AMENDED AND RESTATED LEASE AGREEMENT
THIS AMENDED AND RESTATED LEASE AGREEMENT AMENDS, RESTATES AND SUPERSEDES IN ITS
ENTIRETY THAT CERTAIN LEASE AGREEMENT DATED DECEMBER 30, 2010, BY AND BETWEEN
TENANT (AS DEFINED BELOW) AND LANDLORD (AS DEFINED BELOW).
THIS AMENDED AND RESTATED LEASE AGREEMENT (this “Lease”) is made this 27th day
of March, 2012, between ARE-SD REGION NO. 32, LLC, a Delaware limited liability
company (“Landlord”), and ILLUMINA, INC., a Delaware corporation (“Tenant”).
Address:
5200 Illumina Way, San Diego, California

Premises:
That certain portion of the Project consisting of (i) a building containing
approximately 171,340 rentable square feet (“Building 1”), (ii) a building
containing approximately 159,272 rentable square feet (“Building 2”), (iii) a
central plant building containing approximately 15,969 rentable square feet
(referred to herein as the “Central Plant Building” or “Building 3”), (iv) that
certain to be constructed office/laboratory building containing approximately
127,373 rentable square feet (“Building 4”), and (v) that certain to be
constructed tenant activity center building containing approximately 23,124
rentable square feet (referred to herein as the “Activity Center” or “Building
5”). Building 1, Building 2 and the Central Plant are all as shown on Exhibit A.
Building 1, Building 2, Building 3, Building 4 and Building 5 are collectively
referred to herein as the “Buildings”.

Project:
The real property on which the Buildings are located together with all
improvements now or in the future located thereon and appurtenances thereto as
described on Exhibit B.

Base Rent:
$3.15 per rentable square foot of Building 1, Building 2, Building 3 and
Building 4 per month, subject to adjustment as provided for in this Lease, plus

$77,916.67 per month for Building 5, subject to adjustment as provided for in
this Lease.
Rentable Area of Premises:
497,078 rentable square feet, subject to adjustment as provided for in this
Lease.

Rentable Area of Project:
497,078 rentable square feet, subject to adjustment as provided for in this
Lease.

Tenant’s Share of Operating Expenses: 100%, subject to adjustment as provided
for in this Lease.
Security Deposit: None
Initial Commencement Date: November 1, 2011
Bi-Annual Rent Adjustment Percentage: 6%
Base Term:
Beginning on the Initial Commencement Date and ending 240 months thereafter,
subject to adjustment as provided for in Section 39 hereof.

Permitted Use:
Research and development laboratory, office and other legally permitted uses
consistent with the character of the Project as a Class A office and laboratory
project and otherwise in compliance with the provisions of Section 7 hereof.

Address for Rent Payment:    Landlord’s Notice Address:
DEPT LA 23447    385 E. Colorado Boulevard, Suite 299
Pasadena, CA 91185-3447    Pasadena, CA 91101
Attention: Corporate Secretary
Tenant’s Notice Address:
Following Initial Commencement Date:
5200 Illumina Way
San Diego, CA 92122
Attention: General Counsel
with a copy to:
5200 Illumina Way
San Diego, CA 92122
Attention: Director of Facilities
Prior to Initial Commencement Date:
9885 Towne Center Drive
San Diego, CA 92124
Attention: General Counsel
with a copy to:
9885 Towne Center Drive
San Diego, CA 92124
Attention: Director of Facilities
The following Exhibits and Addenda are attached hereto and incorporated herein
by this reference:
[X] EXHIBIT A - Premises Description
[X] EXHIBIT B - Description of Project

[X] EXHIBIT C – Initial Building 4 Premises Work Letter
[X] EXHIBIT D - Commencement Date

[X] EXHIBIT E - Rules and Regulations
[X] EXHIBIT F - Tenant’s Personal Property

[X] EXHIBIT G - Building 1 and 2 Work Letter
[X] EXHIBIT H - Project Site Plan

[X] EXHIBIT I - Expansion Building Specifications
[X] EXHIBIT J - Expansion Building Work Letter

[X] EXHIBIT K - Tenant Improvement Specifications
[X] EXHIBIT L - Form of Memorandum of Lease

[X] EXHIBIT M - Landlord’s Property
[X] EXHIBIT N - Building 5 Work Letter

[X] EXHIBIT O - Parking Structure Description
[X] EXHIBIT P - Excluded Premises Description

[X] EXHIBIT Q – Sports Courts Description
[X] EXHIBIT R – Remaining Building 4 Premises
                     Work Letter

1.Lease of Premises. Upon and subject to all of the terms and conditions hereof,
Landlord hereby leases the Premises to Tenant and Tenant hereby leases the
Premises from Landlord. The portions of the Project which are designated by
Landlord for the non-exclusive use of tenants of the Project are collectively
referred to herein as the “Common Areas.” Landlord reserves the right, subject
to the restrictions expressly provided for in this Lease, to reasonably modify
Common Areas; provided, however, that Tenant is not precluded from accessing the
Premises, the parking areas and/or otherwise having beneficial use of the
Premises.
2.    Delivery; Acceptance of Premises; Commencement Date.
(a)    Buildings 1, 2 and 3. Tenant acknowledges and agrees that (i) Landlord
delivered Building 1, Building 2 and Building 3 to Tenant in phases with
approximately 79,962 rentable square feet having been delivered on February 1,
2011, approximately 66,221 rentable square feet having been delivered on April
1, 2011, approximately 159,272 rentable square feet having been delivered on
June 1, 2011, and the final approximately 41,126 rentable square feet having
been delivered on July 1, 2011, and (ii) Tenant has had continuous and
uninterrupted access to such portions of Building 1, Building 2 and Building 3
following such delivery. The period commencing February 1, 2011, through the
Initial Commencement Date is referred to herein as the “Early Access Period.”
During the Early Access Period, Tenant constructed the Building 1 and 2 Tenant
Improvements (as defined in the Building 1 and 2 Work Letter) and otherwise
prepare Building 1 and Building 2 for Tenant’s use and occupancy.
The “Initial Commencement Date” occurred on November 1, 2011. Tenant commenced
paying Base Rent and Operating Expenses with respect to Building 1, Building 2
and Building 3 on the Initial Commencement Date.
(b)    Building 4. Landlord shall use reasonable efforts to deliver to Tenant on
or before September 30, 2012 (as such date may be extended by delays caused by
Force Majeure and Tenant Delay), (i) floors 2, 3 and 4 of Building 4, containing
approximately 95,434 rentable square feet (“Initial Building 4 Premises”) with
Landlord’s Work in the Initial Building 4 Premises Substantially TI Completed
and the first floor lobby of Building 4 substantially completed (collectively,
the “Delivery Condition”), and (ii) the balance of Building 4, consisting of
approximately 31,939 rentable square feet on the 1st floor of Building 4
(“Remaining Building 4 Premises”) for the construction by Tenant of the
Remaining Building 4 Premises Tenant Improvements (as defined in the Remaining
Building 4 Premises Work Letter). Except as provided herein, if Landlord fails
to timely deliver the Initial Building 4 Premises or the Remaining Building 4
Premises, as applicable, Landlord shall not be liable to Tenant for any loss or
damage resulting therefrom, and this Lease shall not be void or voidable except
as provided below with respect to Building 4. As used in this Section 2(b), the
terms “Landlord’s Work,” “Tenant Delay” and “Substantially TI Completed” shall
have the meanings set forth for such terms in the Building 4 Work Letter.
The “Building 4 Commencement Date” shall be the earlier of the date that
Landlord delivers Building 4 (the Initial Building 4 Premises and the Remaining
Building 4 Premises) to Tenant with the Initial Building 4 Premises and the
first floor lobby in the Delivery Condition or the date that Landlord could have
delivered Building 4 to Tenant with the Initial Building 4 Premises and the
first floor lobby in the Delivery Condition but for Tenant Delay and which shall
in no event be prior to September 30, 2012. The “Remaining Building 4 Premises
Rent Commencement Date” shall be June 1, 2013.
If Landlord fails to deliver Building 4 to Tenant by March 30, 2013 (as extended
by delays caused by Force Majeure and Tenant Delay , the “Building 4 Outside
Date”) with the Initial Building 4 Premises and first floor lobby in the
Delivery Condition, Tenant shall be entitled, starting on the Building 4
Commencement Date, to occupy the Initial Building 4 Premises, without the
obligation to pay Base Rent, 2 days for each day following the Building 4
Outside Date until such time as Building 4 is delivered to Tenant with the 1st
floor lobby is substantially completed and the Initial Building 4 Premises in
the Delivery Condition. If Landlord fails to deliver Building 4 with the Initial
Building 4 Premises and the first floor lobby in the Delivery Condition to
Tenant by January 7, 2014 (as extended by delays caused by Force Majeure and
Tenant Delay), this Lease with respect to Building 4 only may be terminated by
Tenant by written notice to Landlord, and if so terminated by Tenant, neither
Landlord nor Tenant shall have any further rights, duties or obligations under
this Lease with respect to the Building 4, except with respect to provisions
which expressly survive termination of this Lease. If Tenant does not elect to
terminate this Lease with respect to Building 4 on or before January 14, 2014
(as extended by delays caused by Tenant Delay and Force Majeure), such right to
terminate this Lease respect to the Building 4 shall be waived and this Lease
shall remain in full force and effect. As used in this paragraph, in no event
may any “delays caused by Force Majeure” extend the date of the applicable
delivery by more than 90 days in the aggregate except in the case of any matter
covered by the provisions of Sections 18 and 19 hereof.
Notwithstanding anything to the contrary contained herein, Tenant acknowledges
that Landlord reserves the right to reasonably modify, among other things, the
site plan, building size, configuration and location within the Project of
Building 4; provided, however, that such modifications do not materially and
adversely impact Tenant’s use of Building 4 and associated parking at the
Project, materially reduce or increase the rentable square footage of Building
4, materially and adversely affect the configuration of Building 4, and/or
materially increase Tenant’s obligations under this Lease. Landlord shall
request Tenant’s prior approval with respect to any changes to the location of
Building 4, which approval shall not be unreasonably withheld, conditioned or
delayed.
(c)     Building 5. Landlord shall use reasonable efforts to deliver Building 5
to Tenant Substantially Completed on or before March 1, 2013 (as extended by
delays caused by Force Majeure and Tenant Delay, “Target Building 5 Commencement
Date”). If Landlord fails to timely deliver Building 5, Landlord shall not be
liable to Tenant for any loss or damage resulting therefrom, and this Lease
shall not be void or voidable. If Landlord fails to deliver Building 5 to Tenant
by September 30, 2013 (as extended by delays caused by Force Majeure and Tenant
Delay, the “Building 5 Outside Date”) Substantially Completed, Tenant shall be
entitled, starting on the Building 5 Rent Commencement Date, to occupy Building
5, without the obligation to pay Base Rent, 1 day for each day following the
Building 5 Outside Date until such time as Building 5 is delivered to Tenant
Substantially Completed. As used in this Section 2(c), the terms ”Tenant Delay”
and “Substantially Completed” shall have the meanings set forth for such terms
in the Building 5 Work Letter attached to this Lease as Exhibit B.
Notwithstanding anything to the contrary contained herein, Tenant acknowledges
and agrees that the actual rentable square footage of Building 5 may exceed the
rentable square footage provided for in the Building 5 Entitlements (as defined
in Section 39).
The “Building 5 Commencement Date” shall be the earlier of the date that
Landlord delivers Building 5 to Tenant Substantially Completed or the date that
Landlord could have delivered Building 5 Substantially Completed but for delays
caused by Force Majeure and Tenant Delay. The “Building 5 Rent Commencement
Date” shall be the date that is 30 days after the Building 5 Commencement Date.
Notwithstanding anything to the contrary contained herein, Tenant acknowledges
that Landlord reserves the right to reasonably modify, among other things, the
site plan, building size, configuration and location within the Project of
Building 5; provided, however, that such modifications do not materially and
adversely impact Tenant’s use of Building 5, materially reduce or increase the
rentable square footage of Building 5, materially and adversely affect the
configuration of Building 5, and/or materially increase Tenant’s obligations
under this Lease. Landlord shall request Tenant’s prior approval with respect to
any changes to the location of Building 5, which approval shall not be
unreasonably withheld, conditioned or delayed.
(d)     Term; Acknowledgment of Commencement Date. The “Term” of this Lease
shall be the Base Term, as defined above on the first page of this Lease (as may
be extended pursuant to Section 39), and any Extension Terms which Tenant may
elect pursuant to Section 40 hereof. Upon request of either Landlord or Tenant,
the other party shall execute and deliver a factually correct written
acknowledgment of the Initial Commencement Date, the Initial Building 4
Commencement Date, the Remaining Building 4 Commencement Date and the expiration
date of the Base Term as and when such may be established in the form of the
“Acknowledgement of Commencement Date” attached to this Lease as Exhibit D;
provided, however, that either party’s failure to execute and deliver such
acknowledgment shall not affect the other party’s rights hereunder.
(e)    Acceptance of Premises. Except as set forth in the Building 1 and 2 Work
Letter, the Initial Building 4 Premises Work Letter, the Remaining Building 4
Premises Work Letter or the Building 5 Work Letter, as applicable: (i) Tenant
shall accept Building 1 and Building 2 in their condition as of delivery of
Building 1 and Building 2; (ii) Tenant shall accept the Initial Building 4
Premises and the Remaining Building 4 Premises in their condition as of the
Building 4 Commencement Date; (iii) Tenant shall accept Building 5 in its
condition as of the delivery of Building 5; (iv) except as otherwise provided
for in this Lease, the Building 1 and 2 Work Letter, Initial Building 4 Premises
Work Letter, the Remaining Building 4 Premises Work Letter or the Building 5
Work Letter, Landlord shall have no obligation for any defects in the Premises;
and (v) Tenant’s taking possession of the Premises shall be conclusive evidence
that Tenant accepts the Premises. Tenant shall in addition be entitled to
receive the benefit of all of Landlord’s construction warranties and
manufacturer's equipment warranties, if any, relating to the Premises. Any
access to or occupancy of any portion of the Premises by Tenant before the
commencement of the Base Term for such portion of the Premises shall be subject
to all of the terms and conditions of this Lease (other than the payment of Base
Rent and, except as otherwise provided for herein, Operating Expenses).
Tenant has elected, concurrently with the mutual execution and delivery of this
Lease by the parties, to purchase for $1.00 the furniture, fixtures and
equipment described on Exhibit M located within Building 1 and Building 2
(“Landlord’s Property”), which Tenant has accepted in its “as is” lien free
condition.
Tenant agrees and acknowledges that neither Landlord nor any agent of Landlord
has made any representation or warranty with respect to the condition of all or
any portion of Landlord’s Property, the Premises or the Project, and/or the
suitability of Landlord’s Property, the Premises or the Project for the conduct
of Tenant’s business, and Tenant waives any implied warranty that Landlord’s
Property, the Premises or the Project are suitable for the Permitted Use. This
Lease constitutes the complete agreement of Landlord and Tenant with respect to
the subject matter hereof and supersedes any and all prior representations,
inducements, promises, agreements, understandings and negotiations which are not
contained herein.
(f)     Continuous Access. Subject to any early access provided to Tenant
hereunder, from and after (i) the Initial Commencement Date with respect to
Building 1 and Building 2, (ii) the Initial Building 4 Commencement Date with
respect to the Initial Building 4 Premises and the Remaining Building 4
Premises, (iii) the Building 5 Commencement Date with respect to Building 5, and
(iv) the Sports Courts Commencement Date with respect to the Sports Courts,
through the expiration of the Term, Tenant shall have access to the Premises 24
hours per day, 7 days per week, except in the case of emergencies, as the result
of Legal Requirements, and otherwise subject to the terms of this Lease.
3.    Rent.
(a)    Base Rent. Tenant has delivered to Landlord a payment in the amount of
$683,460.32 which as been applied against the Base Rent first coming due from
Tenant under this Lease. Commencing on the Initial Commencement Date, Tenant
shall pay full Base Rent with respect to Building 1, Building 2 and Building 3.
Commencing on the Initial Building 4 Commencement Date with respect to the
Initial Building 4 Premises and on the Remaining Building 4 Premises Rent
Commencement Date with respect to the Remaining Building 4 Premises, Tenant
shall pay Base Rent with respect to Building 4. Except as may be expressly
provided for in this Lease, Tenant shall pay to Landlord in advance, without
demand, abatement, deduction or set-off, monthly installments of Base Rent on or
before the first day of each calendar month during the Term hereof, in lawful
money of the United States of America, at the office of Landlord for payment of
Rent set forth above, or to such other person or at such other place as Landlord
may from time to time designate in writing. Payments of Base Rent for any
fractional calendar month shall be prorated. The obligation of Tenant to pay
Base Rent and other sums to Landlord and the obligations of Landlord under this
Lease are independent obligations. Except as may be expressly provided for in
this Lease, Tenant shall have no right at any time to abate, reduce, or set-off
any Rent (as defined in Section 5) due hereunder.
Notwithstanding anything to the contrary contained in this Lease, commencing on
the Building 5 Rent Commencement Date and continuing thereafter on the first day
of each month during the Term, Tenant shall be required to pay monthly Base Rent
for Building 5 in the amount set forth on page 1 of this Lease, subject to
increases as provided for in Section 4(a) hereof by the Bi-Annual Rent
Adjustment Percentage on every other anniversary of the Initial Commencement
Date. Notwithstanding the foregoing, the first Bi-Annual Rent Adjustment with
respect to Building 5 only shall not occur until November 1, 2015. Except as may
otherwise be provided in Section 40, the Base Term of the Lease with respect to
Building 5 shall expire on the same day as the Base Term with respect to the
original Premises.
(b)    Base Rent Abatement. Tenant shall be entitled to an abatement of a
portion of the Base Rent (“Rent Abatement”) due during the Term pursuant to the
schedule set forth below:
Base Rent Period During Term
Annual
Base Rent Abatement
Month 1 through Month 12
$
13,100,762

Month 13 through Month 24
$
4,899,238

Month 25 through Month 36
$
9,500,000

Month 37 through Month 48
$
9,500,000

Month 49 through Month 60
$
8,250,000

Month 61 through Month 72
$
8,250,000

Month 73 through Month 84
$
8,250,000

Month 85 through Month 96
$
7,250,000

Month 97 through Month 108
$
7,250,000

Month 109 through Month 120
$
7,250,000

Month 121 through Month 132
$
7,250,000

Month 133 through Month 144
$
7,250,000

As used in the above table, Month 1 shall mean the month in which the Initial
Commencement Date occurs. The Rent Abatement provided for in the schedule above
shall be amortized and applied in equal installments over the applicable 12
month period. For example, for months 13 through 24, $408,269.83 shall be
deducted each month from the monthly Base Rent due during such period.
Notwithstanding anything the contrary contained herein, Tenant shall not,
however, be entitled to the applicable Rent Abatement during any period(s) where
Tenant is in material Default under this Lease.
(c)    Additional Rent. In addition to Base Rent, Tenant agrees to pay to
Landlord as additional rent (“Additional Rent”): (i) Tenant’s Share of Operating
Expenses, and (ii) any and all other amounts Tenant is required or agrees to pay
under the provisions of this Lease, including, without limitation, any and all
other sums that may become due by reason of any default of Tenant or failure to
comply with the agreements, terms, covenants and conditions of this Lease to be
performed by Tenant, after any applicable notice and cure period.
4.    Base Rent Adjustments.
(a)    Bi-Annual Adjustments. Base Rent shall be increased on every other
anniversary of the Initial Commencement Date (i.e., the first day of the 25th
month, 49th month and 61st month of the Term, etc.) (each an “Adjustment Date”)
by multiplying the Base Rent payable immediately before such Adjustment Date by
the Bi-Annual Rent Adjustment Percentage and adding the resulting amount to the
Base Rent payable immediately before such Adjustment Date. Base Rent, as so
adjusted, shall thereafter be due as provided herein. Base Rent adjustments for
any fractional calendar month shall be prorated.
(b)    Excess Costs Allowance. Landlord shall, subject to the terms of the
Building 5 Work Letter, make available to Tenant the Excess Costs Allowance (as
defined in the Building 5 Work Letter). Commencing on the Building 5 Rent
Commencement Date, and continuing thereafter on the first day of each month of
the Base Term, Tenant shall pay to Landlord the amount necessary to fully
amortize the amount of the Excess Costs Allowance actually funded by Landlord,
if any, in equal monthly payments with interest at a rate of 8.5% per annum over
the Base Term (“TI Rent”). The TI Rent shall be increased on each Adjustment
Date by the Bi-Annual Rent Adjustment Percentage. Notwithstanding the foregoing,
the first Bi-Annual Rent Adjustment with respect to TI Rent shall not occur
until November 1, 2015.
5.    Operating Expense Payments. Landlord shall deliver to Tenant a reasonably
detailed line item written estimate of Operating Expenses for each calendar year
during the Term (the “Annual Estimate”), which may be reasonably revised by
Landlord from time to time (but not more than twice) during such calendar year.
During each month of the Term, on the same date that Base Rent is due, Tenant
shall pay Landlord an amount equal to 1/12th of Tenant’s Share of the Annual
Estimate. Payments for any fractional calendar month shall be prorated.
The term “Operating Expenses” means all actual, documented costs and expenses of
any kind or description whatsoever incurred or accrued each calendar year by
Landlord, consistent with GAAP (as defined below) except as otherwise provided
for herein with respect to capital expenditures, consistently applied, and
fairly allocable to the applicable Lease year, including, without limitation,
costs and expenses relating to the ownership, maintenance, repairs, replacements
and/or operation of the Project and the Buildings, Expansion Buildings (if any),
Taxes (as defined in Section 9), capital repairs and improvements amortized over
the lesser of 10 years and the useful life of such capital items with interest
calculated at a rate equal to the prime rate established from time to time by
Wells Fargo Bank (or if Wells Fargo Bank ceases to exist or to publish such a
rate, then the rate published by the largest federally chartered banking
institution in California) plus 1% per annum, and if Landlord has no third party
property manager, administration rent in the amount of 1.0% of Base Rent unless
(x) Landlord has assumed the Common Area Maintenance Obligations (as defined in
Section 13) in which case administration rent shall be increased to 1.5% of Base
Rent or (y) if Landlord has assumed the Common Area Maintenance Obligations and
has also assumed substantial maintenance obligations with respect to the
Premises because of a Maintenance Breach (as defined in Section 13) in which
case the administration rent shall be increased to 2% of Base Rent and Operating
Expenses payable by Tenant pursuant to this Lease (or if Landlord has a third
party property manager in no event may the cost of such third property manager
exceed the costs Landlord is entitled to charge for administration rent for the
performance of the same obligations if there were no third party property
manager); provided, however, that Operating Expenses shall exclude only:
(a)    the original construction costs of the Project and renovation prior to
the date of the Lease and costs of correcting defects in such original
construction or renovation;
(b)    capital expenditures for expansion of the Project;
(c)    interest, principal payments of Mortgage (as defined in Section 27) debts
of Landlord, financing costs and amortization of funds borrowed by Landlord,
whether secured or unsecured;
(d)    depreciation of the Project (except for those capital improvements, the
cost of which are permitted under this Lease to be included in Operating
Expenses);
(e)    advertising, legal and space planning expenses and leasing commissions
and other costs and expenses incurred in procuring and leasing space to tenants
for the Project, including any leasing office maintained in the Project, free
rent and construction allowances for tenants;
(f)    legal and other expenses incurred in the negotiation or enforcement of
leases;
(g)    completing, fixturing, improving, renovating, painting, redecorating or
other work, which Landlord pays for or performs for other tenants within their
premises, and costs of correcting defects in such work;
(h)    costs to be reimbursed by other tenants of the Project or Taxes to be
paid directly by Tenant or other tenants of the Project, whether or not actually
paid;
(i)    salaries, wages, benefits and other compensation paid to officers and
employees of Landlord who are not assigned in whole or in part to the operation,
management, maintenance or repair of the Project (with the costs to be prorated
if such officers and employees are assigned to the Project only in part);
(j)    general organizational, administrative and overhead costs relating to
maintaining Landlord‘s existence, either as a corporation, partnership, or other
entity, including general corporate, legal and accounting expenses;
(k)    costs (including attorneys’ fees and costs of settlement, judgments and
payments in lieu thereof) incurred in connection with disputes with tenants,
other occupants, or prospective tenants, and costs and expenses, including legal
fees, incurred in connection with negotiations or disputes with employees,
consultants, management agents, leasing agents, purchasers or mortgagees of any
of the Buildings;
(l)    costs incurred by Landlord due to the violation by Landlord, its
employees, agents or contractors or any tenant of the terms and conditions of
any lease of space in the Project or any Legal Requirement (as defined in
Section 7);
(m)    penalties, fines or interest incurred as a result of Landlord‘s inability
or failure to make payment of Taxes and/or to file any tax or informational
returns when due, or from Landlord‘s failure to make any payment of Taxes
required to be made by Landlord hereunder before delinquency;
(n)    overhead and profit increment paid to Landlord or to subsidiaries or
affiliates of Landlord for goods and/or services in or to the Project to the
extent the same exceeds the costs of such goods and/or services rendered by
unaffiliated third parties on a competitive basis;
(o)    costs of Landlord’s charitable or political contributions, or of fine art
maintained at the Project;
(p)    costs in connection with services (including electricity), items or other
benefits of a type which are not standard for the Project and which are not
available to Tenant without specific charges therefor, but which are provided to
another tenant or occupant of the Project, whether or not such other tenant or
occupant is specifically charged therefor by Landlord;
(q)    costs incurred in the sale or refinancing of the Project;
(r)    net income taxes of Landlord or the owner of any interest in the Project,
franchise, capital stock, gift, estate or inheritance taxes or any federal,
state or local documentary taxes imposed against the Project or any portion
thereof or interest therein;
(s)    any costs incurred to remove, study, test, remediate or otherwise related
to the existence of any Hazardous Materials which migrate or migrated from
off-site to the Project or which Tenant can prove were in existence in the
Project prior to the commencement of the Early Access Period and was of such a
nature that a Governmental Authority (as defined in Section 9), if it had then
had knowledge of the presence of such Hazardous Materials, in the state, and
under the conditions that they then existed in the Project, would have then
required the removal of such Hazardous Materials or other remedial or
containment action with respect thereto, and costs incurred with respect to
Hazardous Materials, which Hazardous Materials Tenant can prove were brought
onto the Project after the commencement of the Early Access Period by (i)
Landlord, its officers, directors, employees, managers, agents, invitees and
contractors (collectively, “Landlord Parties”), (ii) any other tenant of
Landlord at the Project, or (iii) during any period where any portion of the
Project is leased by Landlord to any other tenant, any third party, and is of
such a nature, at that time, that a Governmental Authority, if it had then had
knowledge of the presence of such Hazardous Materials, in the state, and under
the conditions, that they then exist in the Project, would have then required
the removal, remediation or other action with respect thereto, except and only
to the extent in any case Tenant and/or the Tenant Parties have exacerbated or
contributed to such Hazardous Materials conditions;
(t)    any expenses otherwise includable within Operating Expenses to the extent
actually reimbursed by persons other than tenants of the Project under leases
for space in the Project;
(u)    the costs reimbursed by insurance proceeds received by Landlord;
(v)    any bad debt loss, rent loss, or reserves for bad debts or rent loss;
(w)    the wages and benefits attributable to personnel above the level of vice
president, asset manager and/or equivalent positions (and Landlord shall be
entitled to pass through as part of the Operating Expenses the wages and
benefits attributable to personnel at or below the level of vice president,
asset manager and/or equivalent positions);
(x)    amount paid as ground rental for the Project by Landlord;
(y)    rentals of equipment ordinarily considered to be of a capital nature
(such as elevators and HVAC systems) except if such equipment is reasonably and
customarily leased either temporarily or permanently in the operation of Class A
office and laboratory buildings in the San Diego area;
(z)    costs for services for which Tenant or any other tenant in the Project
reimburses Landlord or which Landlord provides selectively to one or more
tenants (other than Tenant) without reimbursement;
(aa)    any costs expressly excluded from Operating Expenses elsewhere in this
Lease;
(bb)    costs of repairs directly resulting from the gross negligence or willful
misconduct of Landlord or any Landlord Parties (as defined below);
(cc)    any reserves retained by Landlord;
(dd)    costs for late charges, interest or penalties due to the late payment of
bills by Landlord unless Tenant fails to make any applicable payments to
Landlord on the due date;
(ee)    the cost of any training or incentive programs, other than for tenant
life safety information services;
(ff)    in-house legal fees;
(gg)    in-house accounting expenses, except, however, Operating Expenses shall
include all costs and expenses including employee costs for bookkeeping and
accounting functions related to the Project (but employee costs shall be
prorated if such employees are assigned to the Project only in part);
(hh)     costs associated with material portions of the Common Areas dedicated
by Landlord for the exclusive use of other tenants of the Project, except to the
extent Tenant is given its pro-rata share (rentable square feet in the Premises
in relation to rentable square feet in the Project) of comparable Common Areas;
(ii)    costs of signs at the Project in or on the Buildings exclusively
identifying Landlord as the owner of the Project or exclusively identifying
other tenants;
(jj)     to the extent applicable, electric power costs or other utility costs
for which any tenant directly contracts with the local public service company;
(kk)    any entertainment, dining or travel expenses for any purpose;
(ll)    the costs of any flowers, gifts, balloons, etc. provided to any
prospective tenants, Tenant, other tenants, and occupants of the Project;
(mm)    costs reimbursed to Landlord under any warranty carried by Landlord for
the Project, which warranties Landlord shall, as part of Operating Expenses, use
commercially reasonable efforts to enforce;
(nn)    costs of tenant parties unless approved by Tenant;
(oo)    costs of any “tap fees” or any sewer or water connection fees for the
benefit of any particular tenant (other than Tenant) at the Project;
(pp)    costs of magazine and newspaper subscriptions;
(qq)    costs of insurance deductibles in excess of commercially reasonable
deductibles (based on deductibles maintained by other institutional owners of
other Class A office and laboratory buildings in the University Towne Center
area of San Diego);
(rr)    costs arising from any voluntary special assessment on the Building or
the Project by any transit district authority or any other governmental entity
having the authority to impose such voluntary assessment, unless such costs are
approved by Tenant; and
(ss)    the cost of structural repairs and replacements to the foundation, load
bearing walls and roof structure of the Buildings (exclusive of the roof
membrane the cost of which shall be included in Operating Expenses), except for
costs required (i) to comply with Legal Requirements (other than those Legal
Requirements which Landlord was required to comply with as of the date of this
Lease), and/or (ii) required as a result of Tenant’s Alterations or any damage
caused by Tenant or any Tenant Parties.
Landlord shall credit Operating Expenses for any refund Landlord or Landlord's
property manager, if any, receives for any costs, goods, services, utilities or
expenditures previously included in Operating Expenses.
Landlord shall not collect Operating Expenses from Tenant or any other tenants
of the Project in an amount which is in excess of 100% of the Operating Expenses
actually paid by Landlord in connection with the Project, and Landlord shall
make no profit from the collection of Operating Expenses. All Operating Expense
costs payable by Tenant to Landlord under this Lease shall be on an actual cost
basis except as otherwise provided for herein. Landlord shall equitably allocate
Operating Expenses if other buildings are constructed in the Project for use by
tenants other than Tenant.
Within 90 days after the end of each calendar year (or such longer period as may
be reasonably required), Landlord shall furnish to Tenant a statement (an
“Annual Statement”) showing in reasonable detail: (a) the total and Tenant’s
Share of actual Operating Expenses for the previous calendar year, and (b) the
total of Tenant’s payments in respect of Operating Expenses for such year. If
Tenant’s Share of actual Operating Expenses for such year exceeds Tenant’s
payments of Operating Expenses for such year, the excess shall be due and
payable by Tenant as Rent within 30 days after delivery of such Annual Statement
to Tenant. If Tenant’s payments of Operating Expenses for such year exceed
Tenant’s Share of actual Operating Expenses for such year Landlord shall pay the
excess to Tenant within 30 days after delivery of such Annual Statement, except
that after the expiration, or earlier termination of the Term or if Tenant is
delinquent in its obligation to pay Rent, Landlord shall pay the excess to
Tenant after deducting all other amounts due Landlord.
The Annual Statement shall be final and binding upon Tenant unless Tenant,
within 360 days after Tenant’s receipt thereof, shall contest any item therein
by giving written notice to Landlord, specifying each item contested and the
reason therefor. If, during such 360 day period, Tenant reasonably and in good
faith questions or contests the accuracy of Landlord’s statement of Tenant’s
Share of Operating Expenses (including, if applicable, Landlord’s allocation of
the Operating Expenses between the buildings at the Project if any other tenants
lease space from Landlord at the Project), Landlord will provide Tenant with
access to all of Landlord’s relevant books and records relating to the operation
of the Project (the “Expense Information”). If after Tenant’s review of such
Expense Information, Landlord and Tenant cannot agree upon the amount of
Tenant’s Share of Operating Expenses, then Tenant shall have the right to have
an independent public accounting firm selected by Tenant from among the 4
largest in the United States or a regionally recognized independent public
accounting firm selected by Tenant and approved by Landlord (which approval
shall not be unreasonably withheld or delayed), working pursuant to a fee
arrangement other than a contingent fee (at Tenant’s sole cost and expense),
audit and/or review the Expense Information for the year in question (the
“Independent Review”). The results of any such Independent Review shall be
binding on Landlord and Tenant. If the Independent Review shows that the
payments actually made by Tenant with respect to Operating Expenses for the
calendar year in question exceeded Tenant’s Share of Operating Expenses for such
calendar year, Landlord shall at Tenant’s option either (i) credit the excess
amount to the next succeeding installments of estimated Operating Expenses or
(ii) pay the excess to Tenant within 30 days after delivery of such statement,
except that after the expiration or earlier termination of this Lease or if
Tenant is delinquent in its obligation to pay Rent, Landlord shall credit or
pay, as applicable, the excess to Tenant after deducting all other amounts due
Landlord. If the Independent Review shows that Tenant’s payments with respect to
Operating Expenses for such calendar year were less than Tenant’s Share of
Operating Expenses for the calendar year, Tenant shall pay the deficiency to
Landlord within 30 days after delivery of such statement. If the Independent
Review shows that Tenant has overpaid with respect to Operating Expenses by more
than 5% then Landlord shall reimburse Tenant for all costs incurred by Tenant
for the Independent Review. Operating Expenses for the calendar years in which
Tenant’s obligation to share therein begins and ends shall be prorated.
The square footages provided for on page 1 of this Lease with respect to
Building 1, Building 2 and Building 3 shall conclusively be deemed to be the
rentable square footage of Building 1, Building 2 and Building 3, respectively,
and the same shall not be subject to remeasurement during the Term of this
Lease.
Following the approval of the Shell Construction Drawings (as defined in the
Initial Building 4 Premises Work Letter) for Building 4 by Landlord and Tenant,
Landlord shall cause the rentable square footage of Building 4 to be measured by
DGA Architects, or another architect or general contractor reasonably acceptable
to Landlord and Tenant, in accordance with the 1996 Standard Method of Measuring
Floor Area in Office Buildings for single tenant buildings as adopted by the
Building Owners and Managers Association (ANSI/BOMA Z65.1-1996). If the rentable
square footage of Building 4 measured by such party deviates from the amounts
specified for or attributable to Building 4 in the definitions of “Premises”,
“Rentable Area of Premises” and “Rentable Area of Project” on page 1 of this
Lease, then, promptly following such measurement, this Lease shall be amended so
as to (i) reflect the actual rentable square footage thereof in the definitions
of “Premises”, “Rentable Area of Premises” and “Rentable Area of Project”, and
Building 4 shall not thereafter be subject to remeasurement. Landlord and Tenant
shall each have the right to dispute such measurement provided that the
disputing party delivers written notice of such dispute to the other party
within 30 days after the date that Landlord notifies Tenant of the results of
the measurement. If the dispute is not resolved within 30 days after either
party's written notice to the other of such dispute, then such dispute shall be
resolved by a single arbitrator with the qualifications and experience
appropriate to resolve the matter and appointed pursuant to and acting in
accordance with the rules of the American Arbitration Association.
Following the approval of the Shell Construction Drawings (as defined in the
Building 5 Work Letter) for Building 5 by Landlord and Tenant, Landlord shall
cause the rentable square footage of Building 5 to be measured by DGA
Architects, or another architect or general contractor reasonably acceptable to
Landlord and Tenant, in accordance with the 1996 Standard Method of Measuring
Floor Area in Office Buildings for single tenant buildings as adopted by the
Building Owners and Managers Association (ANSI/BOMA Z65.1-1996). If the rentable
square footage of Building 5 measured by such party deviates from the amounts
specified for or attributable to Building 5 in the definitions of “Premises”,
“Rentable Area of Premises” and “Rentable Area of Project” on page 1 of this
Lease, then, promptly following such measurement, this Lease shall be amended so
as to (i) reflect the actual rentable square footage thereof in the definitions
of “Premises”, “Rentable Area of Premises” and “Rentable Area of Project”, and
Building 5 shall not thereafter be subject to remeasurement. The initial Base
Rent payable with respect to Building 5 shall remain $77,916.67 per month
notwithstanding any such change in the rentable square footage of Building
pursuant to this paragraph. Landlord and Tenant shall each have the right to
dispute such measurement provided that the disputing party delivers written
notice of such dispute to the other party within 30 days after the date that
Landlord notifies Tenant of the results of the measurement. If the dispute is
not resolved within 30 days after either party's written notice to the other of
such dispute, then such dispute shall be resolved by a single arbitrator with
the qualifications and experience appropriate to resolve the matter and
appointed pursuant to and acting in accordance with the rules of the American
Arbitration Association.
“Tenant’s Share” shall be the percentage set forth on the first page of this
Lease as Tenant’s Share as reasonably adjusted by Landlord for changes in the
physical size of the Premises or the Project occurring thereafter. If at any
time during the Term any portion of the Project is leased to any third
party(ies), Landlord may equitably increase or decrease Tenant’s Share for any
item of expense or cost reimbursable by Tenant that relates to a repair,
replacement, or service that benefits only the Premises or only a portion of the
Project that includes the Premises or that varies with occupancy or use. Base
Rent, Tenant’s Share of Operating Expenses and all other amounts payable by
Tenant to Landlord hereunder are collectively referred to herein as “Rent.”
6.    Intentionally Omitted.
7.    Use. The Premises shall be used solely for the Permitted Use set forth on
page 1 of this Lease, and in compliance with all laws, orders, judgments,
ordinances, regulations, codes, directives, permits, licenses, the PID Permit
applicable to the Project, covenants and restrictions now or hereafter
applicable to the Premises, and to the use and occupancy thereof, including,
without limitation, the Americans With Disabilities Act, 42 U.S.C. § 12101, et
seq. (together with the regulations promulgated pursuant thereto, “ADA”)
(collectively, “Legal Requirements” and each, a “Legal Requirement”). Landlord
shall not voluntarily encumber title to the Project after the date hereof with
covenants, conditions or restrictions nor amend any existing covenants,
conditions or restrictions encumbering title nor grant easements or make public
dedications which materially and adversely (i) affect Tenant’s use of the
Premises for the Permitted Use, (ii) affect access to the Premises or the
parking facilities, (iii) affect Tenant’s rights under this Lease, (iv) increase
Tenant’s obligations under this Lease, and (v) decrease Tenant’s rights under
this Lease. Tenant shall, upon 5 days’ written notice from Landlord, discontinue
any use of the Premises which is declared by any Governmental Authority having
jurisdiction to be a violation of a Legal Requirement; provided, however, that
Tenant may continue the use in question if Tenant is contesting the same with
the applicable Governmental Authority and Tenant is permitted under Legal
Requirements to continue the use in question while the matter is being
contested. Tenant will not use or permit the Premises to be used for any purpose
or in any manner that would void Tenant’s or Landlord’s insurance. Tenant shall
not permit any part of the Premises to be used as a “place of public
accommodation”, as defined in the ADA or any similar legal requirement. If at
any time during the Term any portion of the Project is leased to any third
party(ies), Tenant shall reimburse Landlord promptly upon demand for any
additional premium charged for any such insurance policy by reason of Tenant’s
failure to comply with the provisions of this Section or otherwise caused by
Tenant’s use and/or occupancy of the Premises. Tenant will use the Premises in a
careful, safe and proper manner and will not commit or permit waste, overload
the floor or structure of the Premises, subject the Premises to use that would
damage the Premises or obstruct or interfere with the rights of Landlord or
other tenants or occupants of the Project, including conducting or giving notice
of any auction, liquidation, or going out of business sale on the Premises, or
using or allowing the Premises to be used for any unlawful purpose. Tenant shall
cause any equipment or machinery to be installed in the Premises so as to
reasonably prevent sounds or vibrations from the Premises from extending into
Common Areas, or other space in the Project. Tenant shall not place any
machinery or equipment which exceeds the structural capacity of the applicable
floor within the Premises. Tenant shall not, without the prior written consent
of Landlord which shall not be unreasonably withheld, use the Premises in any
manner which will require ventilation, air exchange, heating, gas, steam,
electricity or water beyond the existing capacity of the Project as
proportionately allocated to the Premises based upon Tenant’s Share as usually
furnished for the Permitted Use.
Tenant shall, at its sole expense, make any alterations or modifications to the
interior or the exterior of the Premises or the Project that are required by
Legal Requirements (including, without limitation, compliance of the Premises
with the ADA) related to Tenant’s particular use or occupancy of the Premises;
provided, however, that if as a matter of law Tenant is entitled to not
implement or delay implementation of an applicable Legal Requirement Tenant may
not implement or delay such implementation for as long as legally permitted.
Except as provided for in the preceding sentence, Landlord shall, as an
Operating Expense (to the extent such Legal Requirement is generally applicable
to similar buildings in the area in which the Project is located) or at Tenant’s
expenses (to the extent such Legal Requirement is applicable solely by reason of
Tenant’s particular use of the Premises or Tenant’s Alterations) make any
alterations or modifications to the Project that are required by Legal
Requirements. Notwithstanding any other provision herein to the contrary, Tenant
shall be responsible for any and all demands, claims, liabilities, losses,
costs, expenses, actions, causes of action, damages or judgments, and all
reasonable expenses incurred in investigating or resisting the same (including,
without limitation, reasonable attorneys’ fees, charges and disbursements and
costs of suit) (collectively, “Claims”) arising out of or in connection with the
failure of the Premises to comply with Legal Requirements (excepting Landlord’s
obligations with respect to the Premises as expressly set forth herein), and
Tenant shall indemnify, defend, hold and save Landlord harmless from and against
any and all Claims arising out of or in connection with any failure of the
Premises to comply with any Legal Requirement (excepting Landlord’s obligations
with respect to the Premises as expressly set forth herein).
8.    Holding Over. If Tenant remains in possession of the Premises after the
expiration or earlier termination of the Term without the express written
consent of Landlord, (A) Tenant shall become a tenant at sufferance upon the
terms of this Lease except that (i) during the first 90 days of such holding
over, the monthly rental shall be equal to 115% of Rent in effect during the
last 30 days of the Term, and (ii) thereafter, the monthly rental shall be equal
to 150% of Rent in effect during the last 30 days of the Term, and (B) Tenant
shall be responsible for all actual documented damages suffered by Landlord
resulting from or occasioned by Tenant’s holding over in excess of 90 days and,
in addition to such actual documented damages, Landlord shall also be entitled
to consequential damages. Landlord shall, in response to written inquiries from
Tenant, notify Tenant at the time of each such inquiry whether the potential
then exists for consequential damages. No holding over by Tenant, whether with
or without consent of Landlord, shall operate to extend this Lease except as
otherwise expressly provided, and this Section 8 shall not be construed as
consent for Tenant to retain possession of the Premises. Acceptance by Landlord
of Rent after the expiration of the Term or earlier termination of this Lease
shall not result in a renewal or reinstatement of this Lease.
9.    Taxes. Landlord shall pay, as part of Operating Expenses, all taxes,
levies, fees, assessments and governmental charges of any kind, existing as of
the Initial Commencement Date or thereafter enacted (collectively referred to as
“Taxes”), imposed by any federal, state, regional, municipal, local or other
governmental authority or agency, including, without limitation, quasi-public
agencies (collectively, “Governmental Authority”) during the Term, including,
without limitation, all Taxes: (i) imposed on or measured by or based, in whole
or in part, on rent payable to (or gross receipts received by) Landlord under
this Lease and/or from the rental by Landlord of the Project or any portion
thereof, or (ii) based on the square footage, assessed value or other measure or
evaluation of any kind of the Premises or the Project, or (iii) assessed or
imposed by or on the operation or maintenance of any portion of the Premises or
the Project, including parking, or (iv) assessed or imposed by, or at the
direction of, or resulting from Legal Requirements, or interpretations thereof,
promulgated by any Governmental Authority, or (v) imposed as a license or other
fee, charge, tax, or assessment on Landlord’s business or occupation of leasing
space in the Project. Landlord may (but shall, upon Tenant’s written request and
at Tenant’s cost,) contest by appropriate legal proceedings the amount,
validity, or application of any Taxes or liens securing Taxes. Taxes shall not
include any net income taxes or profit taxes or franchise taxes imposed on
Landlord except to the extent such net income taxes or profit taxes or franchise
taxes are in substitution for any Taxes payable hereunder. Nothing herein
contained shall be construed to include as Taxes: (A) any inheritance, estate,
succession, transfer, gift or franchise taxes that is or may be imposed upon
Landlord, or (B) any transfer tax or recording charge payable to the San Diego
County recorder to effectuate a transfer, financing or refinancing of the
Project (or any portion thereof), or any transfer of any partial interest of
Landlord therein. Any assessments that are permitted to be paid in installments
over a period of time (without the imposition of interest, penalties or other
charge) shall be paid by Landlord in the maximum number of permitted
installments. If any such Tax is levied or assessed directly against Tenant,
then Tenant shall be responsible for and shall pay the same at such times and in
such manner as the taxing authority shall require. Tenant shall pay, prior to
delinquency, any and all Taxes levied or assessed against any personal property
or trade fixtures placed by Tenant in the Premises, whether levied or assessed
against Landlord or Tenant. If any Taxes on Tenant’s personal property or trade
fixtures are levied against Landlord or Landlord’s property, or if the assessed
valuation of the Project is increased by a value attributable to improvements in
or alterations to the Premises, whether owned by Landlord or Tenant and whether
or not affixed to the real property so as to become a part thereof, higher than
the base valuation on which Landlord from time-to-time allocates Taxes to all
tenants in the Project, Landlord shall have the right, but not the obligation,
to pay such Taxes. Landlord’s reasonable determination of any excess assessed
valuation shall be binding and conclusive, absent manifest error and shall be
included as part of the information for the Independent Review. The amount of
any such payment by Landlord shall constitute Additional Rent due from Tenant to
Landlord immediately upon demand along with supporting information.
Notwithstanding anything to the contrary contained in this Lease, if, during the
first 60 months after the Initial Commencement Date, any sale, transfer,
refinancing or other changes in ownership of the Project  is consummated, and
solely as a result thereof, and to the extent that solely in connection
therewith, the Project is reassessed (the "Reassessment") for real estate tax
purposes by the appropriate Governmental Authority pursuant to the terms of
Proposition 13, Tenant shall not be obligated to pay the Tax Increase in
connection therewith. The term "Tax Increase" shall mean that portion of the
Taxes, as calculated immediately following the Reassessment, which is
attributable solely to the Reassessment. Accordingly, the term Tax Increase
shall not include (and Tenant shall be required to pay for) any portion of the
Taxes, as calculated immediately following the Reassessment, which (i) is
attributable to the initial assessment of the value of the Project, the base,
shell and core of the Buildings or the tenant improvements located in the
Buildings, (ii) is attributable to assessments which were pending prior to the
Reassessment or which would otherwise have occurred unrelated to the sale, or
(iii) is attributable to the annual inflationary increase of real estate taxes.
In addition, nothing contained in this paragraph is intended to excuse Tenant
from paying the full amount of any Taxes (including, without limitation, as a
result of reassessments) resulting from any construction and/or improvements
made to the Project by Landlord or Tenant at any time pursuant to and/or in
connection with this Lease.
10.    Parking. Subject to all matters of record, Force Majeure, a Taking (as
defined in Section 19 below), the PID Permit and the exercise by Landlord of its
rights hereunder, Tenant shall have the right to use all of the parking spaces
at the Project for the first 36 months after the Initial Commencement Date.
Tenant’s right to use all of the parking spaces at the Project shall be extended
for so long as all of Tenant’s Expansion Rights (as defined in Section 39)
continue in full force and effect. All of Tenant’s parking rights under this
Lease shall, during the Base Term, be at no additional cost to Tenant.
Notwithstanding anything to the contrary contained herein, Landlord and Tenant
acknowledge and agree that all parking at the Project (including, without
limitation, the number of parking spaces available in the Parking Structure(s)
(as defined below) and in the balance of the Project shall be required at all
times to satisfy all Legal Requirements for the Project.
If Tenant’s Expansion Rights expire and/or Landlord commences constructing any
new buildings at the Project (“New Construction”), Tenant shall, subject to the
provisions of this Section 10, be entitled to the following parking rights at
the Project: (i) 4 parking spaces per 1,000 rentable square feet located in
Building 1 and Building 4, (ii) 3 parking spaces per 1,000 rentable square feet
located in Building 2, (iii) if Tenant has elected its Expansion Right with
respect to Building 6 (as defined in Section 39(a)), 4 parking spaces per 1,000
rentable square feet located in Building 6 if the same is an office building and
3 parking spaces per 1,000 rentable square feet located in Building 6 if the
same is a laboratory building, and (v) if Tenant has elected its Expansion Right
with respect to Building 7 (as defined in Section 39(a)), 4 parking spaces per
1,000 rentable square feet located in Building 7 if the same is an office
building and 3 parking spaces per 1,000 rentable square feet located in Building
7 if the same is a laboratory building. Such parking spaces shall be located in
those areas designated for non-reserved parking, subject in each case to
Landlord’s commercially reasonable rules and regulations. If Landlord commences
New Construction, Tenant may elect to mark as reserved or separate and secure
its parking from the balance of the Project, in which case, Landlord shall
reasonably cooperate with Tenant to effectuate, if possible and at Tenant’s sole
cost and expense, such a separation of Tenant’s parking in a manner reasonably
acceptable to Landlord and Tenant. Landlord shall not be responsible for
enforcing Tenant’s parking rights against any third parties, including other
tenants of the Project.
11.    Utilities, Services. During any period of the Term that Landlord is
responsible for the day-to-day maintenance of the Project, Landlord shall
provide, subject to the terms of this Section 11, water, electricity, heat,
light, power, HVAC, sewer, and other utilities (including gas and fire
sprinklers to the extent the Project is plumbed for such services), refuse and
trash collection and janitorial services for the Common Areas (collectively,
“Utilities”). Except as provided for in the preceding sentence, Tenant shall be
responsible for the provision of Utilities to the Project. Landlord shall pay,
as Operating Expenses or subject to Tenant’s reimbursement obligation or
Tenant’s direct payment obligation to the Utility provider as provided for
below, for all Utilities used on the Premises, all maintenance charges for
Utilities, and any storm sewer charges or other similar charges for Utilities
imposed by any Governmental Authority or Utility provider, and any taxes,
penalties, surcharges or similar charges thereon. Landlord may cause, at
Tenant’s expense, any Utilities to be separately metered or charged directly to
Tenant by the provider. Tenant shall pay directly to the Utility provider, prior
to delinquency, any separately metered Utilities and services which may be
furnished to Tenant or the Premises during the Term. Tenant shall pay, as part
of Operating Expenses, its share of all charges for jointly metered Utilities
based upon consumption, as reasonably determined by Landlord. No interruption or
failure of Utilities, from any cause whatsoever other than Landlord’s willful
misconduct, shall result in eviction or constructive eviction of Tenant,
termination of this Lease or, except as provided in the next paragraph, the
abatement of Rent. Tenant shall be responsible for obtaining and paying for its
own janitorial services for the Premises which in no event shall be less than 5
days per week and with specifications comparable to other Class A office
projects in the University Towne Center area of San Diego.
Notwithstanding anything in this Lease to the contrary, if Tenant is prevented
from using, and does not use, the Premises or any portion thereof, as a result
of the failure by Landlord to provide access to the Premises, HVAC service,
water, sewer and electricity as required by this Lease and such failure is due
to the negligent acts or omissions of Landlord and not due in any part to any
act or omission on the part of Tenant or any Tenant Party or any matter beyond
Landlord’s reasonable control (any such stoppage to be known as an “Abatement
Event“), then Tenant shall give Landlord written notice of such Abatement Event,
and if such Abatement Event continues for 3 consecutive business days (including
Saturday) after Landlord’s receipt of any such notice, or occurs for 10
non-consecutive business days in a 12 month period (provided Landlord is sent a
notice (in either of such events, the “Eligibility Period“), then the Base Rent
and Tenant’s Share of Operating Expenses shall be abated or reduced, as the case
may be, after the expiration of the Eligibility Period for such time that Tenant
continues to be so prevented from using, and does not use, the Premises, or a
portion thereof, in the proportion that the rentable area of the portion of the
Premises that Tenant is prevented from using, and does not use (“Unusable
Area“), bears to the total rentable area of the Premises; provided, however,
regardless who is managing the Project, if Tenant is prevented from using, and
does not use, the Unusable Area for a period of time in excess of the
Eligibility Period and the remaining portion of the Premises is not sufficient
to allow Tenant to conduct its business therein, and if Tenant does not conduct
its business from such remaining portion, then for such time after the
expiration of the Eligibility Period during which Tenant is so prevented from
conducting its business and is not conducting its business in any portion of the
Premises, the Base Rent and Tenant’s Share of Operating Expenses for the entire
Premises shall be abated for such time as Tenant continues to be so prevented
from using, and does not use, the Premises. Notwithstanding anything to the
contrary contained herein, Tenant shall not be entitled to any abatement of Rent
provided for in this paragraph above and beyond the amount of rent loss
insurance proceeds paid to Landlord for the Abatement Event in question. If,
however, Tenant reoccupies any portion of the Premises during such period, the
Rent allocable to such reoccupied portion, based on the proportion that the
rentable area of such reoccupied portion of the Premises bears to the total
rentable area of the Premises, shall be payable by Tenant from the date Tenant
reoccupies such portion of the Premises. If Tenant’s right to abatement for a
particular portion of the Premises occurs during a free rent period during the
Term for that particular portion of the Premises, Tenant’s free rent period
shall be extended for the number of days that the abatement period overlapped
the free rent period. Such right to abate Base Rent and Tenant’s Share of
Operating Expenses shall be Tenant’s sole and exclusive remedy at law or in
equity for an Abatement Event and Landlord shall not otherwise be liable for any
loss or damage suffered or sustained by Tenant resulting from any failure or
cessation of services; provided, however, nothing in this paragraph, shall
impair Tenant’s rights under Section 31 below. To the extent Tenant is entitled
to abatement under this paragraph because of an event covered by Sections 18 or
19 of this Lease, then those provisions of this Lease shall apply and not the
provisions of this paragraph. For the avoidance of any doubt, the Rent Abatement
being provided for under this Lease shall not be considered a free rent period.
During any period of the Term that Landlord is responsible for the day-to-day
maintenance of the Project, Landlord’s sole obligation for either providing
emergency generators or providing emergency back-up power to the Project shall
be: (i) to provide emergency generators with not less than the capacity of the
emergency generators located in Building 3 as of the Initial Commencement Date,
and (ii) to contract with a third party to maintain the emergency generators as
per the manufacturer’s standard maintenance guidelines. Landlord shall have no
obligation to provide Tenant with any other operational emergency generators or
back-up power or to supervise, oversee or confirm that the third party
maintaining the emergency generators is maintaining the generators as per the
manufacturer’s standard guidelines or otherwise. During any period of
replacement, repair or maintenance of the emergency generators when the
emergency generators are not operational, including any delays thereto due to
the inability to obtain parts or replacement equipment, Landlord shall have no
obligation to provide Tenant with an alternative back-up generator or generators
or alternative sources of back-up power. Tenant expressly acknowledges and
agrees that Landlord does not guaranty that such emergency generators will be
operational at all times or that emergency power will be available to the
Premises when needed. During any period of the Term that Landlord is responsible
for the day-to-day maintenance of the Project, Landlord shall, upon request from
Tenant from time to time, make the maintenance contract for the emergency
generator available for Tenant’s review, schedule meetings with Tenant and the
applicable contractors maintaining the emergency generators to respond to any
questions or concerns that Tenant may have regarding the maintenance and
operation of the emergency generators.
12.    Alterations and Tenant’s Property. Any alterations, additions, or
improvements made to the Premises by or on behalf of Tenant excluding
installation, removal or realignment of furniture systems (other than removal of
furniture systems owned or paid for by Landlord) not involving any modifications
to the structure or connections (other than by ordinary plugs or jacks) to
Building Systems (as defined in Section 13) (“Alterations”) shall be subject to
Landlord’s prior written consent, which may be given or withheld in Landlord’s
sole discretion if any such Alteration affects the structure or Building Systems
and shall not be otherwise unreasonably withheld. Notwithstanding the foregoing,
Tenant may construct Alterations in the Premises (but not in Building 3 except
for required repairs and replacements) that (i) Tenant reasonably determines to
be beneficial to Tenant’s operations, (ii) do not involve modifications to the
structure of the Buildings or major Building Systems (as defined in Section 13),
(iii) will not materially reduce the quality or the value of the leasehold
improvements to the applicable portion of the Premises (i.e., removing
laboratory improvements), (iv) do not affect the exterior appearance of any
Building, (v) do not create a foreseeable risk of violating any Legal
Requirements or increasing insurance premiums, and (vi) do not involve a use of
the Premises that is inconsistent with the current use of the Premises, without
Landlord’s prior approval if the cost of any such Alteration (excluding
carpeting and painting) does not exceed $100,000 and the aggregate cost of all
such Alterations (excluding carpeting and painting) in any 12 month period does
not exceed $300,000 (a “Notice-Only Alteration”), provided Tenant notifies
Landlord in writing of such intended Notice-Only Alteration, and such notice
shall be accompanied by applicable plans, specifications, work contracts and
such other information concerning the nature and cost of the Notice-Only
Alteration as may be reasonably requested by Landlord, which notice and
accompanying materials shall be delivered to Landlord not less than 15 days in
advance of any proposed construction. If Landlord approves any Alterations,
Landlord may impose such conditions on Tenant in connection with the
commencement, performance and completion of such Alterations as Landlord may
deem appropriate in Landlord’s reasonable discretion. Any request for approval
shall be in writing, delivered not less than 15 days in advance of any proposed
construction, and accompanied by applicable plans, specifications, bid
proposals, work contracts and such other information concerning the nature and
cost of the Alterations as may be reasonably requested by Landlord, including
the identities and mailing addresses of all persons performing work or supplying
materials. Landlord shall respond to Tenant’s written request for consent to any
Alterations within 15 days after Landlord’s receipt of such request along with
all documentation required to be delivered hereunder. If Landlord fails to
respond within such 15 day period, then Tenant shall provide Landlord with a
second written notice stating in bold and all caps 12 point font that Landlord’s
failure to respond to Tenant’s Alteration request within 5 business days after
Landlord’s receipt of the second notice shall be deemed approval by Landlord,
and if Landlord does not respond within such 5 business day period, then
Landlord shall be deemed to have approved such Alteration request. Landlord’s
right to review plans and specifications and to monitor construction shall be
solely for its own benefit, and Landlord shall have no duty to ensure that such
plans and specifications or construction comply with applicable Legal
Requirements. Tenant shall cause, at its sole cost and expense, all Alterations
to comply with insurance requirements and with Legal Requirements and shall
implement at its sole cost and expense any alteration or modification required
by Legal Requirements as a result of any Alterations. Tenant shall pay to
Landlord, as Additional Rent, on demand an amount equal to the greater of (x)
1.5% of all charges incurred by Tenant or its contractors or agents in
connection with any Alteration to cover Landlord’s overhead and expenses for
plan review, coordination, scheduling and supervision and (y) all of Landlord’s
reasonable, actual out-of-pocket costs in connection with such Alteration.
Before Tenant begins any Alteration, Landlord may post on and about the Premises
notices of non-responsibility pursuant to applicable law. Tenant shall reimburse
Landlord for, and indemnify and hold Landlord harmless from, any expense
incurred by Landlord by reason of faulty work done by Tenant or its contractors,
delays caused by such work, or inadequate cleanup.
Other than being required by Landlord to provide a completion bond, Tenant shall
make arrangements reasonably satisfactory to Landlord to assure payment for the
completion of all Alterations work free and clear of liens, and shall provide
(and cause each contractor or subcontractor to provide) certificates of
insurance for workers’ compensation and other coverage in amounts and from an
insurance company satisfactory to Landlord protecting Landlord against liability
for personal injury or property damage during construction. Upon completion of
any Alterations, Tenant shall deliver to Landlord: (i) sworn statements setting
forth the names of all contractors and subcontractors who did the work and final
lien waivers from all such contractors and subcontractors; and (ii) “as built”
plans for any such Alteration (if any drawings were required in connection with
such Alteration).
Except for Removable Installations (as hereinafter defined), all Installations
(as hereinafter defined) shall be and shall remain the property of Landlord
during the Term and following the expiration or earlier termination of the Term,
shall not be removed by Tenant at any time during the Term, and shall remain
upon and be surrendered with the Premises as a part thereof. Notwithstanding the
foregoing, Landlord may, at the time its approval of any such Installation is
requested, or at the time it receives notice of a Notice Only Alteration, notify
Tenant that Landlord requires that Tenant remove such Installation upon the
expiration or earlier termination of the Term, in which event Tenant shall
remove such Installation in accordance with the immediately succeeding sentence;
provided, however, that any Installation which is a like kind replacement of an
Installation which was part of the initial improvements to the Premises shall
not be required to be removed by Tenant. Upon the expiration or earlier
termination of the Term, Tenant shall remove (i) any Installations for which
Landlord has given Tenant notice of removal in accordance with the immediately
preceding sentence, and (ii) all of Tenant’s Property (as hereinafter defined),
and Tenant shall restore and repair any damage caused by or occasioned as a
result of such removal, including, without limitation, capping off all such
connections behind the walls of the Premises and repairing any holes. During any
restoration period beyond the expiration or earlier termination of the Term,
Tenant shall pay Rent to Landlord as provided herein as if said space were
otherwise occupied by Tenant. Notwithstanding anything to the contrary contained
herein, Tenant shall not be required to and shall not remove any tenant
improvements located in the Premises as of the date the same are delivered to
Tenant and/or any initial tenant improvements constructed pursuant to the
Building 1 and 2 Work Letter, the Building 4 Work Letter, the Building 5 Work
Letter and/or any Expansion Building Work Letter (as defined in Section 39(a).
Landlord and Tenant agree that nothing in this Lease shall prohibit Tenant from
removing/replacing any of Tenant’s Property at any time throughout the Term
provided that Tenant repairs any damage resulting therefrom. Notwithstanding
anything to the contrary contained herein, Tenant shall not be required at the
expiration or earlier termination of the Term to remove any Alterations existing
as of the date of this Lease from the Premises. In addition, Tenant shall not be
required at the expiration or earlier termination of the Term to remove or
restore Building 5 or the Sports Courts nor shall Tenant remove Building 5 or
the Sports Courts during the Term.
For purposes of this Lease, (x) “Removable Installations” means any items listed
on Exhibit F attached hereto and any items agreed by Landlord in writing to be
included on Exhibit F in the future, (y) “Tenant’s Property” means Removable
Installations and, other than Installations, any Building 4 FF&E (as defined in
the Building 4 Work Letter), personal property or equipment of Tenant that may
be removed without material damage to the Premises, and (z) “Installations”
means all property of any kind paid for by Landlord and/or as part of TI Costs
(as defined in the Building 1 and 2 Work Letter), the TI Fund (as defined in the
Building 4 Work Letter), all Alterations, all fixtures, and all partitions,
hardware, built-in machinery, built-in casework and cabinets and other similar
additions, equipment, property and improvements built into the Premises so as to
become an integral part of the Premises, including, without limitation, fume
hoods which penetrate the roof or plenum area, built-in cold rooms, built-in
warm rooms, walk-in cold rooms, walk-in warm rooms, deionized water systems,
glass washing equipment, autoclaves, chillers, built-in plumbing, electrical and
mechanical equipment and systems, and any power generator and transfer switch.
Nothing contained in the preceding sentence is intended to preclude Tenant from
removing from the first floor of Building 2 any so called freestanding walk-in
cold rooms or walk-in warm rooms not paid for in any part by Landlord.
13.    Landlord’s Repairs. Landlord shall, as an Operating Expense (except as
expressly provided for in Section 5), in a manner consistent with other Class A
office and laboratory buildings in the University Towne Center area of San
Diego, repair, replace and maintain, in good condition and working order, all
structural elements of the Project (including without limitation, the roofs,
foundations, and interior and exterior load bearing walls of the Buildings and
Parking Structure), all exterior elements of the Project (including, without
limitation, the exterior walls and windows of the Buildings and the Parking
Structure), all parking areas and other Common Areas of the Project, all HVAC,
plumbing, fire sprinklers, elevators and other building systems serving the
Premises and/or any other portions of the Project (collectively, “Building
Systems”), and, subject to the last paragraph of Section 11, the emergency
generators serving the Project, all uninsured losses and damages caused by
Tenant, or by any of Tenant’s agents, servants, employees, invitees and
contractors (collectively, “Tenant Parties”) excluded. Losses and damages caused
by Tenant or any Tenant Party shall be repaired by Landlord and, to the extent
not covered by insurance required to be maintained by Landlord or Tenant
hereunder, at Tenant’s sole cost and expense. Landlord reserves the right to
stop Building Systems services when necessary (i) by reason of accident or
emergency, or (ii) for planned repairs, alterations or improvements, which are,
in the judgment of Landlord, desirable or necessary to be made, until said
repairs, alterations or improvements shall have been completed. Landlord shall
have no responsibility or liability for failure to supply Building Systems
services during any such period of interruption; provided, however, that
Landlord shall, except in case of emergency, give Tenant 96 hours advance notice
of any planned stoppage of Building Systems services for routine maintenance,
repairs, alterations or improvements. Tenant shall promptly give Landlord
written notice of any repair required by Landlord pursuant to this Section,
after which Landlord shall effect such repair within a reasonable period of
time. Landlord shall not be liable for any failure to make any repairs or to
perform any maintenance unless such failure shall persist for an unreasonable
time after Tenant’s written notice of the need for such repairs or maintenance
along with an explanation of the effects of any delays (whether the time is
reasonable or unreasonable being, among other things, in part a function of the
effects of Landlord’s failure to timely make the repairs or perform the
maintenance, such as imminent injury or harm to persons or material damage to
property, and in part a function of the amount of time reasonably necessary to
engage a service provider to make the repairs or perform the maintenance).
Tenant waives its rights under any state or local law to terminate this Lease
or, except as expressly provided for in this Lease, to make such repairs at
Landlord’s expense and agrees that the parties’ respective rights with respect
to such matters shall be solely as set forth herein. Repairs required as the
result of fire, earthquake, flood, vandalism, war, or similar cause of damage or
destruction shall be controlled by Section 18.
Notwithstanding anything to the contrary contained in this Lease, effective as
of the commencement of the Early Access Period, Tenant shall undertake, at
Tenant’s sole cost and expense (except that during the Early Access Period
Landlord shall reimburse Tenant for all maintenance expenses approved in advance
in writing by Landlord), all of Landlord’s maintenance obligations with respect
to the Project including, without limitation, maintaining the Buildings,
Building Systems serving the Buildings and the Common Areas in the condition
which they are required to be maintained by Landlord under this Lease. The
maintenance obligation described in the preceding sentence shall include,
without limitation, an obligation on the part of Tenant to repair, replace and
maintain the Project in good condition and working order and in a first class
manner consistent with other Class A office and laboratory projects in the
University Towne Center area of San Diego. Tenant’s maintenance obligation shall
also include the procurement and maintenance of contracts, in form and substance
reasonably satisfactory to Landlord, with copies to Landlord upon Landlord’s
written request, for and with contractors acceptable to Landlord specializing
and experienced in the maintenance and repair that Tenant is responsible for
under this Lease. During any period where Tenant is maintaining the Project as
provided for in this paragraph, Landlord shall, notwithstanding anything to the
contrary contained in this Lease, have no obligation to perform any maintenance,
repairs or replacements under this Lease with respect to the Project except as
expressly provided for in the Building 1 and 2 Work Letter, the Building 4 Work
Letter, the Building 5 Work Letter and any other applicable work letters and
with the respect to the structural repairs and replacements the cost of which
are excluded from Operating Expenses in Section 5(ss) which shall remain
Landlord’s responsibility. Tenant’s maintenance obligations under this paragraph
shall not include the right on the part of Tenant to make any capital repairs or
improvements to the Project without Landlord’s prior written consent and except
as provided in the immediately following paragraph. Tenant shall not take or
omit to take any action, the taking or omission of which shall cause waste,
damage or injury to the Project. If Tenant fails to maintain any portion of the
Project in a manner reasonably acceptable to Landlord within the requirements of
this Lease (a “Maintenance Breach”), Landlord shall have the right to provide
Tenant with written notice thereof and to assume maintenance of all or any
portion of the Project if Tenant does not cure Tenant’s failure within 10
business days after receipt of such notice (or such longer period as reasonably
necessary to cure such failure so long as Tenant provides Landlord with
reasonably satisfactory evidence that Tenant is diligently prosecuting such cure
to completion). Notwithstanding anything to the contrary contained herein, if
any portion of the Project is leased by Landlord to any other tenant(s) or if
Landlord commences construction of any new building(s) other than pursuant to
Tenant’s exercise of its Expansion Rights pursuant to Section 39) at any time
during the Term, Landlord may elect, at any time and/or from time to time, to
assume performing all the maintenance obligations provided for in this Lease
with respect the Common Areas, Central Plant Building, landscaping, security, if
any, and any other maintenance obligations (collectively, “Common Area
Maintenance Obligations”) and, except in the case of a Maintenance Breach which
relates to the Premises and following which Landlord assumes the obligations,
Tenant shall continue to maintain the Premises and the Building Systems serving
only the Premises (but Tenant shall have no right to maintain Building 3).
During any periods where Tenant is maintaining the entire Project as provided
for in this paragraph and Landlord’s responsibility is limited to reviewing
books and records, the administration rent payable to Landlord shall be 1% of
Base Rent as provided for in Section 5.
Notwithstanding anything above to the contrary, if during the Term, any portion
of the Project which is Tenant’s responsibility under the immediately preceding
paragraph to repair cannot be repaired other than at a cost which is in excess
of 50% of the cost of replacing the applicable item(s) and the same constitutes
a capital expenditure, then such item(s) shall be replaced by Tenant (subject to
Landlord’s prior written approval of the plans and specifications and the cost
of any such replacement). The cost of replacing each such item shall initially
be borne by Landlord but treated as a capital repair and improvement as part of
Operating Expenses payable by Tenant and amortized over the lesser of 10 years
and the useful life of such item with interest calculated at a rate equal to the
prime rate established from time to time by Wells Fargo Bank (or if Wells Fargo
Bank ceases to exist or to publish such a rate, then the rate published by the
largest federally chartered banking institution in California) plus 1% per
annum.
14.    Tenant’s Repairs. Subject to Section 13 hereof, Tenant, at its expense,
shall repair, replace and maintain in good condition all portions of the
Premises, including, without limitation, entries, doors, ceilings, interior
windows, interior walls, and the interior side of demising walls. Such repair
and replacement may include, at Tenant’s sole cost and expense, capital
expenditures and repairs whose benefit may extend beyond the Term. Should Tenant
fail to make any such repair or replacement or fail to maintain the Premises,
Landlord shall give Tenant notice of such failure. If Tenant fails to commence
cure of such failure within 10 business days of Landlord’s notice (or longer if
reasonably necessary to commence such cure), and thereafter diligently prosecute
such cure to completion, Landlord may perform such work and shall be reimbursed
by Tenant within 30 days after demand therefor; provided, however, that if such
failure by Tenant creates or could create an emergency (where there is an
imminent threat of injury or harm to persons or material damage to property),
Landlord may immediately commence cure of such failure and shall thereafter be
entitled to recover the actual, documented costs of such cure from Tenant.
15.    Mechanic’s Liens. Tenant shall discharge, by bond or otherwise, any
mechanic’s lien filed against the Premises or against the Project for work
claimed to have been done for, or materials claimed to have been furnished to,
Tenant within 10 business days after the filing thereof, at Tenant’s sole cost
and shall otherwise keep the Premises and the Project free from any liens
arising out of work performed, materials furnished or obligations incurred by
Tenant; provided, however, that, subject to Tenant’s obligations under this
Lease and any of the work letters attached hereto (including, without
limitation, payment of Operating Expenses), Landlord (and not Tenant) shall be
responsible for liens caused by any work performed by Landlord in the Premises
and/or the Project. Should Tenant fail to discharge any lien described herein,
Landlord shall have the right, but not the obligation, to pay such claim or post
a bond or otherwise provide security to eliminate the lien as a claim against
title to the Project and the cost thereof shall be immediately due from Tenant
as Additional Rent. If Tenant shall lease or finance the acquisition of office
equipment, furnishings, or other personal property of a removable nature
utilized by Tenant in the operation of Tenant’s business, Tenant warrants that
any Uniform Commercial Code Financing Statement filed as a matter of public
record by any lessor or creditor of Tenant will upon its face or by exhibit
thereto indicate that such Financing Statement is applicable only to removable
personal property of Tenant located within the Premises. In no event shall the
address of the Project be furnished on the statement without qualifying language
as to applicability of the lien only to removable personal property, located in
an identified suite held by Tenant.
16.    Indemnification. Tenant hereby indemnifies and agrees to defend, save and
hold Landlord harmless from and against any and all Claims for injury or death
to persons or damage to property occurring within or about the Premises, arising
directly or indirectly out of use or occupancy of the Premises or a breach or
default by Tenant in the performance of any of its obligations hereunder, except
to the extent caused by the willful misconduct or gross negligence of Landlord
or any of the Landlord Parties. Landlord shall not be liable to Tenant for, and
Tenant assumes all risk of damage to, personal property (including, without
limitation, loss of records kept within the Premises). Tenant further waives any
and all Claims for injury to Tenant’s business or loss of income relating to any
such damage or destruction of personal property (including, without limitation,
any loss of records). Landlord shall not be liable for any damages arising from
any act, omission or neglect of any tenant in the Project or of any other third
party.
    Subject to the waivers in the penultimate paragraph of Section 17 and except
as otherwise provided for in this Lease, Landlord hereby indemnifies and agrees
to defend, save and hold Tenant harmless from and against any and all Claims for
injury or death to persons or damage to property occurring at the Project to the
extent caused by or contributed to by (i) the willful misconduct or gross
negligence of Landlord or (ii) defaults by Landlord under this Lease.
17.    Insurance. Landlord shall maintain all risk property and, if applicable,
sprinkler damage insurance covering the full replacement cost of the Project or
such lesser coverage amount as Landlord may elect provided such coverage amount
is not less than the full replacement cost and rent loss insurance for not less
than 12 months. Tenant acknowledges that, notwithstanding the fact that Landlord
may carry such insurance, the coverages remain subject to, among other things,
any deductibles, limitations and exceptions contained in the applicable
policies. Landlord shall further procure and maintain commercial general
liability insurance with a single loss limit of not less than $5,000,000 for
bodily injury and property damage with respect to the Project. Landlord may, but
is not obligated to, maintain such other insurance and additional coverages as
it may deem necessary, including, but not limited to, flood, environmental
hazard and earthquake, loss or failure of building equipment, errors and
omissions, fidelity bonds for employees employed to perform services and
insurance for any improvements installed by Tenant or which are in addition to
the standard improvements customarily furnished by Landlord without regard to
whether or not such are made a part of the Project. All such insurance shall be
included as part of the Operating Expenses. The Project may be included in a
blanket policy (in which case the cost of such insurance allocable to the
Project will be reasonably determined by Landlord based upon the insurer’s cost
calculations). Tenant shall also reimburse Landlord for any actual and
documented increased premiums or additional insurance which Landlord reasonably
deems necessary as a result of Tenant’s use of the Premises.
Tenant, at its sole cost and expense, shall maintain during the Term: all risk
property insurance with business interruption and extra expense coverage,
covering the full replacement cost of all property and improvements installed or
placed in the Premises by Tenant at Tenant’s expense; workers’ compensation
insurance with no less than the minimum limits required by law; employer’s
liability insurance with such limits as required by law; and commercial general
liability insurance, with a minimum limit of not less than $5,000,000 per
occurrence for bodily injury and property damage with respect to the Premises
which coverage amount may be satisfied through a combination of primary and
umbrella policies. The commercial general liability insurance policy and
umbrella policies shall name Alexandria Real Estate Equities, Inc., Landlord and
any property manager as additional insureds; insure on an occurrence and not a
claims-made basis; be issued by insurance companies which have a rating of not
less than policyholder rating of A- and financial category rating of at least
Class VII in “Best’s Insurance Guide”; shall not be cancelable for nonpayment of
premium unless 30 days prior written notice shall have been given to Landlord
from the insurer; contain a hostile fire endorsement and a contractual liability
endorsement; and provide primary coverage to Landlord (any policy issued to
Landlord providing duplicate or similar coverage shall be deemed excess over
Tenant’s policies). Certificates of insurance showing the limits of coverage
required hereunder and showing Landlord as an additional insured, along with,
upon Landlord’s request, reasonable evidence of the payment of premiums for the
applicable period, shall be delivered to Landlord by Tenant upon commencement of
the Term and upon each renewal of said insurance. Tenant’s policy may be a
“blanket policy” which specifically provides that the amount of insurance with
respect to the Project shall not be prejudiced by other losses covered by the
policy. Tenant shall, at least 10 days prior to the expiration of such policies,
furnish Landlord with renewal certificates.
Notwithstanding anything in this Section 17 to the contrary, for so long as
Tenant can provide Landlord with reasonably acceptable evidence that Tenant has
a net worth exceeding $500,000,000 dollars (as determined in accordance with
GAAP), Tenant may self-insure for the insurance required by Tenant to be
maintained pursuant to this Section 17. With respect to Tenant’s self-insurance,
Landlord and Tenant agree as follows: (a) that Tenant’s self-insurance shall be
treated as actual insurance and that such self-insurance shall be the primary
coverage for every risk for which Tenant is liable or responsible hereunder; (b)
the waiver of subrogation provisions set forth in this Lease shall apply to
Tenant's self-insurance as though Tenant were maintaining the insurance required
under this Lease, (c) Tenant shall bear the entire cost of the defense of any
claim for which it is responsible under the terms of this Lease including,
without limitation, the defense of Landlord, and (d) Tenant shall use its own
funds to pay any claim or indemnity or replace any property or otherwise provide
the funding which would have been available from insurance proceeds but for
Tenant’s election to self-insure. If Tenant elects to self-insure, Landlord
shall be considered to be covered by the same insurance terms, including, but
not limited to, insuring grants, exclusions, conditions and limits, by which it
would have been covered had insurance covering such risk been in effect.
Notwithstanding anything to the contrary contained in this Lease, Tenant hereby
releases Landlord from any liability for loss or damage caused by Landlord
and/or any Landlord Party against which Tenant has elected to self-insure but
which Tenant would otherwise be required to insure against under the Lease and
in no event shall Landlord be liable for any loss or damage which Landlord would
not otherwise be responsible but for Tenant's election to self insure. The right
to self-insure shall only apply as long as Illumina, Inc., or any entity leasing
or subleasing the Premises pursuant to a Permitted Assignment, is the tenant
under this Lease and so long as such entity satisfies the net worth requirements
provided for in the first sentence of this paragraph and shall not apply to any
other assignee or sublessee.
In each instance where Tenant’s insurance is to name Landlord as an additional
insured, Tenant shall upon written request of Landlord also designate and
furnish certificates so evidencing Landlord as additional insured to: (i) any
lender of Landlord holding a security interest in the Project or any portion
thereof, (ii) the landlord under any lease wherein Landlord is tenant of the
real property on which the Project is located, if the interest of Landlord is or
shall become that of a tenant under a ground or other underlying lease rather
than that of a fee owner, and/or (iii) any management company retained by
Landlord to manage the Project.
The property insurance obtained by Landlord and Tenant shall include a waiver of
subrogation by the insurers and all rights based upon an assignment from its
insured, against Landlord or Tenant, and their respective officers, directors,
employees, managers, agents, invitees and contractors (“Related Parties”), in
connection with any loss or damage thereby insured against. Notwithstanding
anything to the contrary contained in this Lease, neither party nor its
respective Related Parties shall be liable to the other for loss or damage
caused by any risk insured against under property insurance required to be
maintained hereunder, and each party waives any claims against the other party,
and its respective Related Parties, for such loss or damage. The failure of a
party to insure its property shall not void this waiver. Landlord and its
respective Related Parties shall not be liable for, and Tenant hereby waives all
claims against such parties for, business interruption and losses occasioned
thereby sustained by Tenant or any person claiming through Tenant resulting from
any accident or occurrence in or upon the Premises or the Project from any cause
whatsoever. If the foregoing waivers shall contravene any law with respect to
exculpatory agreements, the liability of Landlord or Tenant shall be deemed not
released but shall be secondary to the other’s insurer.
Landlord may require insurance policy limits to be raised to conform with
requirements of Landlord’s lender, the recommendations of Landlord’s insurance
consultant and/or to bring coverage limits to levels then being generally
required of new tenants, if any, within the Project; provided, however, that the
increased amount of coverage and deductibles are consistent with coverage
amounts and deductibles then being required by other institutional owners of
Class A office and laboratory projects with tenants occupying similar size
premises in the San Diego area.
18.    Restoration. If, at any time during the Term, any portion of the Premises
is damaged or destroyed by a fire or other casualty, Landlord shall notify
Tenant within 60 days after discovery of such damage as to the amount of time
Landlord reasonably estimates it will take to restore the Premises (the
“Restoration Period”). If the Restoration Period is estimated to exceed 18
months or, if the damage occurs within the last 60 months of the then applicable
expiration date of the Term of this Lease, 12 months (as applicable, the
“Maximum Restoration Period”), Landlord may, in such notice, elect to terminate
this Lease as to only the portion of the Premises that cannot be restored within
the Maximum Restoration Period in which case such termination shall be effective
as of the date that is 75 days after the date of discovery of such damage or
destruction provided, however, that notwithstanding Landlord’s election to
restore, Tenant may elect to terminate this Lease as to only the portion of the
Premises that cannot be restored within the Maximum Restoration Period by
written notice to Landlord delivered within 15 business days of receipt of a
notice from Landlord estimating a Restoration Period for such portion of the
Premises longer than the Maximum Restoration Period. Unless either Landlord or
Tenant so elects to terminate this Lease, Landlord shall, subject to receipt of
sufficient insurance proceeds (with any deductible to be treated as a current
Operating Expense), promptly restore the damaged portion of the Premises
(excluding the improvements installed by Tenant or by Landlord and paid for by
Tenant), subject to delays arising from the collection of insurance proceeds,
from Force Majeure events or as needed to obtain any license, clearance or other
authorization of any kind required to enter into and restore the Premises issued
by any Governmental Authority having jurisdiction over the use, storage,
handling, treatment, generation, release, disposal, removal or remediation of
Hazardous Materials (as defined in Section 30) in, on or about the Premises
(collectively referred to herein as “Hazardous Materials Clearances”); provided,
however, that if repair or restoration of such damaged portion of the Premises
is not substantially complete as of the end of the Maximum Restoration Period
or, if longer, the Restoration Period, Landlord may, in its sole and absolute
discretion, elect not to proceed with such repair and restoration, or Tenant may
by written notice to Landlord delivered within 10 business days of the
expiration of the Maximum Restoration Period or, if longer, the Restoration
Period, elect to terminate this Lease as to only the portion of the Premises
which has not been restored, in which event Landlord shall be relieved of its
obligation to make such repairs or restoration and this Lease shall as to only
the portion of the Premises which has not been restored terminate as of the date
that is 75 days after the later of: (i) discovery of such damage or destruction,
or (ii) the date all required Hazardous Materials Clearances are obtained, but
Landlord shall retain any Rent paid and the right to any Rent payable by Tenant
prior to such election by Landlord or Tenant.
Tenant, at its expense, shall promptly perform, subject to delays arising from
the collection of insurance proceeds, obtaining permits and other governmental
approvals, from Force Majeure (as defined in Section 34) events or to obtain
Hazardous Material Clearances, all repairs or restoration not required to be
done by Landlord. Notwithstanding the foregoing, if any portion of the Premises
are damaged during the last year of the Term and Landlord reasonably estimates
that it will take more than 2 months to repair such damage either Landlord or
Tenant may terminate this Lease as to the damaged portion of the Premises upon
written notice to the other; provided, however, that such notice is delivered
within 10 business days after the date that Landlord provides Tenant with
written notice of the estimated Restoration Period. Landlord shall also have the
right to terminate this Lease with respect to the damaged portion of the
Premises if sufficient insurance proceeds in excess of Landlord’s Contribution
are not available for such restoration. For purposes hereof, the “Landlord’s
Contribution” shall initially mean $2,500,000; provided, however, that such
amount shall be reduced by an amount equal to $12,500 on the first day of each
month during the Term plus any amounts paid by Landlord from time to time as a
Landlord’s Contribution. In no event, however, shall Landlord be required to pay
Landlord’s Contribution if Tenant is in material Default under this Lease. Rent
shall be abated from the date all required Hazardous Material Clearances are
obtained until the Premises are repaired and restored, in the proportion which
the area of the Premises, if any, which is not usable by Tenant bears to the
total area of the Premises; provided, however, in the event that the remaining
portion of the Premises is not sufficient to allow Tenant to conduct its
business therein, and if Tenant does not conduct its business from such
remaining portion, then for such time as Tenant does not conduct its business
therein, the Base Rent and Tenant’s Share of Operating Expenses for the entire
Premises shall be abated but only for so long as Landlord receives rent loss
insurance proceeds for the full amount of the abatement. Such abatement shall be
the sole remedy of Tenant, and except as provided in this Section 18, Tenant
waives any right to terminate the Lease by reason of damage or casualty loss.
The provisions of this Lease, including this Section 18, constitute an express
agreement between Landlord and Tenant with respect to any and all damage to, or
destruction of, all or any part of the Premises, or any other portion of the
Project, and any statute or regulation which is now or may hereafter be in
effect shall have no application to this Lease or any damage or destruction to
all or any part of the Premises or any other portion of the Project, the parties
hereto expressly agreeing that this Section 18 sets forth their entire
understanding and agreement with respect to such matters.
19.    Condemnation. If the whole or any material part of the Premises or the
Project is taken for any public or quasi-public use under governmental law,
ordinance, or regulation, or by right of eminent domain, or by private purchase
in lieu thereof (a “Taking” or “Taken”), and the Taking would in Landlord’s
reasonable judgment, materially interfere with or impair Landlord’s ownership or
operation of the Project, then upon written notice by Landlord this Lease shall
terminate and Rent shall be apportioned as of said date. If the Taking would in
the reasonable judgment of Landlord and Tenant either prevent or materially
interfere with Tenant’s use of the remaining Premises for the Permitted Use
(including permanently preventing reasonable access to the remaining Premises
and/or the parking at the Project) (all as resolved, if the parties are unable
to agree, by arbitration by a single arbitrator with the qualifications and
experience appropriate to resolve the matter and appointed pursuant to and
acting in accordance with the rules of the American Arbitration Association),
then either party shall have the right to terminate this Lease by written notice
to other party within 30 days after the Taking in which case this Lease shall
terminate 30 days thereafter unless either party elects, in writing during such
30 day period following the other party’s election to terminate, to require
arbitration of the matter in which case if this Lease is being terminated based
on the arbitrator’s decision, it shall terminate 30 days after the arbitrator’s
decision. If part of the Premises shall be Taken, and this Lease is not
terminated as provided above, Landlord shall promptly restore the Premises and
the Project as nearly as is commercially reasonable under the circumstances to
their condition prior to such partial Taking and the rentable square footage of
the Buildings, the rentable square footage of the Premises, Tenant’s Share of
Operating Expenses and the Rent payable hereunder during the unexpired Term
shall be reduced to such extent as may be fair and reasonable under the
circumstances. Upon any such Taking, Landlord shall be entitled to receive the
entire price or award from any such Taking without any payment to Tenant, and
Tenant hereby assigns to Landlord Tenant’s interest, if any, in such award.
Tenant shall have the right, to the extent that same shall not diminish
Landlord’s award, to make a separate claim against the condemning authority (but
not Landlord) for such compensation as may be separately awarded or recoverable
by Tenant for moving expenses and damage to Tenant’s trade fixtures, if a
separate award for such items is made to Tenant. Tenant hereby waives any and
all rights it might otherwise have pursuant to any provision of state law to
terminate this Lease upon a partial Taking of the Premises or the Project.
20.    Events of Default. Each of the following events shall be a default
(“Default”) by Tenant under this Lease:
(a)    Payment Defaults. Tenant shall fail to pay any installment of Rent or any
other payment hereunder when due provided, however, that Landlord will give
Tenant notice and an opportunity to cure any failure to pay Rent within 5
business days of any such notice not more than twice in each calendar year
during the Term.
(b)    Insurance. Any insurance required to be maintained by Tenant pursuant to
this Lease shall be canceled or terminated or shall expire or shall be reduced
or materially changed, or Landlord shall receive a notice of nonrenewal of any
such insurance and Tenant shall fail to obtain replacement insurance at least 5
business days before the expiration of the current coverage.
(c)    Abandonment. Tenant shall abandon the Premises. Tenant shall not be
deemed to have abandoned the Premises if (i) Tenant provides Landlord with
reasonable advance notice prior to vacating and, within 60 days after vacating
the Premises, Tenant completes Tenant’s obligations with respect to the
Surrender Plan in compliance with Section 28, (ii) Tenant has made reasonable
arrangements with Landlord for the security of the Premises for the balance of
the Term, and (iii) Tenant continues during the balance of the Term to satisfy
all of its obligations under the Lease as they come due.
(d)    Improper Transfer. Tenant shall assign, sublease or otherwise transfer or
attempt to transfer all or any portion of Tenant’s interest in this Lease or the
Premises except as expressly permitted herein and such assignment, sublease or
other transfer is not voided ab initio within 5 business days after Tenant
becomes aware that such assignment, sublease or other transfer was not expressly
permitted under this Lease. Tenant’s interest in this Lease shall be attached,
executed upon, or otherwise judicially seized and such action is not released
within 90 days of the action.
(e)    Liens. Tenant shall fail to discharge, bond over in a manner reasonably
acceptable to Landlord or otherwise obtain the release of any lien placed upon
the Premises in violation of this Lease within 15 business days after Tenant’s
receipt of notice that any such lien is filed against the Premises.
(f)    Insolvency Events. Tenant shall: (A) make a general assignment for the
benefit of creditors; (B) commence any case, proceeding or other action seeking
to have an order for relief entered on its behalf as a debtor or to adjudicate
it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment,
liquidation, dissolution or composition of it or its debts or seeking
appointment of a receiver, trustee, custodian or other similar official for it
or for all or of any substantial part of its property (collectively a
“Proceeding for Relief”); (C) become the subject of any Proceeding for Relief
which is not dismissed within 90 days of its filing or entry; or (D) be
dissolved or otherwise fail to maintain its legal existence (if Tenant is a
corporation, partnership or other entity) and, in the case of a failure to
maintain Tenant’s legal existence, such failure is not cured within 5 business
days after Tenant becomes aware of such failure.
(g)    Estoppel Certificate or Subordination Agreement. Tenant fails to execute
any document required from Tenant under Sections 23 or 27 within 5 business days
after a second notice requesting such document.
(h)    Other Defaults. Tenant shall fail to comply with any provision of this
Lease other than those specifically referred to in this Section 20, and, except
as otherwise expressly provided herein, such failure shall continue for a period
of 10 business days after written notice thereof from Landlord to Tenant.
Any notice given under Section 20(h) hereof shall: (i) specify the alleged
default, (ii) demand that Tenant cure such default, (iii) be in lieu of, and not
in addition to, or shall be deemed to be, any notice required under any
provision of applicable law, and (iv) not be deemed a forfeiture or a
termination of this Lease unless Landlord elects otherwise in such notice;
provided that if the nature of Tenant’s default pursuant to Section 20(h) is
such that it cannot be cured by the payment of money and reasonably requires
more than 10 business days to cure, then Tenant shall not be deemed to be in
default if Tenant commences such cure within said 10 business day period and
thereafter diligently prosecutes the same to completion; provided, however,
that, upon request by Landlord from time to time, Tenant shall provide Landlord
with detailed written status reports regarding the status of such cure and the
actions being taken by Tenant.
21.    Landlord’s Remedies.
(a)    Payment By Landlord; Interest. All covenants and agreements to be kept or
performed by Tenant under this Lease shall be performed by Tenant at Tenant’s
sole cost and expense and without any reduction of Rent, If Tenant shall fail to
perform any obligation under this Lease and such failure shall continue in
excess of the time allowed under Section 20 above, unless a specific time period
is otherwise stated in this Lease, Landlord may, without waiving or releasing
any obligation of Tenant hereunder, make such payment or perform such act. All
sums so paid or incurred by Landlord, together with interest thereon, from the
date such sums were paid or incurred, at the annual rate equal to 12% per annum
or the highest rate permitted by law (the “Default Rate”), whichever is less,
shall be payable to Landlord on demand as Additional Rent.
(b)    Late Payment Rent. Late payment by Tenant to Landlord of Rent and other
sums due will cause Landlord to incur costs not contemplated by this Lease, the
exact amount of which will be extremely difficult and impracticable to
ascertain. Such costs include, but are not limited to, processing and accounting
charges and late charges which may be imposed on Landlord under any Mortgage
covering the Premises. Therefore, if any installment of Rent due from Tenant is
not received by Landlord within 5 business days after the date such payment is
due, Tenant shall pay to Landlord an additional sum equal to 4% of the overdue
Rent as a late charge. The parties agree that this late charge represents a fair
and reasonable estimate of the costs Landlord will incur by reason of late
payment by Tenant. Notwithstanding the foregoing, Landlord shall waive the
imposition of such late charge for the first late payment of Rent due hereunder
in any calendar year of the Term. In addition to the late charge, Rent not paid
when due shall bear interest at the Default Rate from the 5th business day after
the date due until paid.
(c)    Remedies. Upon the occurrence of a Default, Landlord, at its option,
without further notice or demand to Tenant (unless required by Legal
Requirements), shall have in addition to all other rights and remedies provided
in this Lease, at law or in equity, the option to pursue any one or more of the
following remedies, each and all of which shall be cumulative and nonexclusive,
without any notice or demand whatsoever.
(i)    Terminate this Lease, or at Landlord’s option if permitted by Legal
Requirements, Tenant’s right to possession only, in which event Tenant shall
immediately surrender the Premises to Landlord, and if Tenant fails to do so,
Landlord may, without prejudice to any other remedy which it may have for
possession or arrearages in rent, enter upon and take possession of the Premises
and expel or remove Tenant and any other person who may be occupying the
Premises or any part thereof, without being liable for prosecution or any claim
or damages therefor;
(ii)    Upon any termination of this Lease, whether pursuant to the foregoing
Section 21(c)(i) or otherwise, Landlord may recover from Tenant the following:
(A)    The worth at the time of award of any unpaid rent which has been earned
at the time of such termination; plus
(B)    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 Tenant proves could have been reasonably
avoided; plus
(C)    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 Tenant proves could have been reasonably avoided; plus
(D)    Any other amount necessary to compensate Landlord for all the detriment
proximately caused by Tenant’s failure to perform its obligations under this
Lease or which in the ordinary course of things would be likely to result
therefrom; and
(E)    At Landlord’s election, except as otherwise expressly provided for to the
contrary in this Lease, such other amounts in addition to or in lieu of the
foregoing as may be permitted from time to time by applicable law.
The term “rent” as used in this Section 21 shall be deemed to be and to mean all
sums of every nature required to be paid by Tenant pursuant to the terms of this
Lease, whether to Landlord or to others. As used in Sections 21(c)(ii)(A) and
(B), above, the “worth at the time of award” shall be computed by allowing
interest at the Default Rate. As used in Section 21(c)(ii)(C) above, the “worth
at the time of award” shall be computed by discounting such amount at the
discount rate of the Federal Reserve Bank of San Francisco at the time of award
plus 1%.
(iii)    Landlord may continue this Lease in effect after Tenant’s Default and
recover rent as it becomes due (Landlord and Tenant hereby agreeing that Tenant
has the right to sublet or assign hereunder, subject only to reasonable
limitations). Accordingly, if Landlord does not elect to terminate this Lease
following a Default by Tenant, Landlord may, from time to time, without
terminating this Lease, enforce all of its rights and remedies hereunder,
including the right to recover all Rent as it becomes due.
(iv)    Whether or not Landlord elects to terminate this Lease following a
Default by Tenant, Landlord shall have the right to terminate any and all
subleases, licenses, concessions or other consensual arrangements for possession
entered into by Tenant and affecting the Premises or may, in Landlord’s sole
discretion, succeed to Tenant’s interest in such subleases, licenses,
concessions or arrangements. Upon Landlord’s election to succeed to Tenant’s
interest in any such subleases, licenses, concessions or arrangements, Tenant
shall, as of the date of notice by Landlord of such election, have no further
right to or interest in the rent or other consideration receivable thereunder.
(v)    Independent of the exercise of any other remedy of Landlord hereunder or
under applicable law, Landlord may conduct an environmental test of the Premises
as generally described in Section 30(d) hereof, at Tenant’s expense.
(d)    Effect of Exercise. Exercise by Landlord of any remedies hereunder or
otherwise available shall not be deemed to be an acceptance of surrender of the
Premises and/or a termination of this Lease by Landlord, it being understood
that such surrender and/or termination can be effected only by the express
written agreement of Landlord and Tenant. Any law, usage, or custom to the
contrary notwithstanding, Landlord and Tenant shall each have the right at all
times to enforce the provisions of this Lease in strict accordance with the
terms hereof; and the failure of Landlord or Tenant at any time to enforce its
rights under this Lease strictly in accordance with same shall not be construed
as having created a custom in any way or manner contrary to the specific terms,
provisions, and covenants of this Lease or as having modified the same and shall
not be deemed a waiver of Landlord’s or Tenant’s right to enforce one or more of
its rights in connection with any subsequent default. A receipt by Landlord of
Rent or other payment with knowledge of the breach of any covenant hereof shall
not be deemed a waiver of such breach, and no waiver by Landlord of any
provision of this Lease shall be deemed to have been made unless expressed in
writing and signed by Landlord. To the greatest extent permitted by law, Tenant
waives all right of redemption in case Tenant shall be dispossessed by a
judgment or by warrant of any court or judge. Any reletting of the Premises or
any portion thereof shall be on such terms and conditions as Landlord in its
sole discretion may determine. Landlord shall not be liable for, nor shall
Tenant’s obligations hereunder be diminished because of, Landlord’s failure to
relet the Premises or collect rent due in respect of such reletting or otherwise
to mitigate any damages arising by reason of Tenant’s Default. Landlord shall,
however, use reasonable efforts to mitigate the damages arising by reason of the
termination of this Lease as a result of a Default by Tenant; provided, however,
that in no event shall mitigation require Landlord to consider, among other
things, (i) any tenant which does not satisfy Landlord’s then underwriting
criteria, (ii) subdividing the Premises unless Landlord elects to do so, (iii)
any change in use of the Premises or any alterations which would lessen the
value of the leasehold improvements, (iv) granting any tenant improvement
allowances, free rent or other lease concessions, or (v) or accepting any tenant
if Landlord would have the right to reject such tenant if such tenant were a
proposed assignee or sublessee of Tenant. Notwithstanding any contrary provision
of this Lease, neither Landlord nor Tenant shall be liable to the other party
for any consequential damages, loss of business or profit for a breach or
default under this Lease; provided that this sentence shall not limit Landlord’s
damages (x) as expressly provided for in Section 8 and/or (y) as provided for in
this Section 21 (but expressly excluding, however, Section 21(c)(ii)(E)).
22.    Assignment and Subletting.
(a)    General Prohibition. Without Landlord’s prior written consent subject to
and on the conditions described in this Section 22, Tenant shall not, directly
or indirectly, voluntarily or by operation of law, assign this Lease or sublease
the Premises or any part thereof or mortgage, pledge, or hypothecate its
leasehold interest or grant any concession or license within the Premises, and
any attempt to do any of the foregoing shall be void and of no effect.
(b)    Permitted Transfers. If Tenant desires to assign, sublease, hypothecate
or otherwise transfer this Lease or sublet the Premises other than pursuant to a
Permitted Assignment (as defined below), then at least 15 business days, but not
more than 120 days, before the date Tenant desires the assignment or sublease to
be effective (the “Assignment Date”), Tenant shall give Landlord a notice (the
“Assignment Notice”) containing such information about the proposed assignee or
sublessee, including the proposed use of the Premises and any Hazardous
Materials, if any, proposed to be used, stored handled, treated, generated in or
released or disposed of from the Premises, the Assignment Date, any relationship
between Tenant and the proposed assignee or sublessee, and all material terms
and conditions of the proposed assignment or sublease, including a copy of any
proposed assignment or sublease in its current draft (along with revised drafts
as the same are updated and, when ready, the proposed final form), and such
other information as Landlord may deem reasonably necessary or appropriate to
its consideration whether to grant its consent. Landlord may, by giving written
notice to Tenant within 15 business days after receipt of the Assignment Notice
along with all required information: (i) grant such consent, or (ii) refuse such
consent, in its reasonable discretion. Among other reasons, it shall be
reasonable for Landlord to withhold its consent in any of these instances:  (1)
the proposed assignee or subtenant is a governmental agency; (2) in Landlord’s
reasonable judgment, the use of the Premises by the proposed assignee or
subtenant would entail any alterations that would lessen the value of the
leasehold improvements in the Premises, unless Tenant agrees, if requested to do
so by Landlord, to restore the Premises to its condition prior to such
alteration before the expiration of the Term and Tenant provides Landlord with
security reasonably satisfactory to Landlord to secure such obligation in the
event Tenant fails to perform such obligation; (3) Landlord has experienced
previous material defaults by or is in litigation with the proposed assignee or
subtenant; and (4) the proposed assignee or subtenant is an entity with whom
Landlord is then negotiating to lease space in the Project (as evidenced by an
exchange of proposals). Landlord shall respond to each of Tenant’s Assignment
Notice requests within 15 business days after Landlord’s receipt of such
Assignment Notice request along with all documentation required to be delivered
hereunder. If Landlord fails to respond within such 15 business day period, then
Tenant shall provide Landlord with a second written notice stating in bold and
all caps 12 point font that Landlord’s failure to respond to Tenant’s Assignment
Notice request within 5 business days after Landlord’s receipt of the second
notice shall be deemed approval by Landlord, and if Landlord does not respond
within such 5 business day period, then Landlord shall be deemed to have
approved such Assignment Notice request. Tenant shall reimburse Landlord for
Landlord’s reasonable out-of-pocket expenses incurred in connection with its
consideration of any Assignment Notice and/or its preparation or review of any
consent documents (not to exceed $2,500 per Assignment Notice request).
Notwithstanding the foregoing, Landlord’s consent to an assignment of this Lease
or a subletting of any portion of the Premises to any entity controlling,
controlled by or under common control with Tenant (a “Control Permitted
Assignment”) shall not be required, provided that Landlord shall have the right
to approve the form of any such sublease or assignment. In addition, Tenant
shall have the right to assign this Lease, upon 30 days prior written notice to
Landlord but without obtaining Landlord’s prior written consent, to a
corporation or other entity which is a successor-in-interest to Tenant, by way
of merger, consolidation or corporate reorganization, or by the purchase of all
or substantially all of the assets or the ownership interests of Tenant provided
that (i) such merger or consolidation, or such acquisition or assumption, as the
case may be, is for a good business purpose and not principally for the purpose
of transferring the Lease, and (ii) the net worth (as determined in accordance
with generally accepted accounting principles (“GAAP”)) of the assignee is not
less than the Minimum Net Worth Amount (as determined in accordance with GAAP),
and (iii) such assignee shall agree in writing to assume all of the terms,
covenants and conditions of this Lease arising after the effective date of the
assignment (a “Corporate Permitted Assignment”). Control Permitted Assignments
and Corporate Permitted Assignments are hereinafter referred to as “Permitted
Assignments.” As used in this Lease, (A) “Minimum Net Worth Amount” shall mean
$750,000,000 as of the date of this Lease which amount shall be subject to
annual CPI increases on each annual anniversary of the date of this Lease, and
(B) “CPI” shall mean the Consumer Price Index-All Urban Consumers-San Diego, All
Items” compiled by the U.S. Department of Labor, Bureau of Labor Statistics,
(1982-84 = 100) or, if a substantial change is made to such index or it is
ceases to be published, the parties shall select a reasonably acceptable
substitute.
Notwithstanding anything to the contrary contained herein, a grant by Tenant of
a license or sublease (i) with respect to individual offices within the Premises
on an undemised basis to affiliates of Tenant (“Tenant Affiliate”) or, (ii) with
respect to up to 10% of the Premises to clients or others having a business
relationship with Tenant (each, a “Relationship Party”), shall not constitute an
assignment or subletting requiring Landlord consent under this Section 22;
provided that any such Tenant Affiliate or Relationship Party that is subject to
a sublease (as opposed to a license) with Tenant shall execute and comply with
the terms of Landlord’s form of consent to sublease subject to those changes
proposed by Tenant which are acceptable to Landlord, in Landlord’s reasonable
discretion. Notwithstanding anything to the contrary contained herein, Tenant
shall be fully responsible for the acts of the parties entering the Premises
pursuant to the immediately preceding sentence and Landlord shall have no
liability to or in connection with such parties.
(c)    Additional Conditions. As a condition to any such assignment or
subletting, whether or not Landlord’s consent is required, Landlord may require:
(i)    that any assignee or subtenant agree, in writing at the time of such
assignment or subletting, that if Landlord gives such party notice that Tenant
is in default under this Lease, such party shall thereafter make all payments
otherwise due Tenant directly to Landlord, which payments will be received by
Landlord without any liability except to credit such payment against those due
under the Lease, and any such third party shall agree to attorn to Landlord or
its successors and assigns should this Lease be terminated for any reason;
provided, however, in no event shall Landlord or its successors or assigns be
obligated to accept such attornment; and
(ii)    A list of Hazardous Materials, certified by the proposed assignee or
sublessee to be true and correct, which the proposed assignee or sublessee
intends to use, store, handle, treat, generate in or release or dispose of from
the Premises, together with copies of all documents relating to such use,
storage, handling, treatment, generation, release or disposal of Hazardous
Materials by the proposed assignee or subtenant in the Premises or on the
Project, prior to the proposed assignment or subletting, including, without
limitation: permits; approvals; reports and correspondence; storage and
management plans; plans relating to the installation of any storage tanks to be
installed in or under the Project (provided, said installation of tanks shall
only be permitted after Landlord has given its written consent to do so, which
consent may be withheld in Landlord’s sole and absolute discretion); and all
closure plans or any other documents required by any and all federal, state and
local Governmental Authorities for any storage tanks installed in, on or under
the Project for the closure of any such tanks. Neither Tenant nor any such
proposed assignee or subtenant is required, however, to provide Landlord with
any portion(s) of the such documents containing information of a proprietary
nature which, in and of themselves, do not contain a reference to any Hazardous
Materials or hazardous activities.
(d)    No Release of Tenant, Sharing of Excess Rents. Notwithstanding any
assignment or subletting, Tenant shall at all times remain fully and primarily
responsible and liable for the payment of Rent and for compliance with all of
Tenant’s other obligations under this Lease. If the Rent due and payable by a
sublessee or assignee (or a combination of the rental payable under such
sublease or assignment plus any bonus or other consideration therefor or
incident thereto in any form) exceeds the sum of the rental payable under this
Lease (excluding however, any Rent payable under this Section) and (i) any
changes, alterations and improvements to the Premises in connection with such
sublease or assignment, (ii) any space planning, architectural or design fees or
other expenses incurred in marketing such space or in connection with such
sublease or assignment, (iii) any improvement allowance, rent abatement or other
monetary concessions provided by Tenant to the assignee or sublessee, (iv) any
brokerage commissions incurred by Tenant in connection with such sublease or
assignment, (v) any attorneys' fees incurred by Tenant in connection with such
sublease or assignment, (vi) any lease takeover costs incurred by Tenant in
connection with such sublease or assignment, and (vii) any costs of advertising
the space which is the subject of such sublease or assignment (“Excess Rent”),
then Tenant shall be bound and obligated to pay Landlord as Additional Rent
hereunder 50% of such Excess Rent (after first deducting the costs described in
clauses (i) through (vii) above) within 10 days following receipt thereof by
Tenant. If Tenant shall sublet the Premises or any part thereof, Tenant hereby
immediately and irrevocably assigns to Landlord, as security for Tenant’s
obligations under this Lease, all rent from any such subletting, and Landlord as
assignee and as attorney-in-fact for Tenant, or a receiver for Tenant appointed
on Landlord’s application, may collect such rent and apply it toward Tenant’s
obligations under this Lease; except that, until the occurrence of a Default,
Tenant shall have the right to collect such rent.
(e)    No Waiver. The consent by Landlord to an assignment or subletting shall
not relieve Tenant or any assignees of this Lease or any sublessees of the
Premises from obtaining the consent of Landlord to any further assignment or
subletting nor shall it release Tenant or any assignee of Tenant from full and
primary liability under the Lease. The acceptance of Rent hereunder, or the
acceptance of performance of any other term, covenant, or condition thereof,
from any other person or entity shall not be deemed to be a waiver of any of the
provisions of this Lease or a consent to any subletting, assignment or other
transfer of the Premises.
23.    Estoppel Certificate. Tenant shall, within 10 business days of written
notice from Landlord, execute, acknowledge and deliver a statement in writing in
any form reasonably requested by a proposed lender or purchaser, (i) certifying
that this Lease is unmodified and in full force and effect (or, if modified,
stating the nature of such modification and certifying that this Lease as so
modified is in full force and effect) and the dates to which the rental and
other charges are paid in advance, if any, (ii) acknowledging that there are not
any uncured defaults on the part of Landlord hereunder, or specifying such
defaults if any are claimed, and (iii) setting forth such further information
with respect to the status of this Lease or the Premises as may be reasonably
requested thereon. Any such statement may be relied upon by any prospective
purchaser or encumbrancer of all or any portion of the real property of which
the Premises are a part. Following the original 10 business day period provided
for in this Section 23, Tenant’s failure to deliver such statement within 5
business days after a second written notice from Landlord shall, at the option
of Landlord, constitute a Default under this Lease, and, in any event, shall be
conclusive upon Tenant that the Lease is in full force and effect and without
modification except as may be represented by Landlord in any certificate
prepared by Landlord and delivered to Tenant for execution.
Upon request by Tenant, Landlord will similarly execute an estoppel certificate:
(i) certifying that this Lease is unmodified and in full force and effect (or,
if modified, stating the nature of such modification and certifying that this
Lease as so modified is in full force and effect) and the dates to which the
rental and other charges are paid in advanced, if any, (ii) acknowledging that
there are not, to Landlord’s knowledge, any uncured defaults on the part of
Tenant hereunder, or specifying such defaults if any are claimed and (iii)
setting forth such further information with respect to the status of this Lease
as may be reasonably requested thereon.
24.    Quiet Enjoyment. So long as Tenant is not in Default under this Lease,
Tenant shall, subject to the terms of this Lease, at all times during the Term,
have peaceful and quiet enjoyment of the Premises against any person claiming
by, through or under Landlord.
25.    Prorations. All prorations required or permitted to be made hereunder
shall be made on the basis of a 360 day year and 30 day months.
26.    Rules and Regulations. Tenant shall, at all times during the Term and any
extension thereof, comply with all commercially reasonable rules and regulations
at any time or from time to time established by Landlord covering use of the
Premises and the Project. The current rules and regulations are attached hereto
as Exhibit E and Landlord shall provide Tenant with written notice of any
updates or amendments thereto. If there is any conflict between said rules and
regulations and other provisions of this Lease, the terms and provisions of this
Lease shall control. Landlord shall not have any liability or obligation for the
breach of any rules or regulations by other tenants in the Project. Landlord
shall not enforce such rules and regulations in a discriminatory manner by
enforcing certain rules and regulations only against Tenant and not any other
tenants, if any, at the Project.
27.    Subordination. This Lease and Tenant’s interest and rights hereunder are
hereby made and shall be subject and subordinate at all times to the lien of any
Mortgage now existing or hereafter created on or against the Project or the
Premises, and all amendments, restatements, renewals, modifications,
consolidations, refinancing, assignments and extensions thereof, without the
necessity of any further instrument or act on the part of Tenant; provided,
however that so long as there is no Default hereunder, Tenant’s right to
possession of the Premises shall not be disturbed by the Holder of any such
Mortgage. Tenant agrees, at the election of the Holder of any such Mortgage, to
attorn to any such Holder. Tenant agrees upon demand to execute, acknowledge and
deliver such commercially reasonable instruments, confirming such subordination,
and such commercially reasonable instruments of attornment as shall be requested
by any such Holder, provided any such instruments contain commercially
reasonable non-disturbance provisions assuring Tenant’s quiet enjoyment of the
Premises as set forth in Section 24 hereof. Notwithstanding the foregoing, any
such Holder may at any time subordinate its Mortgage to this Lease, without
Tenant’s consent, by notice in writing to Tenant, and thereupon this Lease shall
be deemed prior to such Mortgage without regard to their respective dates of
execution, delivery or recording and in that event such Holder shall have the
same rights with respect to this Lease as though this Lease had been executed
prior to the execution, delivery and recording of such Mortgage and had been
assigned to such Holder. The term “Mortgage” whenever used in this Lease shall
be deemed to include deeds of trust, security assignments and any other
encumbrances, and any reference to the “Holder” of a Mortgage shall be deemed to
include the beneficiary under a deed of trust. As of the date of this Lease,
there is no existing Mortgage encumbering the Project. As a condition precedent
to Tenant’s execution of a written agreement subordinating this Lease to any
future Mortgage, such agreement shall be required to contain commercially
reasonable non-disturbance and attornment provisions and such agreement shall be
executed by the Holder of any such future Mortgage with a lien on the Project
and the same shall provide, among other things, that so long as Tenant is not in
Default of its obligations under this Lease, foreclosure or other enforcement of
such Mortgage shall not terminate this Lease and the successor to Landlord’s
interest in the Project shall recognize this Lease and Tenant’s right to
possession of the Premises. Tenant shall be entitled, at Tenant’s sole cost and
expense, to record any such subordination non-disturbance and attornment
agreement promptly after full execution and delivery of such agreement.
28.    Surrender. Upon the expiration of the Term or earlier termination of
Tenant’s right of possession, Tenant shall surrender the Premises to Landlord in
the same condition as received, subject to any Alterations or Installations
permitted by Landlord to remain in the Premises, free of Hazardous Materials
brought upon, kept, used, stored, handled, treated, generated in, or released or
disposed of from, the Premises by any person other than a Landlord Party
(collectively, “Tenant HazMat Operations”) and released of all Hazardous
Materials Clearances, broom clean, ordinary wear and tear and casualty loss and
condemnation covered by Sections 18 and 19 excepted. At least 3 months prior to
the surrender of the Premises, Tenant shall deliver to Landlord a narrative
description of the actions proposed (or required by any Governmental Authority)
to be taken by Tenant in order to surrender the Premises (including any
Installations permitted by Landlord to remain in the Premises) at the expiration
or earlier termination of the Term, free from any residual impact from the
Tenant HazMat Operations and otherwise released for unrestricted use and
occupancy (the “Surrender Plan”). Such Surrender Plan shall be accompanied by a
current listing of (i) all Hazardous Materials licenses and permits held by or
on behalf of any Tenant Party with respect to the Premises, and (ii) all
Hazardous Materials used, stored, handled, treated, generated, released or
disposed of from the Premises, and shall be subject to the review and approval
of Landlord’s environmental consultant. In connection with the review and
approval of the Surrender Plan, upon the request of Landlord, Tenant shall
deliver to Landlord or its consultant such additional non-proprietary
information concerning Tenant HazMat Operations as Landlord shall request. On or
before such surrender, Tenant shall deliver to Landlord evidence that the
approved Surrender Plan shall have been satisfactorily completed and Landlord
shall have the right, subject to reimbursement at Tenant’s expense as set forth
below, to cause Landlord’s environmental consultant to inspect the Premises and
perform such additional procedures as may be deemed reasonably necessary to
confirm that the Premises are, as of the effective date of such surrender or
early termination of the Lease, free from any residual impact from Tenant HazMat
Operations. Tenant shall reimburse Landlord, as Additional Rent, for the actual
out-of pocket expense incurred by Landlord for Landlord’s environmental
consultant to review and approve the Surrender Plan and to visit the Premises
and verify satisfactory completion of the same, which cost shall not exceed
$5,000. Landlord shall have the unrestricted right to deliver such Surrender
Plan and any report by Landlord’s environmental consultant with respect to the
surrender of the Premises to third parties.
If Tenant shall fail to prepare or submit a Surrender Plan approved by Landlord,
or if Tenant shall fail to complete the approved Surrender Plan, or if such
Surrender Plan, whether or not approved by Landlord, shall fail to adequately
address any residual effect of Tenant HazMat Operations in, on or about the
Premises, Landlord shall have the right to take such actions as Landlord may
deem reasonable or appropriate to assure that the Premises and the Project are
surrendered free from any residual impact from Tenant HazMat Operations, the
actual, documented cost of which actions shall be reimbursed by Tenant as
Additional Rent, without regard to the limitation set forth in the first
paragraph of this Section 28.
Tenant shall immediately return to Landlord all keys and/or access cards to
parking, the Project, restrooms or all or any portion of the Premises furnished
to or otherwise procured by Tenant. Any Tenant’s Property, Alterations and
property not so removed by Tenant as permitted or required herein shall be
deemed abandoned and may be stored, removed, and disposed of by Landlord at
Tenant’s expense, and Tenant waives all claims against Landlord for any damages
resulting from Landlord’s retention and/or disposition of such property. All
obligations of Tenant and Landlord hereunder not fully performed as of the
termination of the Term, including the obligations of Tenant under Section 30
hereof, shall survive the expiration or earlier termination of the Term,
including, without limitation, indemnity obligations, payment obligations with
respect to Rent and obligations concerning the condition and repair of the
Premises.
29.    Waiver of Jury Trial. TO THE EXTENT PERMITTED BY LAW, TENANT AND LANDLORD
WAIVE ANY RIGHT TO TRIAL BY JURY OR TO HAVE A JURY PARTICIPATE IN RESOLVING ANY
DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, BETWEEN LANDLORD AND
TENANT ARISING OUT OF THIS LEASE OR ANY OTHER INSTRUMENT, DOCUMENT, OR AGREEMENT
EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS RELATED HERETO.
30.    Environmental Requirements.
(a)    Prohibition/Compliance/Indemnity. Tenant shall not cause or permit any
Hazardous Materials (as hereinafter defined) to be brought upon, kept, used,
stored, handled, treated, generated in or about, or released or disposed of
from, the Premises or the Project in violation of applicable Environmental
Requirements (as hereinafter defined) by Tenant or any Tenant Party. If Tenant
breaches the obligation stated in the preceding sentence, or if the presence of
Hazardous Materials in the Premises during the Term or any holding over results
in contamination of the Premises, the Project or any adjacent property or if
contamination of the Premises, the Project or any adjacent property by Hazardous
Materials brought into, kept, used, stored, handled, treated, generated in or
about, or released or disposed of from, the Premises by anyone other than
Landlord and Landlord’s employees, agents and contractors otherwise occurs
during the Term or any holding over, Tenant hereby indemnifies and shall defend
and hold Landlord, its officers, directors, employees, agents and contractors
harmless from any and all actions (including, without limitation, remedial or
enforcement actions of any kind, administrative or judicial proceedings, and
orders or judgments arising out of or resulting therefrom), costs, claims,
damages (including, without limitation, punitive damages and damages based upon
diminution in value of the Premises or the Project, or the loss of, or
restriction on, use of the Premises or any portion of the Project), expenses
(including, without limitation, attorneys’, consultants’ and experts’ fees,
court costs and amounts paid in settlement of any claims or actions), fines,
forfeitures or other civil, administrative or criminal penalties, injunctive or
other relief (whether or not based upon personal injury, property damage, or
contamination of, or adverse effects upon, the environment, water tables or
natural resources), liabilities or losses (collectively, “Environmental Claims”)
which arise during or after the Term as a result of such contamination. This
indemnification of Landlord by Tenant includes, without limitation, costs
incurred in connection with any investigation of site conditions or any cleanup,
treatment, remedial, removal, or restoration work required by any federal, state
or local Governmental Authority because of Hazardous Materials present in the
air, soil or ground water above, on, or under the Premises. Without limiting the
foregoing, if the presence of any Hazardous Materials on the Premises, the
Project or any adjacent property caused by Tenant or any Tenant Party results in
any contamination of the Premises, the Project or any adjacent property, Tenant
shall promptly take all actions at its sole expense and in accordance with
applicable Environmental Requirements as are necessary to return the Premises,
the Project or any adjacent property to the condition existing prior to the time
of such contamination, provided that Landlord’s approval of such action shall
first be obtained, which approval shall not unreasonably be withheld so long as
such actions would not potentially have any material adverse long-term or
short-term effect on the Premises or the Project. Notwithstanding anything to
the contrary contained in Section 28 or this Section 30, Tenant shall not be
responsible for, and the indemnification and hold harmless obligation set forth
in this paragraph shall not apply to (i) contamination in the Premises which
Tenant can prove existed in the Premises immediately prior to the date Building
1 and Building 2 are delivered to Tenant, (ii) the presence of any Hazardous
Materials in the Premises which Tenant can prove migrated from offsite to the
Project, (iii) contamination caused by Landlord or any Landlord’s employees,
agents and contractors, or (iv) contamination in the Common Areas which Tenant
can prove was caused by any party other than Tenant or any Tenant Party during
any period where any portion of the Project is leased by Landlord to any other
tenant(s), unless in any case, the presence of such Hazardous Materials was
caused, contributed to or exacerbated by Tenant or any Tenant Party.
(b)    Business. Landlord acknowledges that it is not the intent of this Section
30 to prohibit Tenant from using the Premises for the Permitted Use. Tenant may
operate its business according to prudent industry practices so long as the use
or presence of Hazardous Materials is strictly and properly monitored according
to all then applicable Environmental Requirements. As a material inducement to
Landlord to allow Tenant to use Hazardous Materials in connection with its
business, Tenant agrees to deliver to Landlord prior to the Initial Commencement
Date a list identifying each type of Hazardous Materials to be brought upon,
kept, used, stored, handled, treated, generated on, or released or disposed of
from, the Premises and setting forth any and all governmental approvals or
permits required in connection with the presence, use, storage, handling,
treatment, generation, release or disposal of such Hazardous Materials on or
from the Premises (“Hazardous Materials List”). Tenant shall deliver to Landlord
an updated Hazardous Materials List at least once a year and shall also deliver
an updated list before any new Hazardous Material is brought onto, kept, used,
stored, handled, treated, generated on, or released or disposed of from, the
Premises. Tenant shall deliver to Landlord true and correct copies of the
following documents (the “Haz Mat Documents”) relating to the use, storage,
handling, treatment, generation, release or disposal of Hazardous Materials
prior to the Commencement Date, or if unavailable at that time, concurrent with
the receipt from or submission to a Governmental Authority: permits; approvals;
reports and correspondence; storage and management plans, notice of violations
of any Legal Requirements; plans relating to the installation of any storage
tanks to be installed in or under the Project (provided, said installation of
tanks shall only be permitted after Landlord has given Tenant its written
consent to do so, which consent may be withheld in Landlord’s sole and absolute
discretion); all closure plans or any other documents required by any and all
federal, state and local Governmental Authorities for any storage tanks
installed in, on or under the Project for the closure of any such tanks; and a
Surrender Plan (to the extent surrender in accordance with Section 28 cannot be
accomplished in 3 months). Tenant is not required, however, to provide Landlord
with any portion(s) of the Haz Mat Documents containing information of a
proprietary nature which, in and of themselves, do not contain a reference to
any Hazardous Materials or hazardous activities. It is not the intent of this
Section to provide Landlord with information which could be detrimental to
Tenant’s business should such information become possessed by Tenant’s
competitors.
(c)    Tenant Representation and Warranty. Tenant hereby represents and warrants
to Landlord that (i) Tenant has not been required by any prior landlord, lender
or Governmental Authority at any time to take remedial action in connection with
Hazardous Materials contaminating a property which contamination was permitted
by Tenant or resulted from Tenant’s action or use of the property in question,
and (ii) Tenant is not subject to any enforcement order issued by any
Governmental Authority in connection with the use, storage, handling, treatment,
generation, release or disposal of Hazardous Materials (including, without
limitation, any order related to the failure to make a required reporting to any
Governmental Authority).
(d)    Testing. Landlord shall have the right to conduct annual tests of the
Premises to determine whether any contamination of the Premises or the Project
has occurred as a result of Tenant’s use. Tenant shall be required to pay the
cost of such annual test of the Premises if there is a violation of this Section
30 or if contamination for which Tenant is responsible under this Section 30 is
identified; provided, however, that if Tenant conducts, at Tenant’s cost, its
own tests of the Premises using third party contractors and test procedures
acceptable to Landlord which tests are certified to Landlord, Landlord shall
accept such tests in lieu of the annual tests. In addition, at any time, and
from time to time, prior to the expiration or earlier termination of the Term,
Landlord shall have the right to conduct appropriate tests of the Premises and
the Project to determine if contamination has occurred as a result of Tenant’s
use of the Premises. In connection with such testing, upon the request of
Landlord, Tenant shall deliver to Landlord or its consultant such
non-proprietary information concerning the use of Hazardous Materials in or
about the Premises by Tenant or any Tenant Party. If contamination has occurred
for which Tenant is liable under this Section 30, Tenant shall pay all costs to
conduct such tests. If no such contamination is found, Landlord shall pay the
costs of such tests (which shall not constitute an Operating Expense). Landlord
shall provide Tenant with a copy of all third party, non-confidential reports
and tests of the Premises made by or on behalf of Landlord during the Term
without representation or warranty and subject to a confidentiality agreement.
Tenant shall, at its sole cost and expense, promptly and satisfactorily
remediate any environmental conditions identified by such testing and for which
Tenant is responsible under this Lease in accordance with all Environmental
Requirements. Landlord’s receipt of or satisfaction with any environmental
assessment in no way waives any rights which Landlord may have against Tenant.
(e)    Intentionally Omitted.
(f)    Underground Tanks. If underground or other storage tanks storing
Hazardous Materials located on the Premises or the Project are used by Tenant or
are hereafter placed on the Premises or the Project by Tenant, Tenant shall
install, use, monitor, operate, maintain, upgrade and manage such storage tanks,
maintain appropriate records, obtain and maintain appropriate insurance,
implement reporting procedures, properly close any underground storage tanks,
and take or cause to be taken all other actions necessary or required under
applicable state and federal Legal Requirements, as such now exists or may
hereafter be adopted or amended in connection with the installation, use,
maintenance, management, operation, upgrading and closure of such storage tanks.
(g)    Tenant’s Obligations. Tenant’s and Landlord’s obligations under this
Section 30 shall survive the expiration or earlier termination of the Lease.
During any period of time after the expiration or earlier termination of this
Lease required by Tenant or Landlord to complete the removal from the Premises
of any Hazardous Materials (including, without limitation, the release and
termination of any licenses or permits restricting the use of the Premises and
the completion of the approved Surrender Plan), Tenant shall continue to pay the
full Rent during such period in accordance with this Lease for any portion of
the Premises not relet by Landlord in Landlord’s sole discretion, which Rent
shall be prorated daily.
(h)    Definitions. As used herein, the term “Environmental Requirements” means
all applicable present and future statutes, regulations, ordinances, rules,
codes, judgments, orders or other similar enactments of any Governmental
Authority regulating or relating to health, safety, or environmental conditions
on, under, or about the Premises or the Project, or the environment, including
without limitation, the following: the Comprehensive Environmental Response,
Compensation and Liability Act; the Resource Conservation and Recovery Act; and
all state and local counterparts thereto, and any regulations or policies
promulgated or issued thereunder. As used herein, the term “Hazardous Materials”
means and includes any substance, material, waste, pollutant, or contaminant
listed or defined as hazardous or toxic, or regulated by reason of its impact or
potential impact on humans, animals and/or the environment under any
Environmental Requirements, asbestos and petroleum, including crude oil or any
fraction thereof, natural gas liquids, liquefied natural gas, or synthetic gas
usable for fuel (or mixtures of natural gas and such synthetic gas). As defined
in Environmental Requirements, Tenant is and shall be deemed to be the
“operator” of Tenant’s “facility” and the “owner” of all Hazardous Materials
brought on the Premises by Tenant or any Tenant Party, and the wastes,
by-products, or residues generated, resulting, or produced therefrom.
31.    Tenant’s Remedies/Limitation of Liability. Landlord shall not be in
default hereunder unless Landlord fails to perform any of its obligations
hereunder within 30 days after written notice from Tenant specifying such
failure (unless such performance will, due to the nature of the obligation,
require a period of time in excess of 30 days, then after such period of time as
is reasonably necessary so long as Landlord has commenced the cure and is
diligently prosecuting the same to completion)). If Landlord fails to cure a
Landlord default after the expiration of all applicable notice and cure periods,
Tenant may, except as otherwise provided for in this Lease and subject to any
limitations contained in this Lease, exercise all of its rights and remedies
provided for in this Lease or at law or in equity for such default. Upon any
default by Landlord, Tenant shall give notice by registered or certified mail to
any Holder of a Mortgage covering the Premises and to any landlord of any lease
of property in or on which the Premises are located and Tenant shall offer such
Holder and/or landlord the same cure rights provided to Landlord for a default
but also time to obtain possession of the Project by power of sale or a judicial
action if such should prove necessary to effect a cure; provided Landlord shall
have furnished to Tenant in writing the names and addresses of all such persons
who are to receive such notices. All obligations of Landlord hereunder shall be
construed as covenants, not conditions. Tenant waives its rights under Legal
Requirements relating to a landlord’s duty to maintain its premises in a
tenantable condition.
Notwithstanding the foregoing, if Tenant is not maintaining the Project as
contemplated pursuant to the second paragraph of Section 13 hereof and any
claimed Landlord default hereunder materially and adversely affects Tenant’s
ability to conduct its business in the Premises (a “Material Landlord Default”),
Tenant shall, as soon as reasonably possible, give Landlord written notice of
such claim which notice shall specifically state that a Material Landlord
Default exists and telephonic notice to Tenant’s principal contact with
Landlord. Landlord shall then have 2 business days to commence cure of such
claimed Material Landlord Default and shall diligently prosecute such cure to
completion. If such claimed Material Landlord Default is not a default by
Landlord hereunder and/or is not the responsibility of Landlord under this
Lease, Landlord shall be entitled to recover from Tenant, as Additional Rent,
any costs incurred by Landlord in connection with such cure in excess of the
costs, if any, that Landlord would otherwise have been liable to pay hereunder.
If Landlord fails to commence cure of any claimed Material Landlord Default as
provided above, Tenant may, following the delivery of a second written notice to
Landlord (except in the case of an emergency in which case no additional written
notice shall be required but Tenant shall use good faith efforts to provide
Landlord with verbal notice with written notice to follow) commence and
prosecute such cure to completion provided that it does not affect any Building
Systems directly affecting other tenants, the structure of any of the Buildings
or the Common Areas, and shall be entitled to recover the costs of such cure
(but not any consequential or other damages) from Landlord by way of
reimbursement from Landlord, to the extent of Landlord’s obligation to cure such
claimed Material Landlord Default hereunder. Landlord shall reimburse Tenant for
its reasonable costs and expenses incurred to cure the claimed Material Landlord
Default within 30 days after Landlord's receipt of an invoice and evidence of
payment of such costs and expenses, together with reasonable documentation
substantiating such costs and expenses and delivery to Landlord of unconditional
lien waivers from all material suppliers and workmen who supplied materials or
performed work associated with such maintenance and/or repairs (the
“Reimbursement Invoice”). Landlord shall have the right not to reimburse Tenant
as provided for in the preceding sentence and instead dispute Tenant’s
entitlement to reimbursement, Tenant’s right to perform such repairs and/or
maintenance and/or or the amount being requested by Tenant. If Landlord elects,
in the exercise of its good faith reasonable discretion, to dispute any of the
foregoing matters, Landlord shall notify Tenant in writing of the nature of such
dispute within 30 days after receipt of Tenant’s written request for
reimbursement. Landlord and Tenant shall meet and discuss the dispute and if
Landlord and Tenant fail to reach a resolution of the dispute within 15 days
after their meeting, the dispute shall be resolved by arbitration by a single
arbitrator with the qualifications and experience appropriate to resolve the
matter and appointed pursuant to and acting in accordance with the rules of the
American Arbitration Association. If the arbitrator decides in favor of Tenant,
then Landlord shall promptly pay the amount of any award to Tenant. If either
party is determined by the arbitrator to be the prevailing party, then such
party shall be entitled to have its reasonable attorneys’ fees and costs in
connection with such arbitration paid by the other party. If Landlord has not
paid to Tenant in full the amount of any such award plus any attorneys’ fees and
costs awarded by the arbitrator within 30 days of the date of the arbitrator’s
decision, then Tenant shall have the right to set off against the next monthly
payments of Base Rent the amount of the award (including any awarded attorneys’
fees and costs).
All obligations of Landlord under this Lease will be binding upon Landlord only
during the period of its ownership of the Premises and not thereafter. The term
“Landlord” in this Lease shall mean only the owner for the time being of the
Premises. Upon the transfer by such owner of its interest in the Premises and
the assumption (in writing) of such owner’s obligations under this Lease
thereafter accruing, such owner shall thereupon be released and discharged from
all obligations of Landlord thereafter accruing, but such obligations shall be
binding during the Term upon each new owner for the duration of such owner’s
ownership.
32.    Inspection and Access. Landlord and Landlord’s representatives agents and
contractors may enter the Premises during business hours (i) on not less than 24
hours written notice (which may be by email) for the purpose of inspecting the
Premises and showing the Premises to third parties (including, without
limitation prospective purchasers or tenants) and (ii) on not less than 72 hours
advance written notice (except in the case of emergencies in which case no such
notice shall be required and such entry may be at any time) for the purpose of
effecting any such repairs or for any other business purpose. Notwithstanding
the foregoing, Landlord may only show the Premises to prospective tenants for
the Premises during the last 18 months of the Term. Landlord may erect a
suitable sign at the Project stating the Premises (or portions thereof) may be
available for lease but in no event may Landlord erect such sign sooner than 18
months before the expiration of the Term for any portion of the Premises. If
Landlord desires to lease space at the Project (other than the Premises),
Landlord may erect a suitable sign at the Project stating that space is or may
be available for lease. Landlord may erect a suitable sign at the Project
stating the Project is available for sale. Tenant shall at all times, except in
the case of emergencies, have the right to escort Landlord or its agents,
representatives, contractors or guests while the same are in the Premises,
provided such escort does not materially and adversely affect Landlord’s access
rights hereunder. Notwithstanding anything to the contrary set forth in this
Lease, Tenant may designate by prior written notice to Landlord certain limited
areas of the Premises as "Secured Areas" should Tenant require such areas for
the purpose of securing certain valuable property or confidential information.
Landlord may not enter such Secured Areas except in the case of emergency or in
the event of a Landlord inspection, in which case Landlord shall provide Tenant
with 10 days' prior written notice of the specific date and time of such
Landlord inspection.
33.    Security. Tenant acknowledges and agrees that security devices and
services, if any, while intended to deter crime may not in given instances
prevent theft or other criminal acts and that Landlord is not providing any
security services with respect to the Premises. Tenant agrees that Landlord
shall not be liable to Tenant for, and Tenant waives any claim against Landlord
with respect to, any loss by theft or any other damage suffered or incurred by
Tenant in connection with any unauthorized entry into the Premises or any other
breach of security with respect to the Premises. So long as Tenant is the sole
tenant of the Project, Tenant shall be permitted with Landlord’s prior approval,
which shall not be unreasonably withheld, to install security fencing and gates
(including a 24 hour guard), all as reasonably approved by Landlord, at Tenant’s
sole cost and expense; provided, however, that Landlord and the Landlord Parties
shall at all times have continuous and unfettered access to the Common Areas.
Upon Landlord’s written request at the point where Tenant will no longer be the
only tenant at the Project, Tenant shall be responsible, at Tenant’s sole cost
and expense, for removing such security fencing and gates and restoring the
Project to its condition prior the installation of such security fencing and
gates. Tenant shall be solely responsible for the personal safety of Tenant’s
officers, employees, agents, contractors, guests and invitees while any such
person is in, on or about the Premises and/or the Project. Tenant shall at
Tenant’s cost obtain insurance coverage to the extent Tenant desires protection
against such criminal acts. Tenant shall have the use during the Term of the
existing Access Control and Alarm Monitoring System and Closed Circuit
Television Surveillance Systems (collectively, the “Security Systems”) at no
additional rental cost to Tenant; provided, however, that Tenant shall be
responsible for all maintenance, repairs and replacements to the Security
Systems during the Term. Notwithstanding the foregoing, if at any time during
the Term any portion of Building 1 and/or Building 2 is leased to any third
party(ies), Tenant agrees to cooperate with Landlord and/or adjust its usage of
the Security Systems to reasonably address any privacy, confidentiality,
security, legal or other reasonable concerns of such third party(ies).
34.    Force Majeure. Except for the payment of Rent, neither Landlord nor
Tenant shall be held responsible or liable for delays in the performance of its
obligations hereunder when caused by, related to, or arising out of acts of God,
strikes, lockouts, or other labor disputes, embargoes, quarantines, weather,
national, regional, or local disasters, calamities, or catastrophes, inability
to obtain labor or materials (or reasonable substitutes therefor) at reasonable
costs or failure of, or inability to obtain, utilities necessary for
performance, governmental restrictions, orders, limitations, regulations, or
controls, national emergencies, inability to obtain permits or approvals,
including, without limitation, city and public utility approvals beyond the time
periods that generally prevail for obtaining such permits and approvals,
revocation of permits, enemy or hostile governmental action, terrorism,
insurrection, riots, civil disturbance or commotion, fire or other casualty, and
other causes or events beyond their reasonable control (“Force Majeure”).
35.    Brokers. Landlord and Tenant each represents and warrants that it has not
dealt with any broker, agent or other person (collectively, “Broker") in
connection with this transaction and that no Broker brought about this
transaction, other than Cushman & Wakefield of San Diego, Inc. Landlord and
Tenant each hereby agree to indemnify and hold the other harmless from and
against any claims by any Broker, other than the broker, if any named in this
Section 35, claiming a commission or other form of compensation by virtue of
having dealt with Tenant or Landlord, as applicable, with regard to this leasing
transaction. Landlord shall be responsible for the commission payable to Cushman
& Wakefield of San Diego, Inc., arising out of the execution of this Lease in
accordance with the terms of a separate written agreement between Cushman &
Wakefield of San Diego, Inc., and Landlord. Landlord and Tenant both acknowledge
that Cushman & Wakefield of San Diego, Inc., is acting in a dual agency capacity
under this Lease. Landlord and Tenant acknowledge and agree with the disclosure
and consent to the agency relationship specified.
36.    Limitation on Landlord’s Liability. NOTWITHSTANDING ANYTHING SET FORTH
HEREIN OR IN ANY OTHER AGREEMENT BETWEEN LANDLORD AND TENANT TO THE CONTRARY:
(A) LANDLORD SHALL NOT BE LIABLE TO TENANT OR ANY OTHER PERSON FOR (AND TENANT
AND EACH SUCH OTHER PERSON ASSUME ALL RISK OF) LOSS, DAMAGE OR INJURY, WHETHER
ACTUAL OR CONSEQUENTIAL TO: TENANT’S PERSONAL PROPERTY OF EVERY KIND AND
DESCRIPTION, INCLUDING, WITHOUT LIMITATION TRADE FIXTURES, EQUIPMENT, INVENTORY,
SCIENTIFIC RESEARCH, SCIENTIFIC EXPERIMENTS, LABORATORY ANIMALS, PRODUCT,
SPECIMENS, SAMPLES, AND/OR SCIENTIFIC, BUSINESS, ACCOUNTING AND OTHER RECORDS OF
EVERY KIND AND DESCRIPTION KEPT AT THE PREMISES AND ANY AND ALL INCOME DERIVED
OR DERIVABLE THEREFROM; (B) ANY LIABILITY OF LANDLORD HEREUNDER SHALL BE
STRICTLY LIMITED SOLELY TO LANDLORD’S INTEREST IN THE PROJECT OR ANY PROCEEDS
FROM SALE OR CONDEMNATION THEREOF AND ANY INSURANCE PROCEEDS PAYABLE IN RESPECT
OF LANDLORD’S INTEREST IN THE PROJECT OR IN CONNECTION WITH ANY SUCH LOSS; AND
(C) IN NO EVENT SHALL ANY PERSONAL LIABILITY BE ASSERTED AGAINST LANDLORD IN
CONNECTION WITH THIS LEASE NOR SHALL ANY RECOURSE BE HAD TO ANY OTHER PROPERTY
OR ASSETS OF LANDLORD OR ANY OF LANDLORD’S OFFICERS, DIRECTORS, EMPLOYEES,
AGENTS OR CONTRACTORS. UNDER NO CIRCUMSTANCES SHALL LANDLORD OR ANY OF
LANDLORD’S OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR CONTRACTORS BE LIABLE FOR
INJURY TO TENANT’S BUSINESS OR FOR ANY LOSS OF INCOME OR PROFIT THEREFROM.
NOTWITHSTANDING ANYTHING SET FORTH HEREIN, IN NO EVENT SHALL ANY PERSONAL
LIABILITY BE ASSERTED BY LANDLORD AGAINST ANY OF TENANT'S OFFICERS, DIRECTORS OR
EMPLOYEES NOR SHALL ANY OF SUCH PARTIES BE PERSONALLY LIABLE FOR INJURY TO
LANDLORD’S BUSINESS OR FOR ANY LOSS OF INCOME OR PROFIT THEREFROM.
37.    Severability. If any clause or provision of this Lease is illegal,
invalid or unenforceable under present or future laws, then and in that event,
it is the intention of the parties hereto that the remainder of this Lease shall
not be affected thereby. It is also the intention of the parties to this Lease
that in lieu of each clause or provision of this Lease that is illegal, invalid
or unenforceable, there be added, as a part of this Lease, a clause or provision
as similar in effect to such illegal, invalid or unenforceable clause or
provision as shall be legal, valid and enforceable.
38.    Signs; Exterior Appearance. If Landlord leases space at the Project to
any other tenants, Tenant shall not, without the prior written consent of
Landlord, which may be granted or withheld in Landlord’s reasonable discretion:
(i) attach any awnings, exterior lights, decorations, balloons, flags, pennants,
banners, painting or other projection to any outside wall of the Project, (ii)
use any curtains, blinds, shades or screens other than Landlord’s standard
window coverings, (iii) coat or otherwise sunscreen the interior or exterior of
any windows, (iv) place any bottles, parcels, or other articles on the window
sills, (v) place any equipment, furniture or other items of personal property on
any exterior balcony, or (vi) paint, affix or exhibit on any part of the
Premises or the Project any signs, notices, window or door lettering, placards,
decorations, or advertising media of any type which can be viewed from the
exterior of the Premises. Interior signs on doors and the directory tablet
within the Premises shall be inscribed, painted or affixed for Tenant by
Landlord at the sole cost and expense of Tenant. The directory tablet shall be
provided exclusively for the display of the name and location of tenants.
Tenant may install, at Tenant’s sole cost and expense, all legally permitted
signage bearing Tenant’s name and logo desired by Tenant at the Buildings
including, but not limited to, (i) exclusive signage on multiple locations on
the Buildings including building top, façade and eyebrow signs, all as may be
desired by Tenant and reasonably acceptable to Landlord (“Building Signs”), (ii)
any existing monument signs at the main entrance to each of the Buildings
(“Building Monument Signs”), and (iii) any existing monument signs at the
Project entrances at Nobel Drive and Judicial Drive (“Project Monument Signs”).
Tenant acknowledges and agrees that Tenant's Building Signs, Building Monuments
Signs and Project Monument Signs, without limitation, the size, color, type and
locations, shall be subject to Landlord’s prior written approval, which shall
not be unreasonably withheld, conditioned or delayed and shall be consistent
with Landlord’s signage program at the Project and applicable Legal
Requirements. Tenant shall at all times have the most prominent location on the
Building Monument Signs and Project Monument Signs. Tenant shall be responsible,
at Tenant’s sole cost and expense, for the maintenance of Tenant’s signage on
Tenant’s Building Signs, Building Monument Signs and Project Monument Signs, for
the removal of Tenant’s Building Signs and Tenant’s signage on the Building
Monument Signs and Project Monument Signs at the expiration or earlier
termination of this Lease and for the repair all damage (excluding discoloration
of the building facades caused by any Building Signs) resulting from such
removal. Tenant’s signage rights on the Project Monument Signs shall become
non-exclusive if, at any time during the Term, space in any building at the
Project is leased to any third party(ies).
39.    Right to Expand.
(a)    Expansion in the Project. Tenant shall have the right, but not the
obligation, on or before January 1, 2015 (“Expansion Right Expiration Date”) to
expand the Premises (the “Expansion Rights”) to include the to be constructed
buildings (including any related subterranean parking) contemplated on the
project site plan attached hereto as Exhibit H (“Project Site Plan”) as
(i) Building 6, which Landlord currently contemplates will contain 4 floors and
a total of approximately 134,804 rentable square feet of laboratory and/or
office space (“Building 6”), and (ii) Building 7, which Landlord currently
contemplates will contain 4 floors and a total of approximately 134,804 rentable
square feet of laboratory and/or office space (“Building 7”), all upon the terms
and conditions in this Section 39; provided, however, that all of the Expansion
Requirements (as defined below) are met each time Tenant exercises an Expansion
Right. Building 6 and Building 7 shall each be individually referred to herein
as an “Expansion Building” and collectively as the “Expansion Buildings”. Upon
Tenant's written request from time to time during the Term (but in no event more
than twice during any calendar year), Landlord shall provide to Tenant updated
information regarding the status of entitlements for the Project, including, but
not limited to, material correspondence between Landlord and any governmental
authority regarding such entitlements. Notwithstanding anything to the contrary
contained herein, Tenant acknowledges that, as of the date of this Lease, (a)
Landlord has not yet received approval from the City of San Diego for the
building entitlements required for the construction of Building 5 (“Building 5
Entitlements”), (b) the parties currently contemplate that the City of San Diego
will approve Building 5 Entitlements equal to 22,116 square feet, (c) if the
City of San Diego approves Building 5 Entitlements of less or more than 22,116
square feet, the Buildable Entitlements (as defined below) available for the
Expansion Buildings shall be proportionately adjusted, and (d) if the Buildable
Entitlements available for the Expansion Buildings are so adjusted, the rentable
square footages of Building 6 and Building 7 shall be adjusted such that each
equals 50% of the available Buildable Entitlements.
As used in this Lease, “Expansion Requirements” shall mean that all of the
following requirements are satisfied: (i) Tenant is not in material Default
under any provision of the Lease; (ii) Tenant has a credit rating of “BBB-” or
better from Standard & Poor’s Corporation, or “Baa3” or better from Moody’s
Investors Service, Inc. (or in each case any successor thereof), or, in the
event that Tenant does not have a credit rating at that time, Tenant has a net
worth (as determined in accordance with GAAP) that is not less than the Minimum
Net Worth Amount; and (iii) Illumina, Inc., a Delaware corporation, or any
entity leasing or subleasing the Premises pursuant to a Permitted Assignment, is
the tenant occupying and operating out of at least 70% of the Premises under
this Lease.
Subject to the terms and conditions of this Section 39, if Tenant elects to
exercise an Expansion Right with respect to Building 6 only or both of the
Expansion Buildings, Tenant shall, on or before the Expansion Right Expiration
Date, deliver written notice to Landlord of its election to exercise such
Expansion Right (each, an “Expansion Notice”), which Expansion Notice shall
identify the Expansion Building(s) with respect to which Tenant is exercising
its Expansion Right (“Identified Expansion Building”) along with a deposit in
the amount of $100,000 multiplied by the number of Identified Expansion
Buildings identified in the Expansion Notice for use by Landlord for the initial
costs actually incurred by Landlord in connection with the initial design and
pricing (collectively, Initial Costs”) for each Identified Expansion Building
(“Expansion Deposit”). Landlord agrees to contribute up to $100,000 for the
Initial Costs associated with each Identified Expansion Building following the
exhaustion of Tenant’s applicable Expansion Deposit for such Identified
Expansion Building (evidence of which exhaustion/contribution shall be provided
to Tenant upon Tenant's written request from time to time in the form of a
detailed line item statement).
Notwithstanding anything to the contrary contained herein, Tenant acknowledges
and agrees that (i) Landlord shall have no obligation to commence the design
and/or construction of any Expansion Building prior to Tenant delivering an
Expansion Notice and an Expansion Deposit with respect to such Expansion
Building to Landlord, (ii) in no event shall Tenant have the right to exercise
an Expansion Right with respect to Building 7 if Tenant has not previously or
concurrently therewith exercised an Expansion Right with respect to Building 6
and Landlord shall have the right, in Landlord’s sole and absolute discretion,
to elect not to construct Building 7 for Tenant if Tenant elects as provided for
in this Lease to rescind its Expansion Notice with respect to Building 6, (iii)
in no event shall Tenant have the right under any circumstances to exercise an
Expansion Right with respect to less than all of the rentable square footage of
either Expansion Building, (iv) the Project Site Plan including, without
limitation, the number of floors, rentable square footages, configuration and
locations of the Expansion Buildings within the Project are not guaranteed and
are subject to change by Landlord in the exercise of Landlord’s reasonable
discretion; provided, however, that so long as all of Tenant’s Expansion Rights
remain in full force and effect under this Section 39, any such changes made by
Landlord shall not materially and adversely impact: (A) the use of Building 6
and/or Building 7 for the Permitted Use, (B) Tenant’s ability to access the
Premises, (C) Tenant’s parking rights under Section 10, or (D) the total square
footage available to Tenant for expansion of the Premises pursuant to this
Section 39(a), and (v) Landlord’s obligation to develop each Expansion Building
on receipt of the applicable Expansion Notice is expressly conditioned upon and
subject to, and with Landlord having no liability for the failure of any of such
conditions (except as otherwise expressly provided herein), Landlord’s ability
to obtain, on terms and conditions reasonably acceptable to Landlord, all
governmental approvals necessary to permit the design and construction of the
applicable Expansion Building, the reasonable availability of materials and
labor and all other conditions outside of Landlord’s reasonable control. If
Tenant exercises its Expansion Rights hereunder with respect to either Expansion
Building and does not exercise any of its rescission rights under Section 39(c)
with respect thereto, Landlord agrees to use reasonable and diligent efforts to
pursue and obtain as contemplated under this Lease and the applicable work
letter the necessary governmental approvals to permit the design and
construction of the applicable Expansion Building.
(b)    Extension of Expansion Right Expiration Date. Tenant shall have the right
to extend the Expansion Right Expiration Date by delivering written notice
(“Election Notice”) of such election to Landlord no later than June 30, 2014, in
which case, commencing on January 1, 2015 (“Land Rent Commencement Date”), and
continuing thereafter on the first day of each month until the Outside Expansion
Right Expiration Date (as defined below), Tenant shall be required to pay rent
to Landlord (“Land Rent”) in an amount which results in Landlord receiving in
equal monthly installments a 7.5% per annum return on the amount of the then
Buildable Entitlements at the Project multiplied by $50 for each square foot of
such Buildable Entitlements. The Land Rent shall be increased on every other
anniversary of the Land Rent Commencement Date by the Bi-Annual Rent Adjustment
Percentage. For example, if Tenant elects to extend the Expansion Right
Expiration Date as provided for in this Section 39(b) and Tenant has not
commenced paying Base Rent on any Expansion Building, the Land Rent due on
January 1, 2015, shall be $84,252.50 per month ((calculated as follows: 269,608
X $50.00 per square foot X 7.5%) divided by 12). Notwithstanding anything to the
contrary contained herein, if, commencing on January 1, 2015 and continuing for
each month of the Term, Tenant pays the Land Rent due under this Lease and
Tenant timely exercises any express right which Tenant has under Section
39(e)(E) to terminate this Lease with respect to the Expansion Building then
being constructed, Landlord shall refund to Tenant the allocable portion of the
Land Rent paid by Tenant with respect to such Expansion Building between the
date that Tenant exercised the Expansion Right for such Expansion Building and
the date Tenant elects to terminate the Lease pursuant to Section 39(e)(E) with
respect to such Expansion Building. In no event, however, shall Tenant be
entitled to any refund of any Land Rent if Tenant’s termination right under
Section 39(e)(E) is caused in whole or in part by any revocation of any
entitlements existing as of the date hereof. If Landlord receives written notice
from any Governmental Authority revoking any entitlements existing as of the
date hereof, Landlord shall provide Tenant with a copy of such notice and the
Land Rent shall be adjusted accordingly on a going forward basis.
If Tenant does not provide Landlord with an Election Notice by June 30, 2014,
then Landlord shall provide Tenant with a written notice stating in bold and all
caps 12 point font that Tenant’s failure to respond in writing to Landlord
within 10 business days after Tenant’s receipt of Landlord’s notice and
affirmatively electing in such response to extend the Expansion Right Expiration
Date shall be deemed Tenant’s election to waive Tenant’s right to extend the
Expansion Right Expiration Date. If in Tenant’s response notice, Tenant elects
to extend the Expansion Right Expiration Date, Tenant shall be required to
commence paying Land Rent as provided for in this Lease commencing on January 1,
2015.
As used in this Lease, (i) “Outside Expansion Right Expiration Date” shall mean
the earlier of (a) the date which is 6 months after the date Tenant provides
Landlord with written notice of its election to terminate all of its unexercised
Expansion Rights under this Section 39, and (b) October 31, 2031; and (ii)
“Buildable Entitlements” shall mean all 269,608 rentable square feet of space
contemplated for the Expansion Buildings minus the rentable square footage of
the Expansion Building(s) for which Tenant is paying Base Rent.
For the avoidance of doubt, (x) following the Expansion Right Expiration Date
or, if applicable the Outside Expansion Right Expiration Date, or (y) if Tenant
is not paying the Land Rent which Tenant is required to pay to Landlord under
this Lease, Landlord shall have the right to develop any new building(s) at the
Project and lease all or any portion of such new building(s) to any third
party(ies) (except as provided in Sections 39(f) and 44(r)) upon any terms and
conditions acceptable to Landlord.
(c)    Rescission Rights.
(i)    Initial Rescission Right. Following receipt of each Expansion Notice,
Landlord shall deliver to Tenant a detailed written line item estimate on the
part of Landlord of the Project Costs (as defined below) for the Identified
Expansion Building (“Initial Project Cost Estimate”) along with a corresponding
estimate of the initial monthly Base Rent which would be due for the applicable
Identified Expansion Building (“Initial Base Rent Estimate”). Tenant shall have
the right (“Initial Rescission Right”) to rescind the applicable Expansion
Notice by delivery to Landlord of a written rescission notice (“Initial
Rescission Notice”) on or before the date that is 15 business days after
Landlord’s delivery to Tenant of the Initial Project Cost Estimate and Initial
Base Rent Estimate for the Identified Expansion Building if (and only if) the
Initial Base Rent Estimate for the Identified Expansion Building for the first
year of the Base Term for such Identified Expansion Building exceeds $3.00 per
rentable square foot per month (“Cap Amount”). The Cap Amount provided for in
the preceding sentence applies if the first year of the Base Term for the
Identified Expansion Building is reasonably estimated by Landlord to commence
within 24 months after the Initial Commencement Date, and the Cap Amount shall
thereafter be increased by the Bi-Annual Rent Adjustment Percentage on every
other anniversary of the Initial Commencement Date. The Initial Rescission Right
shall only apply, depending on when the Base Term for the Identified Expansion
Building is reasonably estimated by Landlord to commence, if the Initial Base
Rent Estimate exceeds the Cap Amount (as adjusted). If Tenant fails to timely
deliver the Initial Rescission Notice to Landlord, Tenant shall be deemed to
have waived its Initial Rescission Right. If Tenant delivers the Initial
Rescission Notice to Landlord pursuant to this paragraph (and Tenant does not
continue to pay Land Rent as provided for in this Lease), Tenant’s Expansion
Right with respect to the Identified Expansion Building shall terminate and be
of no further force or effect, in which case Tenant shall have no further rights
under Section 39 with respect to such Identified Expansion Building, and
Landlord shall have the right to develop any new building(s) at the Project and
lease all or any portion of such new building(s) to any third party(ies) (except
as provided in Sections 39(f) and 44(r)) upon any terms and conditions
acceptable to Landlord unless Tenant continues to pay the Land Rent as provided
for in Section 39(b) in which case Landlord shall not have the right to develop
any new building(s) until the Outside Expansion Right Expiration Date.
(ii)    Final Rescission Right. Following Tenant’s waiver of its Initial
Rescission Right and the development by Landlord of preliminary plans for such
Identified Expansion Building, Landlord shall prepare a RFP for 3 general
contractors reasonably acceptable to Landlord and Tenant who will each be
requested to respond with their fee and general conditions based on the
Expansion Building Preliminary Plans. Landlord and Tenant shall use reasonable
efforts to agree upon one of the bids (“Contractor’s Initial Bid”) for the
purposes of developing a revised estimate of the Project Costs. Based on the
Contractor’s Initial Bid, Landlord shall deliver to Tenant a revised written
estimate on the part of Landlord of the Project Costs for the Identified
Expansion Building (“Revised Project Cost Estimate”). Tenant shall have a final
right (“Final Rescission Right”) to rescind the applicable Expansion Notice by
delivery to Landlord of a written rescission notice (“Final Rescission Notice”)
on or before (i) the date that is 15 business days after Landlord’s delivery to
Tenant of the Revised Project Cost Estimate for the Identified Expansion
Building if (and only if) the Revised Project Cost Estimate exceeds the Initial
Project Cost Estimate by more than 20%, or (ii) the date that is 5 business days
after Landlord selection of such Contractor’s Initial Bid for the purposes of
developing the Revised Project Cost Estimate if Tenant was unwilling to agree to
use the Contractor’s Initial Bid selected by Landlord for the purposes of
developing a revised estimate of the Project Costs. If Tenant fails to timely
deliver the Final Rescission Notice to Landlord, Tenant shall be deemed to have
waived its Final Rescission Right. If Tenant delivers the Final Rescission
Notice to Landlord pursuant to this paragraph (and Tenant does not continue to
pay Land Rent as provided for in this Lease), Tenant’s Expansion Right with
respect to the Identified Expansion Building shall terminate and be of no
further force or effect, in which case Tenant shall have no further rights under
Section 39 with respect to such Identified Expansion Building, and Landlord
shall have the right to develop any new building(s) at the Project and lease all
or any portion of such new building(s) to any third party(ies) (except as
provided in Sections 39(f) and 44(r)) upon any terms and conditions acceptable
to Landlord unless Tenant continues to pay the Land Rent as provided for in
Section 39(b) in which case Landlord shall not have the right to develop any new
building(s) until the Outside Expansion Right Expiration Date.
(iii)    Effect of Multiple Rescissions. Notwithstanding anything to the
contrary contained in this Lease, if Tenant’s exercises a second Initial
Rescission Right and/or a second Final Rescission Right under this Lease, Tenant
shall be solely responsible (without any contribution from Landlord) for all
Initial Costs and other related costs incurred by Landlord in connection with
all future exercises by Tenant of any of its Expansion Rights.
(iv)    Acknowledgement. If Tenant elects to exercise either its Initial
Rescission Right or its Final Rescission Right with respect to any Identified
Expansion Building, Landlord shall return to Tenant any unused portion, if any,
of the Expansion Deposit delivered by Tenant to Landlord with respect to such
Identified Expansion Building. Tenant acknowledges and agrees that the Initial
Project Cost Estimates and the Revised Project Cost Estimate provided by
Landlord and the Contractor’s Initial Bid delivered pursuant to the provisions
of Section 39(c)(i) and (ii) are merely estimates and are not a guaranty of
actual Project Costs and/or the amount of Base Rent which will be payable for
any Identified Expansion Building and Landlord shall have no liability to Tenant
in connection therewith nor shall Tenant have any additional rescission rights
beyond those expressly provided for in Section 39(c)(i) and (ii).
(d)    Lease Terms for Expansion Building(s). Tenant acknowledges and agrees
that if Tenant leases any Expansion Building(s) pursuant to this Section 39, all
of the terms and conditions of this Lease shall apply to the leasing of such
Expansion Building, except that: (i) the definitions on page 1 of this Lease
shall be amended as necessary to document and reflect the addition of the
applicable Expansion Building to the Project; (ii) Tenant shall be required to
pay annual Base Rent in equal monthly installments for the first 12 months
following the Expansion Building Rent Commencement Date (as defined below) for
the applicable Expansion Building at a rate which provides Landlord with an
annual return on all Project Costs for such Expansion Building which is the
greater of (A) 300 basis points above the 10-year U.S. Treasury yield as of the
date that Landlord receives the applicable Expansion Notice, and (B) 8.5%, and
such return shall be subject to increases as provided for in Section 4 hereof by
the Bi-Annual Rent Adjustment Percentage on every other anniversary of the
applicable Expansion Building Rent Commencement Date; (iii) the Base Term of the
Lease with respect to the applicable Expansion Building shall expire on the same
day as the Base Term with respect to the original Premises; provided, however,
that each time Tenant exercises its Expansion Right with respect to any
Expansion Building during the last 120 months of the Base Term, the Base Term
for the entire Premises shall be extended each time to the date that is 120
months after the Expansion Building Rent Commencement Date for the applicable
Expansion Building; (iv) Landlord shall be responsible for the construction of
tenant improvements in each Expansion Building desired by Tenant which
improvements shall be of a fixed and permanent nature approved by Landlord
(“Expansion Building Tenant Improvements”) and shall be required to satisfy the
requirements set forth on Exhibit K, and the parties shall enter into a work
letter for the Expansion Building and Expansion Building Tenant Improvements
reasonably acceptable to both parties and based substantially on the form of
work letter attached hereto as Exhibit J (each, an “Expansion Building Work
Letter”) with Tenant receiving a tenant improvement allowance from Landlord in
the amount of $60 per rentable square foot of the applicable Expansion Building
($7.50 per rentable square foot of which may be used for Tenant’s cabling and
Tenant’s furniture, fixtures and equipment within the applicable Expansion
Building) which shall be disbursed as provided for in the applicable Expansion
Building Work Letter; and (v) the “Expansion Building Rent Commencement Date”
shall be the date that is 60 days after the Substantial Completion of the
Building Shell and the Substantial TI Completion of the Expansion Building
Tenant Improvements (all as defined in the Expansion Building Work Letter), and
Tenant shall commence paying Base Rent and Operating Expenses for the Expansion
Building on such date.
As used in this Lease, “Project Costs” shall mean the sum of all of the actual,
documented costs incurred by Landlord through Project Close-Out in connection
with the acquisition, design and construction of the applicable Expansion
Building, the Parking Structure and all related improvements including, without
limitation: (i) the value of the land on which the applicable Expansion Building
is being constructed (which for purposes hereof the parties agree is equal to
$50.00 per rentable square foot of the applicable Expansion Building as of the
Initial Commencement Date and such amount is subject to increases of 6% on every
other anniversary of the Initial Commencement Date; (ii) architectural,
engineering, construction and development cost and fees; (iii) other soft and
legal costs; (iv) a development fee to Landlord equal to 3% of the hard Project
Costs; (v) Landlord’s carry costs related to the applicable Expansion Building
from the initiation of construction of such Expansion Building until the
applicable Expansion Building Rent Commencement Date; (vi) the $60 per rentable
square foot tenant improvement allowance granted by Landlord for the applicable
Expansion Building Tenant Improvements plus Landlord’s carry costs related to
the applicable Expansion Building Tenant Improvements from the initiation of
construction of the applicable Expansion Building Tenant Improvements until the
applicable Expansion Building Rent Commencement Date; (vii) infrastructure
costs, assessments, impact fees, site preparation costs, testing, labor and
materials to construct the applicable Expansion Building and the Parking
Structure and related infrastructure and improvements, permit fees, costs
associated with obtaining the PID Permit amendment and necessary entitlement or
re-entitlements, if necessary, and any other governmental fees, sales taxes and
fees payable to contractors, project landscaping, water, gas and electrical fees
and related miscellaneous costs, and builder’s risk insurance and other
insurance related costs, (viii) leasing commissions, if any, payable to a broker
solely in its capacity as the broker representing Tenant in connection with the
applicable Expansion Right and, unless Tenant has notified Landlord in writing
otherwise, such broker shall be Cushman & Wakefield of San Diego, Inc., but only
if Steve Rosetta is the broker at Cushman & Wakefield of San Diego, Inc.,
representing Tenant in connection with the applicable Expansion Right and
further provided however, that Landlord and tenant’s broker (whether Cushman &
Wakefield of San Diego, Inc., or any other brokerage company) shall have entered
into a commission agreement with respect to such commission which agreement is
in form and content acceptable to Landlord and such broker, each in their
respective sole and absolute discretion, (ix) Landlord’s carry costs related to
the Parking Structure from the initiation of construction of such Parking
Structure until the Project Close-Out; (x) Landlord’s contribution towards the
Initial Costs for such Expansion Building, and (xi) Landlord’s reasonable
financing costs (or reasonable imputed market rate financing costs) with respect
to all of the foregoing. Landlord shall not incur any Project Costs not
contemplated by this Lease and/or any applicable work letter without Tenant’s
prior written approval. Tenant shall have the right to audit Project Costs
within 180 days after the Project Close-Out and if Tenant discovers errors and
Landlord and Tenant are unable to resolve such dispute within 30 days after the
expiration of such 180 day period, it shall be resolved by arbitration by a
single arbitrator with the qualifications and experience appropriate to resolve
the matter and appointed pursuant to and acting in accordance with the rules of
the American Arbitration Association.
As used herein, “Parking Structure” shall mean, all as elected by Landlord in it
sole discretion, one or more parking structures each of which may be constructed
in one or more phases with the same or different numbers of tiers in each phase;
provided, however that the first parking structure shall be constructed in
generally the location depicted on the Project Site Plan. Landlord shall not
however require the construction in connection with any Expansion Building of
more parking spaces than is required under applicable Legal Requirements to
satisfy the PID Permit for the then Premises and the additional rentable square
footage of such Expansion Building. Each Parking Structure shall generally
comply with the requirements set forth on Exhibit O attached hereto. Landlord
shall use reasonable efforts to notify Tenant of its elections with respect to
the applicable Parking Structure(s) within a reasonable time after Tenant
exercises its Expansion Right for an Expansion Building. If Landlord elects to
construct any Parking Structure(s) in phases, all of the Project Costs incurred
in connection with each such phase of the applicable Parking Structure(s) shall
be attributable to the applicable Expansion Building being constructed by
Landlord. For example, if Landlord elects in connection with Tenant’s exercise
of the Expansion Right for Building 6 to construct a Parking Structure with only
2 tiers, all of the Project Costs in connection with such Parking Structure
shall be included in the definition of Project Costs for Building 6 and used to
calculate Base Rent for Building 6, and, if Tenant thereafter elects to exercise
its Expansion Right for Building 7, and Landlord elects to construct additional
tiers and/or a new Parking Structure at that time, all of the Project Costs in
connection with such additional tiers and/or new Parking Structure shall be
included in the definition of Project Costs for Building 7 and used to calculate
Base Rent for Building 7. Notwithstanding anything to the contrary contained
herein, if Tenant properly exercises its rescission rights as provided for in
this Lease, any elections made by Landlord pursuant to this paragraph shall not
be binding on Landlord if Landlord so elects and Landlord shall be free to make
new elections if Tenant thereafter exercises any of its Expansion Rights.
As used in this Lease, “Project Close-Out” shall mean the first date following
the final completion of the applicable Expansion Building by Landlord that (i)
all contractors, subcontractors, suppliers, architects and others who supplied
labor or materials have been paid in full and all liens are released; (ii) the
architect or general contractor for the applicable Expansion Building have
issued any certificate(s) of completion as may be required by Landlord; (iii)
all punch list items have been completed; and (iv) the contractors and architect
have provided all close out documentation required by Landlord; provided,
however, that in no event shall such date be deemed to occur until the
applicable Expansion Building Rent Commencement Date.
(e)    Construction of Expansion Buildings. In addition to the foregoing, the
following provisions shall apply with respect to the design and construction of
each Expansion Building:
(A)    Building Shell. Notwithstanding anything to the contrary contained in
this Section 39, Landlord’s construction obligation with respect to the each
Expansion Building shall be limited to an obligation to construct, subject to
the other provisions of this Section 39, and to deliver to Tenant the Expansion
Building upon Substantial Completion of the Building Shell and upon Substantial
TI Completion of the Expansion Building Tenant Improvements. As used in this
Lease, “Building Shell” shall mean a warm shell containing the warm shell
requirements set forth in the Expansion Building Requirements attached hereto as
Exhibit I. As used in this Lease, “Building Shell/TI Delivery Date” shall mean
the date that Tenant is notified in writing that the Building Shell has been
Substantially Completed.
(B)    Architects and Contractors. After the selection of the general contractor
as provided for in the Expansion Building Work Letter, Landlord shall enter into
a guaranteed maximum price contract with the selected general contractor.
(C)    Plans. Tenant acknowledges that certain plans and other information that
may be made available to Tenant pursuant to the provisions of this Section 39
and any Expansion Building Work Letter constitute information that Landlord
considers confidential and, upon request from Landlord, Tenant and Landlord
shall execute a confidentiality and non-disclosure agreement reasonably
acceptable to each party with respect to such confidential information.
(D)    Budget. The cost information related to the design and construction of
each Expansion Building shall be shared with Tenant on a so called “open book
basis”. Tenant shall have the right to approve (which approval shall not be
unreasonably withheld, conditioned or delayed) any material changes to the final
budget prior to Landlord entering into the guaranteed maximum price contract
with the general contractor for the Building Shell. Notwithstanding anything to
the contrary contained herein or in the Expansion Building Work Letter, Landlord
shall have the right to include a contingency of up to 10% in the budget and in
the guaranteed maximum price contract with the general contractor. In addition,
the budget for each Expansion Building shall also include a payment for the
development fee provided for as part of the Project Costs. Landlord shall not be
entitled to any reimbursement of any fees, overhead, travel, salaries or costs
of Landlord’s personnel in connection with the construction of the Expansion
Building unless they are defined as direct Project Cost.
(E)    Schedule. Landlord’s proposed construction schedule shall be included as
part of the Expansion Building Work Letter. Landlord shall use reasonable
efforts to cause the Building Shell to be Substantially Completed within 24
months after the building permit for the shell and core construction of the
applicable Shell Building has been issued by the applicable Governmental
Authority). If the Building Shell/TI Delivery Date has not occurred within such
24 month period, Tenant shall have no right to terminate this Lease with respect
to the Expansion Building nor shall Landlord have any liability to Tenant for
any loss or damage resulting therefrom except that Tenant shall be entitled to
occupy such Expansion Building following the Expansion Building Rent
Commencement Date without the obligation to pay Base Rent 1 day for each day
following the expiration of such 24 month period until the Building Shell/TI
Delivery Date. If the Building Shell/TI Delivery Date has not occurred within 30
months after the building permit for the shell and core construction of the
applicable Shell Building has been issued by the applicable Governmental
Authority, Tenant shall have the right to elect to either (i) continue to
receive the Base Rent abatement provided for in the preceding sentence, or (ii)
terminate this Lease only with respect to the applicable Expansion Building by
written notice to Landlord, in which case, except as provided for in the last
sentence of the first paragraph of Section 39(b), Landlord shall not have any
further duties or obligations to Tenant under this Lease with respect to the
applicable Expansion Building and Tenant shall have no further expansion rights
with respect to such Expansion Building and Landlord shall be free to lease it
to any third party(ies) on any terms and conditions acceptable to Landlord. If
Tenant does not elect to terminate this Lease with respect to the applicable
Expansion Building pursuant to subsection (ii) of the immediately preceding
sentence within 10 business days after the expiration of such 30 month period,
such right to terminate this Lease with respect to applicable Expansion Building
shall be waived, this Lease with respect to the applicable Expansion Building
shall remain in full force and effect, and Tenant shall be deemed to have
elected to proceed under subsection (i) above. Notwithstanding anything to the
contrary contained herein, Tenant acknowledges and agrees that any Tenant Delays
(as defined in Expansion Building Work Letter) and/or delays caused by Force
Majeure shall extend the dates set forth in this paragraph for Landlord’s
performance of its obligations on a day for day basis; provided, however, that
in no event may any delays caused by Force Majeure extend the dates set forth in
this paragraph for Landlord’s performance of its obligations by more than 90
days in the aggregate except in the case of any matter covered by the provisions
of Sections 18 and 19 hereof.
(F)    Acknowledgment. Upon the request of either Landlord or Tenant, the
parties shall execute and deliver a written factually correct acknowledgement of
the Building Shell/TI Delivery Date, the Expansion Building Rent Commencement
Date, the Base Rent for the Expansion Building and the expiration date of the
Base Term as and when such are established in the form substantially similar to
the form of the “Acknowledgement of Commencement Date” attached to this Lease as
Exhibit D; provided, however, the failure by either party to execute and deliver
such acknowledgment shall not affect the other party’s rights hereunder.
(f)    Right to Further Expand at the Project. During the Term, Tenant shall
have the right (the “SGS Expansion Right”) to elect to lease any Available
Second Generation Space upon the terms and conditions set forth in this Section
39(f). As used herein, “Available Second Generation Space” shall mean any space
previously leased by Landlord to any third party in any new building(s)
constructed by Landlord at the Project after the date hereof and not leased by
Tenant. If there is any Available Second Generation Space available for lease or
becoming available for lease to a third party (other than the tenant then
leasing such space (whether or not such tenant has the right to renew) and/or
any other party to whom Landlord has granted a right to lease such Available
Second Generation Space), Landlord shall, at such time as Landlord shall elect,
deliver to Tenant written notice (the “Offer Notice”) of such Available Second
Generation Space, together with the terms and conditions on which Landlord is
prepared to lease to Tenant such Available Second Generation Space. Tenant shall
be entitled to exercise its right under this Section 39(f) only with respect to
the entire Available Second Generation Space identified in the Offer Notice.
    If the applicable Available Second Generation Space being described in the
applicable Offer Notice is 1 floor or less of any applicable building, Landlord
may not require a base term for such space in the Offer Notice which is more
than 10 years. If the applicable Available Second Generation Space being
described in the applicable Offer Notice is more than 1 floor in any applicable
building, there shall be no cap on the length of the base term which Landlord
may require for such space in the Offer Notice. If Tenant delivers an Acceptance
Notice but in good faith believes that the Base Rent and escalations being
required by Landlord is above the market rate for such Available Second
Generation Space, the Base Rent for such Available Second Generation Space shall
be determined in the same manner as the Market Rate (as defined in Section 40)
is determined pursuant to Section 40 but on an expedited basis to be agreed upon
by Landlord and Tenant at the time Tenant delivers an Acceptance Notice but in
all events the determination of the Base Rent for such Available Second
Generation Space must be finalized, if at all, within 30 days after Tenant
delivers the applicable Acceptance Notice.
    Tenant shall have 10 business days following delivery of the Offer Notice to
deliver to Landlord written notification (“Acceptance Notice”) if Tenant elects
to lease the Available Second Generation Expansion Space described in the Offer
Notice. Tenant’s failure to deliver an Acceptance Notice to Landlord within the
required 10 business day period shall be deemed to be an election by Tenant not
to exercise Tenant’s right to lease the Available Second Generation Space
pursuant to this Section 39(f), in which case Tenant shall be deemed to have
waived its rights under this Section 39(f) with respect to such Available Second
Generation Space, the provisions of this Section 39(f) shall no longer apply to
such Available Second Generation Space and Landlord shall have the right to
lease such Available Second Generation Space to any party or parties and on any
terms and conditions acceptable to Landlord in its sole and absolute discretion.
Notwithstanding anything to the contrary contained herein, if Tenant delivers an
Acceptance Notice to Landlord for any Available Second Generation Space and
within 30 days thereafter no lease amendment or lease agreement for the
applicable Available Second Generation Space has been entered into by the
parties on such terms and conditions as may be acceptable to each party in its
sole and absolute discretion after negotiating in good faith, Tenant shall be
deemed to have waived its right to lease the applicable Available Second
Generation Space and Landlord shall be free to lease the same to any third party
and on any terms and conditions acceptable to Landlord in its sole and absolute
discretion.
Notwithstanding anything to the contrary contained herein, Tenant’s SGS
Expansion Right shall, at Landlord’s option, not be in effect during any period
where Tenant is in material Default under this Lease.
(g)    Tenant Default. Notwithstanding anything to the contrary contained
herein, Landlord shall have the right to suspend performance of all or any of
Landlord’s obligations under this Section 39 during any period that Tenant is in
material Default under this Lease and such period of suspension shall constitute
a delay caused by Tenant; provided that Landlord has notified Tenant in writing
of Landlord’s intention to suspend performance due to such Default.
(h)    Amended Lease. Landlord and Tenant shall enter into a lease amendment or
lease agreement acceptable to both Landlord and Tenant for each Expansion
Building setting forth the lease the rental of such Expansion Building
consistent with those set forth in this Section 39.
(i)    Termination. The Expansion Right shall, at Landlord’s option, terminate
and be of no further force or effect even after Tenant’s due and timely exercise
of the Expansion Right, if, after such exercise, but prior to the commencement
date of the Base Term of the lease of the applicable Expansion Building, there
is any material Default by Tenant under the Lease.
(j)    Rights Personal. The Expansion Rights and the SGS Expansion Right are
personal to Tenant and are not assignable without Landlord’s consent, which may
be granted or withheld in Landlord’s sole discretion separate and apart from any
consent by Landlord to an assignment of Tenant’s interest in the Lease optional
provision, except that they may be assigned in connection with any Permitted
Assignment of this Lease.
(k)    No Extensions. The period of time within which any Expansion Right or SGS
Expansion Right, as applicable, may be exercised shall not be extended or
enlarged by reason of Tenant’s inability to exercise the Expansion Right or SGS
Expansion Right, as applicable.
(l)    Additional Entitlements. Tenant acknowledges and agrees that (i) Landlord
may be able to obtain additional entitlements for approximately 190,000
additional rentable square feet at the Project (“Additional Entitlements”), (ii)
if Landlord obtains any or all such Additional Entitlements, the Project Site
Plan may be revised by Landlord to include such additional square footage, (iii)
in no event is Landlord obligated to seek or obtain such Additional
Entitlements, and (iv) if Landlord obtains any or all such Additional
Entitlements, Tenant’s Expansion Right shall, at Landlord’s option, include such
additional square footage subject to all of the other provisions of this Section
39; provided, however, that Tenant shall not be required to pay Land Rent in
connection with such Additional Entitlements. In no event shall any portion of
the square footage comprising the Additional Entitlements be added to Building 6
or Building 7 so long as Tenant continues to have the Expansion Rights under
this Lease and Tenant is paying the Land Rent.
40.    Right to Extend Term. Tenant shall have the right to extend the Term of
the Lease upon the following terms and conditions:
(a)    Extension Rights. Tenant shall have 4 consecutive rights (each, an
“Extension Right”) to extend the term of this Lease with respect to all or any
of the Buildings (provided that Tenant must exercise its Extension Right with
respect to the entire rentable square footage of any Building being leased to
Tenant with respect which Tenant is exercising its Extension Right) for 5 years
each (each, an “Extension Term”) on the same terms and conditions as this Lease
(other than with respect to Base Rent, the Building 4 Work Letter, the Building
1 and 2 Work Letter, the Building 5 Work Letter, any Expansion Building Work
Letter and Section 39 hereof) by giving Landlord written notice of its election
to exercise each Extension Right (which notice shall identify the Building(s)
with respect to which Tenant elects to exercise its Extension Right) at least 12
months prior, and no earlier than 24 months prior, to the expiration of the Base
Term of the Lease or the expiration of any prior Extension Term. Notwithstanding
the foregoing or anything to the contrary contained in this Lease, Tenant shall
only have the right to extend the term of this Lease with respect to Building 5
and the Sports Courts if Tenant is also extending the term of the Lease with
respect to Building 1, Building 2, Building 3, Building 4 and any Expansion
Buildings then being leased by Tenant. If Tenant extends the term of this Lease
for any Extension Term with respect to some but not all of the Buildings then
being leased by Tenant at the Project, Tenant shall not have the right to extend
the term of the Lease with respect to Building 5 or the Sports Courts, Building
5 shall no longer be included as part of the Premises and Tenant shall no longer
have the right to use Building 5 or the Sports Courts.
    Upon the commencement of any Extension Term, (i) Base Rent for Building 1,
Building 2, Building 3, Building 4 and any applicable Expansion Buildings shall
be payable at the Market Rate (as defined below), and (ii) Base Rent for
Building 5 shall be equal to the amount of Base Rent payable for Building 5
immediately prior to such commencement of the Extension Term. Base Rent for
Building 1, Building 2, Building 3, Building 4 and Building 5 shall thereafter
be adjusted on each annual anniversary of the commencement of such Extension
Term by a percentage as determined by Landlord and agreed to by Tenant at the
time the Market Rate is determined (or as part of the determination of Market
Rate as provided in Section 40(b) below). As used herein, “Market Rate” shall
mean the rate that comparable landlords of comparable buildings have accepted in
current transactions from non-equity (i.e., not being offered equity in the
buildings), nonrenewal, non-expansion and nonaffiliated tenants of similar
financial strength for space of comparable size, quality (including all
Alterations and other improvements other than the Excluded Improvements (as
defined below)) and floor height in Class A office and laboratory buildings, as
applicable, in the University Towne Center area of San Diego for a comparable
term, with the determination of the Market Rate to take into account all
relevant factors, including tenant inducements, percentage of laboratory and
office space, parking costs, leasing commissions, allowances or concessions, if
any. If the allowances, free rent and/or other economic concessions granted
pursuant to this Section 40 differ from those granted in the comparable
transactions, an adjustment to the applicable Market Rate shall be made on a
basis consistent with the adjustments commonly made in the market for comparable
differences in concession packages. As used herein, “Excluded Improvements”
shall mean those fixed and permanent improvements to the Premises which Tenant
can prove to Landlord’s reasonable satisfaction were installed and paid for by
Tenant during the 120 months immediately prior to the then applicable expiration
date of the Base Term and which Landlord could require under this Lease to
remain in the Premises upon expiration of the Base Term of this Lease.
If, on or before the date which is 180 days prior to the expiration of the Base
Term of this Lease or any prior Extension Term, Tenant has not agreed with
Landlord’s determination of the Market Rate and the rent escalations for the
applicable Extension Term after negotiating in good faith, Tenant shall be
deemed to have elected arbitration as described in Section 40(b). Tenant
acknowledges and agrees that, if Tenant has elected to exercise an Extension
Right by delivering notice to Landlord as required in this Section 40(a), Tenant
shall have no right thereafter to rescind or elect not to extend the term of the
Lease for such Extension Term.
(b)    Arbitration.
(i)    Within 10 days of Tenant’s notice to Landlord of its election (or deemed
election) to arbitrate Market Rate and escalations, each party shall deliver to
the other a proposal containing the Market Rate and escalations that the
submitting party believes to be correct (“Extension Proposal”). If either party
fails to timely submit an Extension Proposal and such failure continues for more
than 5 business days after receipt of a written notice from the other party
requesting such party’s Extension Proposal, then the requesting party’s
submitted proposal shall determine the Base Rent for the Extension Term. If both
parties submit Extension Proposals, then Landlord and Tenant shall meet within 7
days after delivery of the last Extension Proposal and make a good faith attempt
to mutually appoint a single Arbitrator (as defined below) to determine the
Market Rate. If Landlord and Tenant are unable to agree upon a single
Arbitrator, then each shall, by written notice delivered to the other within 10
days after the meeting, select an Arbitrator. If either party fails to timely
give notice of its selection for an Arbitrator and such failure continues for
more than 5 business days after receipt of a written notice from the other party
requesting such party’s Arbitrator selection, then the requesting party’s
submitted Arbitrator shall determine the Base Rent for the Extension Term. The 2
Arbitrators so appointed shall, within 5 business days after their appointment,
appoint a third Arbitrator. If the 2 Arbitrators so selected cannot agree on the
selection of the third Arbitrator within the time above specified, then either
party, on behalf of both parties may request such appointment of such third
Arbitrator by application to any state court of general jurisdiction in the
jurisdiction in which the Premises are located, upon 10 days prior written
notice to the other party of such intent.
(ii)    The authority of the Arbitrator(s) shall be limited strictly to a
selection of either Landlord’s Extension Proposal in its entirety or Tenant’s
Extension Proposal in its entirety as the Extension Proposal which most closely
approximates the Market Rate and escalations. The Arbitrator(s) shall have no
authority to create an independent structure of Market Rate and escalations,
combine elements of both Extension Proposals to create a third, or compromise or
alter in any way any of the components of the Extension Proposals submitted by
the parties. The sole decision to be made shall be which of the parties’
Extension Proposals in its entirety shall determine the Market Rate and
escalations for the Extension Term.
(iii)    The decision of the Arbitrator(s) shall be made within 30 days after
the appointment of a single Arbitrator or the third Arbitrator, as applicable.
The decision of the single Arbitrator or majority of the 3 Arbitrators shall be
final and binding upon the parties. Each party shall pay the fees and expenses
of the Arbitrator appointed by or on behalf of such party and the fees and
expenses of the third Arbitrator shall be borne equally by both parties. If the
Market Rate and escalations are not determined by the first day of the Extension
Term, then Tenant shall pay Landlord Base Rent in an amount equal to the Base
Rent in effect immediately prior to the Extension Term increased by the
Bi-Annual Rent Adjustment Percentage until such determination is made. After the
determination of the Market Rate and escalations, the parties shall make any
necessary adjustments to such payments made by Tenant. Landlord and Tenant shall
then execute an amendment recognizing the Market Rate and escalations for the
Extension Term.
(iv)    An “Arbitrator” shall be any person appointed by or on behalf of either
party or appointed pursuant to the provisions hereof and: (i) shall be (A) a
member of the American Institute of Real Estate Appraisers with not less than 10
years of experience in the appraisal of institutional quality Class A office and
life sciences space in San Diego, or (B) a licensed commercial real estate
broker with not less than 15 years experience representing landlords and/or
tenants in the leasing of institutional quality Class A office and life sciences
space in San Diego, (ii) devoting substantially all of their time to
professional appraisal or brokerage work, as applicable, at the time of
appointment and (iii) be in all respects impartial and disinterested.
(c)    Rights Personal. Extension Rights are personal to Tenant and are not
assignable without Landlord’s consent, which may be granted or withheld in
Landlord’s sole discretion separate and apart from any consent by Landlord to an
assignment of Tenant’s interest in the Lease, except that they may be assigned
in connection with any Permitted Assignment of this Lease.
(d)    Exceptions. Notwithstanding anything set forth above to the contrary,
Extension Rights shall, at Landlord’s option, not be in effect and Tenant may
not exercise any of the Extension Rights during any period of time that Tenant
is in material Default under any provision of this Lease.
(e)    No Extensions. The period of time within which any Extension Rights may
be exercised shall not be extended or enlarged by reason of Tenant’s inability
to exercise the Extension Rights.
(f)    Termination. The Extension Rights shall, at Landlord’s option, terminate
and be of no further force or effect even after Tenant’s due and timely exercise
of an Extension Right, if, after such exercise, but prior to the commencement
date of an Extension Term, Tenant is in material Default under this Lease.
41.    Right of First Refusal to Purchase. Tenant shall also have the right to
purchase the Buildings or the Project upon the following terms and conditions:
(a)RFR Right. If Landlord intends to accept a bona fide offer (the “Pending
Deal”) to sell the Project, or any portion thereof, to any third party (other
than to an affiliate of Landlord or a Holder (or its successors or assigns) or
in connection with a sale of the Project as part of a portfolio transaction),
Landlord shall, so long as Tenant’s rights hereunder are preserved, deliver to
Tenant written notice (the “Pending Deal Notice”) of the material terms of such
Pending Deal including, without limitation, the purchase price and any earnest
money deposits required to be delivered (collectively, the “Material Terms”).
Within 10 business days after Tenant’s receipt of the Pending Deal Notice,
Tenant shall have the right to elect (“RFR Purchase Option”) to purchase the
Project or the portion thereof identified in the Pending Deal Notice (as
applicable, the “Identified Property”), subject to the terms set forth in the
Pending Deal Notice by delivering to Landlord written notice (the “Pending Deal
Acceptance”) of Tenant’s election to purchase the Identified Property. Nothing
contained in this Section 41 shall excuse Tenant from any of its obligations
under this Lease prior to the date that the Identified Property is conveyed to
Tenant or from any obligation that survives the expiration or earlier
termination of this Lease with respect to the Identified Property. For purposes
of this Section 41, the definition of a “portfolio transaction” shall include a
transaction which includes the Project and at least 2 other properties owned by
Landlord or any entities affiliated with Landlord.
Tenant’s failure to deliver a Pending Deal Acceptance as required pursuant to
the preceding paragraph to Landlord within the required 10 business day period
shall be deemed to be an election by Tenant not to exercise Tenant’s right to
purchase the Identified Property in which case, subject to the next sentence,
Landlord shall have the right to sell the Identified Property to any third party
on any terms and conditions acceptable to Landlord and Tenant shall be deemed to
have irrevocably and forever waived its right pursuant to this Section 41 to
purchase the Identified Property. Notwithstanding anything to the contrary
contained herein, Tenant’s RFR Purchase Option shall be restored if (i) Landlord
fails to sell the Identified Property to a third party within 12 months after
Landlord’s delivery of the Pending Deal Notice to Tenant (“Free Period”), or
(ii) at any time within such Free Period, Landlord intends to accept a purchase
price for the Identified Property which is less than 95% of the purchase price
set forth in the original Pending Deal Notice (“Reduced Purchase Price”);
provided, however, that Tenant shall have the right to deliver a Pending Deal
Acceptance to Landlord exercising its right to purchase the Identified Property
for the Reduced Purchase Price and such other terms set forth in a revised
Pending Deal Notice for a period of 10 business days after Landlord’s delivery
to Tenant of a revised Pending Deal Notice reflecting the Reduced Purchase
Price. Tenant’s failure to deliver a Pending Deal Acceptance in connection with
such revised Pending Deal Notice within such 10 business day period shall be
deemed to be an election by Tenant not to purchase the Identified Property in
which case, Tenant shall be deemed to have irrevocably and forever waived its
right pursuant to this Section 41 to purchase the Identified Property unless
Landlord does not sell the Identified Property during the remaining portion of
the Free Period or in the event that the Reduced Purchase Price is further
reduced as provided for in clause (ii) above during such Free Period in which
case Tenant’s rights under this Section 41 shall be restored.
(b)     Purchase and Sale Agreement. If after the expiration of a period of 15
days from the date Tenant delivers the Pending Deal Acceptance, Landlord and
Tenant have not, after negotiating in good faith, entered into (A) a purchase
and sale agreement for the purchase and sale of the Identified Property which
agreement shall among other things: (i) contain the Material Terms, and (ii)
contain commercially reasonable terms consistent with comparable transactions
for properties being sold on an “as is” basis in the Southern California area
(the “RFR Purchase Agreement”), and (B) if the Identified Property is less than
all of the Premises, an amendment to this Lease, acceptable to both parties, in
their respective sole and absolute discretion, documenting the termination of
this Lease with respect to the Identified Property effective on the closing of
the transaction contemplated by the RFR Purchase Agreement and documenting other
related changes to this Lease necessitated thereby, Tenant shall be deemed to
have irrevocably and forever waived its rights under this Section 41 to purchase
the Identified Property, in which case (x) Tenant shall have no further rights
under this Section 41, (y) Tenant’s rights under this Section 41 shall not be
restored, and (z) Landlord shall have the right to sell the Identified Property
to any third party on any terms and conditions acceptable to Landlord.
(c)    Rights Personal. The RFR Purchase Option is personal to Tenant and is not
assignable without Landlord’s consent, which may be granted or withheld in
Landlord’s sole discretion separate and apart from any consent by Landlord to an
assignment of Tenant’s interest in the Lease, except that they may be assigned
in connection with any Permitted Assignment of this Lease.
(d)     Termination. The RFR Purchase Option shall, at Landlord’s option,
terminate and be of no further force or effect even after Tenant’s due and
timely exercise of the RFR Purchase Option, if, after such exercise, but prior
to the Closing Date, (i) Tenant is in material Default under this Lease, or (ii)
Tenant defaults under the RFR Purchase Agreement.
(e)    Exceptions. Notwithstanding anything set forth above to the contrary, the
RFR Purchase Option shall, at Landlord’s option, not be in effect and Tenant may
not exercise the RFR Purchase Option during any period of time that Tenant is in
material Default under any provision of this Lease.
(f)    No Extensions. The period of time within which the RFR Purchase Option
may be exercised shall not be extended or enlarged by reason of Tenant’s
inability to exercise the RFR Purchase Option.
42.    Early Termination Right. Tenant shall have the one time right to
terminate this Lease with respect to the entire Premises only ("Termination
Right") effective as of the last day of the 180th month of the original Base
Term (“Termination Date”); provided, however that Tenant delivers to Landlord
(i) a written notice ("Termination Notice") of its election to exercise its
Termination Right on or before the expiration of the 168th month of the original
Base Term, and (ii) concurrent with Tenant’s delivery to Landlord of the
Termination Notice, (x) an amount equal to 6 months of Rent at the amount
payable by Tenant as of the date that Tenant delivers the Termination Notice to
Landlord, and (y) an amount equal to, as calculated by Landlord and provided to
Tenant within 10 business days after Tenant delivers a written request therefor
to Landlord, (1) all of the unamortized tenant improvement allowances provided
to Tenant in connection with the Building 1 and 2 Tenant Improvements, the
Building 4 Tenant Improvements, the Building 5 Improvements and any Expansion
Building Tenant Improvements, (2) all of the unamortized third party leasing
commissions paid by Landlord in connection with Tenant’s lease of the Premises,
and (3) all of the unamortized Rent Abatement provided to Tenant under this
Lease all of which shall be amortized on a straight line basis over the
originally scheduled Base Term (collectively, the "Early Termination Payment").
If Tenant timely and properly exercises the Termination Right, Tenant shall
vacate the entire Premises and deliver possession thereof to Landlord in the
condition required by the terms of this Lease within 30 days before the
Termination Date and Tenant shall have no further obligations under this Lease
with respect to the Premises except for those accruing prior to the Termination
Date and those which, pursuant to the terms of the Lease, survive the expiration
or early termination of the Lease with respect to the Premises. If Tenant does
not deliver to Landlord the Termination Notice and the Early Termination Payment
within the time period provided for in this paragraph, Tenant shall be deemed to
have waived its Termination Right. Notwithstanding the foregoing, the
Termination Right shall be null and void and of no further force or effect if
Tenant exercises any of its Expansion Rights pursuant to Section 39 after the
date that is 60 months after the Initial Commencement Date and such Expansion
Right is not rescinded by Tenant as specifically permitted pursuant to terms of
this Lease. Upon Tenant's request from time to time, Landlord shall provide
Tenant with Landlord's estimate of the Early Termination Payment amount.
43.    Redevelopment of Project. Except as otherwise provided for in this Lease,
Tenant acknowledges that Landlord, in its reasonable discretion, may from time
to time expand, renovate and/or reconfigure the Project as the same may exist
from time to time and, in connection therewith or in addition thereto, as the
case may be, from time to time without limitation:  (a) change the shape, size,
location, number and/or extent of any improvements, buildings, structures,
lobbies, hallways, entrances, exits, parking and/or parking areas relative to
any portion of the Project; (b) modify, eliminate and/or add any buildings,
improvements, and parking structure(s) either above or below grade, to the
Project, the Common Areas and/or any other portion of the Project and/or make
any other changes thereto affecting the same; and (c) make any other changes,
additions and/or deletions in any way affecting the Project and/or any portion
thereof as Landlord may elect from time to time, including without limitation,
additions to and/or deletions from the land comprising the Project, the Common
Areas and/or any other portion of the Project. Notwithstanding anything to the
contrary contained in this Lease, Tenant shall have no right to seek damages
(including abatement of Rent) or to cancel or terminate this Lease because of
any proposed changes, expansion, renovation or reconfiguration of the Project
nor shall Tenant have the right to restrict, inhibit or prohibit any such
changes, expansion, renovation or reconfiguration; provided, however, Landlord
shall not change the size, dimensions or location of the Premises. In no event
shall the redevelopment contemplated pursuant to this Section 43 materially and
adversely affect, other than on a temporary basis while work may be ongoing,
Tenant’s beneficial use and occupancy of the Premises and access to parking at
the Project. Notwithstanding the foregoing, Landlord shall meet with Tenant to
discuss and make Tenant aware of any significant redevelopment of the Project
prior to Landlord commencing construction of the same. Any new buildings
constructed by Landlord at the Project pursuant to this Section 43 shall be
comparable in quality to the existing Buildings at the Project.
44.    Miscellaneous.
(a)    Notices. All notices or other communications between the parties shall be
in writing and shall be deemed duly given upon delivery or refusal to accept
delivery by the addressee thereof if delivered in person, or upon actual receipt
if delivered by reputable overnight guaranty courier, addressed and sent to the
parties at their addresses set forth above. Landlord and Tenant may from time to
time by written notice to the other designate another address for receipt of
future notices.
(b)    Joint and Several Liability. If and when included within the term
“Tenant,” as used in this instrument, there is more than one person or entity,
each shall be jointly and severally liable for the obligations of Tenant.
(c)    Financial Information. Tenant shall furnish Landlord with true and
complete copies of (i) Tenant’s most recent audited annual financial statements
within 90 days of the end of each of Tenant’s fiscal years during the Term, and
(ii) Tenant’s most recent unaudited quarterly financial statements within 45
days of the end of each of Tenant’s first three fiscal quarters of each of
Tenant’s fiscal years during the Term. Notwithstanding anything above to the
contrary, so long as Tenant is a “public company” and its financial information
is publicly available, then the foregoing delivery requirements of this Section
44(c) shall not apply.
(d)    Recordation. This Lease shall not be filed by or on behalf of Tenant in
any public record. Upon Tenant’s request and at Tenant’s sole cost and expense,
Landlord shall prepare and file after execution by Landlord and Tenant a
memorandum of this Lease in substantially the form attached hereto as Exhibit L.
Tenant shall, within 15 business days after request from Landlord, record a
termination of the memorandum on the expiration or earlier termination of this
Lease.
(e)    Interpretation. The normal rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall not be employed
in the interpretation of this Lease or any exhibits or amendments hereto. Words
of any gender used in this Lease shall be held and construed to include any
other gender, and words in the singular number shall be held to include the
plural, unless the context otherwise requires. The captions inserted in this
Lease are for convenience only and in no way define, limit or otherwise describe
the scope or intent of this Lease, or any provision hereof, or in any way affect
the interpretation of this Lease.
(f)    Not Binding Until Executed. The submission by Landlord to Tenant of this
Lease shall have no binding force or effect, shall not constitute an option for
the leasing of the Premises, nor confer any right or impose any obligations upon
either party until execution and delivery of this Lease by both parties.
(g)    Limitations on Interest. It is expressly the intent of Landlord and
Tenant at all times to comply with applicable law governing the maximum rate or
amount of any interest payable on or in connection with this Lease. If
applicable law is ever judicially interpreted so as to render usurious any
interest called for under this Lease, or contracted for, charged, taken,
reserved, or received with respect to this Lease, then it is Landlord’s and
Tenant’s express intent that all excess amounts theretofore collected by
Landlord be credited on the applicable obligation (or, if the obligation has
been or would thereby be paid in full, refunded to Tenant), and the provisions
of this Lease immediately shall be deemed reformed and the amounts thereafter
collectible hereunder reduced, without the necessity of the execution of any new
document, so as to comply with the applicable law, but so as to permit the
recovery of the fullest amount otherwise called for hereunder.
(h)    Choice of Law. Construction and interpretation of this Lease shall be
governed by the internal laws of the state in which the Premises are located,
excluding any principles of conflicts of laws.
(i)    Time. Time is of the essence as to the performance of Tenant’s and
Landlord’s obligations under this Lease.
(j)    OFAC. Tenant is currently (a) in compliance with and shall at all times
during the Term of this Lease remain in compliance with the regulations of the
Office of Foreign Assets Control (“OFAC”) of the U.S. Department of Treasury and
any statute, executive order, or regulation relating thereto (collectively, the
“OFAC Rules”), (b) not listed on, and shall not during the term of this Lease be
listed on, the Specially Designated Nationals and Blocked Persons List
maintained by OFAC and/or on any other similar list maintained by OFAC or other
governmental authority pursuant to any authorizing statute, executive order, or
regulation, and (c) not a person or entity with whom a U.S. person is prohibited
from conducting business under the OFAC Rules.
(k)    Incorporation by Reference. All exhibits and addenda attached hereto are
hereby incorporated into this Lease and made a part hereof. If there is any
conflict between such exhibits or addenda and the terms of this Lease, such
exhibits or addenda shall control.
(l)    Entire Agreement. This Lease, including the exhibits attached hereto,
constitutes the entire agreement between Landlord and Tenant pertaining to the
subject matter hereof and supersedes all prior and contemporaneous agreements,
understandings, letters of intent, negotiations and discussions, whether oral or
written, of the parties, and there are no warranties, representations or other
agreements, express or implied, made to either party by the other party in
connection with the subject matter hereof except as specifically set forth
herein.
(m)    No Accord and Satisfaction. No payment by Tenant or receipt by Landlord
of a lesser amount than the monthly installment of Base Rent or any Additional
Rent will be other than on account of the earliest stipulated Base Rent and
Additional Rent, nor will any endorsement or statement on any check or letter
accompanying a check for payment of any Base Rent or Additional Rent be an
accord and satisfaction. Landlord may accept such check or payment without
prejudice to Landlord’s right to recover the balance of such Rent or to pursue
any other remedy provided in this Lease.
(n)    Hazardous Activities. Notwithstanding any other provision of this Lease,
Landlord, for itself and its employees, agents and contractors, reserves the
right to refuse to perform any repairs or services in any portion of the
Premises which, pursuant to Tenant’s routine safety guidelines, practices or
custom or prudent industry practices, require any form of protective clothing or
equipment other than safety glasses. In any such case, Tenant shall contract
with parties who are acceptable to Landlord, in Landlord’s reasonable
discretion, for all such repairs and services, and Landlord shall, to the extent
required, equitably adjust Tenant’s Share of Operating Expenses in respect of
such repairs or services to reflect that Landlord is not providing such repairs
or services to Tenant.
(o)    Roof Equipment. Subject to the provisions of this Lease, Tenant may, at
its sole cost, install, maintain, and from time to time replace a
telecommunications dish antenna or other related equipment on the roofs of the
Buildings (collectively, “Roof Equipment”) in locations selected by Tenant and
reasonably acceptable to Landlord for Tenant’s own communication purposely use
only; provided, however, that (i) Tenant shall obtain Landlord’s prior written
approval with respect to the installation of such Roof Equipment which approval
shall not be unreasonably withheld, conditioned or delayed and shall include
consideration all relevant factors including, without limitation, the proposed
size, weight and location of the Roof Equipment and method for fastening the
same to the roof, (ii) Tenant shall, at its sole cost, comply with any
reasonable requirements imposed by Landlord and all Legal Requirements and the
conditions of any bond or warranty maintained by Landlord on the roof, (iii)
Tenant shall be responsible for paying for any structural upgrades that may be
required by Landlord in connection with the Roof Equipment, and (iv) Tenant
shall remove, at its expense, at the expiration or earlier termination of this
Lease, any Roof Equipment which Landlord requires to be removed. Landlord shall
have the right to supervise any roof penetration. Tenant may not access the roof
without a representative of Landlord (who shall be reasonably available) being
present. Tenant shall repair any damage to the Buildings caused by Tenant’s
installation, maintenance, replacement, use or removal of the Roof Equipment.
Tenant shall remove any Roof Equipment at its cost upon expiration or
termination of the Lease. Tenant shall install, use, maintain and repair the
Roof Equipment, and use the access areas, so as not to damage or interfere with
the operation of the Buildings. Tenant shall protect, defend, indemnify and hold
harmless Landlord from and against claims, damages, liabilities, costs and
expenses of every kind and nature, including reasonable attorneys’ fees,
incurred by or asserted against Landlord arising out of Tenant’s installation,
maintenance, replacement, use or removal of the Roof Equipment.
Notwithstanding anything to the contrary contained herein, Tenant acknowledges
and agrees that, Landlord shall have the right, at no cost whatsoever to Tenant
during the Term, to install, maintain, repair and remove solar rooftop photo
voltaic systems (“Solar Roof Systems”) on the roofs of one or more of the
Buildings at any time during the Term, in locations acceptable to Landlord, in
its reasonable discretion. Landlord and Tenant shall cooperate to minimize any
potential adverse impact that such Solar Roof Systems may have on Tenant’s
rights under this Lease (including, but not limited to, Tenant’s use of the
Premises).
(p)    LEED Certification. Tenant agrees to cooperate with Landlord (with the
reasonable costs being passed through as part of Operating Expenses if
applicable to any of the existing buildings at the Project or as part of the
Project Costs if applicable to any Expansion Building(s)) and to comply with
measures implemented by Landlord with respect to any of the Buildings and/or the
Project in connection with Landlord’s efforts to obtain a Leadership in Energy
and Environmental Design (LEED) certificate for any or all of the Buildings
and/or the Project, including any measures implemented by Landlord in connection
with any Solar Roof Systems installed by Landlord.
(q)    Building 3. Tenant acknowledges and agrees that certain Building Systems
serving the Buildings are located within Building 3 and that Tenant shall have
no right to enter Building 3 during the Term except during any periods where
Tenant is responsible for the maintenance of the entire Project pursuant to the
provisions of the second paragraph of Section 13. If any space at the Project is
leased to any third party(ies) whose premises are served by any of the Building
Systems located within Building 3, both the Base Rent payable by Tenant with
respect to Building 3 as well as Tenant’s Share of Operating Expenses payable
with respect to Building 3 shall be proportionately adjusted by Landlord.
(r)    Project Restriction. Landlord shall not enter into a lease agreement for
any space in the Project (and all leases entered into by Landlord after the date
hereof for the occupancy of space at the Project during the Term shall recite
the leasing restrictions contained in this Section 44(r)) or sell any portion of
the Project to Life Technologies Corporation or any successor corporation to
Life Tech Corporation (“Life Tech”), or lease any space in the Project (other
than space on the roofs of the Buildings) for other than the Permitted Use
(“Alternate User”); provided, however, that nothing contained in this sentence
shall in any way limit or preclude (i) any tenant that Landlord may lease space
to at the Project from being acquired, directly or indirectly, by Life Tech,
(ii) any tenant that Landlord may lease space to at the Project from assigning
its lease or subleasing its premises to Life Tech, and (iii) Landlord from
consenting to any transaction described in clauses (i) or (ii). The provisions
of this paragraph shall only apply as long as Illumina, Inc., or its transferee
under a Permitted Assignment is the tenant occupying no less than 75% of the
Premises under this Lease and shall not apply to any other assignee or
sublessee. In no event shall Landlord lease any space in the Project to a tenant
for medical office or hospital purposes or any uses other than Class A office or
research and development laboratory without Tenant’s prior written consent which
consent shall not be unreasonably withheld, conditioned or delayed.
(s)    Equipment Financing. Subject to the provisions of this Section 44(s),
during the Term, Landlord waives any statutory landlord’s lien and any
attachment for Rent on Tenant’s Property and on any Alteration of Tenant that is
not required to be surrendered to Landlord at the expiration or sooner
termination of the Term of this Lease (collectively, “Personalty”) that Landlord
may have or may hereafter acquire. Landlord acknowledges and agrees that
Tenant’s Personalty may be leased from an equipment lessor or encumbered by
Tenant’s lender (collectively, “Equipment Lessor”) and that Tenant may execute
and enter into an equipment lease or security agreement with respect to such
Personalty (“Equipment Lease”). If and to the extent required by any Equipment
Lease or Equipment Lessor, Landlord shall execute and deliver to the Equipment
Lessor a written consent, waiver and/or acknowledgment which is in form and
content reasonably acceptable to Landlord (“Lien Waiver”) in which Landlord (i)
acknowledges and agrees that, during the Term, the Personalty which is the
subject of the Equipment Lease and described with specificity on an exhibit to
the Lien Waiver constitutes the personal property of Tenant (unless contrary to
the provisions of this Lease), and shall not be considered to be part of the
Premises, regardless of whether or by what means they become attached thereto,
(ii) agrees that, during the Term, it shall not claim any interest in such
Personalty, and (iii) agrees that Equipment Lessor may enter the Premises for
the purpose of removing such Personalty, but only if, in such consent such
Equipment Lessor agrees to repair any damage resulting from such removal and to
indemnify and hold harmless Landlord from and against any claim or other loss
that results from such entry and, agrees, within 3 business days after the
expiration or termination of the Term to pay all Rent that would accrue under
the Lease if it had not terminated or expired for the period from the expiration
or termination of such Lease until 5 business days after such Equipment Lessor
relinquishes its right rights to enter into the Premises; provided, further,
such Equipment Lessor’s right to enter the Premises shall in any event expire 30
days after the expiration or termination of the Lease in which case the
Equipment Lessor and Tenant shall agree that the Personalty shall be deemed
abandoned. Such Lien Waiver documents also may contain such other reasonable and
customary provisions that are reasonably acceptable to Landlord. Landlord shall
be entitled to be paid as administrative rent a fee of $1,500 per occurrence for
its time and effort in preparing and negotiating each Lien Waiver.
(t)    When Payment Is Due. Whenever in this Lease a non-scheduled payment is
required to be made by one party to the other, but a specific date for payment
is not set forth or a specific number of days within which payment is to be made
is not set forth, or the words "immediately," "promptly" and/or "on demand," or
the equivalent, are used to specify when such payment is due, then such payment
shall be due 30 days after the party which is entitled to such payment sends
written notice to the other party demanding payment.
(u)    Property Manager. If Landlord has assumed maintenance of the Project
pursuant to the second paragraph of Section 13, Landlord shall provide a
commercially reasonable system pursuant to which Tenant, in the event of any
emergency, may promptly contact the Project manager and Project engineer or
their equivalent 24 hours per day, 7 days per week (whether or not within
business hours).
(v)    Fiber Optic. Subject to the terms of this Lease, and subject to Tenant
obtaining Landlord’s consent, which shall not be unreasonably withheld or
delayed, Tenant shall have the right, at Tenant’s sole cost and expense, to
bring to the Buildings comprising the Premises such fiber optic cabling as
Tenant shall desire for Tenant’s business operations at the Premises. Landlord
shall reasonably cooperate with Tenant, at Tenant’s sole cost and expense, in
connection with Tenant’s securing access to the fiber optic cabling of Tenant’s
choice.
(w)    Internet Service. Tenant shall have the right to contract with any
internet service provider desired by Tenant, at Tenant’s sole cost and expense.
(x)    Confidentiality. Landlord and Tenant acknowledge and agree that the terms
and conditions of that certain Confidentiality Agreement dated October 7, 2010,
between Tenant and Landlord’s affiliate, Alexandria Real Estate Equities, Inc.,
shall have no further force or effect following the execution and delivery of
this Lease by both parties.
(y)    Sports Courts. Landlord shall, at Tenant’s cost and expense, construct
those certain sports courts described on Exhibit Q (the “Sports Courts”), in the
location within the Project shown on the Site Plan. The Sports Courts shall be
constructed pursuant to a plan and budget mutually agreed upon by Landlord and
Tenant and Landlord shall cause the Sports Courts to be constructed and
completed following the mutual agreement by Landlord and Tenant of such plan and
budget. Landlord shall use reasonable efforts to deliver the Sports Courts to
Tenant substantially completed on or before March 31, 2012 (as extended by
delays caused by Force Majeure and delays caused by Tenant, “Target Sports
Courts Commencement Date”). Landlord shall commence and complete the Sports
Courts in a diligent manner. If Landlord fails to timely deliver the Sports
Courts, Landlord shall not be liable to Tenant for any loss or damage resulting
therefrom, and this Lease shall not be void or voidable. The date that Landlord
delivers the Sports Courts to Tenant substantially completed shall be the
“Sports Courts Commencement Date”. Subject to the terms of Section 40, Tenant
shall have the exclusive right to use the Sports Courts and the Sports Courts
shall not become part of the Common Areas of the Project for so long as Tenant
continues to lease Building 5 as part of the Premises. Tenant shall have no
right to use the Sports Courts at any time that Tenant is not leasing Building
5.
Landlord shall have no obligation to bear any portion of the Sports Courts
Project Costs. After the end of each calendar month beginning with the month in
which Sports Courts Project Costs are first incurred after execution of this
Lease by both parties, Landlord shall determine the Sports Courts Project Costs
incurred for the prior calendar month (and if applicable, for the period prior
to Lease execution) (collectively, the “Total Monthly Sports Courts Project
Costs"). Landlord shall submit to Tenant monthly during the construction of the
Sports Courts a report (each, a "Sports Courts Reimbursement Notice") setting
forth in reasonable detail: (i) a computation of the Sports Courts Project Costs
incurred during the prior calendar month; and (ii) the then-current cumulative
Sports Courts Project Costs. Sports Courts Reimbursement Notices may be sent at
the beginning of a calendar month for the prior calendar month. Upon final
completion of Sports Courts, Landlord shall prepare a final Reimbursement Notice
consisting of a reconciliation of the total Sports Courts Project Costs. Tenant
shall pay to Landlord the Total Monthly Sports Courts Project Costs as set forth
in each Reimbursement Notice within 30 days of receipt of each Reimbursement
Notice. Such payment by Tenant shall be a condition precedent to Landlord's
obligation to complete the Sports Courts. If Tenant fails to pay the Total
Monthly Sports Courts Project Costs as set forth in any Reimbursement Notice
within such 30-day period, Landlord shall have all of the rights and remedies
set forth in this Lease for nonpayment of Rent (including, but not limited to,
the right to interest at the Default Rate after the expiration of 5 business
days following the date when due and the right to assess a late charge). For
purposes of any litigation instituted with regard to such amounts, those amounts
will be deemed Rent under this Lease.
As used in this Lease, “Sports Courts Project Costs” shall mean the sum of all
of the actual, documented costs incurred by Landlord through the Sports Courts
Close-Out in connection with the acquisition, design and construction of the
Sports Courts and all related improvements including, without limitation: (i)
architectural, engineering, construction and development cost and fees; (ii)
other soft and legal costs; (iii) a development fee to Landlord equal to 3% of
the hard Sports Courts Project Costs; (iv) Landlord’s carry costs related to the
Sports Courts from the initiation of construction of the Sports Courts until the
Sports Courts Commencement Date; (v) infrastructure costs, assessments, impact
fees, site preparation costs, testing, labor and materials to construct the
Sports Courts and related infrastructure and improvements, permit fees, costs
associated with obtaining the PID Permit amendment and necessary entitlement or
re-entitlements, if necessary, and any other governmental fees, sales taxes and
fees payable to contractors, project landscaping, water, gas and electrical fees
and related miscellaneous costs, and builder’s risk insurance and other
insurance related costs, (vi) Landlord’s contribution towards the Initial Costs
for the Sports Courts, and (viii) Landlord’s reasonable financing costs (or
reasonable imputed market rate financing costs) with respect to all of the
foregoing. Landlord shall not incur any Sports Courts Project Costs not
contemplated by this Lease without Tenant’s prior written approval. Tenant shall
have the right to audit Sports Courts Project Costs within 180 days after the
Sports Courts Close-Out and if Tenant discovers errors and Landlord and Tenant
are unable to resolve such dispute within 30 days after the expiration of such
180 day period, it shall be resolved by arbitration by a single arbitrator with
the qualifications and experience appropriate to resolve the matter and
appointed pursuant to and acting in accordance with the rules of the American
Arbitration Association. Notwithstanding anything to the contrary contained
herein, Tenant shall provide, at Tenant’s sole cost, all moveable site
furnishings required in connection with the Sports Courts.
As used in this Lease, “Sports Courts Close-Out” shall mean the first date
following the final completion of the Sports Courts by Landlord that (i) all
contractors, subcontractors, suppliers, architects and others who supplied labor
or materials have been paid in full and all liens are released; (ii) the
architect or general contractor for Sports Courts have issued any certificate(s)
of completion as may be required by Landlord; (iii) all punch list items have
been completed; and (iv) the contractors and architect have provided all close
out documentation required by Landlord.
Notwithstanding anything to the contrary contained herein, Tenant acknowledges
that Landlord reserves the right to reasonably modify, among other things, the
site plan, size, configuration and location within the Project of the Sports
Courts; provided, however, that such modifications do not materially increase
Tenant’s obligations under this Lease.
(z)    Project Address. If at any time during the Term, (i) any portion of the
Project is leased to a tenant other than Tenant, (ii) Tenant changes its name,
or (iii) Tenant’s name or identity changes as a result of a Permitted Assignment
under Section 22 , Landlord shall have the right, in Landlord’s sole and
absolute discretion, to change the street name of the Project from Illumina Way
to any other name desired by Landlord.
[ Signatures on next page ]
IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of the day
and year first above written.
TENANT:
ILLUMINA, INC.,
a Delaware corporation

By:    
Its:    

LANDLORD:
ARE-SD REGION NO. 32, LLC,
a Delaware limited liability company

By:    ALEXANDRIA REAL ESTATE EQUITIES, L.P.,
    a Delaware limited partnership,
    managing member

By:    ARE-QRS CORP.,
        a Maryland corporation,
general partner

By:                    
Its: