Document:

Exhibit 10.7

 

July 17, 2012

 

Luis Pena

 

 

 

Dear Luis,

 

This offer letter further amends and restates the offer letter by and between you and Dermira, Inc. (f/k/a Skintelligence, Inc.), a Delaware corporation (the “Company”), dated June 1, 2011, as amended and restated on August 3, 2011 (your “Prior Offer Letter”).

 

It is my pleasure to offer you the position of Vice-President of Product Development for the Company. We have very exciting plans to build a premier dermatology company, and we are very excited to have you as part of the team.

 

The terms of your offer are as follows:

 

·Title: Vice-President, Product Development

 

·Start Date: June 1, 2011

 

·Responsibilities: You will be a key team member in the development and execution of the company’s corporate development strategy and activities. You will be responsible for managing the Company’s product development strategy and activities by identifying and assessing opportunities and alternatives, and establishing and managing efficient and well-executed product development programs.

 

·Annual Salary: $260,000

 

·Stock Option Grant: Subject to the approval of the Company’s board of directors, you will be granted an option to purchase 550,000 shares of the Company’s common stock at a price equal to the fair market value as established by an independent assessment within 60 days of the closing of the Series A financing.

 

·Bonus: You will be eligible to participate in the Company’s bonus incentive plan, with a target bonus of 30% (pro-rated in any years which you are employed for less than 12 months), which will be authorized by the Company’s board of directors in its sole assessment of the company’s performance against its goals. Any bonus for a fiscal year will be paid within 21/2 months after the close of that fiscal year, but only if you are still employed by the Company at the time of payment. The determinations of the Board with respect to any bonus will be final and binding.

 

 

·Benefits: You shall be entitled to participate in any of the Company’s employee benefit plans or programs that become available to similarly situated employees of the Company.

 

·Health Insurance: You will be entitled to participate in the company’s health insurance programs.

 

·Severance: If your employment with the Company is terminated for any reason other than for Cause, the Company will pay you your then current monthly salary for a period of six (6) months following your employment termination date as severance (the “Severance Payment”). Similarly, if you resign your employment for Good Reason, then you shall receive the Severance Payment on the terms set forth in this paragraph. You accept the Severance Payment in full satisfaction of all rights and entitlements to notice of termination or compensation in lieu under statute or contract law. However, the Company shall not be required to pay any part of the Severance Payment unless you (i) have returned all Company property in your possession, and (ii) have executed a general release of all claims that you may have against the Company or persons affiliated with the Company. The release must be in the form reasonably prescribed by the Company, without alterations. You must execute and return the release on or before the date specified by the Company in the prescribed form.

 

In addition, (i) all shares of the Company’s common stock subject to outstanding equity awards, including, without limitation, stock options, restricted stock units, stock appreciation rights and restricted stock, granted to or held by you shall immediately become fully vested and exercisable, and any such outstanding equity awards that are subject to a right of repurchase, right of forfeiture, or similar right, shall be released from such right and shall be fully vested, in each case, immediately prior to the occurrence of a Termination Upon Change in Control (as defined below) and (ii) upon your Disability (as defined below) or death, with respect to any outstanding equity award that is not then at least 25% vested, that number of shares of the Company’s common stock subject to such outstanding equity award(s), including, without limitation, stock options, restricted stock units, stock appreciation rights and restricted stock, granted to or held by you shall immediately become vested and exercisable such that, after such acceleration the total number of shares of the Company’s common stock subject to such outstanding equity award(s) shall be 25% vested and exercisable, and 25% of such outstanding equity awards that are subject to a right of repurchase, right of forfeiture, or similar right, shall be released from such right and shall become vested. In the event of a Change of Control whereby the successor or acquiring entity (if any) or any Parent (as defined in the 2010 Plan) (if any) of such successor or acquiring entity does not assume, convert, replace or substitute your outstanding equity awards as provided in Section 11.1 of the 2010 Plan, or any comparable term of any similar equity incentive plan, in a manner than preserves the material terms and conditions of such equity awards, then, notwithstanding Section 11.2 of the 2010 Plan, or any comparable term of any similar equity incentive plan, all of your outstanding equity awards shall, at least 10 days prior to the effective date of such Change of Control, immediately become fully vested and exercisable, and any such outstanding

 

 

equity awards that are subject to a right of repurchase, right of forfeiture, or similar right, shall be released from such right and shall be fully vested.

 

“2010 Plan” shall mean the Company’s 2010 Equity Incentive Plan, as amended from time to time.

 

“Cause” shall mean the determination by the Company’s Board of Directors that:

 

(a) you have been convicted of or pled guilty or no contest to any felony;

 

(b) you have committed one or more acts of fraud, theft, embezzlement or misappropriation against the Company;

 

(c) you have falsified Company records; willfully destroyed Company property; or, while an employee of the Company, engaged in conduct that constitutes harassment or discrimination prohibited by law;

 

(d) you refused to perform your duties as reasonably directed by the Chief Executive Officer or Board of Directors; or

 

(e) you materially breached your obligations under this agreement, the EIPPA (as defined below), or any other agreement between you and the Company.

 

“Change in Control” shall mean (a) a sale of substantially all of the assets of the Company; (b) a merger or consolidation in which the Company is not the surviving corporation (other than a merger or consolidation in which stockholders immediately before the merger or consolidation have, immediately after the merger or consolidation, a majority of the then-outstanding voting power); (c) a reverse merger in which the Company is the surviving corporation but the shares of the Company’s common stock outstanding immediately preceding the merger are converted by virtue of the merger into other property, whether in the form of securities, cash or otherwise (other than a reverse merger in which shareholders immediately before the merger have, immediately after the merger, a majority of the then-outstanding voting power); or (d) any transaction or series of related transactions in which in excess of 50% of the Company’s voting power is transferred.

 

“Disability” shall mean a physical or mental incapacity or disability as a result of which you become unable to perform the essential functions of your job at the Company (if appropriate, with reasonable accommodation) for a continuous period of ninety days or for an aggregate period of 120 days in any consecutive 12-month period,

 

“Good Reason” shall mean:

 

(a) a material reduction in your total target annual compensation as an employee of the Company or a reduction in your base salary as an employee of the Company, except (in either case) to the extent that the Company implements an equal percentage reduction applicable to all executive officers and management personnel, or (in either case) reductions which are made with your consent;

 

 

(b) a material, substantial reduction in your duties, responsibilities or authority at the Company without your prior written consent;

 

(c) removing you from the position designated for you in this offer letter without your prior written consent; or

 

(d) a change in the geographic location at which you must perform services which results in an increase in Employee’s one-way commute by more than 50 miles.

 

“Termination Upon Change of Control” shall mean:

 

(a) any termination of your employment by the Company without Cause within twelve (12) months following a Change of Control; or

 

(b) any resignation of your employment with the Company for Good Reason where (i) such Good Reason occurs within twelve (12) months following the Change of Control and (ii) such resignation occurs within ninety (90) days following such Good Reason.

 

·Dilution of Shares: The Company shall, within 90 days after the Second Tranche Closing (as defined in that certain Series A Preferred Stock Purchase Agreement, dated as of August 3, 2011, by and among the Company and certain stockholders), grant you an option provided that you are, on the date of grant, then providing services to the Company as an employee, to purchase the number of shares of Common Stock so that the total number of shares issued to or held by, and issuable under options granted to held by, by you represents 1.4% of the Fully Diluted Capitalization of the Company (giving effect to the exercise of all outstanding options and warrants and the conversion of all outstanding convertible securities), at such exercise price as shall be determined by the Company’s Board of Directors in good faith to be the fair market value of the common stock on the date of such grant, and on other terms as approved by the Company’s Board of Directors including without limitation that such option shall commence vesting no earlier than the date of such grant. Such stock option will be subject to the terms and conditions applicable to options granted generally under the Company’s 2010 Equity Incentive Plan. “Fully Diluted Capitalization” shall mean the sum of (a) the outstanding capital stock of the Company and outstanding options to purchase shares of the Company’s common stock and warrants and other convertible securities and instruments (assuming the conversion or exercise of any convertible or exercisable options, warrants, securities or other instruments then outstanding, whether or not currently convertible or exercisable) and (b) the number of shares that are reserved under any compensatory stock plan or other arrangement adopted by the Company and that are not yet issued or subject to an outstanding option, each determined as of the date of this offer letter; provided, that, that for purposes of the calculation of the number of shares issuable, the Fully Diluted Capitalization shall include any shares of the Company’s Series A Preferred Stock issued in any Second Tranche Closing.

 

 

The Company reserves the right to change or otherwise modify, in its sole discretion, any of the preceding terms of employment, including those relating to salary, bonus plan, if applicable, and benefíts at any time. The foregoing sentence does not change the at-will nature of your employment and the Company may terminate you at any time.

 

As a condition of your employment, you are required to continue to abide by the terms of the Employee Intellectual Property Protection Agreement that you executed upon commencing employment (the “EIPPA”).

 

The Company reserves the right to change or otherwise modify, in its sole discretion, any of the preceding terms of employment, including those relating to salary, bonus incentive plan, and benefits at any time; provided, however, that so long as you are providing services to the Company in accordance with the terms of your employment, the Company may not reduce your annual salary, benefits or the Health Insurance terms set forth above for a period of one year following your start date; provided, further, that the Company may not change or otherwise modify the paragraph regarding severance without your written consent. The foregoing sentence does not change the at-will nature of your employment and the Company may terminate you at any time, subject to the paragraph above titled “Severance.”

 

While we look forward to a long and profitable relationship, you will be an at-will employee of the Company, which means the employment relationship can be terminated by either party for any reason, at any time, with or without prior notice and with or without cause, subject to the paragraph above titled “Severance.” Any statements or representations to the contrary (and any statements contradicting any provision in this letter) should be regarded by you as ineffective. Further, your participation in any stock, option or benefit program is not to be regarded as assuring you of continuing employment for any particular period of time. Any modification or change in your at-will employment status may only occur by way of a written employment agreement signed by you and the Chief Executive Officer of the Company.

 

Please note that because of employer regulations adopted in the Immigration Reform and Control Act of 1986, within three (3) business days of starting your new position you will need to present documentation demonstrating that you have authorization to work in the United States.

 

With respect to the terms addressed in this offer letter, this offer letter contains the entire agreement and understanding by and between you and the Company. You and the Company hereby amend and restate your Prior Offer Letter to read in its entirety as set forth in this offer letter, such that the Prior Offer Letter is hereby terminated and entirely replaced and superseded by this offer letter. This offer letter supersedes all prior undertakings and agreements, written or oral, as may have existed prior to the date of execution of this offer letter with regard to the terms addressed in this offer letter, including the Prior Offer Letter. By executing this offer letter, you acknowledge that any such superseded understandings and agreements are terminated, and you disclaim any and all rights or interest that may have existed with respect thereto. Further, any

 

 

representations, promises, agreements or understandings, written or oral, with regard to the terms addressed in this offer letter that are not contained in this offer letter shall be of no force or effect.

 

[Remainder of Page Intentionally Left Blank]

 

 

Please let me know if you have additional questions. I Iook forward to finalizing this agreement.

 

 

	
Sincerely,
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
/s/ Tom Wiggans
    	
 
    
	
Tom Wiggans
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
Accepted and agreed, this   17 day of July, 2012:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
/s/ Luis Pena
    	
 
    
	
Luis PenaExhibit 10.8

 

BASIC LEASE INFORMATION

 

2055-2075 Woodside Road

 

The following is a summary of lease information that is referred to in the Lease. To the extent there is any conflict between the provisions of this summary and any more specific provision of the Lease, such more specific provision shall control.

 

	
LEASE EFFECTIVE DATE:
    	
 
    	
September 12,   2011
    
	
 
    	
 
    	
 
    
	
LANDLORD:
    	
 
    	
WOODSIDE   ROAD HOLDINGS, LLC,
    
	
 
    	
 
    	
a   California limited liability company
    
	
 
    	
 
    	
 
    
	
ADDRESS OF LANDLORD:
    	
 
    	
c/o   Nearon Enterprises
    
	
 
    	
 
    	
500   La Gonda Way
    
	
 
    	
 
    	
Suite 210
    
	
 
    	
 
    	
Danville,   CA 94526
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
With a copy to:
    
	
 
    	
 
    	
Orchard   Commercial, Inc.
    
	
 
    	
 
    	
2055   Laurelwood Road, Suite 130
    
	
 
    	
 
    	
Santa   Clara, CA 95054
    
	
 
    	
 
    	
 
    
	
TENANT:
    	
 
    	
SKINTELLIGENCE, INC.,
    
	
 
    	
 
    	
a   Delaware corporation
    
	
 
    	
 
    	
 
    
	
ADDRESS OF TENANT:
    	
 
    	
AT   THE PREMISES
    
	
 
    	
 
    	
 
    
	
PREMISES:
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
Rentable
    	
 
    
	
 
    	
 
    	
Suite
    	
 
    	
Square   Footage
    	
 
    
	
 
    	
 
    	
270
    	
 
    	
2,851   r.s.f.
    	
 
    
	
 
    	
 
    	
 
    
	
BUILDING:
    	
 
    	
2055-2075   Woodside Road
    
	
 
    	
 
    	
Redwood   City, CA 94061
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
[Square   Footage of Building: 28,500 r.s.f.]
    
	
 
    	
 
    	
 
    
	
LEASE TERM:
    	
 
    	
Three   (3) years
    

 

2055-2075 WOODSIDE ROAD

SKINTELLIGENCE, INC.

 

i

 

	
SCHEDULED COMMENCEMENT DATE:
    	
 
    	
The   date that is ninety (90) days after the Lease Effective Date.
    
	
 
    	
 
    	
 
    
	
EXPIRATION DATE:
    	
 
    	
The   calendar day preceding the third (3rd) anniversary of the   Commencement Date; provided, however, that if the Commencement Date shall   occur on a date other than the first day of a calendar month, the Expiration   Date shall be the last day of the calendar month in which the third (3rd) anniversary of the   Commencement Date occurs.
    
	
 
    	
 
    	
 
    
	
RENT:
    	
 
    	
(i) For   the period commencing on the Commencement Date through the day immediately   preceding the first anniversary of the Commencement Date (the “1-Year   Anniversary”);
    	
 
    	
$9,693.40   (per month);
   $116,320.80 (per year);
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
(ii) For   the period commencing on the 1-Year Anniversary through the day immediately   preceding the second annual anniversary of the Commencement Date (the “2-Year   Anniversary”);
    	
 
    	
$9,978.50   (per month);
   $119,742.00 (per year);
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
(iii) For   the period commencing on the 2-Year Anniversary through the Expiration Date.
    	
 
    	
$10,263.60   (per month);
   $123,163.20 (per year);
    
	
 
    	
 
    	
 
    
	
BASE YEAR:
    	
 
    	
2011
    
	
 
    	
 
    	
 
    
	
PERMITTED USE:
    	
 
    	
General   office use, sales, manufacturing, R&D, storage of materials, and shipping   and receiving, to the extent permitted by the City of Redwood City and in accordance   with the Project Rules (as defined in Paragraph 8 below).
    

 

ii

 

	
TENANT’S PERCENTAGE SHARE:
    	
 
    	
Ten   percent (10%)
    
	
 
    	
 
    	
 
    
	
SECURITY DEPOSIT:
    	
 
    	
$30,790.80,   subject to Paragraph 25 below.
    
	
 
    	
 
    	
 
    
	
UNRESERVED PARKING SPACES:
    	
 
    	
Tenant   shall have access to nine (9) unreserved parking spaces on an “as-is”   available basis
    
	
 
    	
 
    	
 
    
	
LANDLORD’S BROKER:
    	
 
    	
Cornish &   Carey Commercial Newmark Knight Frank
    
	
 
    	
 
    	
 
    
	
TENANT’S BROKER:
    	
 
    	
Cornish &   Carey Commercial Newmark Knight Frank
    
	
 
    	
 
    	
 
    
	
ATTACHMENTS:
    	
 
    	
Exhibit A
    	
—
    	
Floor   Plan
    
	
 
    	
 
    	
Exhibit B
    	
—
    	
Operating   Expenses and Taxes
    
	
 
    	
 
    	
Exhibit C
    	
—
    	
Rules And   Regulations
    
	
 
    	
 
    	
Exhibit D
    	
—
    	
Tenant   Improvements
    
	
 
    	
 
    	
Exhibit E
    	
—
    	
Commencement   Memorandum
    

 

iii

 

TABLE OF CONTENTS

 

	
1.
    	
LEASE   EFFECTIVE DATE AND PARTIES
    	
1
    
	
 
    	
 
    	
 
    
	
2.
    	
PREMISES,   COMMON AREA AND PARKING
    	
1
    
	
 
    	
 
    	
 
    
	
3.
    	
TERM
    	
2
    
	
 
    	
 
    	
 
    
	
4.
    	
DELIVERY   OF POSSESSION
    	
2
    
	
 
    	
 
    	
 
    
	
5.
    	
RENT
    	
3
    
	
 
    	
 
    	
 
    
	
6.
    	
USE
    	
5
    
	
 
    	
 
    	
 
    
	
7.
    	
ESCALATION
    	
6
    
	
 
    	
 
    	
 
    
	
8.
    	
RULES   AND REGULATIONS
    	
7
    
	
 
    	
 
    	
 
    
	
9.
    	
ASSIGNMENT   AND SUBLETTING
    	
8
    
	
 
    	
 
    	
 
    
	
10.
    	
LIABILITY   OF LANDLORD
    	
9
    
	
 
    	
 
    	
 
    
	
11.
    	
MAINTENANCE   AND REPAIRS
    	
10
    
	
 
    	
 
    	
 
    
	
12.
    	
SERVICES
    	
11
    
	
 
    	
 
    	
 
    
	
13.
    	
ALTERATIONS
    	
12
    
	
 
    	
 
    	
 
    
	
14.
    	
INSURANCE, INDEMNIFICATION   AND EXCULPATION
    	
13
    
	
 
    	
 
    	
 
    
	
15.
    	
DESTRUCTION
    	
15
    
	
 
    	
 
    	
 
    
	
16.
    	
ENTRY
    	
16
    
	
 
    	
 
    	
 
    
	
17.
    	
EVENTS   OF DEFAULT
    	
16
    
	
 
    	
 
    	
 
    
	
18.
    	
TERMINATION   UPON DEFAULT
    	
17
    
	
 
    	
 
    	
 
    
	
19.
    	
CONTINUATION   AFTER DEFAULT
    	
17
    
	
 
    	
 
    	
 
    
	
20.
    	
OTHER   RELIEF
    	
18
    
	
 
    	
 
    	
 
    
	
21.
    	
ATTORNEYS’   FEES
    	
18
    
	
 
    	
 
    	
 
    
	
22.
    	
NOTICES
    	
18
    
	
 
    	
 
    	
 
    
	
23.
    	
EMINENT   DOMAIN
    	
19
    
	
 
    	
 
    	
 
    
	
24.
    	
LATE   CHARGE/RETURNED CHECKS
    	
20
    
	
 
    	
 
    	
 
    
	
25.
    	
SECURITY   DEPOSIT
    	
20
    
	
 
    	
 
    	
 
    
	
26.
    	
RELOCATION.   [INTENTIONALLY LEFT BLANK]
    	
21
    
	
 
    	
 
    	
 
    
	
27.
    	
ESTOPPEL   CERTIFICATE
    	
21
    
	
 
    	
 
    	
 
    
	
28.
    	
SURRENDER
    	
22
    
	
 
    	
 
    	
 
    
	
29.
    	
HOLDING   OVER
    	
22
    
	
 
    	
 
    	
 
    
	
30.
    	
SUBORDINATION
    	
23
    
	
 
    	
 
    	
 
    
	
31.
    	
INABILITY   TO PERFORM
    	
23
    

 

iv

 

	
32.
    	
MISCELLANEOUS
    	
23
    
	
 
    	
 
    	
 
    
	
33.
    	
BROKER
    	
25
    
	
 
    	
 
    	
 
    
	
34.
    	
SIGNAGE
    	
25
    

 

v

 

LEASE

 

1.                                      LEASE EFFECTIVE DATE AND PARTIES.

 

This Lease (this “Lease”) is dated, for reference purposes only, as of the Lease Effective Date provided in the Basic Lease Information. PRIOR TO THE DATE THIS LEASE IS EXECUTED BY LANDLORD AND TENANT, THE TERMS OF THIS LEASE SHALL NOT BE BINDING ON EITHER PARTY. UNTIL SIGNED BY LANDLORD, LANDLORD SHALL HAVE NO OBLIGATION OF ANY KIND HEREUNDER TO ANY OF THE PARTIES INVOLVED IN MAKING THIS OFFER TO LEASE THE PREMISES.

 

This Lease is made and entered into as of the Lease Effective Date by and between WOODSIDE ROAD HOLDINGS, LLC, a California limited liability company (“Landlord”), and SKINTELLIGENCE, INC., a Delaware corporation (“Tenant”).

 

2.                                      PREMISES, COMMON AREA AND PARKING.

 

(a)                                 Landlord does hereby lease to Tenant, and Tenant does hereby lease from Landlord, for the term and subject to the covenants and conditions hereinafter set forth, to all of which Landlord and Tenant agree, those certain premises (“Premises”) identified in the Basic Lease Information and shown on Exhibit A attached to this Lease and hereby made a part hereof, and located in the Building identified in the Basic Lease Information. The term “Building” shall include adjacent parking structures used in connection therewith. The Premises, the Building, the Common Areas, the land upon which the same are located, along with all other buildings and improvements thereon or thereunder, are herein collectively referred to as the “Office Building Project”. Tenant shall have the right to use, in common with others (to the extent not otherwise restricted by this Lease), the facilities and indoor and outdoor areas of the Office Building Project that are designated by Landlord in its sole discretion for common use by occupants of the Building (the “Common Areas”). The exterior walls of the Building, exterior balconies and any space in the Premises and the ceiling plenum used for shafts, stacks, pipes, conduits, ducts, electric or other utilities, or other Building facilities, and the use thereof and access thereto through the Premises for the purposes of operation, maintenance and repairs, are reserved to Landlord.

 

(b)                                 Tenant’s Percentage Share has been determined by taking the quotient arrived at by dividing the number of rentable square feet of the Premises provided in the Basic Lease Information by the number of the rentable square feet of the Building, and multiplying said quotient by 100. The square footage figures contained in this Lease shall be final and binding on the parties; provided, however, Landlord reserves the right to remeasure the Premises, one time during the Term, in connection with a remeasurement of the floor area of the entire Building in accordance with any standard that Landlord applies to the Building on a Building-wide basis.

 

(c)                                  So long as no uncured Event of Default (as defined in Paragraph 17 below) has been declared hereunder and subject to the Project Rules (as defined in Paragraph 8), Tenant shall be entitled to use its pro rata share of the non-reserved automobile parking spaces located in those portions of the Common Areas designated from time to time by Landlord for parking (the “Parking Facility”). Tenant shall not use more parking spaces than its pro rata share. Said

 

1

 

parking spaces shall be used for parking by vehicles no larger than full-size passenger automobiles, herein called “Permitted Size Vehicles.” Vehicles other than Permitted Size Vehicles shall be parked and loaded or unloaded as directed by Landlord in the Project Rules. Tenant shall not permit or allow any vehicles that belong to or are controlled by Tenant or Tenant’s employees, suppliers, shippers, customers, contractors or invitees to be loaded, unloaded, or parked in areas other than those designated by Landlord for such activities. If Tenant permits or allows any of the prohibited activities described in this Lease or in any Project Rules then in effect, Landlord shall have the right, without notice, in addition to such other rights and remedies that it may have, to remove or tow away the vehicle involved and charge the cost to Tenant, which cost shall be immediately payable upon demand by Landlord. Neither Landlord nor any of Landlord’s employees, agents or representatives shall have any liability or responsibility to Tenant or any other party parking in the Parking Facility for any loss or damage that may be occasioned by or may arise out of such parking, including, without limitation, loss of property or damage to person or property from any cause whatsoever, other than to the extent arising from the gross negligence or willful misconduct of Landlord. Tenant, in consideration of the parking privileges hereby conferred on Tenant waives, any and all liabilities against Landlord and any of Landlord’s employees, agents and representative, by reason of occurrences in the Parking Facility and the driveway access and entrances thereto.

 

3.                                      TERM.

 

(a)                                 The term of this Lease (“Term”) shall be for the period identified in the Basic Lease Information. The Term shall commence on the date Landlord delivers possession of the Premises with the improvements described in Exhibit D attached hereto substantially complete (subject to punchlist items), and shall end on the Expiration Date.

 

(b)                                 The “Commencement Date” shall be the actual date the Term of this Lease commences in accordance with this Paragraph 3 and Paragraph 4(c). Landlord and Tenant shall execute a written statement in the form attached hereto as Exhibit E (the “Commencement Memorandum”), setting forth (i) the Commencement Date and the Expiration Date; and (ii) the other matters referenced in such Commencement Memorandum. The enforceability of this Lease shall not be affected and the term of this Lease shall commence on the Commencement Date and end on the Expiration Date whether or not the Commencement Memorandum is executed.

 

4.                                      DELIVERY OF POSSESSION.

 

(a)                                 Except as expressly provided in Paragraph 4(c) below, Landlord shall deliver possession of the Premises to Tenant, and Tenant shall accept the same, in its “AS IS” condition, subject to all recorded matters and governmental regulations, and without any warranties of any kind, including without limitation, any warranty of condition, or compliance with law, or that the Premises or any Building Systems (as defined in Paragraph 11(a) below) are suitable for Tenant’s use. Tenant agrees that, except as provided in Paragraph 4(c) below, Landlord has no obligation and has made no promise to alter, remodel, improve, or repair the Premises or any part thereof or to repair, bring into compliance with Applicable Laws, or improve any condition existing in the Premises as of the Commencement Date. Tenant agrees that neither Landlord nor any of Landlord’s employees or agents has made any representation or warranty as to the present or

 

2

 

future suitability of the Premises for the conduct of Tenant’s business therein. Any improvements or personal property located in the Premises are delivered without any representation or warranty from Landlord, either express or implied, of any kind, including merchantability or suitability for a particular purpose.

 

(b)                              In the event of the inability of Landlord to deliver possession of the Premises at the time for the commencement of the Term for any reason whatsoever, neither Landlord nor its agents shall be liable for any damage caused thereby, nor shall this Lease thereby become void or voidable, nor shall the Term be in any way extended, but in such event Tenant shall not be liable for any rent until such time as Landlord can deliver possession. Notwithstanding the foregoing, if the Commencement Date has not occurred on or before December 1, 2011 (the “Delivery Deadline”) (provided that the Delivery Deadline shall be extended on a day-for-day basis for any accidents, strike, labor troubles, acts of God, or any other cause, whether similar or dissimilar, which is beyond the reasonable control of Landlord, and any “Tenant Delays” as that term is defined in Exhibit D attached hereto), then Tenant shall have the right to terminate this Lease effective upon thirty (30) days written notice to Landlord. However, if Landlord is able to deliver possession of the Premises in accordance with the terms of this Paragraph 4 on or before the expiration of such thirty (30) day period, then this Lease shall not be terminated and Tenant’s notice shall be null and void and have no further effect. If Tenant fails to give a termination notice within thirty (30) days after the Delivery Deadline (as the Delivery Deadline may be extended as provided above), then Tenant shall be deemed to have irrevocably waived its right to terminate this Lease. In the event that this Lease is terminated in accordance with this Paragraph 4(b), then neither Landlord nor Tenant shall be liable to the other due to such termination.

 

(c)                                  Landlord shall construct and install in the Premises the Tenant Improvements provided in, and in accordance with, Exhibit D attached hereto. Landlord shall replace and repair any defect in construction of the Tenant Improvements for a period of one (1) year from the Commencement Date, without charge to Tenant. Thereafter, Landlord shall have no liability or responsibility with respect to any defect in construction of any of the Tenant Improvements. In the event of any Tenant Delays (as that term is defined in Exhibit D). the Commencement Date shall be determined by subtracting the number of days of Tenant Delay from the date otherwise determined in accordance with Paragraph 3 hereof.

 

5.                                      RENT.

 

(a)                                 Tenant shall pay to Landlord the following amounts as rent for the Premises:

 

(i)                                     During the Term, commencing on the Commencement Date, Tenant shall pay to Landlord, as base monthly rent, the respective amounts of monthly rent specified in the Basic Lease Information (the “Base Rent”). If the Commencement Date should occur on a day other than the first day of a calendar month, or if the Expiration Date should occur on a day other than the last day of a calendar month, then the Base Rent for such fractional month shall be prorated upon a daily basis based upon a thirty (30) day month. Base Rent is due and payable monthly, in advance, on the first day of each calendar month, except that Base Rent for the first full calendar month of the Term for which Base Rent is payable (the “First Month”)  shall be paid upon execution of this Lease. If the Commencement Date occurs on a day other than the first day of a calendar month, Base Rent for the period from the Commencement Date through

 

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the end of said calendar month shall be due and payable on the Commencement Date, and the Base Rent payable upon execution of this Lease shall be credited against the Base Rent due for the First Month as of the first day of the First Month.

 

(ii)                                   During each calendar year or part thereof during the Term subsequent to the Base Year specified in the Basic Lease Information (the “Base Year”), Tenant shall pay to Landlord, as additional monthly rent, Tenant’s Percentage Share (as provided in the Basic Lease Information) of the total dollar increase, if any, in all Operating Expenses (as defined in Exhibit B hereto) paid or incurred by Landlord in such calendar year or part thereof over Operating Expenses paid or incurred by Landlord in the Base Year. Payments on account of Tenant’s Percentage Share of Operating Expenses, determined in accordance with Paragraph 7(a), are due and payable monthly together with the payment of Base Rent. Any Operating Expenses that are not specifically attributable to a specific building or to the operation, repair and maintenance thereof may, at Landlord’s option, be equitably allocated by Landlord to all buildings in the Office Building Project.

 

(iii)                                 During each calendar year or part thereof during the Term subsequent to the Base Year, Tenant shall pay to Landlord, as additional monthly rent, Tenant’s Percentage Share of the total dollar increase, if any, in all Property Taxes (as defined in Exhibit B hereto) paid or incurred by Landlord in such calendar year or part thereof over the Property Taxes paid or incurred by Landlord in the Base Year. Payments on account of Tenant’s Percentage Share of Property Taxes, determined in accordance with Paragraph 7(a), are due and payable monthly together with the payment of Base Rent. No offset shall be given for decreases in either Operating Expenses or Property Taxes against the other, and each of Operating Expenses and Property Taxes shall be determined separately. Any Property Taxes that are not specifically attributable to a specific building may, at Landlord’s option, be equitably allocated by Landlord to all buildings in the Office Building Project.

 

(iv)                                Throughout the Term, Tenant shall pay, as additional rent, all other amounts of money and charges required to be paid by Tenant under this Lease, whether or not such amounts of money or charges are designated “additional rent.” As used in this Lease, “rent” shall mean and include all Base Rent, additional monthly rent as described in Paragraphs 5(a)(ii) and (iii) above, and any other additional rent payable by Tenant in accordance with this Lease.

 

(b)                                 Rent shall be paid to Landlord in lawful money of the United States of America at the following address: Orchard Commercial, Inc., 2055 Laurelwood Road, Suite 130, Santa Clara, CA 95054, or at such other place as Landlord may designate in writing in advance, free from all claims, demands, or set-offs against Landlord of any kind or character whatsoever.

 

(c)                                  Adjustments in Base Rent specified in the Basic Lease Information shall be determined on a Lease Year basis. As used herein, the term “Lease Year” shall mean a twelve (12) calendar month period; provided, however that the first Lease Year of the Term shall, except as may otherwise be expressly provided in this Lease, commence on the Commencement Date and run through the day immediately preceding the first day of the month in which the one-year anniversary of the Commencement Date occurs, with each successive Lease Year specified in the Basic Lease Information to run for a period of the next succeeding twelve (12) months,

 

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other than and except for the final Lease Year specified in the Base Lease Information which shall commence as hereinabove provided and which shall run through the Expiration Date notwithstanding the actual number of days included in said period.

 

6.                                      USE.

 

(a)                                 The Premises shall be used for the purposes identified in the Basic Lease Information (except as limited by Paragraph 6(b) below), and, subject to the terms of this Lease, uses incidental thereto, and shall be used for no other purpose without the prior written consent of Landlord, which consent, provided the same is consistent with the character of the Office Building Project, shall not be unreasonably withheld, but shall otherwise be in the sole discretion of Landlord. Notwithstanding anything in the foregoing to the contrary, in the case of public unrest, a general state of emergency or other circumstances rendering such action advisable in Landlord’s opinion, Landlord reserves the right to prevent access to the Building during the continuance of the same by such action as Landlord may deem appropriate, including closing doors and such action shall not relieve Tenant of or result in any abatement of any of Tenant’s obligations under this Lease.

 

(b)                                 Tenant shall not use the Premises or permit anything to be done in or about the Premises or the Building which will in any way conflict with any present or future law, statute, ordinance, code, rule regulation, requirement, license, permit, certificate, judgment, decree, order or direction of any present or future governmental or quasi-governmental authority, agency, department, board, panel or court (singularly and collectively “Applicable Laws”). Tenant shall, at its expense, promptly comply with all Applicable Laws (including, without limitation, the Federal Americans with Disabilities Act as it affects Tenant’s operations within the Premises), and with the requirements of any board of fire insurance underwriters or other similar bodies now or hereafter constituted, relating to or affecting the condition, use or occupancy of the Premises. It is the intent of the parties to allocate to Tenant the cost of compliance of any and all Applicable Laws, regardless of the existing condition of the Premises, the cost of compliance or the foreseeability of the enactment or application of the Applicable Laws to the Premises. Notwithstanding the foregoing, Tenant shall not be required to make structural changes to the Premises unless they arise or are required because of or in connection with Tenant’s specific use of the Premises, or the type of business conducted by Tenant in the Premises, or Tenant’s Alterations, or Tenant’s acts or omissions.

 

(c)                                  Supplementing the provisions of Paragraph 6(b) above, Tenant shall not use or permit the generation, possession, storage, use, transportation, or disposal of any Hazardous Substances in, on or from the Premises, other than the use of any ordinary and customary materials in minimal quantities reasonably required to be used by Tenant in the normal course of Tenant’s business as permitted under the terms of Paragraph 6(a) above, and so long as such use does not expose the Premises, the Building or any other part of the Office Building Project or neighboring properties to any meaningful risk of contamination or damage or expose Landlord to any liability therefor. The term “Hazardous Substances” as used in this Lease shall mean any product, substance, chemical, material or waste whose presence, nature, quantity and/or intensity of existence, use, manufacture, disposal, transportation, spill, release or effect, either by itself or in combination with other materials expected to be on the Premises, is either: (i) potentially

 

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injurious to the public health, safety or welfare, the environment or the Premises, or (ii) regulated or monitored by any federal, state or local governmental or quasi-governmental authority, agency, department, board, panel or court under any Applicable Laws.

 

(d)                                 Notwithstanding anything contained in this Lease to the contrary, Tenant is not liable or responsible (legally, financially or otherwise) to Landlord for any violation of or non-compliance with any Applicable Law if such violation or non-compliance either consists of violations of applicable building codes of the City of Redwood City, or involves Hazardous Substances, that existed at the Premises as of the Lease Effective Date.

 

7.                                      ESCALATION.

 

The additional monthly rent payable pursuant to Paragraphs 5(a)(ii) and (iii) hereof shall be calculated and paid in accordance with the following procedures:

 

(a)                                 On or before the first day of each calendar year during the Term subsequent to the Base Year, or as soon thereafter as practicable, Landlord shall give Tenant written notice of Landlord’s reasonable estimate of the amounts payable by Tenant under Paragraphs 5(a)(ii) and (iii) hereof for the ensuing calendar year. On or before the first day of each month during such ensuing calendar year, Tenant shall pay to Landlord one-twelfth of such estimated amounts. If such notice is not given for any calendar year, Tenant shall continue to pay on the basis of the prior year’s estimate until the month after such notice is given, and subsequent payments by Tenant shall be based on Landlord’s current estimate, adjusted, as determined by Landlord, so that the subsequent monthly installments payable by Tenant hereunder through the end of the calendar year reimburse Landlord for all amounts payable by Tenant under Paragraphs 5(a)(ii) and (iii) hereof. If at any time it appears to Landlord that the amounts payable under Paragraphs 5(a)(ii) and (iii) hereof for the current calendar year will vary from Landlord’s estimate, Landlord may, by giving written notice to Tenant, revise Landlord’s estimate for such year, and subsequent payments by Tenant for such year shall be based on such revised estimate.

 

(b)                                 On or before April 1st of each calendar year subsequent to the Base Year or as soon after such date as practicable, Landlord shall give Tenant a written statement of the amounts payable under Paragraphs 5(a)(ii) and (iii) hereof for the prior calendar year certified by Landlord. If such statement shows an amount owing by Tenant that is less than the estimated payments for such calendar year previously made by Tenant, provided no Event of Default shall then exist under this Lease or if this Lease has previously been terminated or the Term expired, no Event of Default shall have existed under this Lease as of said termination or expiration date, Landlord shall, at its option, either refund or credit the excess to Tenant within thirty (30) days of the date of such statement. If such statement shows an amount owing by Tenant that is more than the estimated payments for such calendar year previously made by Tenant, Tenant shall pay the deficiency to Landlord within thirty (30) days after delivery of such statement and payment of such deficiency shall be a condition precedent to Tenant’s rights to inspect Landlord’s books pursuant to Paragraph 7(d) below. Failure by Landlord to give any notice or statement to Tenant under this Paragraph 7 shall not waive Landlord’s right to receive, or Tenant’s obligation to pay, the amounts payable by Tenant under Paragraphs 5(a)(ii) and (iii) hereof.

 

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(c)                                  If the Term ends on a day other than the last day of a calendar year, the amounts payable by Tenant under Paragraphs 5(a)(ii) and (iii) hereof applicable to the calendar year in which such Term ends shall be prorated according to the ratio which the number of days in such calendar year to and including the end of the Term bears to three hundred sixty (360). Termination of this Lease shall not affect the obligation of Tenant pursuant to Paragraph 7(b) hereof to be performed after such termination.

 

(d)                                 So long as no uncured Event of Default has occurred hereunder and not more often than once per calendar year, Tenant shall have the right, at its sole cost and expense, to inspect the books of Landlord directly relating to Operating Expenses and Property Taxes, after giving a minimum of fifteen (15) day’s prior written notice to Landlord. Tenant shall conduct its inspection of Landlord’s books during the business hours of Landlord at Landlord’s office in the Building or at such other location as Landlord may designate, for the purpose of verifying the information in such statement. Tenant shall have no right to copy any of Landlord’s books or remove such books from the location maintained by Landlord. Tenant shall use a certified public accountant reasonably acceptable to Landlord to conduct its inspection of Landlord’s books and in no event shall Tenant have the right to pay such accountant on a contingency fee basis. If Tenant shall have availed itself of its right to inspect the books and records, and whether or not Tenant disputes the accuracy of the information set forth in such books and records, Tenant shall nevertheless pay the amount set forth in Landlord’s statement and continue to pay the amounts required by the provisions of Paragraph 7(b), pending resolution of said dispute. Any default in the payment of such charges by Tenant shall be deemed an Event of Default (as hereinafter defined) under this Lease. If Tenant’s inspection of Landlord’s books reveals that the total dollar increase, if any, in the aggregate amount of Operating Expenses paid or incurred by Landlord in the calendar year being audited over the Base Year, plus the total dollar increase, if any, in Property Taxes paid or incurred by Landlord in the calendar year being audited over the Base Year (collectively, the “Increased Expenses”)  are overstated, then Landlord shall within thirty (30) days after the completion of the inspection elect to either reimburse or credit Tenant for any and all overcharges; or if the Increased Expenses for any calendar year are not overstated, then Tenant shall within thirty (30) days after the completion of the inspection pay to Landlord the amount (if any) by which Tenant has underpaid Tenant’s Share of Operating Expenses and/or Property Taxes for the calendar year being audited. If Tenant fails to notify Landlord of Tenant’s election to inspect Landlord’s books within ninety (90) days of Tenant’s receipt of Landlord’s statement, Landlord’s statement shall be deemed final and binding on Tenant and Tenant shall have no further right to inspect Landlord’s books with respect to the Operating Expenses and Property Taxes for the calendar year for which the Landlord’s statement pertains.

 

8.                                      RULES AND REGULATIONS.

 

Tenant shall faithfully observe and comply with the Rules and Regulations attached to this Lease as Exhibit C and made a part hereof, and such other reasonable rules and regulations as Landlord may from time to time adopt for the safety, care and cleanliness of the Office Building Project, the facilities thereof, or the preservation of good order therein (collectively, the “Project Rules”). Landlord reserves the right from time to time in its sole discretion to make all reasonable additions and modifications to the Project Rules. Any additions and modifications to the Project Rules shall be binding on Tenant when delivered to Tenant. Landlord shall not be

 

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liable to Tenant for violation of any such Project Rules, or for the breach of any covenant or condition in any lease, by any other tenant in the Building. In the event of any conflict between this Lease and the Project Rules, the terms of this Lease shall govern. A waiver by Landlord of any rule or regulation for any other tenant shall not constitute nor be deemed a waiver of the rule or regulation for this Tenant. Landlord shall use commercially reasonable efforts to enforce the Project Rules in a non-discriminatoiy manner.

 

9.                                      ASSIGNMENT AND SUBLETTING.

 

(a)                                 Tenant shall not assign, mortgage or hypothecate this Lease, or any interest therein, or permit the use of the Premises by any person or persons other than the Tenant, or sublet the Premises, or any part thereof, without the prior written consent of Landlord, which consent, subject to Landlord’s right of termination in accordance with Paragraph 9(b) below, shall not be unreasonably withheld. For purposes of this Paragraph 9, an assignment shall not include an assignment for security purposes, which shall only be permitted with the prior consent of Landlord in its sole and absolute discretion. Consent to any such assignment or sublease shall not operate as a waiver of the necessity for consent to any subsequent assignment or sublease, and the terms of such consent shall be binding upon any person holding by, under or through Tenant.

 

(b)                                 If Tenant desires to assign its interest in this Lease or to sublease all or any part of the Premises, Tenant shall notify Landlord in writing at least sixty (60) days in advance of the proposed transaction. This notice shall be accompanied by: (i) a statement setting forth the name and business of the proposed assignee or subtenant; (ii) a copy of the proposed form of assignment or sublease (and any collateral agreements) setting forth all of the material terms and the financial details of the sublease or assignment; and (iii) financial statements and any other information concerning the proposed assignment or sublease which Landlord may reasonably request. If Tenant proposes to assign this Lease or sublet any portion of the Premises, Landlord shall have the right, in its sole and absolute discretion, to terminate this Lease in the event of a proposed assignment, or to terminate the effectiveness of this Lease with respect to any portion of the Premises proposed by Tenant for sublease, on written notice to Tenant within thirty (30) days after receipt of Tenant’s notice and the information described above or the receipt of any additional information requested by Landlord. If Landlord elects to terminate this Lease, in the event of a proposed assignment, or to terminate the effectiveness of this Lease with respect to any portion of the Premises proposed by Tenant for sublease, this Lease, or the effectiveness of this Lease with respect to any portion of the Premises proposed by Tenant for sublease, shall terminate as of the effective date of the proposed assignment or commencement of the term of the proposed sublease as set forth in Tenant’s notice, and Landlord shall have the right (but no obligation) to enter into a direct lease with the proposed assignee or subtenant. Tenant may withdraw its request for Landlord’s consent at any time prior to, but not after, Landlord delivers a written notice of termination.

 

(c)                                  If Landlord elects not to terminate this Lease, in the event of a proposed assignment, or elects not to terminate the effectiveness of this Lease with respect to any portion of the Premises proposed by Tenant for sublease, pursuant to Paragraph 9(b) above, Landlord shall not unreasonably withhold its consent to an assignment or subletting.

 

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(d)                                 Each permitted assignee, transferee or subtenant, other than Landlord, shall assume and be deemed to have assumed this Lease and shall be and remain liable jointly and severally with Tenant for the payment of the rent and for the due performance or satisfaction of all of the provision, covenants, conditions and agreements herein contained on Tenant’s part to be performed or satisfied. Regardless of Landlord’s consent, no subletting or assignment shall release or alter Tenant’s obligation or primary liability to pay the rent and perform all other obligations under this Lease. No permitted assignment or sublease shall be binding on Landlord unless such assignee, subtenant or Tenant shall deliver to Landlord a counterpart of such assignment or sublease which contains a covenant of assumption by the assignee or subtenant, but the failure or refusal of the assignee or subtenant to execute such instrument of assumption shall not release or discharge the assignee or subtenant from its liability as set forth above.

 

(e)                                  If Tenant is a partnership, a transfer of the interest of any general partner, a withdrawal of one or more general partner(s) from the partnership, or the dissolution of the partnership, shall be deemed to be an assignment of this Lease. If Tenant is currently a partnership (either general or limited), joint venture, co-tenancy, joint tenancy or an individual, the conversion of the Tenant entity or person into any type of entity which possesses the characteristics of limited liability such as, by way of example only, a corporation, a limited liability company, limited liability partnership, or limited liability limited partnership, shall be deemed an assignment for purposes of this Lease.

 

(f)                                   Any notice by Tenant to Landlord pursuant to this Paragraph 9 of a proposed assignment or sublease shall be accompanied by a payment of Two Thousand Five Hundred Dollars ($2,500) as a non-refundable fee for the processing of Tenant’s request for Landlord’s consent. In addition to said fee, Tenant shall reimburse Landlord for reasonable attorneys’ fees incurred by Landlord in connection with such review and the preparation of documents in connection therewith. Tenant shall pay to Landlord monthly on or before the first (1st) of each month fifty percent (50%) of the rent or other consideration received from such assignee(s) or subtenant(s) over and above the concurrent underlying rent payable by Tenant to Landlord for that portion of the Premises being assigned or sublet, and after deduction for the amortized portion of the reasonable expenses actually paid by Tenant to unrelated third parties for brokerage commissions, legal fees, tenant improvements to the Premises, or design fees incurred as a direct consequence of the assignment or sublease. Tenant shall furnish Landlord with a true signed copy of such assignment(s) or sublease(s) and any supplementary agreements or amendments thereto, within five (5) days after their respective execution.

 

10.                               LIABILITY OF LANDLORD.

 

It is expressly understood and agreed that the obligations of Landlord under this Lease shall be binding upon Landlord and its successors and assigns and any future owner of the Building only with respect to events occurring during its and their respective ownership of the Building. In the event of any conveyance of title to the Office Building Project (or any portion thereof in which the Building is located), then the grantor or transferor shall be relieved of all liability with respect to Landlord’s obligations to be performed under this Lease after the date of such conveyance. In addition, Tenant agrees to look solely to Landlord’s interest in the Building for recovery of any judgment against Landlord arising in connection with this Lease, it being

 

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agreed that neither Landlord nor any successor or assign of Landlord nor any future owner of the Building, nor any partner, shareholder, or officer of any of the foregoing shall ever be personally liable for any such judgment.

 

11.                               MAINTENANCE AND REPAIRS.

 

(a)                                 Subject to reimbursement pursuant to Paragraph 7 hereof, Landlord shall maintain and repair the Common Areas, the roof, structural and exterior elements of the Building and the mechanical, electrical, telecommunication, vertical transportation, plumbing, heating, ventilating, air-conditioning and other equipment, facilities and systems located within or serving the Premises or the Office Building Project (collectively, the “Building Systems”), and keep such areas, elements and systems in good order and condition, consistent with the standards of other comparable buildings in the vicinity of the Building. Any damage in or to any such areas, elements or systems caused by Tenant or any agent, officer, employee, contractor, licensee or invitee of Tenant shall be repaired by Landlord at Tenant’s expense and Tenant shall pay to Landlord, upon billing by Landlord, as additional rent, the cost of such repairs incurred by Landlord.

 

(b)                                 Tenant shall, at all times during the Term of this Lease and at Tenant’s sole cost and expense, maintain and repair the Premises and every part thereof and all equipment (including, without limitation, any kitchen equipment), and any fixtures and improvements therein, and keep all of the foregoing clean and in good working order and operating condition, ordinary wear and tear and damage thereto by fire or other casualty excepted. All repairs and replacements made by or on behalf of Tenant shall be made and performed at Tenant’s cost and expense and at such time and in such manner as Landlord may reasonably designate, by contractors or mechanics reasonably approved by Landlord and so that the same shall be at least equal in quality, value, character and utility to the original work or installation being repaired or replaced. Notwithstanding Landlord’s obligations under Paragraph 11(a) above, Tenant shall be responsible for payment, as additional rent, for the cost of any maintenance and repair of any Building Systems (wherever located) that serves only Tenant or the Premises. Tenant hereby waives all rights under California Civil Code Section 1941 and all rights to make repairs at the expense of Landlord or in lieu thereof to vacate the Premises as provided by California Civil Code Section 1942 or any other law, statute or ordinance now or hereafter in effect.

 

(c)                                  Tenant shall not alter, modify, add to or disturb any telecommunications wiring or cabling in the Building other than located exclusively in the Premises, without Landlord’s prior written consent. By its acceptance of possession of the Premises, Tenant shall be deemed to have agreed that the existing number and type of lines designated for service to or presently serving the Premises, as the case may be, is adequate for Tenant’s occupancy. Any and all telecommunications equipment and cabling serving Tenant and the Premises and connecting to or from the intermediate distribution frame (“IDF”) shall be located solely in the Premises, and Tenant shall only be permitted to access the IDF with the prior written consent of Landlord and for purposes of confirming interconnection with the Building’s riser facilities. Landlord reserves the right to limit the number of local exchange carriers and competitive alternative telecommunications providers (collectively, “TSPs”) having access to the Building’s riser system and infrastructure, to install a cable distribution/riser management system to which

 

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Tenant and all TSPs shall connect, and to charge TSPs for the use of Landlord’s telecommunications riser system and infrastructure; provided, however, in all cases, Landlord will provide Building and riser access to at least one TSP for dial tone telecommunications service to tenants of the Building.

 

(d)                                 Tenant’s installation of telephone lines, cables, and other electronic telecommunications services and equipment shall be subject to the terms and conditions of Paragraph 13 of this Lease. Upon the expiration or earlier termination of this Lease, Tenant shall remove, at its sole cost and expense, all of Tenant’s telecommunications lines and cabling designated by Landlord for removal.

 

12.                               SERVICES.

 

(a)                                 As an item of Operating Expenses, reimbursable as otherwise provided in this Lease, Landlord shall provide heating, ventilation and air conditioning as reasonably required, reasonable amounts of electricity for normal lighting and office machines, water for reasonable and normal drinking and lavatory use, replacement light bulbs and/or fluorescent tubes and ballasts for standard overhead fixtures and unmanned passenger and freight elevator service. Landlord shall make janitorial and cleaning services available to the Premises five (5) days per week and shall provide periodic Building exterior window washing service. Tenant shall pay to Landlord on demand the costs incurred by Landlord for extra cleaning in the Premises required because of misuse or neglect on the part of Tenant or Tenant’s employees or the use of portions of the Premises for special purposes requiring greater or more difficult cleaning work than office areas.

 

(b)                                 Except as provided in Paragraph 12(a), Tenant shall pay for all water, gas, heat, light, power, telephone, broadband or cable and other utilities and services specially or exclusively supplied and/or metered exclusively to the Premises or to Tenant, together with any taxes thereon. If any such specially or exclusively supplied services are not separately metered to the Premises, Tenant shall pay a reasonable proportion to be determined by Landlord of all charges jointly metered with other premises in the Building.

 

(c)                                  Building services and utilities shall be provided during generally accepted business days and hours or such other days or hours as may hereafter be set forth (except for electricity and water, which, subject to the terms of this Lease, shall be provided on a 24-hour per day, 365 days per year basis). Utilities and services required at other times shall be subject to advance request and reimbursement by Tenant to Landlord of Landlord’s reasonable charges therefor upon demand.

 

(d)                                 Tenant shall not make connection to utilities except by or through existing outlets and shall not install or use machinery or equipment in or about the Premises that uses excess water, lighting or power, or suffer or permit any act that causes extra burden upon the utilities or services, including but not limited to security services, over standard office usage for the Office Building Project. Landlord shall require Tenant to reimburse Landlord for any excess expenses or costs that may arise out of a breach of this subparagraph by Tenant. Landlord may, in its sole discretion, install at Tenant’s sole cost and expense supplemental equipment and/or separate metering applicable to Tenant’s excess usage or loading.

 

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(e)                                  There shall be no abatement of rent and Landlord shall not be liable in any respect whatsoever for the inadequacy, stoppage, interruption or discontinuance of any utility or service due to riot, strike, labor dispute, breakdown, accident, repair, in cooperation with governmental request or directions, or any other cause whatsoever, unless caused by the negligence or willful misconduct of Landlord or its employees or agents. Any interruption or discontinuance of service shall not be deemed an eviction or disturbance of Tenant’s use and possession of the Premises, or any part thereof, nor shall it render Landlord liable to Tenant for any injury, loss or damage by abatement of rent or otherwise, nor shall it relieve Tenant from performance of Tenant’s obligations under this Lease. Landlord shall, however, exercise reasonable diligence to restore any service so interrupted.

 

13.                               ALTERATIONS.

 

(a)                                 Tenant shall make no alterations, improvements or additions in or to the Premises or any part thereof (individually and collectively, “Alterations”) without giving Landlord prior notice of the proposed Alterations and obtaining Landlord’s prior written consent thereto, which consent, except as hereinafter provided, shall not be unreasonably withheld or delayed; provided, however, Landlord may withhold its consent in its sole discretion if any proposed Alterations would adversely affect any of the structural elements of the Building, the Building’s electrical, plumbing, heating, telecommunications, mechanical or life safety systems, or involve any permanently affixed signage visible from or to be attached to the exterior of the Premises. Any and all work by Tenant shall be performed only by contractors approved by Landlord and, where the prior consent of Landlord is required, upon the approval by Landlord of fully detailed and dimensioned plans and specifications pertaining to the work in question, to be prepared and submitted by Tenant at its sole cost and expense. Landlord’s approval or consent to any such work shall not impose any liability upon Landlord, and no action taken by Landlord in connection with such approval, including, without limitation, attending construction meetings of Tenant’s contractors, shall render Tenant the agent of Landlord for purposes of constructing the Alterations.

 

(b)                                 Tenant shall at its sole cost and expense obtain all necessary approvals and permits pertaining to any Alterations. Tenant shall be responsible for any additional alterations and improvements required by law to be made by Landlord to or in the Building as a result of any alterations, additions or improvements to the Premises made by or for Tenant. All alterations, additions, fixtures (other than trade fixtures) and improvements, including, but not limited to carpeting, other floor coverings, built-in shelving, bookcases, paneling and built-in security systems (excluding any leased system) made in or upon the Premises either by or for Tenant and affixed to or forming a part of the Premises, shall immediately upon installation become Landlord’s property free and clear of all liens and encumbrances.

 

(c)                                  Tenant shall keep the Premises and the Building free from any mechanics’ liens, vendors liens or any other liens arising out of any work performed, materials furnished or obligations incurred by Tenant, and agrees to defend, indemnify and hold harmless Landlord from and against any such lien or claim or action thereon, together with costs of suit and reasonable attorneys’ fees incurred by Landlord in connection with any such claim or action. Before commencing any work or alteration, addition or improvement to the Premises which

 

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requires Landlord’s consent, Tenant shall give Landlord at least ten (10) business days’ written notice of the proposed commencement of work (to afford Landlord an opportunity to post appropriate notices of non-responsibility). In the event that there shall be recorded against the Premises or the Building or the property of which the Premises is a part any claim or lien arising out of any such work performed, materials furnished or obligations incurred by Tenant and such claim or lien shall not be removed, bonded over or discharged by Tenant within ten (10) days of written notice from Landlord, Landlord shall have the right but not the obligation to pay and discharge said lien by bond or otherwise without regard to whether such lien shall be lawful or correct. Any reasonable costs, including attorney’s fees incurred by Landlord, shall be paid by Tenant within ten (10) days after demand by Landlord.

 

(d)                                 Tenant shall pay to Landlord a project administration fee equal to five percent (5%) of the cost of any Alterations to compensate Landlord for the administrative costs incurred and the Building services provided by Landlord in the supervision and coordination of the work.

 

14.                               INSURANCE, INDEMNIFICATION AND EXCULPATION.

 

(a)                                Tenant shall, at Tenant’s expense, obtain and keep in force during the Term of this Lease a policy of Commercial General Liability insurance utilizing an Insurance Services Office standard form with Broad Form General Liability Endorsement (CL00011188), or equivalent, in an amount not less than $2,000,000.00 combined single limit per occurrence/aggregate of bodily injury and property damage, or in such greater amount as reasonably determined by Landlord, and shall insure Tenant and Landlord, Landlord’s property manager, and any lender(s) whose names have been provided to Tenant in writing (as additional insureds) against liability arising out of the use, occupancy or maintenance of the Premises. The policy shall not contain any intra-insured exclusions as between insured persons or organizations, but shall include coverage for liability assumed under this Lease as an “insured contract” for the performance of Tenant’s indemnity obligations under this Lease. Compliance with the above requirements shall not, however, limit the liability of Tenant nor relieve Tenant of any obligation hereunder. All insurance to be carried by Tenant shall be primary to and not contributory with any similar insurance carried by Landlord, whose insurance shall be considered excess insurance only.

 

(b)                                 (i)                                     Tenant at its cost shall either by separate policy or by endorsement to a policy already carried by Tenant, maintain insurance coverage on all of Tenant’s personal property and Alterations in, on, or about the Premises. Such insurance shall be full replacement cost coverage. Landlord shall be named as a loss payee under said policy. The proceeds from any such insurance shall be used by Tenant for the replacement and/or restoration of Tenant’s personal property and Alterations.

 

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

 

(c)                                  Insurance required hereunder shall be in companies duly licensed to transact business in the state where the Premises are located, and maintaining during the policy term a

 

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“General Policyholders Rating” of at least A-, VII, or such other rating as may be required by Landlord, as set forth in the most current issue of “Best’s Insurance Guide.” Tenant shall cause to be delivered to Landlord, within seven (7) days after the Commencement Date, and from time to time upon Landlord’s request, certified copies of, or certificates evidencing the existence and amounts of, the insurance required to be maintained by Tenant hereunder, with the insureds and loss payable clauses as required by this Lease. No deductible (including any self-insured retention) under any policy of insurance carried by Tenant shall exceed Two Thousand Five Hundred Dollars ($2,500.00). No such policy shall be cancelable or subject to modification except after thirty (30) days prior written notice to Landlord. Tenant shall at least thirty (30) days prior to the expiration of such policies, furnish Landlord with evidence of renewals or “insurance binders” evidencing renewal thereof, or Landlord may order such insurance and charge the cost thereof to Tenant, which amount shall be payable by Tenant to Landlord upon demand.

 

(d)                                 Without affecting any other rights or remedies of the parties, Tenant and Landlord each hereby agree to cause the insurance companies issuing their respective first party insurance to waive any subrogation rights that such insurers may have against Landlord and Tenant, respectively, as long as the insurance is not invalidated by such waiver. If such waivers of subrogation are contained in their respective insurance policies, Landlord and Tenant each waive, release and relieve the other, and waive their entire right to recover damages (whether in contract or in tort) against the other, for loss of or damage to the waiving party’s property arising out of or incident to the perils required to be insured against under this Paragraph 14, to the extent that the loss or damage is insured under their respective insurance policies.

 

(e)                                  Except for instances of the gross negligence or willful misconduct of any of the Landlord Parties (as defined below), Tenant shall indemnify, protect, defend and hold harmless the Premises, Landlord, Landlord’s master or ground lessor, any lenders, Landlord’s partners and members, and each of their officers, directors, shareholders, managers, employees, agents and representatives (collectively, “Landlord Parties”) from and against any and all third party claims against Landlord Parties based on claims, loss of rents and/or damages, costs, liens, judgments, penalties, permits, attorney’s and consultant’s fees, expenses and/or liabilities arising out of, involving, or in dealing with, (i) the occupancy of the Premises by Tenant, (ii) the conduct of Tenant’s business, (iii) any act, omission or neglect of Tenant, its agents, contractors, employees or invitees, and/or (iv) any default or breach by Tenant in the performance in a timely manner of any obligation on Tenant’s part to be performed under this Lease. The foregoing shall include, but not be limited to, the defense or pursuit of any claim or any action or proceeding involved therein, and whether or not (in the case of claims made against Landlord) litigated and/or reduced to judgment, and whether well founded or not. In case any action or proceeding is brought against Landlord by reason of any of the foregoing matters, Tenant upon notice from Landlord shall defend the same at Tenant’s expense by counsel reasonably satisfactory to Landlord and Landlord shall cooperate with Tenant in such defense. Landlord need not have first paid any such claim in order to be so indemnified. The foregoing indemnification obligations shall survive the expiration or earlier termination of this Lease to and until the last date permitted by law for the bringing of any claim with respect to which indemnification may be claimed under this paragraph.

 

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(f)                                   Tenant hereby releases Landlord from, and Landlord shall not be liable to Tenant for, and any all claims for injury or damage to the person or goods, wares, merchandise or other property of Tenant, Tenant’s employees, contractors, invitees, customers, or any other person in or about the Premises, Building or Office Building Project, from any cause, including, without limitation, the active or passive negligence of Landlord, its agents or contractors, and whether said injury or damage results from conditions arising on the Premises or on other portions of the Building or Office Building Project, or from other sources or places, and regardless of whether the cause of such damage or injury or the means of repairing the same is accessible or not, unless caused by the gross negligence or willful misconduct of Landlord or any of its employees or agents. Landlord shall not be liable for any damages arising from any act, omission or neglect of any other lessee of Landlord. Notwithstanding Landlord’s active or passive negligence or breach of this Lease, Landlord shall under no circumstances be liable for injury to Tenant’s business or for any loss of income or profit therefrom.

 

15.                               DESTRUCTION.

 

(a)                                 In the event of a partial destruction of the Premises during the Term from any cause, Landlord shall forthwith repair the same (except as otherwise provided in this Paragraph 15 as to a casualty occurring during the last twelve (12) months of the Term), provided such repairs can be made within ninety (90) days under the laws and regulations of State, county, federal or municipal authorities, but such partial destruction shall not annul or void this Lease, except that Tenant shall be entitled to a proportional abatement in rent from the date of such destruction to the date the destroyed area is substantially repaired and possession thereof is tendered to Tenant, such proportionate abatement to be based upon the amount of square footage in the Premises damaged and the length of time said area is not either actually being used by Tenant for business purposes or is not in a condition habitable for general office use. If such repairs cannot be made within ninety (90) days of such casualty, or if the casualty occurs during the last twelve (12) months of the Term and would result in any rent abatement for a period greater than thirty (30) days, Landlord may, at its option, elect to make such repairs within a reasonable time, this Lease continuing in full force and effect and the rent to be proportionately abated as provided hereinabove. In the event that Landlord does not so elect to make such repairs which cannot be made in ninety (90) days or which results from a casualty occurring during the last twelve (12) months of the term, within a reasonable time following the casualty (but in no event not less than sixty (60) days), this Lease may be terminated at the option of either party. In respect to any partial destruction which Landlord is obligated to repair or may elect to repair under the terms of this Paragraph, Tenant waives the provisions of California Civil Code Sections 1932(2) and 1933(4). In the event that any portion of the Building other than the Premises is destroyed to the extent of ten percent (10%) or more of the replacement cost of the Building, Landlord may elect to terminate this Lease, whether the Premises be injured or not. A total destruction of the Building shall terminate this Lease.

 

(b)                                 If the Premises are to be repaired or restored by Landlord under this Paragraph 15, Landlord shall repair or restore, at Landlord’s cost, the Premises itself and any and all permanently affixed improvements in the Premises constructed or provided by Landlord as of the commencement of the Term, together with any permanently affixed Alterations approved by Landlord (unless at the time of construction Landlord informs Tenant that Tenant will be

 

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required to remove the same at the end of the Term). In no event shall Landlord repair, replace or restore any of Tenant’s Property.

 

16.                               ENTRY.

 

Landlord, Landlord’s agents, employees, contractors and designated representatives, and the holders of any mortgages, deeds of trust or ground leases on the Premises shall have the right to enter the Premises at any time in the case of an emergency, and otherwise at reasonable times for the purpose of inspecting the condition of the Premises, performing any services required of Landlord by this Lease, showing the same to prospective purchasers, lenders or lessees, making such alterations, repairs and improvements to the Premises or to the Office Building Project as Landlord may deem reasonable or desirable, and for verifying compliance by Tenant with this Lease. Tenant waives any charges for damages or injuries or interference with Tenant’s property or business in connection therewith. Any such entry shall be without any rebate of rent to Tenant for any loss of occupancy or quiet enjoyment of the Premises, or damage, injury or inconvenience thereby occasioned.

 

17.                               EVENTS OF DEFAULT.

 

(a)                                 The occurrence of any one or more of the following events (each, an “Event of Default”) shall constitute a breach of this Lease by Tenant: (i) if Tenant shall default in its obligation to pay any rent or other payment(s) due hereunder as and when due and payable; or (ii) if Tenant shall fail to perform or observe any other term hereof (except as otherwise provided in this Paragraph) or of the Project Rules described in Paragraph 8 hereof to be performed or observed by Tenant, such failure shall continue for more than ten (10) days after notice thereof from Landlord, and Tenant shall not within such period commence with due diligence and dispatch the curing of such default, or, having so commenced, thereafter shall fail or neglect to prosecute or complete with due diligence the curing of such default; or (iii) any assignment or subletting in violation of the terms of this Lease; or (iv) the failure of Tenant to maintain insurance coverages required by this Lease and/or to provide evidence of such coverages within three (3) business days after request therefor from Landlord; or (v) Tenant’s failure to timely execute and deliver, when requested, an estoppel certificate in accordance with the terms of this Lease; or (vi) the taking of any action leading to, or the actual dissolution or liquidation of Tenant, if Tenant is other than an individual; or (vii) any guarantor of Tenant’s obligations under this Lease (“Guarantor”) shall become insolvent, file a petition in bankruptcy, or shall have ceased to pay its debts in the ordinary course of business, or Guarantor shall default, beyond any applicable notice and cure period, under its obligations under said guaranty; or (viii) if within sixty (60) days after the commencement of any proceeding against Tenant seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any present or future statute, law or regulation, such proceeding shall not have been dismissed or if this Lease or any estate of Tenant hereunder shall be levied upon under any attachment or execution and such attachment or execution is not vacated within thirty (30) days after notice to Tenant.

 

(b)                                 Any notice required to be given by Landlord under this Lease shall, in each case, be in lieu of, and not in addition to, any notice required to be given under California Code of Civil Procedure Sections 1161 through 1162, or any other applicable unlawful detainer statutes,

 

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to the extent the substance thereof is given in compliance therewith and the notice is served as provided in this Lease, and any time periods provided under such statutes shall run concurrently with the time periods contained in any notice provided under this Lease.

 

18.                               TERMINATION UPON DEFAULT.

 

In any notice given pursuant to any one or more Events of Default, Landlord in its sole discretion may elect to declare a forfeiture of this Lease as provided in Section 1161 of the California Code of Civil Procedure, and provided that Landlord’s notice states such an election, Tenant’s right to possession shall terminate and this Lease shall terminate, unless on or before the date specified in such notice all arrears of rent and all other sums payable by Tenant under this Lease, and all costs and expenses incurred by or on behalf of Landlord hereunder, including attorneys’ fees, incurred in connection with such default, shall have been paid by Tenant and all other breaches of this Lease by Tenant at the time existing shall have been fully remedied to the satisfaction of Landlord. Upon such termination, Landlord may recover from Tenant (a) the worth at the time of award of the unpaid rent which had been earned at the time of termination; (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 rent loss that Tenant proves could reasonably have been avoided; (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 rent loss that Tenant proves could be reasonably avoided; and (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. The “worth at the time of award” of the amount referred to in clauses (a) and (b) above is computed by allowing interest at the discount rate of the Federal Reserve Bank of San Francisco plus five percent (5%) per annum at date of termination, but in no event in excess of the maximum rate of interest permitted by law. The worth at the time of award of the amount referred to in clause (c) above is computed by discounting such amount at the discount rate of the Federal Reserve Bank of San Francisco at the time of award plus one percent (1%). For the purpose of determining unpaid rent under clause (c) above, the monthly rent reserved in this Lease shall be deemed to be the sum of the Base Rent and the amounts last payable by Tenant as reimbursement of expenses pursuant to Paragraphs 5(a)(ii) and (iii) hereof for the calendar year in which Landlord terminated this Lease as provided herein. Tenant waives any rights of redemption or relief from forfeiture under California Code of Civil Procedure Sections 1174 and 1179, or under any other applicable present or future law, if Tenant is evicted or Landlord takes possession of the Premises by reason of any Event of Default.

 

19.                               CONTINUATION AFTER DEFAULT.

 

Even though Tenant has breached this Lease and/or abandoned the Premises, this Lease shall continue in effect for so long as Landlord does not terminate Tenant’s right to possession as provided in Paragraph 18 hereof, and Landlord may enforce all its rights and remedies under this Lease, including the right to recover rent as it becomes due under this Lease. In such event, Landlord may exercise all of the rights and remedies of a landlord under Section 1951.4 of the California Civil Code (which provides that a landlord may continue a lease in effect after a tenant’s breach and abandonment and recover rent as it becomes due, if the tenant has the right to

 

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sublet or assign, subject only to reasonable limitations), or any successor statute. Acts of maintenance or preservation or efforts to relet the Premises or the appointment of a receiver upon initiative of Landlord to protect Landlord’s interest under this Lease shall not constitute a termination of Tenant’s right to possession.

 

20.                               OTHER RELIEF.

 

The remedies provided for in this Lease are in addition to any other remedies available to Landlord at law or in equity, by statute or otherwise. Landlord’s failure to take advantage of any default or breach of covenant on the part of Tenant shall not be, or be construed as a waiver thereof, nor shall any custom or practice which may grow up between the parties in the course of administering this instrument be construed to waive or to lessen the right of Landlord to insist upon the performance by Tenant of any term, covenant or condition hereof, or to exercise any rights given Landlord on account of any such default. A waiver of a particular breach or default shall not be deemed to be a waiver of the same or any other subsequent breach or default. The acceptance of rent hereunder shall not be, nor be construed to be, a waiver of any breach of any term, covenant or condition of this Lease.

 

21.                               ATTORNEYS’ FEES.

 

If as a result of any breach or default on the part of Tenant under this Lease Landlord uses the services of an attorney in order to secure compliance with this Lease, Tenant shall reimburse Landlord upon demand as additional rent for any and all attorneys’ fees and expenses incurred by Landlord, whether or not formal legal proceedings are instituted. Should either party bring an action against the other party, by reason of or alleging the failure of the other party to comply with any or all of its obligations hereunder, or to seek enforcement of any of the terms of this Lease, whether for declaratory or other relief, then the party which prevails in such action shall be entitled to its reasonable attorneys’ fees, expert witness fees and disbursements, and all other reasonable costs and expenses related to such action (including those incurred in connection with any matters on appeal), in addition to all other recovery or relief. The “party which prevails in such action” (a) as used in the context of proceedings in the Bankruptcy Court, means the prevailing party in an adversary proceeding or contested matter, or any other action taken by the non-bankruptcy party which is reasonably necessary to protect its rights under this Agreement, and (b) as used in the context of proceedings in any court other than the Bankruptcy Court, shall mean the party that prevails in obtaining a remedy or relief which most nearly reflects the remedy or relief which the party sought, so that, for example, the party which prevails may be a party which is ordered to pay $100 where the obligation to pay $80 was undisputed and the other party claimed that it was entitled to $1,000.

 

22.                               NOTICES.

 

All approvals, consents and other notices given by Landlord or Tenant under this Lease shall be properly given only if made in writing and either deposited in the United States mail, postage prepaid, certified with return receipt requested, or delivered by hand (which may be through a messenger or recognized delivery, courier or air express service) and addressed to Landlord at the address of Landlord specified in the Basic Lease Information or at such other place as Landlord may from time to time designate in a written notice to Tenant, and addressed

 

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to Tenant at the address of Tenant specified in the Basic Lease Information and, after the Commencement Date, at the Premises, together with a copy to such other address as Tenant may from time to time designate in a written notice to Landlord. Such approvals, consents and other notices shall be effective on the date of receipt (evidenced by the certified mail receipt), if mailed, or on the date of hand delivery, if hand delivered. If any such approval, consent or other notice is not received or cannot be delivered due to a change in the address of the receiving party of which notice was not previously given to the sending party or due to a refusal to accept by the receiving party, such request, approval, consent, notice or other communication shall be effective on the date delivery is attempted. Any approval, consent or other notice under this Lease may be given on behalf of a party by the attorney for such party. Tenant hereby appoints as its agent to receive the service of all default notices and notice of commencement of unlawful detainer proceedings the person in charge of or apparently in charge of or occupying the Premises at the time, and, if there is no such person, then such service may be made by attaching the same on the door of the Premises and such service shall be effective for all purposes under this Lease.

 

23.                               EMINENT DOMAIN.

 

If all or any part of the Premises shall be taken as a result of the exercise of the power of eminent domain or agreement in lieu thereof, this Lease shall terminate as to the part so taken as of the date of taking, and, in the case of a partial taking, Landlord shall have the right to terminate this Lease as to the balance of the Premises by giving written notice to Tenant within sixty (60) days after such date. Common Areas taken shall be excluded from the Common Areas usable by Tenant and no reduction of rent shall occur with respect thereto or by reason thereof. In the event of any taking, Landlord shall be entitled to any and all compensation, damages, income, rent, awards, or interest therein which may be paid or made in connection therewith, and, except as hereinafter expressly provided, Tenant waives and relinquishes to Landlord any and all claims for the value of any unexpired Term of this Lease or otherwise. In the event of a partial taking of the Premises which does not result in a termination of this Lease, the Base Rent thereafter to be paid shall be equitably reduced. If all or any part of the Building shall be taken as a result of the exercise of the power of eminent domain, and, in the case of a partial taking, Landlord determines that the remainder of the Building is not suitable for the continued operation as a multi-tenant office building, Landlord shall have the right to terminate this Lease by giving written notice to Tenant within sixty (60) days of the date when the possession is required. Notwithstanding anything to the contrary in this Paragraph, in the event of a temporary taking for a period less than twenty-four (24) months (or the remainder of the Term, whichever is less), this Lease shall not terminate, but Tenant’s obligation to pay Base Rent and additional rent for the portion of the Premises subject to such temporary taking shall abate for the period during which such taking is in effect. Without obligation to Tenant, Landlord may agree to transfer to any condemnor all or any portion of the Office Building Project sought by such condemnor, free from this Lease and the rights of Tenant hereunder, without first requiring that any action or proceeding be instituted or, if instituted, pursued to a judgment. Landlord and Tenant hereby waive the provisions of California Code of Civil Procedure Sections 1265.110 through 1265.160 to the extent that such provisions are inconsistent with the terms of this Lease.

 

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24.                               LATE CHARGE/RETURNED CHECKS.

 

Rent or other payments due under this Lease which remain unpaid when due shall bear interest from and after the date said amount was due at the discount rate of the Federal Reserve Bank of San Francisco on the date said amount was due, plus five percent (5%) per annum, but in no event in excess of the maximum rate of interest permitted by law. Tenant acknowledges that late payment by Tenant to Landlord of such rent or other payments will cause Landlord to incur costs not contemplated by this Lease, the exact amount of such costs being extremely difficult and impracticable to fix. Therefore, if any installment of rent or other payment due from Tenant is not received by Landlord by the fifth (5th) day of the month when due, Tenant shall pay to Landlord an additional sum of seven and one-half percent (7.5%) of the overdue amount as a late charge. Said late charge shall be due as of the sixth (6th) day of the month in question. If any check for payment by Tenant to Landlord of Base Rent or other sums due hereunder is returned to Landlord by Tenant’s bank for any reason, a returned check charge (“NSF charge”) will be added in the amount of Fifty Dollars ($50.00), in addition to any sums due hereunder including late charges, to compensate Landlord for the costs associated with processing such dishonored check. The parties agree that the foregoing late charges and NSF charge represent a fair and reasonable estimate of the costs Landlord will incur because of said late or dishonored payment. Acceptance of said charges by Landlord shall not constitute a waiver of Tenant’s default for the overdue amount, nor prevent Landlord from exercising the other rights and remedies granted Landlord under this Lease.

 

25.                               SECURITY DEPOSIT.

 

(a)                                 Upon signing this Lease, Tenant shall pay to Landlord the amount of the Security Deposit specified in the Basic Lease Information. The Security Deposit shall be held by Landlord as security for the performance by Tenant of all of the covenants of this Lease to be performed by Tenant, including, without limitation, defaults by Tenant in the payment of rent, the repair of damage to the Premises caused by Tenant, the cleaning of the Premises upon termination of the tenancy created hereby, and for any damages that Landlord may incur as a consequence of any default by Tenant under this Lease, and Tenant shall not be entitled to interest thereon. If Landlord uses or applies the Security Deposit or any portion thereof, Tenant shall, within ten (10) days after demand deposit cash with Landlord in an amount sufficient to restore the Security Deposit to the full amount, and Tenant’s failure to do so shall be deemed a material breach of this Lease. Upon termination of the original Landlord’s or any successor owner’s interest in the Premises or the Building, the original Landlord or such successor owner shall be released from further liability with respect to the Security Deposit upon the original Landlord’s or such successor owner’s complying with California Civil Code Section 1950.7. Subject to the foregoing, Tenant hereby waives the provisions of Section 1950.7 of the California Civil Code (return of security deposit within thirty (30) days of termination of Lease), or any successor statute providing a time limit for the return of a security deposit to a commercial tenant, and all other provisions of law, now or hereafter in force, which provide that Landlord may claim from a security deposit only those sums reasonably necessary to remedy defaults in the payment of rent, to repair damage caused by Tenant or to clean the Premises, it being agreed that Landlord may, in addition, claim those sums reasonably necessary to compensate Landlord for any other loss or damage caused by the default of Tenant under this Lease. The parties agree

 

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that Landlord shall have the right to (i) retain the Security Deposit until the time of entry of an award in any action brought by Landlord pursuant to California Civil Code Section 1951.2, and (ii) offset the Security Deposit against any such award. In the event the Security Deposit exceeds the amount of the award, Landlord shall refund to Tenant any remainder within thirty (30) days of the entry of the award.

 

(b)                                 On the first (1st) anniversary of the Commencement Date (the “First Deposit Reduction Date”), if Tenant is not then in default under this Lease, and to the extent that the Security Deposit then held by Landlord hereunder exceeds Twenty Thousand Five Hundred Twenty-Seven and 20/100 Dollars ($20,527.20) (such excess amount hereinafter referred to as the “First Excess Security Deposit”), then Landlord shall return to Tenant the First Excess Security Deposit within thirty (30) days after the First Deposit Reduction Date. Upon such return of the First Excess Security Deposit to Tenant, the Security Deposit under this Lease shall thereafter be equal to Twenty Thousand Five Hundred Twenty-Seven and 20/100 Dollars ($20,527.20), and Landlord shall have satisfied all obligations to Tenant with respect to the First Excess Security Deposit, including, without limitation, any obligation to return such amount to Tenant described in this Lease or arising under any applicable law. On the First Deposit Reduction Date, if there is then an Event of Default under this Lease, or if the First Excess Security Deposit equals Zero and No/100 Dollars ($0.00), then in either such event the amount of the Security Deposit shall be unchanged and Landlord shall have no obligation to return any portion of the Security Deposit to Tenant.

 

(c)                                  If the Security Deposit has been reduced pursuant to the terms of Paragraph 25(b) above, then on the second (2nd) anniversary of the Commencement Date (the “Second Deposit Reduction Date”), if Tenant is not then in default under this Lease, and to the extent that the Security Deposit then held by Landlord hereunder exceeds Ten Thousand Two Hundred Sixty-Three and 60/100 Dollars ($10,263.60) (such excess amount hereinafter referred to as the “Second Excess Security Deposit”), then Landlord shall return to Tenant the Second Excess Security Deposit within thirty (30) days after the Second Deposit Reduction Date. Upon such return of the Second Excess Security Deposit to Tenant, the Security Deposit under this Lease shall thereafter be equal to Ten Thousand Two Hundred Sixty-Three and 60/100 Dollars ($10,263.60), and Landlord shall have satisfied all obligations to Tenant with respect to the Second Excess Security Deposit, including, without limitation, any obligation to return such amount to Tenant described in this Lease or arising under any applicable law. On the Second Deposit Reduction Date, if there is then an Event of Default under this Lease, or if the Second Excess Security Deposit equals Zero and No/100 Dollars ($0.00), then in either such event the amount of the Security Deposit shall be unchanged and Landlord shall have no obligation to return any portion of the Security Deposit to Tenant. If the Security Deposit has not been reduced pursuant to the terms of Paragraph 25(b) above, then the Security Deposit shall not be reduced pursuant to the terms of this Paragraph 25(c).

 

26.                               RELOCATION. [INTENTIONALLY LEFT BLANK]

 

27.                               ESTOPPEL CERTIFICATE.

 

Within ten (10) days after notice from Landlord, Tenant shall execute and deliver to Landlord a certificate stating (a) that this Lease is unmodified and in full force and effect (or, if

 

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there have been modifications, that this Lease is in full force and effect, as modified, and stating the date and nature of each modification), (b) the date, if any, to which rental and other sums payable hereunder have been paid, (c) that no notice has been received by Tenant of any default which has not been cured, except as to defaults specified in said certificate and (d) such other matters as may be reasonably requested by Landlord. Tenant’s failure to timely deliver an estoppel certificate in accordance with this Paragraph shall be deemed an Event of Default in accordance with Paragraph 17 of this Lease.

 

28.                               SURRENDER.

 

On or before the expiration or sooner termination of this Lease Tenant shall remove all of Tenant’s properly and all alterations, additions, fixtures and improvements therein or thereto except those which Landlord has confirmed in writing should be left in place; and fully repair any damage to the Premises, the Building or other portions of the Office Building Project caused by the removal of any of the items provided herein. Subject to the foregoing, Tenant shall surrender the Premises at the expiration or earlier termination of the tenancy herein created broom clean, and in the same condition as received, reasonable use and wear thereof and damage by the act of God or by the elements excepted. The voluntary or other surrender of this Lease by Tenant, or a mutual cancellation thereof, shall not work a merger and shall at the option of Landlord, terminate all of any existing subleases or subtenancies, or may, at the option of Landlord, operate as an assignment to it of any or all such subleases or subtenancies. Tenant’s obligations under this Paragraph shall survive the termination of this Lease.

 

29.                               HOLDING OVER.

 

(a)                                 If, with Landlord’s approval, Tenant holds possession of the Premises after expiration of the Term of this Lease, Tenant shall become a tenant from month to month upon the terms herein specified but at a Base Rent equal to one hundred fifty percent (150%) of the Base Rent in effect at the expiration of the Term of this Lease, payable in advance on or before the first day of each month. Such month-to-month tenancy may be terminated by either Landlord or Tenant by giving thirty (30) days’ written notice of termination to the other at any time.

 

(b)                                 If, without Landlord’s written approval, Tenant holds possession of the Premises after expiration of the Term of this Lease, Tenant shall become a tenant at sufferance upon the terms herein specified but at a Base Rent equal to two hundred percent (200%) of the Base Rent in effect at the expiration of the Term of this Lease, payable in advance on or before the first day of each month. Such tenancy at sufferance shall be terminated immediately upon Landlord giving written notice of such termination to Tenant at any time.

 

(c)                                  If Tenant fails to surrender the Premises upon the expiration or termination of this Lease except as hereinabove provided, Tenant hereby indemnifies and agrees to hold Landlord harmless from all costs, loss, expense or liability, including without limitation, costs, real estate brokers claims and attorneys’ fees, arising out of or in connection with any delay by Tenant in surrendering and vacating the Premises, including, without limitation, any claims made by any succeeding tenant based on any delay and any liabilities arising out of or in connection with

 

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these claims. Nothing in this Paragraph shall be deemed to permit Tenant to retain possession of the Premises after the expiration or sooner termination of the Term.

 

30.                               SUBORDINATION.

 

This Lease shall be subordinate to any ground lease, master lease, mortgage, deed of trust, or any other hypothecation for security now or later placed upon the Building and to any advances made on the security of it or Landlord’s interest in it, and to all renewals, modifications, consolidations, replacements, and extensions of it. However, if any mortgagee, trustee, master lease or ground lessor elects to have this Lease prior to the lien of its mortgage or deed of trust or prior to its master lease or ground lease, and gives notice of that to Tenant, this Lease shall be deemed prior to the mortgage, deed of trust, master lease or ground lease, whether this Lease is dated prior or subsequent to the date of the mortgage, deed of trust, master lease or ground lease, or the date of recording of it. In the event any mortgage or deed of trust to which this Lease is subordinate is foreclosed or a deed in lieu of foreclosure is given to the mortgagee or beneficiary, Tenant shall attorn to the purchaser at the foreclosure sale or to the grantee under the deed in lieu of foreclosure. In the event of termination of any master lease or ground lease to which this Lease is subordinate, Tenant shall attorn to the master lessor or ground lessor. Tenant agrees to execute any documents, in form and substance reasonably acceptable to Tenant, required to effectuate the subordination, to make this Lease prior to the lien of any mortgage or deed of trust, master lease or ground lease, or to evidence the attornment.

 

31.                               INABILITY TO PERFORM.

 

Landlord shall not be in default hereunder nor shall Landlord be liable to Tenant for any loss or damages if Landlord is unable to fulfill any of its obligations, or is delayed in doing so, if the inability or delay is caused by reason of accidents, strike, labor troubles, acts of God, or any other cause, whether similar or dissimilar, which is beyond the reasonable control of Landlord.

 

32.                               MISCELLANEOUS.

 

(a)                                 The words “Landlord” and “Tenant” as used herein shall include the plural as well as the singular. Words used in masculine gender include the feminine and neuter. If there be more than one Tenant, the obligations hereunder imposed on Tenant shall be joint and several. Subject to the provisions hereof relating to assignment and subletting, this Lease is intended to and does bind the heirs, executors, administrators, successors and assigns of any and all of the parties hereto. Each provision of this Lease to be observed or performed by Tenant shall be deemed both a covenant and a condition. Time is of the essence of this Lease.

 

(b)                                 If Tenant is a corporation or limited liability company, Tenant (and as to clause (iv) of this Paragraph 32(b) only, each person executing this Lease on behalf of Tenant) represents and warrants to Landlord that (i) Tenant is duly incorporated or formed, as the case may be and validly existing under the laws of its state of incorporation or formation, (ii) Tenant is qualified to do business in California, (iii) Tenant has the full right, power and authority to enter into this Lease and to perform all of Tenant’s obligations hereunder, and (iv) each person signing this Lease on behalf of the corporation or company is duly and validly authorized to do so. If Tenant is a partnership (whether a general or limited partnership), each person executing

 

23

 

this Lease on behalf of Tenant represents and warrants to Landlord that (A) he/she is a general partner of Tenant, (B) he/she is duly authorized to execute and deliver this Lease on behalf of Tenant, (C) this Lease is binding on Tenant (and each general partner of Tenant) in accordance with its terms, and (D) each general partner of Tenant is personally liable for the obligations of Tenant under this Lease.

 

(c)                                  There are no oral agreements between Landlord and Tenant affecting this Lease, and this Lease supersedes and cancels any and all previous negotiations, arrangements, brochures, agreements and understandings, if any, between Landlord and Tenant or displayed by Landlord to Tenant with respect to the subject matter of this Lease or the Building. No party has been induced to enter into this Lease by, nor is any party relying on, any representation or warranty outside those expressly set forth in this Lease. Notwithstanding the preparation of this Lease by Landlord or its agent, all of the provisions of this Lease have been freely negotiated by the parties hereto, and each of the parties has had the opportunity to be represented by counsel in connection with the negotiation and execution of this Lease. Accordingly, the parties agree that there shall be no presumption or implication against either party with respect to the meaning or interpretation of this Lease, and any presumption against the drafter implied by law is hereby waived. Any amendment or modification of this Lease is ineffective to modify, waive, or terminate this Lease, in whole or in part, unless such agreement is in writing, signed by the parties to this Lease.

 

(d)                                 Any provision of this Lease which shall be held invalid, void or illegal shall in no way affect, impair or invalidate any of the other provisions hereof and such other provisions shall remain in full force and effect.

 

(e)                                  The obstruction of Tenant’s view, air, or light by any structure erected in the vicinity of the Building, whether by Landlord or third parties, shall in no way affect this Lease or impose any liability upon Landlord.

 

(f)                                   To the extent permitted by law, Tenant hereby waives trial by jury in any action, proceeding or counterclaim brought by either of the parties hereto on any matters whatsoever arising out of or in any way connected with this Lease.

 

(g)                                  This Lease shall be governed by the laws of the State of California applicable to transactions to be performed wholly therein.

 

(h)                                 Provided that Landlord and each person with whom the financial statements will be shared have entered into commercially reasonable confidentiality agreements with Tenant, Tenant, not more than twice in each calendar year, shall submit to Landlord (and any lender or prospective lender of Landlord) the following financial statements, all of which must be prepared in accordance with generally accepted accounting principles consistently applied: (i) quarterly financial statements for Tenant within fifty (50) days after the end of each fiscal quarter during the Term; (ii) annual financial statements for Tenant, audited by an independent certified public accountant, within one hundred twenty (120) days after the end of each fiscal year during the Term (provided, however, that Landlord agrees that Tenant’s 2011 financial statements may be submitted as having been reviewed by Tenant’s certified public accounting firm, if Tenant elects not to have the same audited); and (iii) the most recent financial statements for Tenant and

 

24

 

Guarantor in Tenant’s or Guarantor’s possession as may be reasonably requested by Landlord (or any lender or prospective lender of Landlord) within ten (10) days of Landlord’s or such lender’s request therefor.

 

(i)                                     Tenant is not acting, directly or indirectly, for or on behalf of any person named by the United States Treasury Department as a Specifically Designated National and Blocked Person, or for or on behalf of any person designated in Executive Order 13224 as a person who commits, threatens to commit, or supports terrorism. Tenant is not engaged in this Lease directly or indirectly on behalf of, or facilitating this Lease directly or indirectly on behalf of, any such person.

 

33.                               BROKER.

 

Tenant represents and warrants to Landlord that Tenant has had no dealings with any broker, finder, or similar person who is or might be entitled to a commission or other fee in connection with the execution of this Lease, except for Landlord’s Broker and Tenant’s Broker. Landlord shall pay the commission due Landlord’s Broker and Tenant’s Broker pursuant to a separate agreement between Landlord and Landlord’s Broker. Landlord and Tenant shall each indemnify, defend, protect and hold the other harmless from and against any and all claims and damages and for any and all costs and expenses (including reasonable attorneys’ fees and costs) resulting from claims that may be asserted against the other party by any broker, agent or finder not disclosed herein.

 

34.                               SIGNAGE.

 

Landlord, at its sole cost and expense, shall provide signage to Tenant in accordance with the Building’s signage program, including one (1) line identifying Tenant on the Building lobby directory sign and tenant identification signage next to the main entry door into the Premises. Initial signage shall be provided by Landlord at Landlord’s expense, but any changes, deletions, or additions requested by Tenant after the Commencement Date will be provided by Landlord at Tenant’s sole cost and expense, upon reasonable notice by Tenant. In addition, At Tenant’s sole cost and expense, Landlord shall fabricate and install signage identifying Tenant on the Building’s monument sign located near Woodside Road (the “Monument Sign”), in such location on the Monument Sign as shall be designated by Landlord from time to time, in accordance with any sign program or other standards adopted by Landlord from time to time.

 

[SIGNATURES ON NEXT PAGE]

 

25

 

IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the date first above written.

 

	
LANDLORD: 
    	
TENANT:
    
	
 
    	
 
    
	
WOODSIDE ROAD HOLDINGS, LLC, 
    	
SKINTELLIGENCE, INC.,
    
	
a California limited liability company
    	
a Delaware corporation
    
	
 
    	
 
    
	
By:
    	
Nearon Mission Pointe Holdings II, LLC, 
    	
By:
    	
/s/ Tom Wiggans
    
	
 
    	
a Delaware limited liability company
    	
Name:
    	
Tom Wiggans
    
	
Its:
    	
Sole   Member 
    	
Its:
    	
CEO
    
	
 
    	
 
    	
 
    
	
By:
    	
Nearon Enterprises,
    	
 
    
	
 
    	
a California corporation
    	
 
    
	
Its:
    	
Managing Member
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/   David S. Christensen
    	
 
    
	
 
    	
David   S. Christensen
    	
 
    
	
Its:
    	
Co-President   and Chief Operating Officer
    	
 
    

 

26

 

EXHIBIT A

 

FLOOR PLAN

 

 

A-1

 

EXHIBIT B

 

OPERATING EXPENSES AND TAXES

 

A.                                    As used in this Lease, “Operating Expenses” shall mean, without duplication, all costs and expenses paid or incurred by Landlord in connection with the management, operation, maintenance and repair of the Building and/or the Office Building Project (individually and collectively, as used in this Exhibit, the “Building”), and in providing services in accordance with this Lease, including the following: salaries, wages, other compensation, taxes and benefits (including payroll, social security, workers’ compensation, unemployment, disability and similar taxes and payments) for all personnel engaged in the management, operation, maintenance or repair of the Building; uniforms provided to such personnel; premiums and other charges for all property, earthquake, rental value, liability and other insurance carried by Landlord, together with the amount of any deductible under such policy, except that for any deductible incurred by Landlord as a result of a claim under a policy of property or earthquake insurance, the deductible shall be reasonably amortized as determined by Landlord, according to generally accepted accounting principles to the extent such deductible was utilized for Capital Expenditures (as defined below); water and sewer charges or fees; license, permit and inspection fees; electricity, water, heating, ventilation, air conditioning, gas, fuel, steam and other utilities; sales, use and excise taxes on goods and services purchased by Landlord; telephone, delivery, postage, stationery supplies and other expenses; reasonable management fees and expenses; repairs to and maintenance of the Building, including Building systems and accessories thereto and repair and replacement of worn out or broken equipment, facilities, parts and installations; janitorial, window cleaning, security, guard, extermination, water treatment, garbage and waste disposal, rubbish removal, plumbing and other services; inspection or service contracts for elevator, electrical, mechanical and other Building equipment and systems; supplies, tools, materials and equipment; accounting, legal and other professional fees and expenses (excluding legal fees, accounting, and other professional fees and expenses incurred by Landlord relating to disputes with specific tenants or the negotiation, interpretation or enforcement of specific leases); painting of any of the public or common areas of the Office Building Project, including, without limitation, the Building exterior and any interior portions thereof, and the cost of maintaining the sidewalks, landscaping and other common areas of the Office Building Project; the cost of parking area repair, restoration and maintenance, including, without limitation, resurfacing, restriping and cleaning; the cost, amortized over the useful life as reasonably determined by Landlord, according to generally accepted accounting principles, of all furniture, fixtures, draperies, carpeting and personal property furnished by Landlord in common areas or public corridors of the Building or in the Building office; all costs and expenses resulting from compliance with any laws, ordinances, rules, regulations or orders applicable to the Building; Building office rent or rental value for office space reasonably necessary for the proper management and operation of the Building; all costs and expenses of contesting by appropriate legal proceedings any matter concerning managing, operating, maintaining or repairing the Building, or the validity or applicability of any law, ordinance, rule, regulation or order relating to the Building, or the amount or validity of any Property Taxes; reasonable depreciation as determined by Landlord according to generally accepted accounting principles on all machinery, fixtures, tools and equipment (including window washing machinery) used in the management, operation, maintenance or repair of the Building and on window coverings provided by

 

B-1

 

Landlord; the cost, reasonably amortized as determined by Landlord, according to generally accepted accounting principles, of all capital improvements made to the Building or capital assets acquired by Landlord that are designed or intended to be a labor-saving or energy-saving device, or to improve economy or efficiency in the management, operation, maintenance or repair of the Building, or to reduce any item of Operating Expenses, or that constitute a replacement of a Building system, or that are required by any law, ordinance, rule, regulation or order (collectively, “Capital Expenditures”); charges and assessments on the Office Building Project pursuant to any applicable covenants, conditions and restrictions encumbering the Office Building Project; and such other usual costs and expenses which are paid by other landlords for the on-site operation, servicing, maintenance and repair of comparable office buildings in the San Francisco Bay Area. To the extent Landlord elects to purchase any type of insurance not carried by Landlord during the entire Base Year, then the insurance component of Operating Expenses for the Base Year shall be grossed up to reflect the amount of the insurance premiums that would have been incurred if Landlord had carried the same insurance coverage during the entire Base Year, as reasonably determined by Landlord. Notwithstanding anything contained in the Lease or the foregoing list of Operating Expenses, no expenses incurred for the following shall be included in Operating Expenses for any expense year: costs of remediation or removal of Hazardous Substances, any cost or expenditure for which Landlord may be reimbursed by others, expense reserves, fines, penalties and interest, Property Taxes, depreciation on the Building (except as described above), costs of tenants’ improvements (including permit, license and inspection fees), real estate brokers’ commissions, interest, payments of loan principal and expenses related to a financing or refinancing of the Building, the cost of services provided to tenants materially in excess of services customarily provided to Tenant, whether or not Landlord is entitled to reimbursement therefor, Landlord’s legal costs and expenses in connection with any lease dispute, or litigation with any tenant, or Landlord’s costs in maintaining Landlord’s corporate or limited liability company status.

 

B.                                    Notwithstanding anything to the contrary in the Lease or this Exhibit B, for purposes of determining Operating Expenses for any year, including, but not limited to the Base Year, any and all charges paid by Landlord for gas, electricity or power generation (“Gas and Electrical Costs”) shall be segregated. Any increases in Gas and Electrical Costs for any calendar year subsequent to the Base Year shall be determined separately, based on the total dollar increase, if any, in all Gas and Electrical Costs paid or incurred by Landlord in such calendar year over Gas and Electrical Costs paid or incurred by Landlord in the Base Year. In addition, notwithstanding anything to the contrary in the Lease or this Exhibit B, for purposes of determining Operating Expenses for any year, including, but not limited to the Base Year, any and all charges paid by Landlord to maintain insurance with respect to the Office Building Project (“Insurance Costs”) shall also be segregated. Any increases in Insurance Costs for any calendar year subsequent to the Base Year shall be determined separately, based on the total dollar increase, if any, in all Insurance Costs paid or incurred in such calendar year over Insurance Costs paid or incurred by Landlord in the Base Year.

 

C.                                    Actual Operating Expenses for the Base Year and each subsequent calendar year shall be adjusted, if necessary, to equal Landlord’s reasonable estimate of Operating Expenses for a full calendar year with the total area of the Building occupied during such full calendar year; provided, however, Landlord shall not in any year collect in excess of one hundred percent

 

B-2

 

(100%) of the actual Operating Expenses paid or incurred by Landlord in any calendar year.

 

D.                                    Landlord reserves the right to, in good faith, establish classifications for the equitable allocation of Operating Expenses that are incurred for the direct benefit of specific types of tenants or users in the Building (“Cost Pools”). Such Cost Pools may include, but shall not be limited to, office, ground floor retail, and lower level basement, tenants of the Building and tenants of any other building(s) within the Office Building Project. Landlord’s determination of such allocations in a manner consistent with the terms and conditions of this section shall be final and binding on Tenant. Tenant acknowledges that the allocation of Operating Expenses among Cost Pools does not affect all Operating Expenses, and is limited to specific items that are incurred or provided to tenants of Cost Pools which Landlord determines, in good faith, it would be inequitable to share, in whole or in part, among tenants of other Cost Pools in the Building.

 

E.                                     As used in this Lease, “Property Taxes” shall mean all taxes, assessments, excises, levies, fees and charges (and any tax, assessment, excise, levy, fee or charge levied wholly or partly in lieu thereof or as a substitute therefor or as an addition thereto) of every kind and description, general or special, ordinary or extraordinary, foreseen or unforeseen, secured or unsecured, that are levied, assessed, charged, confirmed or imposed by any public or government authority on or against, or otherwise with respect to, the Building or any part thereof or any personal property used in connection with the Building, or any charge or fee imposed by any federal, state or local government, district or agency for fire protection, public transportation, housing, trash removal, sidewalk, street maintenance or other public service(s). Property Taxes shall not include net income (measured by the income of Landlord from all sources or from sources other than solely rent), franchise, documentary transfer, inheritance or capital stock taxes of Landlord, unless levied or assessed against Landlord in whole or in part in lieu of, as a substitute for, or as an addition to any Property Taxes.

 

F.                                      In addition to all rent and other charges to be paid by Tenant under the Lease, Tenant shall reimburse Landlord upon demand for all taxes, assessments, excises, levies, fees and charges including all payments related to the cost of providing facilities or services, whether or not now customary or within the contemplation of Landlord and Tenant, that are payable by Landlord and levied, assessed, charged, confirmed or imposed by any public or government authority upon, or measured by, or reasonably attributable to (i) the cost or value of Tenant’s equipment, furniture, fixtures and other personal property located in the Premises or the cost or value of any leasehold improvements made in or to the Premises by or for Tenant, regardless of whether title to such improvements is vested in Tenant or Landlord, (ii) any rent payable under this Lease, including any gross income tax or excise tax levied by any public or government authority with respect to the receipt of any such rent, but excluding franchise, income taxes or other taxes based on net income that are imposed upon Landlord, (iii) the possession, leasing, operation, management, maintenance, alteration, repair, use or occupancy by Tenant of the Premises, or (iv) this transaction or any document to which Tenant is a party creating or transferring an interest or an estate in the Premises. All taxes, assessments, excises, levies, fees and charges payable by Tenant under this Exhibit shall be deemed to be, and shall be paid as, additional rent.

 

B-3

 

EXHIBIT C

 

RULES AND REGULATIONS OF

2055-2075 WOODSIDE Road

 

COMMON AREAS

 

The sidewalks, halls, passages, exits, entrances, elevators and stairways of the Building shall not be obstructed by Tenant or used for any purpose other than for ingress to and egress from the Premises. The halls, passages, exits, entrances, elevators and stairways are not for the general public and Landlord shall in all cases have the right to control and prevent access thereto of all persons (including, without limitation, messengers or delivery personnel not wearing uniforms) whose presence in the judgment of Landlord would be prejudicial to the safety, character, reputation or interests of the Building and its tenants. Neither Tenant nor any agent, employee, contractor, invitee or licensee of Tenant shall go upon the roof of the Building. Landlord shall have the right at any time, without the same constituting an actual or constructive eviction and without incurring any liability to Tenant therefor, to change the arrangement or location of entrances or passageways, doors or doorways, corridors, elevators, stairs, toilets and common areas of the Building.

 

SIGNS

 

No sign, placard, picture, name, advertisement or notice visible from the exterior of the Premises shall be inscribed, painted, affixed or otherwise displayed by Tenant on any part of the Building or the Premises without the prior written consent of Landlord. Landlord will adopt and furnish to tenants general guidelines relating to signs inside the Building. Tenant agrees to conform to such guidelines. All approved signs or lettering shall be printed, painted, affixed or inscribed at the expense of Tenant by a person approved by Landlord. Material visible from outside the Building will not be permitted.

 

PROHIBITED USES

 

The Premises shall not be used for the storage of merchandise held for sale to the general public or for lodging. No cooking shall be done or permitted on the Premises except that private use by Tenant of microwave ovens and/or Underwriters’ Laboratory approved equipment for brewing coffee, tea, hot chocolate and similar beverages will be permitted, provided that such use is in accordance with all applicable federal, state and municipal laws, codes, ordinances, rules and regulations. Tenant shall not use electricity for lighting, machines or equipment in excess of four (4) watts per square foot.

 

JANITORIAL SERVICE

 

Tenant shall not employ any person other than the janitor of Landlord for the purpose of cleaning the Premises unless otherwise agreed to by Landlord in writing. Except with the written consent of Landlord, no persons other than those approved by Landlord shall be permitted to enter the Building for the purpose of cleaning the Premises.

 

C-1

 

KEYS

 

Landlord will furnish Tenant without charge with two (2) keys to each door lock provided in the Premises by Landlord. Landlord may make a reasonable charge for any additional keys requested by Tenant. Tenant shall not have any such keys copied or any keys made. Tenant shall not alter any lock or install a new or additional lock or any bolt on any door of the Premises. Tenant, upon the termination of this Lease, shall deliver to Landlord all keys to doors in the Building.

 

MOVING PROCEDURES

 

Landlord shall designate appropriate entrances for deliveries or other movement to or from the Premises of equipment, materials, supplies, furniture or other property, and Tenant shall not use any other entrances for such purposes. All moves shall be scheduled and carried out during non-business hours of the Building. All persons employed and means or methods used to move equipment, materials, supplies, furniture or other property in or out of the Building must be approved by Landlord prior to any such movement. Landlord shall have the right to prescribe the maximum weight, size and position of all equipment, materials, furniture or other property brought into the Building. Heavy objects shall, if considered necessary by Landlord, stand on a platform of such thickness as is necessary properly to distribute the weight. Landlord will not be responsible for loss of or damage to any such property from any cause, and all damage done to the Building by moving or maintaining such property shall be repaired at the expense of Tenant.

 

NO NUISANCES

 

Tenant shall not use or keep in the Premises or the Building any kerosene, gasoline or inflammable or combustible fluid or material other than limited quantities thereof reasonably necessary for the operation or maintenance of office equipment. Tenant shall not use any method of heating or air conditioning other than that supplied by Landlord. Tenant shall not use or keep or permit to be used or kept any foul or noxious gas or substance in the Premises, or permit or suffer the Premises to be occupied or used in a manner offensive or objectionable to Landlord or other occupants of the Building by reason of noise, odors or vibrations, or interfere in any way with other tenants or those having business in the Building, nor shall any animals be brought or kept in the Premises or the Building.

 

BUSINESS HOURS

 

Landlord establishes the hours of 7:00 a.m. to 6:00 p.m., Monday through Friday, except generally recognized holidays (“business days”), as reasonable and usual business hours for the purposes of this Lease.

 

ACCESS TO BUILDING

 

Landlord reserves the right to exclude from the Building during the evening, night and early morning hours beginning at 6:00 p.m. and ending at 7:00 a.m. Monday through Friday, and at all hours on Saturdays, Sundays, union holidays and legal holidays, all persons who do not present identification acceptable to Landlord. Tenant shall provide Landlord with a list of all persons authorized by Tenant to enter the Premises and shall be liable to Landlord for all acts of such persons. Landlord shall in no case be liable for damages for any error with regard to the

 

C-2

 

admission to or exclusion from the Building of any person. In the case of invasion, mob, riot, public excitement or other circumstances rendering such action advisable in Landlord’s opinion, Landlord reserves the right to prevent access to the Building during the continuance of the same by such action as Landlord may deem appropriate, including closing doors.

 

USE OF NAME OF BUILDING

 

Tenant shall not use the name of the Building for any purpose other than as an address of the business to be conducted by Tenant in the Premises. Landlord shall have the right to change the name, address or title of the Office Building Project or the Building.

 

BUILDING DIRECTORY

 

The directory of the Building will be provided for the display of the name and location of Tenant. Landlord reserves the right to restrict the amount of directory space utilized by Tenant. Landlord may make a reasonable charge for the replacement of directory slots/panels requested by Tenant.

 

WINDOW COVERINGS

 

No curtains, draperies, blinds, shutters, shades, screens or other coverings, hangings or decorations shall be attached to, hung or placed in, or used in connection with any window of the Building without the prior written consent of Landlord. In any event, with the prior written consent of Landlord, such items shall be installed on the office side of Landlord’s standard window covering and shall in no way be visible from the exterior of the Building. Tenant shall keep window coverings closed when the effect of sunlight (or the lack thereof) would impose unnecessary loads on the Building’s air conditioning systems.

 

FOOD AND BEVERAGES

 

Tenant shall not obtain for use in the Premises ice, drinking water, food, beverage, or other similar services, except at such reasonable hours and under such reasonable regulations as may be established by Landlord.

 

BATHROOMS

 

The toilet rooms, toilets, urinals, wash bowls and other apparatus shall not be used for any purpose other than that for which they were constructed, no foreign substance of any kind whatsoever shall be thrown therein, and the expense of any breakage, stoppage or damage resulting from the violation of this rule shall be paid by Tenant if caused by Tenant or its agents, employees, contractors, invitees or licensees.

 

BICYCLES, VEHICLES

 

There shall not be used in any space, or in the public halls of the Building, either by Tenant or others, any hand trucks except those equipped with rubber tires and side guards or such other material handling equipment as Landlord approves. No other vehicles of any kind, except as hereinafter provided, shall be brought by Tenant into the Building or kept in or about

 

C-3

 

the Premises. Bicycles are permitted in the Building only in the areas designated by Landlord and only in accordance with rules and regulations adopted by Landlord for bicycles and bicycle owners.

 

TRASH REMOVAL

 

Tenant shall store all its trash and garbage within the Premises. No material shall be placed in the trash boxes or receptacles if such material is of such nature that it may not be disposed of in the ordinary and customary manner of removing and disposing of office building trash and garbage in the city or county in which the Building is located without being in violation of any law or ordinance governing such disposal. All garbage and refuse disposal shall be made only through entryways and elevators provided for such purposes and at such times as Landlord shall designate. Tenant shall crush and flatten all boxes, cartons and containers. Tenant shall pay extra charges for any unusual trash disposal.

 

NO SOLICITING

 

Canvassing, soliciting, distribution of handbills or any other written material and peddling in the Building are prohibited, and Tenant shall cooperate to prevent the same.

 

NO SMOKING

 

There shall be NO SMOKING in the Building or in the immediate area of the entrances to the Building as designated by Landlord.

 

PARKING RULES

 

1.                                      Automobile parking areas shall be used only for parking by vehicles no longer than full size, passenger automobiles herein called “Permitted Size Vehicles”.

 

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

 

3.                                      Unless otherwise instructed, every person using the parking area is required to park and lock his own vehicle. Landlord is not responsible for any damage to vehicles, injury to persons or loss of property, all of which risks are assumed by the party using the parking area.

 

4.                                      The maintenance, washing, waxing or cleaning of vehicles in the parking structure or anywhere on the property is prohibited.

 

5.                                      Tenant shall be responsible for ensuring that all of its employees, agents and invitees comply with the applicable parking rules, regulations, laws and agreements.

 

6.                                      Landlord reserves the right to modify these rules and/or adopt such other reasonable and nondiscriminatory rules and regulations as it may deem necessary for the proper operation of the parking area.

 

C-4

 

7.                                      Parking herein provided is intended as a license only and no bailment is intended or shall be created hereby.

 

8.                                      Users of the parking area will obey all posted signs and park only in the areas designated for vehicle parking.

 

WAIVER

 

Landlord may waive any one or more of these Rules and Regulations for the benefit of any particular tenant or tenants, but no such waiver by Landlord shall be construed as a waiver of such Rules and Regulations in favor of any other tenant or tenants, nor prevent Landlord from thereafter enforcing any such Rules and Regulations against any or all of the tenants of the Building.

 

SUPPLEMENTAL TO LEASE

 

These Rules and Regulations are in addition to, and shall not be construed to in any way modify or amend, in whole or in part, the covenants of this Lease.

 

C-5

 

EXHIBIT D

 

TENANT IMPROVEMENTS

 

Landlord will perform, at its sole cost and expense, the work described in this Exhibit D (the “Tenant Improvements”), and shall deliver the Premises to Tenant with the Tenant Improvements completed, subject to punchlist items. Landlord shall correct and complete the items on such punchlist promptly after such written notice from Tenant. If Tenant fails to provide such written notice of punchlist items to Landlord on or before the date that is thirty (30) days after the date Landlord delivers possession of the Premises to Tenant, then Tenant shall be deemed to have waived the right to require Landlord to perform such punchlist items. The Tenant Improvements shall be the improvements described in the scope of work (“Scope of Work”) prepared by E.A. Davidovits & Co., Inc. and attached hereto as Schedule 1 and as depicted in the space plan (the “Space Plan”) attached hereto as Schedule 2. Except as noted in the Scope of Work and the Space Plan, Landlord shall utilize Building Standard (as defined below) materials for improvement to the Premises. By its execution of the Lease, Tenant hereby authorizes Landlord to perform and commence work on the Tenant Improvements through contractors selected and under the supervision and control of Landlord. As used herein, the term “Building Standard” refers to the materials maintained in stock or typically used by Landlord for use in the improvement of tenant space in the Building.

 

In the event of any Tenant Delays (as that term is hereinafter defined), the Commencement Date of the Lease shall be determined based on the date Landlord in good faith determines it would have substantially completed the Tenant Improvements without the delays attributable to Tenant Delays. As used herein, the term “Tenant Delays” shall mean any delay that Landlord may encounter in the performance of Landlord’s obligations under this Exhibit D or the Lease to construct the Tenant Improvements because of any act or omission of any nature by Tenant or its agents, including, without limitation, delays resulting from changes in or additions to the plans for the Tenant Improvements; delays due to the failure to promptly give authorizations or approvals required by to enable Landlord to proceed with any work; or delays due to the postponement of any Landlord work at the request of Tenant.

 

Landlord shall have the right to cease all work in the event the number of days attributable to Tenant Delays exceeds the aggregate of twenty (20) days, unless Tenant gives unconditional approval to all Tenant Improvements in a manner requested by Landlord to allow Landlord to proceed with the immediate construction of the Tenant Improvements. The failure of Tenant to provide such unconditional approval within three (3) business days after written demand therefor from Landlord shall constitute a non-curable Event of Default under the Lease.

 

D-1

 

SCHEDULE 1

 

SCOPE OF WORK

 

E.A. DAVIDOVITS & CO., INC.

GENERAL CONTRACTORS

 

REMODEL OF SUITE #270, 2055 WOODSIDE RD.

SCOPE OF WORK, JOB QUALIFICATIONS AND ALTERNATE PRICING

 

SCOPE OF WORK: E.A. DAVIDOVITS & CO, INC. will provide labor, equipment, and materials necessary to perform the work shown on attach floor plan EXHIBIT A and described in proposal EXHIBIT B, attached hereto, as follows:

 

1)                                     DEMOLITION:

 

Includes:         Safe off electrical, plumbing and mechanical systems prior to start of demo. Demolition of interior ceiling tile (broken or stained), excess doors, frames, side-lights, walls, flooring (carpet and existing top set base) required for new suite configuration. Also includes removal and lawful disposal of debris generated by demolition

 

Excludes:                        The testing for and/or removal of any hazardous materials such as asbestos or lead and all other demolition work not detailed on the plans or described under inclusions above.

 

2)                                     CONCRETE: N I C

 

3)                                     STRUCTURAL STEEL: N I C

 

4)                                     MASONRY: N I C

 

5)                                     ROUGH CARPENTRY:

 

Includes:                            Provide all materials and labor required to install backing required to secure new break room cabinetry to walls

 

Excludes:                        All other work under this division not detailed on the plans or described within inclusions above.

 

6)                                     ACOUSTICAL CEILINGS:

 

Includes:                            Provide materials and labor required to replace all damage, broken and stained ceiling tiles

 

Excludes:                        All other work under this division not detailed on the plans or described within inclusions above.

 

7)                                     CABINETRY:

 

Includes:         Provide shop drawings and p-lam finish materials samples for tenant selection and approvals. Provide a labor and materials to fabricate and install 8 LF of base cabinets, counter tops, and

 

	

    	
555 PRICE AVENUE, SUITE   200
    
	
REDWOOD CITY, CA 94063
    
	
LICENSE #708744
    
	
(650) 366-6068 · FAX (650) 368-1188
    

 

SCHEDULE 1-1

 

upper cabinets for new break room. Casework bodies to be constructed from white melamine with plastic laminate veneer at exposed to view cabinet surfaces. Countertops to be plastic laminate with waterfall edge and 4” back splash and one 4” side splash

 

Excludes:                        All other work under this division not detailed on the plans or described within inclusions above.

 

8)                                     DOORS, FRAMES, HARDWARE AND SIDE LIGHT FRAMES:

 

Includes:         Provide all labor and materials to install new pre-finished stain graded wood doors with aluminum frames and ADA compliant operating hardware (pricvacy door latch and door stop) to match existing; remove and relocate existing doors, fames and hardware as possible; provide new sidelight frames with mid span vertical mullions as required.

 

Excludes:                        All other work under this division not detailed on the plans or described within inclusions above.

 

9)                                     GLASS/GLAZING:

 

Includes:         Provide all labor and materials to glaze all new sidelights with 1/4” glass, tempered as required for code compliance; and at relocated side lights reuse existing glazing materials: and provide

 

Excludes:                        All other work under this division not detailed on the plans or described within inclusions above.

 

10)                              DRYWALL/METAL STUDS:

 

Includes:         Provide all labor and materials required install new ceiling height drywall partitions shown on plans; patch existing door openings; cut in for new door openings; patch demolition scars, patch existing wall surfaces to prep for painting; and finish all new and repaired drywall finishes to match the existing drwall surface finishes.

 

Excludes:                        All other work under this division not detailed on the plans or described within inclusions above.

 

11)                              FINISHES:

 

Includes:         Provide labor and material require for final janitorial at suite after completion of construction, including dusting, vacuuming carpet, waxing new VCT flooring, and cleaning interior glass surfaces only

 

SCHEDULE 1-2

 

Excludes:                        All other work under this division not detailed on the plans or described within inclusions above.

 

12)                              FLOORING:

 

Includes:         Provide cost appropriate samples for tenant selection. Provide labor and materials to install new carpet over 32 oz. commercial padding throughout suite, except in break room (allowance is $24 per square yard); prepare sub flooring and install new VCT at break room (Armstrong Excelon); and install new rubber top set base at all walls in suite and patch common corridor as required.

 

Excludes:                        All other work under this division not detailed on the plans or described within inclusions above.

 

13)                              THERMAL/ACOUSTICAL:

 

Includes:         Provide labor and materials required for the installation of acoustical batt insulation at all new walls and a 4’ runner of acoustical batt insulation above the ceiling over new walls (extend 2’ at either side of all new walls)

 

Excludes:                        All other work under this division not detailed on the plans or described within inclusions above.

 

14)                              PAINTING/WALL COVERINGS:

 

Includes:         Provide brush outs for approval of tenant’s color selections using eggshell enamel by Kelley Moore Paint. Provide labor and materials to prepare and prime as required (spot prime only at existing walls) and paint all interior walls of suite applying 1 finish coat to cover: allow for one accent color at walls of suite; paint affect walls outside of suite resulting from door patches and new door cut in from corner to corner to best possible match; and touch up existing doors as possible (not refinished).

 

Excludes:                        All other work under this division not detailed on the plans or described within inclusions above.

 

15)                              GENERAL CONDITIONS:

 

Includes:         Provide labor and materials to perform clean up and debris disposal throughout the course of construction; provide supervision and project management, on part time basis, required to manage project, assure quality of construction and timely completion of the project; provide tools, equipment and scaffolding required for build project; provide temporary barricades (temp closure at new front door opeing) to secure project; provide protection at existing common area building

 

SCHEDULE 1-3

 

finish to prevent damage; and provide and maintain temporary sanitation facilities for use by the construction crews.

 

Excludes:        Contractor will not provide for or cost of course of construction temp utilities, to be provide by owner/tenant. All other work under this division not detailed on the plans or described within inclusions above.

 

16)                              SPECIALTIES:

 

Includes:         Provide labor and materials to provide and install 1 each fire cabinet with signage and 5# extinguisher (location to be determined by fire marshall); provide and install 9 each new mini blinds at the perimeter exterior window line of building as required by new wall layout

 

Excludes:                        All other work under this division not detailed on the plans or described within inclusions above.

 

17)                              FURNISHINGS: N I C

 

18)                              EQUIPTMENT: N I C

 

19)                              MECHANICAL:

 

A)    Fire Protection/Sprinklers: N I C

 

B)    HVAC:

 

Includes:         Provide all labor and materials to safe off existing system, re-rout/distribute existing and new duct work, provide new registers, reuse existing thermostats, and install new 70 CFM exhaust fan in break room

 

Excludes:                        All other work under this division not detailed on the plans or described within inclusions above.

 

C)    Plumbing:

 

Includes:         Provide all labor and materials to install new waste water line, break room sink and trim, and insta-hot water heater

 

Excludes:                        All other work under this division not detailed on the plans or described within inclusions above.

 

20)                              ELECTRICAL:

 

Includes:         Provide all labor and materials required to install eight each new parabolic style light fixtures, relocate eleven each existing parabolic light fixtures, relocate 1 each existing exit light, install ten each new OCS style light switches, install one each ceiling mounted OCS to control open area, provide nineteen each new duplex receptacles, install ten each new ring and strings for

 

SCHEDULE 1-4

 

data/telco by tenant, provide two each base feeds (inc two circuits) for new tenant provided cubicals, provide five new circuits for added plugs, and allow to re-circuit existing lights and plugs after demo and reconfiguration

 

Excludes:                        All other work under this division not detailed on the plans or described within inclusions above.

 

QUALIFICATIONS:

 

	
1)
    	
Proposal will only be valid for thirty days from date on   EXHIBIT A.
    
	
2)
    	
Proposal assumes that all work will be performed during standard   working hours, neither shift nor over time have been included.
    
	
3)
    	
Proposal assumes that existing HVAC and Electrical Systems are   sufficient for requirements the new construction
    
	
4)
    	
Proposal does not cover added work at roof (i.e. roof screens)
    

 

ALTERNATE PRICING: (not  included in the contract amount)

 

	
1)
    	
Asbestos and/or hazardous materials sampling by EAD
    	
 
    	
$650
    
	
2)
    	
Blue printing, deliveries, etc (@ cost x 1.2)
    	
 
    	
TBD
    
	
3)
    	
Special inspection, if required
    	
 
    	
By Owner
    

 

A.D.A. DISCLOSURE: In accordance with state regulations, the local chief building official could, at his or her discretion, request that an additional amount, equivalent to 20% of the contract, be spent on handicap accessibility upgrades to the building. This applies to improvements up to $120,000; when this sum has been exceeded, by adding together any improvements to the building done after January 26, 1992, the chief building official could require a complete handicap upgrade of the building. None of these costs are included in this contract unless otherwise noted.

 

SPECIFIC EXCLUSIONS: Any items not specifically shown on plans or described herein; Overtime, union labor rates, repairs of existing code violations, phone/data wiring, removal of hazardous substances (i.e., asbestos or lead paint), panic hardware, fire or burglar alarm work, removal or relocation of concealed utility lines, or responsibility for accidental cutting of same; any work to building’s HVAC equipment or controls.

 

ASBESTOS AND LEAD REMOVAL: The OSHA Asbestos in the Construction Industry standard (29 CFR 1926.1101) states the following: Building and/or facility tenants shall notify the contractor and/or their authorized representative about the presence, location, and quantity of ACM or PCBM at the worksites in their building.

 

(A)       Prospective employers applying or bidding for work whose employees reasonably can be expected to work in or adjacent to areas containing such material.”

 

N.I.C - Denotes items that are “not in contract.” These items are not included in the scope of work.

 

SCHEDULE 1-5

 

SCHEDULE 2

 

SPACE PLAN

 

 

 

SCHEDULE 2-1

 

EXHIBIT E

 

COMMENCEMENT MEMORANDUM

 

This Lease Commencement Memorandum (“Memo”) confirms specific terms outlined in the lease dated               , 20            (“Lease”), by and between WOODSIDE ROAD HOLDINGS, LLC, a California limited liability company (“Landlord”), and SKINTELLIGENCE, INC., a Delaware corporation (“Tenant”), located at 2055 Woodside Road, Suite 270, Redwood City, California (“Premises”).

 

In accordance with the terms and conditions of the above referenced Lease, Tenant hereby accepts possession of the Premises and agrees as follows:

 

Commencement & Expiration Dates

 

Commencement Date of the Lease:                               ;

 

Expiration Date of the Lease:                                        .

 

Premises

 

Suite:                     .

 

Total Rentable Square Feet:

 

Tenant’s Percentage Share:       % (        rentable square feet of /        rentable square feet)

 

Rent

 

Base Rent is confirmed as outlined below.

 

	
Rent Period
    	
 
    	
Rent/SF/MO
    	
 
    	
Monthly Rent
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Period 1
    	
 
    	
$
    	
 
    	
 
    	
$
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Period 2
    	
 
    	
$
    	
 
    	
 
    	
$
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Period 3
    	
 
    	
$
    	
 
    	
 
    	
$
    	
 
    	
 
    

 

Tenant Improvements

 

Landlord has completed construction of the Tenant Improvements identified in the Lease. Tenant accepts the Tenant Improvements.

 

Security Deposit

 

Landlord has received Tenant’s Security Deposit of $          as outlined in the Basic Lease Information.

 

E-1

 

Parties to acknowledge their acceptance of this Memo by signing two (2) originals copies to be distributed to Landlord and Tenant. Terms not specifically outlined or modified in this Memo shall remain in effect as outlined in Lease.

 

AGREED AND ACCEPTED on                  ,        .

 

[SIGNATURES ON NEXT PAGE]

 

E-2

 

	
LANDLORD:
    	
 
    	
TENANT:
    
	
 
    	
 
    	
 
    
	
WOODSIDE ROAD HOLDINGS, LLC,
    	
 
    	
SKINTELLIGENCE, INC.,
    
	
a California limited liability company
    	
 
    	
a Delaware corporation
    
	
 
    	
 
    	
 
    
	
By:
    	
Nearon Mission Pointe Holdings II, LLC,
    	
 
    	
 
    
	
 
    	
a Delaware limited liability company
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
By:
    	
 
    
	
Its:
    	
Sole Member
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
Name:
    	
 
    
	
 
    	
By:
    	
Nearon Enterprises, a California corporation 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
Its:
    	
 
    
	
 
    	
Its:
    	
Managing Member
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
David S. Christensen
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Its:
    	
Co-President and Chief Operating Officer
    	
 
    	
 
    	
 
    

 

E-3

 

FIRST AMENDMENT TO LEASE

 

THIS FIRST AMENDMENT TO LEASE (“Amendment”) is entered into as of November 18, 2011 (the “Effective Date”), by and between WOODSIDE ROAD HOLDINGS, LLC, a California limited liability company (“Landlord”) and DERMIRA, INC., a Delaware corporation (“Tenant”).

 

RECITALS

 

This Amendment is based upon the following facts, understandings and intentions of the parties:

 

A.                                    Landlord owns that certain building commonly known as 2055 Woodside Road, Redwood City, California (the “Building”).

 

B.                                    Landlord and Tenant (formerly known as Skintelligence, Inc., a Delaware corporation) entered into that certain Lease dated as of September 12, 2011 (the “Existing Lease”) with respect to Suite 270 of the Building, consisting of approximately two thousand eight hundred fifty-one (2,851) rentable square feet (“Suite 270”).

 

C.                                    On or about September 9, 2011, Tenant changed its name from Skintelligence, Inc. to Dermira, Inc.

 

D.                                    Tenant wishes to expand the Premises to include Suite 290 (“Suite 290”) of the Building. Suite 290 is approximately one thousand seventy-six (1,076) rentable square feet and is more particularly shown on Exhibit A attached hereto.

 

E.                                     Landlord and Tenant now desire to amend the Existing Lease as more particularly described in the terms and conditions hereinafter set forth. The Existing Lease, as modified by this Amendment, shall hereinafter be referred to as the “Lease”.

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

 

1.                                      Definitions. All capitalized terms not otherwise defined herein shall have the same meanings utilized in the Existing Lease; provided, however, that to the extent any capitalized term is defined in this Amendment differently from the definition given in the Existing Lease, the definition utilized in this Amendment shall be controlling.

 

2.                                      Amendment to Existing Lease. This Amendment shall constitute an amendment to the Existing Lease. Except as specifically modified by this Amendment, all of the terms and conditions of the Existing Lease shall remain unmodified and in full force and effect.

 

1

 

3.                                      Premises. Effective as of the date (the “Expansion Date”) that is the later to occur of (a) the date that Landlord delivers Suite 290 to Tenant in the condition required in this Amendment, and (b) the date that is thirty (30) days after the date that Landlord delivers possession of Suite 270 to Tenant pursuant to the terms and conditions of the Existing Lease, the Premises described in the Basic Lease Information of the Existing Lease shall be deleted in its entirety, and in its place there shall be inserted the following:

 

	
PREMISES:
    	
 
    	
Suites
    	
 
    	
Rentable Square Footage
    	
 
    
	
 
    	
 
    	
270 and 290
    	
 
    	
3,927 r.s.f.
    	
 
    

 

Effective as of the Expansion Date, Exhibit A attached to this Amendment shall be appended to and made a part of Exhibit A attached to the Existing Lease.

 

4.                                      Tenant’s Percentage Share. Effective as of the Expansion Date, the Tenant’s Percentage Share described in the Basic Lease Information of the Existing Lease shall be deleted in its entirety, and in its place there shall be inserted the following:

 

TENANT’S PERCENTAGE SHARE: Thirteen and 78/100 Percent (13.78%)

 

5.                                      Base Rent. Notwithstanding anything to the contrary contained in the Existing Lease, including, but not limited to the Rent described in the Basic Lease Information of the Existing Lease, effective as of the Expansion Date, the Base Rent payable pursuant to the Lease for the following periods shall be in the following amounts:

 

	
 
    	
 
    	
Monthly
    	
 
    	
Annual
    	
 
    
	
Period
    	
 
    	
Base   Rent
    	
 
    	
Base   Rent
    	
 
    
	
For the period commencing on the Expansion Date through   the day immediately preceding the 1 Year Anniversary
    	
 
    	
$
    	
13,705.23
    	
 
    	
$
    	
164,462.76
    	
 
    
	
For the period commencing on the 1 Year   Anniversary through the day immediately preceding the 2 Year Anniversary
    	
 
    	
$
    	
14,097.93
    	
 
    	
$
    	
169,175.16
    	
 
    
	
For the period commencing on the 2 Year Anniversary   through the Expiration Date
    	
 
    	
$
    	
14,490.63
    	
 
    	
$
    	
173,887.56
    	
 
    

 

2

 

6.                                      Security Deposit - Amount. On or before the Effective Date, Tenant shall increase the Security Deposit held by Landlord under the Lease to Forty-Two Thousand Four Hundred Eleven and 60/100 Dollars ($42,411.60) by delivering to Landlord the amount of Eleven Thousand Six Hundred Twenty and 80/100 Dollars ($11,620.80) (the “Additional Security Deposit”). Upon Landlord’s receipt of the Additional Security Deposit, the Security Deposit described in the Basic Lease Information of the Existing Lease shall be deleted in its entirety, and in its place there shall be inserted the following:

 

SECURITY DEPOSIT: $42,411.60, subject to Paragraph 25 below

 

7.                                      Security Deposit - Disposition. Effective as of the Expansion Date, Paragraphs 25(b) and 25(c) of the Existing Lease shall be deleted in their entirety, and in their place there shall be inserted the following:

 

(b)                                 On the first (1st) anniversary of the Commencement Date (the “First Deposit Reduction Date”), if Tenant is not then in default under this Lease, and to the extent that the Security Deposit then held by Landlord hereunder exceeds Twenty-Eight Thousand Two Hundred Seventy-Four and 40/100 Dollars ($28,274.40) (such excess amount hereinafter referred to as the “First Excess Security Deposit”), then Landlord shall return to Tenant the First Excess Security Deposit within thirty (30) days after the First Deposit Reduction Date. Upon such return of the First Excess Security Deposit to Tenant, the Security Deposit under this Lease shall thereafter be equal to Twenty-Eight Thousand Two Hundred Seventy-Four and 40/100 Dollars ($28,274.40), and Landlord shall have satisfied all obligations to Tenant with respect to the First Excess Security Deposit, including, without limitation, any obligation to return such amount to Tenant described in this Lease or arising under any applicable law. On the First Deposit Reduction Date, if there is then an Event of Default under this Lease, or if the First Excess Security Deposit equals Zero and No/100 Dollars ($0.00), then in either such event the amount of the Security Deposit shall be unchanged and Landlord shall have no obligation to return any portion of the Security Deposit to Tenant.

 

(c)                                  If the Security Deposit has been reduced pursuant to the terms of Paragraph 25(b) above, then on the second (2nd) anniversary of the Commencement Date (the “Second Deposit Reduction Date”), if Tenant is not then in default under this

 

3

 

Lease, and to the extent that the Security Deposit then held by Landlord hereunder exceeds Fourteen Thousand One Hundred Thirty-Seven and 20/100 Dollars ($14,137.20) (such excess amount hereinafter referred to as the “Second Excess Security Deposit”), then Landlord shall return to Tenant the Second Excess Security Deposit within thirty (30) days after the Second Deposit Reduction Date. Upon such return of the Second Excess Security Deposit to Tenant, the Security Deposit under this Lease shall thereafter be equal to Fourteen Thousand One Hundred Thirty-Seven and 20/100 Dollars ($14,137.20), and Landlord shall have satisfied all obligations to Tenant with respect to the Second Excess Security Deposit, including, without limitation, any obligation to return such amount to Tenant described in this Lease or arising under any applicable law. On the Second Deposit Reduction Date, if there is then an Event of Default under this Lease, or if the Second Excess Security Deposit equals Zero and No/100 Dollars ($0.00), then in either such event the amount of the Security Deposit shall be unchanged and Landlord shall have no obligation to return any portion of the Security Deposit to Tenant. If the Security Deposit has not been reduced pursuant to the terms of Paragraph 25(b) above, then the Security Deposit shall not be reduced pursuant to the terms of this Paragraph 25(c).

 

8.                                      Unreserved Parking Spaces. Effective as of the Expansion Date, the Security Deposit described in the Basic Lease Information of the Existing Lease shall be deleted in its entirety, and in its place there shall be inserted the following:

 

	
UNRESERVED PARKING SPACES:
    	
 
    	
Tenant shall have access to twelve (12) unreserved parking spaces on   an “as-is” available basis
    

 

9.                                      Floor Plan of Suite 270. Certain improvements originally intended to be performed by Landlord and delivered to Tenant in connection with Suite 270 will now be performed by Landlord and delivered in connection with Suite 290, and as a result thereof, Exhibit A of the Existing Lease shall be deleted in its entirety and shall be replaced with Exhibit D attached hereto.

 

10.                               Tenant Improvements – Space Plan. Schedule 2 of Exhibit D of the Existing Lease shall be deleted in its entirety and replaced with Exhibit C attached hereto.

 

4

 

11.                               Landlord’s Work; Condition of Suite 290. Landlord shall construct and install in Suite 290 the improvements (“Landlord’s Work”) provided in, and in accordance with, Exhibit B attached hereto. As of the Expansion Date, all building systems serving Suite 290, including standard ceiling lighting, plumbing, life safety, and HVAC, shall be in good operating condition and working order. Except as otherwise expressly provided in the Lease, Tenant accepts Suite 290 in its existing “AS-IS” condition and Tenant acknowledges and agrees that Landlord has no obligation to and has made no promise to alter, remodel, improve, or repair Suite 290 or any part thereof, or to bring Suite 290 into compliance with applicable laws, or to improve any condition existing therein.

 

12.                               Tenant’s Work. Tenant shall bear and pay all of the costs (“Tenant Work Costs”) incurred in connection with the installation of furniture and data and telecommunication wiring in Suite 290 (collectively, “Tenant’s Work”). Upon completion of Tenant’s Work, Tenant shall deliver written notice (“Tenant’s Completion Notice”) notifying Landlord that Tenant has completed performance of Tenant’s Work, which notice shall be accompanied by copies of paid invoices and receipts showing that full payment has been received for the performance of Tenant’s Work. Upon Landlord’s receipt of Tenant’s Completion Notice, Landlord shall reimburse Tenant for the Tenant Work Costs up to an aggregate maximum amount (the “Allowance”) equal to the lesser of (a) Seven Thousand Five Hundred and No/100 Dollars ($7,500.00), and (b) the actual amount of Tenant Work Costs. Tenant shall not be entitled to a credit for any unused portion of the Allowance in the form of rent abatement or otherwise. Notwithstanding anything to the contrary contained in this Amendment, Landlord shall have no obligation to disburse any portion of the Allowance that remains undisbursed as of March 1, 2012.

 

13.                               No Default. As a material part of the consideration for Landlord to enter into this Amendment, Tenant hereby represents and warrants that no default has occurred or is now occurring under the Lease. Tenant agrees that no default on the part of Landlord exists in the performance of the terms, covenants, and conditions set forth in the Lease required to be performed on the part of Landlord as of the Effective Date.

 

14.                               Brokers. Other than Cornish & Carey Commercial/Newmark KnightFrank (“Broker”), Landlord and Tenant each represent and warrant to the other that it has not dealt with any broker, agent or other person in connection with the transaction evidenced by this Amendment. Landlord shall pay Broker a commission in connection with the transaction evidenced by this Amendment pursuant to a separate agreement. Each party agrees to indemnify, defend, protect and hold the other harmless from and against any claims by any broker (other than Broker), agent or other person claiming a commission or other form of compensation if in fact such person has dealt with the indemnifying party with regard to this transaction. The provisions of this Paragraph 14 shall survive the termination of the Lease.

 

5

 

15.                               Counterparts. This Amendment may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the day and year first above written.

 

	
“TENANT”
    	
 
    	
“LANDLORD”
    
	
 
    	
 
    	
 
    
	
DERMIRA, INC.,
    	
 
    	
WOODSIDE ROAD HOLDINGS, LLC,
    
	
a Delaware corporation 
    	
 
    	
a California limited liability company
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/ Tom Wiggans
    	
 
    	
By:
    	
Nearon Mission Pointe Holdings II, LLC,
    
	
Name:
    	
Tom Wiggans
    	
 
    	
 
    	
a Delaware limited liability company
    
	
Its:
    	
CEO
    	
 
    	
Its:
    	
Sole Member
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
Nearon Enterprises,
    
	
 
    	
 
    	
 
    	
a California corporation
    
	
 
    	
 
    	
Its:
    	
Managing Member
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/ David S. Christensen
    
	
 
    	
 
    	
 
    	
David S. Christensen
    
	
 
    	
 
    	
Its:
    	
Co-President and Chief Operating Officer
    

 

6

 

EXHIBIT A

 

Floor Plan of Suite 290

 

 

1

 

EXHIBIT B

 

Landlord’s Work

 

Landlord will perform, at its sole cost and expense, the work described in this Exhibit B (“Landlord’s Work”), and shall deliver Suite 290 to Tenant with Landlord’s Work completed, subject to punchlist items. If Tenant delivers written notice of such punchlist items to Landlord on or before the date that is thirty (30) days after the Expansion Date, then Landlord shall correct and complete the items on such punchlist promptly after such written notice from Tenant. Landlord’s Work shall include the following improvements, as more particularly described in the space plan attached hereto as Schedule 1:

 

1.                            Paint interior walls.

 

2.                            Install new carpet.

 

3.                            Repair (or replace if required as reasonably determined by Landlord) ceiling tiles.

 

4.                            Convert the office identified on Schedule 1 attached hereto into one (1) private office and hallway corridor that connects Suite 270 and Suite 290.

 

Landlord shall utilize Building Standard materials for improvement to Suite 290. By its execution of this Amendment, Tenant hereby authorizes Landlord to perform and commence work on Landlord’s Work through contractors selected and under the supervision and control of Landlord.

 

As used herein, the term “Building Standard” refers to the materials maintained in stock, or typically used, by Landlord for the improvement of tenant space in the Building.

 

In the event of any Tenant Delays, the date that Landlord is deemed to have delivered Suite 290 to Tenant shall be determined based on the date Landlord in good faith determines it would have substantially completed Landlord’s Work without the delays attributable to Tenant Delays.

 

Landlord shall have the right to cease all work in the event the number of days attributable to Tenant Delays exceeds an aggregate of twenty (20) days, unless Tenant gives unconditional approval to all Landlord’s Work in a manner requested by Landlord to allow Landlord to proceed with the immediate construction of Landlord’s Work. The failure of Tenant to provide such unconditional approval within three (3) business days after written demand therefor from Landlord shall constitute a non-curable Event of Default under the Lease.

 

1

 

SCHEDULE 1 to EXHIBIT B

 

Space Plan of Suite 290

 

 

1

 

EXHIBIT C

 

Schedule 2 to Exhibit D of the Existing Lease

 

Space Plan of Suite 270

 

 

1

 

EXHIBIT D

 

Exhibit A of the Existing Lease

 

Floor Plan of Suite 270

 

 

1

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