deemed
the property of Lessor for any purpose under this Lease.

16.

CONFIDENTIAL INFORMATION, INDEMNITIES OF RELATIONSHIPS

 

16.1

Confidential Information

Lessor and Lessee acknowledge that this Lease, and all material information
exchanged during the negotiations related to this Lease, is confidential
information, consisting of: the content of this Lease, the Lessee’s financial
statements, the identity of the brokers, and all written, printed, graphic, or
electronic information furnished by any party and not otherwise public without
violation of this Section 16.1 (collectively, “Confidential
Information”).  Except to the extent disclosure is required by law, the parties
shall keep all Confidential Information in strict confidence, and shall not
disclose any Confidential Information to any third party other than Lessee’s or
Lessor’s independent auditors, financial and legal advisors, employees,
contractors, those selected to review Common Area Operating Expenses and taxes,
and legal and space-planning consultants or to enforce this Lease; provided,
however, that Lessee may disclose the terms to prospective subtenants or
assignees.  No Confidential Information or other information regarding this
Lease shall be reported or otherwise released.  This provision shall survive the
termination or expiration of this Lease, for a period of one
year.  Notwithstanding the foregoing, Lessor acknowledges that Lessee is a
“reporting company” under applicable Law and required to publicly file with, and
report to, the Securities and Exchange Commission (the “SEC”) with respect to
certain information that may include information regarding this Lease.  Lessor
agrees that Lessee’s disclosure of any information regarding this Lease pursuant
to the requirements of the SEC, including the filing of this Lease with the SEC,
or otherwise as required under applicable Law is expressly permitted under the
terms of this Lease.  In no event shall either party be liable for monetary
damages in the event of a violation of the Section 16.1 and injunctive relief
shall be the only remedy available for a breach hereof (“Permitted Regulatory
Reporting”).

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16.2

Indemnities

Lessee and Lessor do each hereby agree to indemnify, protect, defend and hold
the other harmless from and against liability for compensation or charges which
may be claimed by any broker (other than those hired by the Parties to this
Lease to represent them in such Lease negotiations), finder or other similar
party by reason of any dealings or actions of the indemnifying Party, including
any costs, expenses, attorneys’ fees reasonably incurred with respect thereto.

17.

ESTOPPEL CERTIFICATES AND FINANCIAL STATEMENTS

 

17.1

Obligation to Provide Estoppel Certificate

Each Party (as “Responding Party”) shall within 10 business days after written
notice from the other Party (the “Requesting Party”) execute, acknowledge and
deliver to the Requesting Party a statement in writing in form similar to the
“Estoppel Certificate” form attached hereto as Exhibit D, plus such additional
information, confirmation and/or statements as may be reasonably requested by
the Requesting Party.

 

17.2

Remedies for Failure to Provide Estoppel Certificate.

If the Responding Party shall fail to execute or deliver the Estoppel
Certificate within such 10 business day period, the Requesting Party may execute
an Estoppel Certificate stating that: (i) the Lease is in full force and effect
without modification except as may be represented by the Requesting Party, (ii)
there are no uncured defaults in the Requesting Party’s performance, and (iii)
if Lessor is the Requesting Party, not more than one month’s rent has been paid
in advance. Prospective purchasers and encumbrancers may rely upon the
Requesting Party’s Estoppel Certificate, and the Responding Party shall be
estopped from denying the truth of the facts contained in said Certificate.

 

17.3

Additional Provisions Regarding Lessor Finance, Refinance or Sale of Premises

If Lessor desires to finance, refinance, or sell the Premises, or any part
thereof, Lessee and all Guarantors shall within 10 business days after written
notice from Lessor (but not more frequently than two (2) times per calendar
year), deliver to any potential lender or purchaser designated by Lessor such
financial statements as may be reasonably required by such lender or purchaser,
including but not limited to Lessee’s financial statements for the past three
years.  All such financial statements shall be received by Lessor and such
lender or purchaser in confidence and shall be used only for the purposes herein
set forth. Notwithstanding the foregoing, in the event that (i) stock in the
entity which constitutes Lessee under this Lease is publicly traded on a
national stock exchange, (ii) Lessee has its own, separate and distinct 10K and
10Q filing requirements (as opposed to joint filings with an entity that
controls Lessee or is under common control with Lessee), and (iii) Lessee’s
financial statements are readily available to the public, then Lessee's
obligation to its most recent current financial statement shall be deemed
satisfied.

18.

SUBORDINATION; ATTORNMENT; NON-DISTURBANCE

 

18.1

Subordination

Subject to Lessee’s receipt of a Non-Disturbance Agreement (defined below), this
Lease and any Option granted hereby shall be subject and subordinate to any
ground lease, mortgage, deed of trust, or other hypothecation or security device
(collectively, “Security Device”), now or

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hereafter placed upon the Premises, to any and all advances made on the security
thereof, and to all renewals, modifications, and extensions thereof. Lessee
agrees that, except as otherwise set forth in a Non-Disturbance Agreement, the
holders of any such Security Devices (in this Lease together referred to as
“Lender”) shall have no liability or obligation to perform any of the
obligations of Lessor under this Lease. Subject to Lessee’s receipt of a
Non-Disturbance Agreement, any Lender may elect to have this Lease and/or any
Option granted hereby superior to the lien of its Security Device by giving
written notice thereof to Lessee, whereupon this Lease and such Options shall be
deemed prior to such Security Device, notwithstanding the relative dates of the
documentation or recordation thereof.

 

18.2

Attornment

In the event that Lessor transfers title to the Premises, or the Premises are
acquired by another upon the foreclosure or termination of a Security Devise to
which this Lease is subordinated (i) Lessee shall, subject to the
non-disturbance provisions of Section 18.3, attorn to such new owner, and upon
request, enter into a new lease, containing all of the terms and provisions of
this Lease, with such new owner for the remainder of the term hereof, or, at the
election of the new owner, this Lease will automatically become a new lease
between Lessee and such new owner, and (ii) Lessor shall thereafter be relieved
of any further obligations hereunder for the period from and after such transfer
and such new owner shall assume all of Lessor’s obligations, except that such
new owner shall not: (a) be liable for any act or omission of any prior lessor
or with respect to events occurring prior to acquisition of ownership; (b) be
subject to any offsets or defenses which Lessee might have against any prior
lessor, (c) be bound by prepayment of more than one month’s rent, or (d) be
liable for the return of any security deposit paid to any prior lessor which was
not paid or credited to such new owner, and Lessor shall remain liable to Lessee
for performance of all such obligations.

 

18.3

Non-Disturbance

With respect to Security Devices entered into by Lessor, Lessee’s subordination
of this Lease shall be subject to receiving a commercially reasonable
non-disturbance agreement (a “Non-Disturbance Agreement”) from the Lender which
Non-Disturbance Agreement provides, among other things, that Lessee’s possession
of the Premises, and this Lease, including any options to extend the term
hereof, will not be disturbed so long as Lessee is not in Breach hereof and
attorns to the record owner of the Premises.

 

18.4

Self-Executing

The agreements contained in this Section 18 shall be effective without the
execution of any further documents; provided, however, that, upon written
request from Lessor or a Lender in connection with a sale, financing or
refinancing of the Premises, Lessee and Lessor shall execute such further
writings as may be reasonably required to separately document any subordination,
attornment and/or Non-Disturbance Agreement provided for herein and which do not
decrease the benefits to Lessee, or increase the obligations of Lessee, under
this Lease.

19.

OPTIONS

 

19.1

General Provisions Applicable to Options

19.1.1“Option” shall mean:  (a) the right to extend or reduce the term of or
renew this Lease or to extend or reduce the term of or renew any lease that
Lessee has on other property of Lessor; (b) the right of first refusal or first
offer to lease either the Premises or other property of

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Lessor; (c) the right to purchase, the right of first offer to purchase or the
right of first refusal to purchase the Premises or other property of Lessor.

19.1.2Any Option granted to Lessee in this Lease is personal to the original
Lessee and transferees under Permitted Transfers, unless otherwise agreed to by
the parties, and cannot be assigned or exercised by anyone other than said
original Lessee and only while the original Lessee is in full possession of the
Premises and, if requested by Lessor, with Lessee certifying that Lessee has no
intention of thereafter assigning or subletting.

19.1.3In the event that Lessee has any multiple Options to extend or renew this
Lease, a later Option cannot be exercised unless the prior Options have been
validly exercised.

 

19.2

Effect of Default on Options

19.2.1Lessee shall have no right to exercise an Option: (i) during the period
commencing with the giving of any notice of Default and continuing until said
Default is cured, (ii) during the period of time any Base Rent that is then due
is unpaid (without regard to whether notice thereof is given Lessee), (iii)
during the time Lessee is in Breach of this Lease, or (iv) in the event that
Lessee has been given three or more notices of separate Default which remain
uncured during the 12 month period immediately preceding the exercise of the
Option.

19.2.2The period of time within which an Option may be exercised shall not be
extended or enlarged by reason of Lessee’s inability to exercise an Option
because of the provisions of Section 19.2.1.

 

19.3

Option Exercise Procedures

19.3.1If Lessee elects to exercise an Option, it shall do so by delivery of
written notice of such election to Lessor not less than nine (9) and no more
than the twelve (12) months prior to the expiration date of the Original Term or
extension period, as applicable.  

19.3.2The Base Rent and method of annual increases thereto for the extension
period shall be the then fair market rental rate and method for annual increases
for comparable space in the area.  

19.3.3The fair market rental and method for annual increases shall be mutually
agreed upon by Lessor and Lessee within thirty (30) days after Lessor’s receipt
of Lessee’s written notice of the exercise of the Option (the “Agreement
Period”).

19.3.4If Lessor and Lessee are unable to so agree within the Agreement Period,
each shall select an appraiser and, within fifteen (15) days after the
expiration of the Agreement Period, shall notify the other of the name, business
address and telephone number of the appraiser so selected.  Said two (2)
appraisers shall, within thirty (30) days after the expiration of the Agreement
Period, jointly select a third appraiser and shall notify Lessor and Lessee of
the name, business address and telephone number of said appraiser. Each of the
three (3) appraisers shall, within forty-five (45) days after expiration of the
Agreement Period, make a good faith determination of the then fair market rental
rate of the Premises and the method for annual increases in said rate and shall
notify Lessor, Lessee, and each other appraiser of such determinations.  If all
appraisers do not agree on the fair market rental rate and method for annual
increases, the common decision of two (2) of them shall be determinative.  If
two (2) of the three (3) appraisers are unable to so agree, the fair market
rental rate that is neither the highest nor

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lowest of the three (3) determinations shall be the Base Rent and the method for
annual increases shall be the method specified by the appraiser who’s
determination of fair market rental is used.  

19.3.5Lessor and Lessee shall each cooperate with all reasonable requests by any
of the appraisers in order to assist the appraisers in the timely performance of
their duties hereunder.  To be eligible to serve as an appraiser, one must be a
licensed real estate broker in California with a minimum of five (5) years
continuous experience in the leasing of similar space in the area, and must be
actively engaged in such activity at the time of his or her selection.

19.3.6Lessor and Lessee shall each pay the fees and expenses of its own
appraiser and one-half (1/2) of the fees and expenses of the third appraiser.  

20.

MISCELLANEOUS PROVISIONS

 

20.1

Definition of Lessor

The term “Lessor” as used herein shall mean the owner or owners at the time in
question of the fee title to the Premises, or, if this is a sublease, of the
Lessee’s interest in the prior lease. In the event of a transfer of Lessor’s
title or interest in the Premises or this Lease, Lessor shall deliver to the
transferee or assignee (in cash or by credit) any unused Security Deposit held
by Lessor. Upon such transfer or assignment and delivery of the Security
Deposit, as aforesaid, the prior Lessor shall be relieved of all liability with
respect to the obligations and/or covenants under this Lease thereafter to be
performed by the Lessor (subject to Section 18.2 hereof).  Subject to the
foregoing, the obligations and/or covenants in this Lease to be performed by the
Lessor shall be binding only upon the Lessor as hereinabove defined.

 

20.2

Severability

The invalidity of any provision of this Lease, as determined by a court of
competent jurisdiction, shall in no way affect the validity of any other
provision hereof.

 

20.3

Days

Unless otherwise specifically indicated to the contrary, the word “days” as used
in this Lease shall mean and refer to calendar days.

 

20.4

Limitation on Liability

The obligations of Lessor under this Lease shall not constitute personal
obligations of Lessor, or its partners, members, directors, officers or
shareholders, and Lessee shall look to the Premises, and to no other assets of
Lessor, for the satisfaction of any liability of Lessor with respect to this
Lease, and shall not seek recourse against Lessor’s partners, members,
directors, officers or shareholders, or any of their personal assets for such
satisfaction.

 

20.5

Time of Essence

Time is of the essence with respect to the performance of all obligations to be
performed or observed by the Parties under this Lease.

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20.6

No Prior or Other Agreements

This Lease contains all agreements between the Parties with respect to any
matter mentioned herein, and no other prior or contemporaneous agreement or
understanding shall be effective. Lessor and Lessee each represents and warrants
to the other that it has made, and is relying solely upon, its own investigation
as to the nature, quality, character and financial responsibility of the other
Party to this Lease and as to the use, nature, quality and character of the
Premises.

 

20.7

Notices

20.7.1All notices required or permitted by this Lease or applicable law shall be
in writing and may be delivered in person (by hand or by courier) or may be sent
by regular, certified or registered mail or U.S. Postal Service Express Mail,
with postage prepaid, or by facsimile transmission, and shall be deemed
sufficiently given if served in a manner specified in this Section 20.7.  The
addresses noted adjacent to a Party’s signature on this Lease shall be that
Party’s address for delivery or mailing of notices. Either Party may by written
notice to the other specify a different address for notice. A copy of all
notices to Lessor shall be concurrently transmitted to such party or parties at
such addresses as Lessor may from time to time hereafter designate in writing.

20.7.2Any notice sent by registered or certified mail, return receipt requested,
shall be deemed given on the date of delivery shown on the receipt card, or if
no delivery date is shown, the postmark thereon.  If sent by regular mail the
notice shall be deemed given 72 hours after the same is addressed as required
herein and mailed with postage prepaid.  Notices delivered by United States
Express Mail or overnight courier that guarantees next day delivery shall be
deemed given 24 hours after delivery of the same to the Postal Service or
courier. Notices transmitted by facsimile transmission or similar means shall be
deemed delivered upon telephone confirmation of receipt (confirmation report
from fax machine is sufficient), provided a copy is also delivered via delivery
or mail.  If notice is received on a Saturday, Sunday or legal holiday, it shall
be deemed received on the next business day.

 

20.8

Waivers

20.8.1No waiver by Lessor of the Default or Breach of any term, covenant or
condition hereof by Lessee, shall be deemed a waiver of any other term, covenant
or condition hereof, or of any subsequent Default or Breach by Lessee of the
same or of any other term, covenant or condition hereof.  Lessor’s consent to,
or approval of, any act shall not be deemed to render unnecessary the obtaining
of Lessor’s consent to, or approval of, any subsequent or similar act by Lessee,
or be construed as the basis of an estoppel to enforce the provision or
provisions of this Lease requiring such consent.

20.8.2The acceptance of Rent by Lessor shall not be a waiver of any Default or
Breach by Lessee. Any payment by Lessee may be accepted by Lessor on account of
monies or damages due Lessor, notwithstanding any qualifying statements or
conditions made by Lessee in connection therewith, and such statements and/or
conditions shall be of no force or effect whatsoever unless specifically agreed
to in writing by Lessor at or before the time of deposit of such payment.

20.8.3THE PARTIES AGREE THAT THE TERMS OF THIS LEASE SHALL GOVERN WITH REGARD TO
ALL MATTERS RELATED THERETO AND HEREBY WAIVE THE

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PROVISIONS OF ANY PRESENT OR FUTURE STATUTE TO THE EXTENT THAT SUCH STATUTE IS
INCONSISTENT WITH THIS LEASE.

 

20.9

No Right To Holdover

Lessee has no right to retain possession of the Premises or any part thereof
beyond the expiration or termination of this Lease. In the event that Lessee
holds over, then the Base Rent shall be equal to one hundred twenty-five percent
(125%) of the Base Rent in effect on the termination date, computed on a monthly
basis for each month or part thereof during the first month of such holding
over, and thereafter one hundred fifty percent (150%) of the Base Rent in effect
on the termination date, computed on a monthly basis for each month or part
thereof during such holding over. Nothing contained herein shall be construed as
consent by Lessor to any holding over by Lessee.

 

20.10

Cumulative Remedies

No remedy or election hereunder shall be deemed exclusive but shall, wherever
possible, be cumulative with all other remedies at law or in equity.

 

20.11

Covenants and Conditions; Construction of Agreement

All provisions of this Lease to be observed or performed by Lessee are both
covenants and conditions. In construing this Lease, all headings and titles are
for the convenience of the Parties only and shall not be considered a part of
this Lease.  Whenever required by the context, the singular shall include the
plural and vice versa.  This Lease shall not be construed as if prepared by one
of the Parties, but rather according to its fair meaning as a whole, as if both
Parties had prepared it.

 

20.12

Binding Effect; Choice of Law

This Lease shall be binding upon the parties, their personal representatives,
successors and assigns and be governed by the laws of the State in which the
Premises are located.  Any litigation between the Parties hereto concerning this
Lease shall be initiated in the county in which the Premises are located.

 

20.13

Attorneys’ Fees

If any Party brings an action or proceeding involving the Premises whether
founded in tort, contract or equity, or to declare rights hereunder, the
Prevailing Party (as hereafter defined) in any such proceeding, action, or
appeal thereon, shall be entitled to reasonable attorneys’ fees. Such fees may
be awarded in the same suit or recovered in a separate suit, whether or not such
action or proceeding is pursued to decision or judgment.  The term, “Prevailing
Party” shall include, without limitation, a Party who substantially obtains or
defeats the relief sought, as the case may be, whether by compromise,
settlement, judgment, or the abandonment by the other Party of its claim or
defense. The attorneys’ fees award shall not be computed in accordance with any
court fee schedule, but shall be such as to fully reimburse all reasonable
attorneys’ fees reasonably incurred. Subject to Lessee’s contest in court as to
any Default, Lessor shall be entitled to attorneys’ fees, costs and expenses
incurred in the preparation and service of notices of a Default and
consultations in connection therewith, whether or not a legal action is
subsequently commenced in connection with such Default or resulting Breach ($200
is a reasonable minimum per occurrence for such services and consultation).

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20.14

Lessor’s Access; Showing Premises; Repairs

Lessor and Lessor’s agents shall have the right to enter the Premises, in the
case of an emergency i.e. imminent threat to life or property) upon such notice
as is reasonable under the circumstances, and otherwise at reasonable times
after reasonable prior notice for the purpose of showing the same to prospective
purchasers, lenders, or, during the last six (6) months of the term of this
Lease, tenants, and making such alterations, repairs, improvements or additions
to the Premises as Lessor may deem necessary or desirable and the erecting,
using and maintaining of utilities, services, pipes and conduits through the
Premises and/or other premises as long as the foregoing actions by Lessor are
permitted under other applicable provisions of this Lease and there is no
adverse effect on Lessee’s use or occupancy of the Premises in any material
respsect. All such activities shall be without abatement of rent or liability to
Lessee provided the same are conducted in compliance with Lessee’s reasonable
workplace safety and security requirements,  

 

20.15

Auctions

Lessee shall not conduct, nor permit to be conducted, any auction upon the
Premises without Lessor’s prior written consent. Lessor shall not be obligated
to exercise any standard of reasonableness in determining whether to permit an
auction.

 

20.16

Signs

Lessor may place on the exterior of the Premises ordinary “For Sale” signs at
any time and ordinary “For Lease” signs during the last six months of the term
hereof.  Lessee shall not place any sign upon the Project without Lessor’s prior
written consent, which will not be unreasonably withheld, conditioned, or
delayed; provided that Lessee shall have the right to install logo and/or name
door signage, signage on the Project monument and on the exterior of the
Premises.  All signs must comply with all applicable government and zoning
requirements.  Any permits necessitated by Lessee’s signage shall be obtained by
Lessee at Lessee’s sole expense.

 

20.17

Termination; Merger

Unless specifically stated otherwise in writing by Lessor, the voluntary or
other surrender of this Lease by Lessee, the mutual termination or cancellation
hereof, or a termination hereof by Lessor for Breach by Lessee, shall
automatically terminate any sublease or lesser estate in the Premises; provided,
however, that Lessor may elect to continue any one or all existing
subtenancies.  Lessor’s failure within 10 days following any such event to elect
to the contrary by written notice to the holder of any such lesser interest,
shall constitute Lessor’s election to have such event constitute the termination
of such interest.

 

20.18

Consents

Except as otherwise provided herein, wherever in this Lease the consent of a
Party is required to an act by or for the other Party, such consent shall not be
unreasonably withheld or delayed. Lessor’s actual reasonable costs and expenses
(including but not limited to architects’, attorneys’, engineers’ and other
consultants’ fees) incurred in the consideration of, or response to, a request
by Lessee for any Lessor consent, including but not limited to consents to an
assignment, a subletting or the presence or use of a Hazardous Substance, shall
be paid by Lessee upon receipt of an invoice and supporting documentation
therefor. Lessor’s consent to any act, assignment or subletting shall not
constitute an acknowledgment that no Default or Breach by Lessee of this Lease
exists, nor shall such consent be deemed a waiver of any then-existing Default
or Breach, except as may be otherwise specifically stated in writing by Lessor
at

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the time of such consent. The failure to specify herein any particular condition
to Lessor’s consent shall not preclude the imposition by Lessor at the time of
consent of such further or other conditions as are then reasonable with
reference to the particular matter for which consent is being given. In the
event that either Party disagrees with any determination made by the other
hereunder and reasonably requests the reasons for such determination, the
determining party shall furnish its reasons in writing and in reasonable detail
within 10 business days following such request.

 

20.19

Quiet Possession

Subject to payment by Lessee of the Rent and performance of all of the
covenants, conditions and provisions on Lessee’s part to be observed and
performed under this Lease in all material respects, Lessee shall have quiet
possession and quiet enjoyment of the Premises during the term hereof.

 

20.20

Security Measures

Lessee hereby acknowledges that the Rent payable to Lessor hereunder does not
include the cost of guard service or other security measures, and that Lessor
shall have no obligation whatsoever to provide same. Lessee assumes all
responsibility for the protection of the Premises, Lessee, its agents and
invitees and their property from the acts of third parties.  Provided however,
that Lessor is responsible for providing the security of the Common Areas.

 

20.21

Reservations

Lessor reserves the right: (i) to grant, without the consent or joinder of
Lessee, such easements, rights and dedications that Lessor deems necessary, (ii)
to cause the recordation of parcel maps and restrictions, and (iii) to create
and/or install new utility raceways, so long as such easements, rights,
dedications, maps, restrictions, and utility raceways do not unreasonably
interfere with the use or occupancy of the Premises by Lessee. Lessee agrees to
sign any documents reasonably requested by Lessor to effectuate such rights
provided the same do not decrease the benefits to Lessee, or increase the
obligations of Lessee, under this Lease.

 

20.22

Performance Under Protest

If at any time a dispute shall arise as to any amount or sum of money to be paid
by one Party to the other under the provisions hereof, the Party against whom
the obligation to pay the money is asserted shall have the right to make payment
“under protest” and such payment shall not be regarded as a voluntary payment
and there shall survive the right on the part of said Party to institute suit
for recovery of such sum. If it shall be adjudged that there was no legal
obligation on the part of said Party to pay such sum or any part thereof, said
Party shall be entitled to recover such sum or so much thereof as it was not
legally required to pay.  A Party who does not initiate suit for the recovery of
sums paid “under protest” within 6 months shall be deemed to have waived its
right to protest such payment.

 

20.23

Authority; Multiple Parties; Execution

20.23.1If either Party hereto is a corporation, trust, limited liability
company, partnership, or similar entity, each individual executing this Lease on
behalf of such entity represents and warrants that he or she is duly authorized
to execute and deliver this Lease on its behalf. Each Party shall, within 30
days after request, deliver to the other Party satisfactory evidence of such
authority.

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20.23.2If this Lease is executed by more than one person or entity as “Lessee”,
each such person or entity shall be jointly and severally liable hereunder.  It
is agreed that any one of the named Lessees shall be empowered to execute any
amendment to this Lease, or other document ancillary thereto and bind all of the
named Lessees, and Lessor may rely on the same as if all of the named Lessees
had executed such document.

20.23.3This Lease may be executed by the Parties in counterparts, each of which
shall be deemed an original and all of which together shall constitute one and
the same instrument.

 

20.24

Offer

Preparation of this Lease by either party or their agent and submission of same
to the other Party shall not be deemed an offer to lease to the other Party.
This Lease is not intended to be binding until executed and delivered by all
Parties hereto.

 

20.25

Amendments

This Lease may be modified only in writing, signed by the Parties in interest at
the time of the modification. As long as they do not decrease the benefits to
Lessee, or increase the obligations of Lessee, under this Lease as a result
thereof, Lessee agrees to make such reasonable non-monetary modifications to
this Lease as may be reasonably required by a Lender in connection with the
obtaining of normal financing or refinancing of the Premises provided Lessee has
received a Non-Disturbance Agreement from such Lender.

 

20.26

Waiver of Trial By Jury

THE PARTIES HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO TRIAL BY JURY IN ANY ACTION
OR PROCEEDING INVOLVING THE PROPERTY OR ARISING OUT OF THIS AGREEMENT.

 

20.27

Accessibility; Americans with Disabilities Act

20.27.1The Premises have not undergone an inspection by a Certified Access
Specialist (CASp). A Certified Access Specialist (CASp) can inspect the subject
premises and determine whether the subject premises comply with all of the
applicable construction-related accessibility standards under state law.
Although state law does not require a CASp inspection of the subject premises,
the commercial property owner or lessor may not prohibit the lessee or tenant
from obtaining a CASp inspection of the subject premises for the occupancy or
potential occupancy of the lessee or tenant, if requested by the lessee or
tenant. The parties shall mutually agree on the arrangements for the time and
manner of the CASp inspection, the payment of the fee for the CASp inspection,
and the cost of making any repairs necessary to correct violations of
construction-related accessibility standards within the premises.

20.27.2Since some aspects of compliance with the Americans with Disabilities Act
(ADA) are dependent upon Lessee’s specific use of the Premises, Lessor makes no
warranty or representation as to whether or not the Premises comply with ADA or
any similar legislation applicable to Lessee’s specific use of the Premises. In
the event that Lessee requests a CASp inspection and/or Lessee’s specific use of
the Premises (rather than as generally required for any tenant of the Project)
requires modifications or additions to the Premises in order to be in ADA
compliance (or other construction-related accessibility standards, if
applicable), Lessee agrees to make any such necessary modifications and/or
additions at Lessee’s expense, provided that the

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foregoing shall not relieve Lessor of any obligations it otherwise has under
this Lease regarding the condition of the Premises or its compliance with law.

20.27.3LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH
TERM AND PROVISION CONTAINED HEREIN, AND BY THE EXECUTION OF THIS LEASE SHOW
THEIR INFORMED AND VOLUNTARY CONSENT THERETO.  THE PARTIES HEREBY AGREE THAT, AT
THE TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE EFFECTUATE THE INTENT
AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE PREMISES.

The parties hereto have executed this Lease at the place and on the dates
specified above their respective signatures.

(SIGNATURES CONTINUED ON NEXT PAGE)

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LESSOR:R. E. Hazard Contracting Company,

a California corporation

 

/s/ T. B. Hazard

By:Thomas B. Hazard

Its: President

 

 

 

Lessor’s Address for Notices:

c/o Cypress View Properties, Inc.

Attn:  Larry Figueroa

401 B Street, Suite 2400

San Diego, CA  92101

619-795-8578

larry@cypressview.com

 

 

LESSEE:

Tandem Diabetes Care, Inc.,

a Delaware corporation

 

/s/ David B. Berger

By: David B. Berger

Its: Executive Vice President and General Counsel

Lessee’s Address for Notices:

11075 Roselle Street
San Diego, CA 92121
Attn: David Berger, Executive Vice President and General Counsel

 

 

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EXHIBIT A – “Site Plan of the Premises”

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EXHIBIT B – “Tenant Improvements” - [Not applicable – intentionally omitted.]

EXHIBIT C – “Guaranty” - [Not applicable – intentionally omitted.]

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EXHIBIT D – “Estoppel Certificate”

STANDARD ESTOPPEL CERTIFICATE - BY LESSEE

 

To Whom It May Concern:

Re: Industrial/Commercial Multi-Tenant Lease – Gross Modified Dated February 19,
2019 ("Lease") By And Between Tandem Diabetes Care, Inc., a Delaware corporation
(“Lessee”) and R. E. Hazard Contracting Company, a California corporation
(“Lessor”), concerning the real property commonly known as 6495 Marindustry
Place, San Diego, CA (the “Premises”)

Lessee hereby certifies to its actual (and not constructive) knowledge, without
duty of investigation, as of the date hereof, as follows:

1.A true copy of the Lease, including all amendments thereto, if any, is
attached as Exhibit A. Other than the document included in Exhibit A there are
no oral or written agreements or understandings between the Lessor and Lessee
with respect to the Premises.

2.The Lease term commenced on May 1, 2019, and will continue for eighty-four
(84) months, until April 30, 2026.

3.The current monthly rent and Lessor’s Share of Operating Expenses (as defined
in the Lease), if any, are as follows:

 

Amount

Day of Month Due

Amount Paid YTD

Rent

 

 

 

Operating Expenses

 

 

 

No rents or Operating Expenses have been prepaid except as reflected in the
Lease.

4.The current amount of security deposit held by Lessor is $_____________.

5.The improvements and space required to be provided by Lessor have been
furnished and completed in all respects to the satisfaction of Lessee, and all
promises of an inducement by Lessor have been fulfilled.

6.Lessee has no knowledge of any uncured defaults by Lessor under the Lease and
has received no notice of default under the Lease that is continuing.

7.There are no disputes between Lessor and Lessee concerning the Lease, the
Premises or the improvements therein or thereon.

8.Lessee is in full and complete possession of the Premises and has not assigned
or sublet any portion of the Premises.

9.Lessee has made no alterations or additions to the Premises not contemplated
in the Lease and such alterations and additions, if any, comply with the terms
of the Lease.

10.Lessee is not currently the subject of a bankruptcy proceeding.

11.Lessee is informed by Lessor that buyers, lenders and others will rely upon
the statements made in this Estoppel Certificate, and has therefore adjusted the
language hereof as necessary to make it an accurate statement of the current
facts set forth in this Estoppel Certificate concerning the Lease. No individual
signing this Estoppel Certificate shall have any personal liability hereunder.

 

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LESSEE:

Tandem Diabetes Care, Inc.,

a Delaware corporation

 

Dated:

By:  _________________________

Name:_______________________

Title:  ________________________

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SCHEDULE 1 – Lessee’s List of Permitted Hazardous Substances

 

 

 

 

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