<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-Q
[ x ] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the Quarter Ended June 30, 1998
or
[ ] Transition report pursuant to Section 13 or 15(d) of Securities Exchange
Act of 1934
Commission file number 1-14430
MAXIM PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
Delaware 87-0279983
- -------------------------------------------------------------------------------
(State of incorporation) (I.R.S. Employer Identification No.)
8899 University Center Lane, Suite 200, San Diego, CA 92122
- -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(619) 453-4040
- -------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
As of August 12, 1998, the registrant had 9,829,368 shares of Common Stock,
$.001 par value, outstanding.
<PAGE>
MAXIM PHARMACEUTICALS, INC.
(A Development Stage Company)
INDEX
<TABLE>
<CAPTION>
Part I - Financial Information Page
<S> <C> <C>
Item 1. Financial Statements
Balance Sheets -
June 30, 1998 (unaudited) and September 30, 1997 ....................1
Statements of Operations (unaudited) -
Three Months and Nine Months Ended June 30, 1998
and 1997, and from Inception (October 23, 1989)
through June 30, 1998................................................2
Statements of Cash Flows (unaudited) -
Nine Months Ended June 30, 1998 and 1997
and from Inception (October 23, 1989) through
June 30, 1998........................................................3
Notes to Financial Statements........................................4
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations........................6
Part II - Other Information
Item 1. Legal Proceedings....................................................8
Item 2. Changes in Securities and Use of Proceeds............................8
Item 5. Other Information....................................................8
Item 6. Exhibits and Reports on Form 8-K.....................................9
SIGNATURE .....................................................................9
</TABLE>
<PAGE>
BALANCE SHEETS
Maxim Pharmaceuticals, Inc. (A Development Stage Company)
<TABLE>
<CAPTION>
June 30, 1998 September 30, 1997
------------- ------------------
(Unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 11,395,805 $ 447,523
Short-term investments in marketable securities 20,043,202 9,389,690
Accrued interest and other current assets 2,086,085 576,836
----------------- ----------------
Total current assets 33,525,092 10,414,049
Investments in marketable securities 4,336,579 2,322,398
Patents and licenses, net 1,853,466 1,815,428
Property and equipment, net 1,149,704 718,988
Other assets 229,156 586,893
----------------- ----------------
Total assets $ 41,093,997 $ 15,857,756
----------------- ----------------
----------------- ----------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 4,631,830 $ 1,082,038
Accrued expenses 310,800 597,388
Note payable - 102,161
Current portion of long-term debt 294,015 127,712
----------------- ----------------
Total current liabilities 5,236,645 1,909,299
Long-term debt, less current portion 814,578 555,229
Stockholders' Equity:
Preferred stock, $.001 par value, 5,000,000 shares authorized - -
Common stock, $.001 par value, 20,000,000 shares authorized;
9,385,197 and 6,671,237 shares issued and outstanding at
June 30, 1998 and September 30, 1997, respectively 9,385 6,672
Additional paid-in capital 69,515,416 34,269,521
Deficit accumulated during the development stage (34,460,320) (20,832,052)
Deferred compensation (21,707) (50,913)
----------------- ----------------
Total stockholders' equity 35,042,774 13,393,228
----------------- ----------------
Total liabilities and stockholders' equity $ 41,093,997 $ 15,857,756
----------------- ----------------
----------------- ----------------
</TABLE>
1
<PAGE>
STATEMENTS OF OPERATIONS (unaudited)
Maxim Pharmaceuticals, Inc. (A Development Stage Company)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended October 23, 1989
June 30 June 30 (inception) to
1998 1997 1998 1997 June 30, 1998
--------------- -------------- ------------------ ---------------- ------------------
<S> <C> <C> <C> <C> <C>
Operating expenses:
Research and development $ 6,075,063 $ 1,538,480 $ 12,477,924 $ 3,293,528 $ 27,832,347
Business development 543,043 121,716 857,664 284,895 1,470,754
General and administrative 615,808 493,331 1,965,047 1,394,716 11,316,060
--------------- -------------- ------------------ ---------------- ------------------
Total operating expenses 7,233,914 2,153,527 15,300,635 4,973,139 40,619,161
Other income (expense):
Investment income 546,414 226,982 1,731,416 732,142 2,946,196
Interest expense (22,016) (27,964) (59,049) (60,269) (2,040,420)
Other expense - 1,066 - (13,355) (116,964)
Gain on sale of subsidiary - - - - 2,288,474
Research grant revenue - - - - 2,946,001
--------------- -------------- ------------------ ---------------- ------------------
Total other income (expense) 524,398 200,084 1,672,367 658,518 6,023,287
--------------- -------------- ------------------ ---------------- ------------------
Discontinued operations:
Loss from operation of discontinued
diagnostic division - - - - (347,608)
Gain on sale of diagnostic division - - - - 483,162
--------------- -------------- ------------------ ---------------- ------------------
Net loss $ (6,709,516) $ (1,953,443) $ (13,628,268) $ (4,314,621) $ (34,460,320)
--------------- -------------- ------------------ ---------------- ------------------
Net loss per share of common stock $ (0.72) $ (0.29) $ (1.51) $ (0.65)
--------------- -------------- ------------------ ----------------
Weighted average shares outstanding 9,312,288 6,671,246 9,045,800 6,671,240
--------------- -------------- ------------------ ----------------
</TABLE>
See Notes to Financial Statements
2
<PAGE>
STATEMENTS OF CASH FLOWS (unaudited)
Maxim Pharmaceuticals, Inc. (A Development Stage Company)
<TABLE>
<CAPTION>
Nine Months Ended
June 30 October 23, 1989
----------------------------------- (inception) to
1998 1997 June 30, 1998
---------------- -------------- ----------------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net loss $ (13,628,268) $ (4,314,621) $ (34,460,320)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 277,312 180,787 1,321,240
Amortization of net premium on investments 83,693 123,664 240,035
Stock options issued as compensation 42,928 50,869 483,917
Loss on disposal of property and equipment 481 - 133,164
Loss on write-off of patents - 53,339 242,212
Gain on sale of subsidiary - - (2,288,474)
Loss on write-off of receivable from related party - - 147,803
Other - - 51,701
Gain on sale of diagnostic division - - (483,162)
Loss on write-off of purchased research
and development - - 2,646,166
Cumulative effect of reorganization - - 1,152,667
Changes in operating assets and liabilities:
Accrued interest and other current assets (1,509,249) 160,038 (2,086,085)
Other assets 357,737 (200,000) (376,959)
Accounts payable 3,549,792 74,291 4,631,830
Accrued expenses (286,588) 70,974 332,010
---------------- -------------- ----------------
Net cash used in operating activities (11,112,162) (3,800,659) (28,312,255)
INVESTING ACTIVITIES:
Purchases of marketable securities (28,505,436) (10,340,141) (54,414,866)
Maturities of marketable securities 15,754,050 11,186,000 29,795,050
Additions to patents and licenses (159,923) (603,377) (2,654,763)
Purchases of property and equipment (586,624) (721,422) (2,199,319)
Cash acquired in acquisition of business - - 985,356
Proceeds from sale of diagnostic division - - 496,555
---------------- -------------- ----------------
Net cash used in investing activities (13,497,933) (478,940) (27,991,987)
FINANCING ACTIVITIES:
Net proceeds from issuance of common stock
and warrants 35,234,886 68 60,892,752
Proceeds from issuance of notes payable and
long-term debt 504,160 626,533 5,894,963
Payments on notes payable and long-term debt (180,669) (247,000) (3,227,452)
Proceeds from issuance of notes payable to
related parties - - 4,982,169
Payments on notes payable to related parties - - (1,329,885)
Net proceeds from issuance of preferred stock - - 487,500
---------------- -------------- ----------------
Net cash provided by financing activities 35,558,377 379,601 67,700,047
---------------- -------------- ----------------
Net increase (decrease) in cash and cash equivalents 10,948,282 (3,899,998) 11,395,805
Cash and cash equivalents at beginning of period 447,523 4,070,089 -
---------------- -------------- ----------------
Cash and cash equivalents at end of period $ 11,395,805 $ 170,091 $ 11,395,805
---------------- -------------- ----------------
</TABLE>
See Notes to Financial Statements.
3
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)
Maxim Pharmaceuticals, Inc. (A Development Stage Company)
1. PRINCIPLES OF INTERIM PERIOD REPORTING
Maxim Pharmaceuticals, Inc. (the "Company") has not earned significant revenues
from planned principal operations. Accordingly, the Company's activities have
been accounted for as those of a "Development Stage Enterprise" as set forth in
Financial Accounting Standards Board Statement No. 7 ("SFAS 7").
In the opinion of the Company, the unaudited financial statements contain all of
the adjustments, consisting only of normal recurring adjustments and accruals,
necessary to present fairly the financial position of the Company as of June 30,
1998 and September 30, 1997, and the results of operations for the three months
and nine months ended June 30, 1998 and 1997 and from inception (October 23,
1989) to June 30, 1998. The results of operations for the three months and nine
months ended June 30, 1998 are not necessarily indicative of the results to be
expected in subsequent periods or for the year as a whole. For further
information, refer to the financial statements and footnotes thereto for the
year ended September 30, 1997.
2. NET LOSS PER SHARE OF COMMON STOCK
Effective October 1, 1997, the Company adopted Financial Accounting Standards
Board Statement No. 128, "Earnings per Share" ("SFAS 128"). Net loss per share
of common stock is computed by dividing the net loss by the weighted average
number of shares of common stock outstanding during the period. Net loss per
share calculated by including the additional common shares issuable upon
exercise of outstanding options and warrants is not presented as these
securities are antidilutive.
3. LINE OF CREDIT AGREEMENT
In March 1997 the Company entered into a line of credit agreement with a bank.
Under the agreement the Company was permitted to borrow up to $900,000 during
1997 to fund qualified equipment purchases. At January 1, 1998, $718,620 in
outstanding advances under the line of credit converted to a term loan payable
in equal installments over 48 months, including interest at prime plus 0.5%. In
March 1998 the line of credit agreement was amended to permit the Company to
borrow up to an additional $700,000 during 1998. On January 1, 1999, any
outstanding advances under the amended line of credit will convert to a term
loan payable in 48 equal installments, including interest at prime plus 0.25%.
At June 30, 1998, advances under the line of credit totaled $431,980. The term
loan and borrowings under the amended line of credit are both secured by all
assets of the Company.
4. STOCKHOLDERS' EQUITY
Secondary Public Offering - During October 1997 the Company completed a
secondary public offering in which it sold 2,500,000 shares of common stock at a
price of $15.25 per share. The Company received net proceeds of approximately
$34,700,000 after underwriting discounts and other issuance costs.
4
<PAGE>
4. STOCKHOLDERS' EQUITY (Continued)
Shares Issued Upon Exercise of Common Stock Options and Warrants - During the
nine months ended June 30, 1998 the Company issued 128,573 and 76,957 shares of
common stock upon the exercise of warrants and options, respectively.
5. LEASE COMMITMENTS
In July 1998 the Company entered into a five-year operating lease commencing
October 15, 1998 for approximately 25,400 square feet of office facilities
located in San Diego, California. Future minimum lease commitments for all
building leases approximate the following for each of the five years ending
September 30, 2002, and thereafter: 1998- $483,372; 1999 - $921,459; 2000 -
$984,199; 2001 - $1,023,899; 2002 - $785,579; thereafter - $825,964.
In June 1998 the Company entered into a two-year sublease agreement, whereby the
Company sublet approximately 4,800 square feet of its laboratory facilities.
Future minimum lease income approximates the following for each of the three
years ending September 30, 2000: 1998 - $40,911; 1999 - $193,123; 2000 -
$147,868.
5
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Maxim Pharmaceuticals, Inc. (A Development Stage Company)
This Management's Discussion and Analysis of Financial Condition and Results of
Operations contains certain forward-looking statements that involve risks and
uncertainties. The Company's actual results may differ materially from those
anticipated in these forward-looking statements. Factors that may cause such
differences include, but are not limited to, those discussed under "Risk
Factors" and elsewhere in the Company's Annual Report on Form 10-K for the year
ended September 30, 1997 and the Company's Registration Statement on Form S-3
(File No. 333-52403), each as amended through the date hereof and as filed with
the Securities and Exchange Commission, including the uncertainties associated
with research and development, the risk that products that appeared promising in
early clinical trials do not demonstrate efficacy in larger-scale clinical
trials, the risk that clinical trials will not commence when planned, and the
risk that the Company will not obtain approval to market its products.
Results of Operations for the Three Months and Nine Months Ended June 30, 1998
and 1997
Research and Development Expenses - For the quarter ended June 30, 1998,
research and development expenses were $6,075,000, an increase of $4,537,000, or
295%, over the same period in the prior year. This increase was primarily
attributable to increased activity related to late-stage cancer clinical trials
of the Company's Maxamine(TM) drug, including hiring additional clinical and
development personnel, clinical trial site and contract research organization
costs and other clinical costs. These clinical trials include a Phase III
clinical trial in malignant melanoma commenced in the United States in July
1997, an international Phase III malignant melanoma clinical trial commenced in
November 1997, and an international Phase III clinical trial in acute
myelogenous leukemia commenced in February 1998.
For the nine months ended June 30, 1998, research and development costs were
$12,478,000, an increase of $9,184,000, or 279%, over the same period of the
prior year. This increase resulted primarily from the Phase III clinical trial
efforts described above.
Business Development and General and Administrative Expenses - For the quarter
ended June 30, 1998, business development expenses totaled $543,000, an increase
of $421,000, or 346%, over the same period in the prior year. This increase was
due to additional personnel and other resources devoted to preparation for the
potential market launch of Maxamine, including corporate partnering efforts,
market evaluations and third-party reimbursement evaluations. General and
administrative expenses for the quarter ended June 30, 1998 were $616,000, an
increase of $122,000, or 25%, over the same period of the prior year. This
increase was in a large part due to the increased personnel costs and general
expenses associated with the Company's expanded operations.
Business development costs for the nine month period ended June 30, 1998 totaled
$858,000, an increase of $573,000, or 201%, over the same period of the prior
year. General and administrative expenses for the nine month period ended June
30, 1998 were $1,965,000, an increase of $570,000, or 41%, over the same period
of the prior year. Both of these increases resulted from the expanded activities
described above.
Other Income (Expense) - Investment income was $546,000 for the quarter ended
June 30, 1998, compared to $227,000 for the same period in the prior year. This
increase was due to income on the proceeds of the Company's secondary public
offering completed in October 1997. Interest expense for the quarter ended June
30, 1998 approximated that for the same period of the prior year and totaled
$22,000.
Investment income was $1,731,000 for the nine month period ended June 30, 1998,
compared to $732,000 for the same period of the prior year, due to the income on
the secondary public offering proceeds
6
<PAGE>
described above. Interest expense for the nine month period ended June 30, 1998
was $59,000, consistent with the same period of the prior year.
Net Loss - Net loss for the quarter ended June 30, 1998 totaled $6,710,000, an
increase of $4,756,000, or 243%, over the same period of the prior year. The
increase was due to the expansion of research and development and general
corporate activities described above, partially offset by the current quarter
increase in investment income. Net loss per share of common stock for the three
month period ended June 30, 1998 was $.72, a 148% increase over the loss of $.29
per share for the same period of the prior year. This increase resulted from the
increase in net loss for the quarter partially offset by the increase in the
number of shares of common stock outstanding.
Net loss for the nine months ended June 30, 1998 totaled $13,628,000, an
increase of $9,314,000, or 216%, over the same period of the prior year. Net
loss per share of common stock for the nine month period was $1.51, a 132%
increase over the loss of $.65 per share for the same period of the prior year.
Liquidity and Capital Resources
The Company has financed its operations primarily through the sale of its equity
securities, including an initial public offering in July 1996 and an
international secondary public offering in October 1997 which provided net
proceeds to the Company of approximately $18.2 million and $34.7 million,
respectively.
As of June 30, 1998, the Company had cash, cash equivalents and investments
totaling approximately $35.8 million. For the nine months ended June 30, 1998,
net cash used in the Company's operating activities was approximately $11.1
million. The Company expects its cash requirements to increase significantly in
future periods as it conducts additional product development efforts including
clinical trials, other research and development activities, and efforts
associated with the commercial launch of any products that are developed. Among
the activities which are expected to result in an increase in cash requirements
are two Phase III cancer clinical trials of Maxamine commenced in 1997, and the
continuation of a third international Phase III cancer clinical trial commenced
in February 1998.
The Company's cash requirements may vary materially from those now planned
because of the results of clinical trials and other research and development,
the time and costs involved in obtaining regulatory approvals, the cost of
filing, prosecuting, defending and enforcing patent claims and other
intellectual property rights, competing technological and market developments,
changes in the Company's existing research relationships, the ability of the
Company to establish collaborative arrangements and the development of the
Company's product commercialization activities. As a result of these factors, it
is difficult to predict accurately the timing and amount of the Company's cash
requirements. In order to successfully commercialize any of its products, the
Company expects that it will ultimately be required to seek additional funds
through public or private financings or collaborative arrangements with
corporate partners. The issuance of additional equity securities could result in
substantial dilution to the Company's stockholders. There can be no assurance
that additional funding will be available on terms acceptable to the Company, if
at all. The failure to fund its capital requirements would have a material
adverse effect on the Company's business, financial condition and results of
operations.
The Company has never paid a cash dividend and does not contemplate the payment
of cash dividends in the foreseeable future.
7
<PAGE>
PART II-OTHER INFORMATION
Item 1. Legal Proceedings
In March 1997 the former President and Chief Operating Officer and Chief
Financial Officer of the Company (the "Former Employees") filed a complaint in
the Superior Court in the State of California, County of San Diego (the
"Complaint") seeking claims for certain purported damages in contract and in
tort arising from their respective terminations of employment with the Company.
As previously reported in the Company's Form 10-Q for the quarter ended March
31, 1998, in May 1998 the Company entered into an agreement with the Former
Employees resulting in a full and final release of claims against the Company
and a dismissal with prejudice of the Complaint.
Item 2. Changes in Securities and Use of Proceeds
(c) In June 1998, the Company issued 100 shares of Common Stock upon exercise of
warrants at a price per share of $3.00. The Company issued such shares in
reliance upon the exemption provided by Section 4(2) of the Securities Act of
1933.
(d) Of the net offering proceeds to the Company of $18.2 million that resulted
from the sale of shares of common stock and warrants pursuant to the Company's
Registration Statement on Form SB-2 (File No. 333-4854-LA), through June 30,
1998, the following payments have been made:
<TABLE>
<CAPTION>
(A) (B)
<S> <C> <C>
Purchase and installation of
machinery and equipment 931,000
Repayment of indebtedness 289,000 728,000
Interest earning bonds and securities 37,000
Research and development expenses 12,206,000
Business development expenses 825,000
General and administrative 2,619,000
Intellectual property 585,000
</TABLE>
(A) Direct or indirect payments to directors, officers, general partners of the
issuer or their associates; to persons owning ten percent or more of any
class of equity securities of the issuer; and to affiliates of the issuer.
(B) Direct or indirect payments to others.
Item 5. Other Information
Pursuant to the Company's bylaws, stockholders who wish to bring matters or
propose nominees for director at the Company's 1999 annual meeting of
stockholders must provide specified information to the Company between November
22, 1998 and December 22, 1998 (unless such matters are included in the
Company's proxy statement pursuant to Rule 14a-8 under the Securities Exchange
Act of 1934, as amended).
8
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
<TABLE>
<CAPTION>
Exhibit Number Description of Exhibit
- -------------- ----------------------
<S> <C>
10.22 Lease dated July 2, 1998 between British
Pacific Properties Corporation, a California Corporation,
As Landlord, and the Registrant
27.1 Financial Data Schedule
</TABLE>
b.) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended June 30, 1998.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Maxim Pharmaceuticals, Inc.
Date: August 12, 1998 /s/ Dale A. Sander
------------------------------------------
Dale A. Sander
Chief Financial Officer
(Principal Accounting Officer and Officer
duly authorized to sign this report on
behalf of the registrant)
9
<PAGE>
<PAGE>
Exhibit 10.22
BRITISH PACIFIC CENTRE
BRITISH PACIFIC PROPERTIES CORPORATION
a California corporation
<PAGE>
BRITISH PACIFIC CENTRE OFFICE BUILDING LEASE
BETWEEN
BRITISH PACIFIC PROPERTIES CORPORATION,
a California corporation
(Landlord)
and
MAXIM PHARMACEUTICALS,
a Delaware Corporation
<PAGE>
BRITISH PACIFIC CENTRE OFFICE BUILDING LEASE
Basic Lease Provisions
The following constitutes a summary of the Basic Lease Provisions set
forth in the British Pacific Centre Office Building Lease ("Lease") between the
parties and regarding the Premises specified below. The Basic Lease Provisions
are an integral part of this Lease and each reference in this Lease to any of
the Basic Lease Provisions shall be construed to incorporate all of the terms
provided under each such Basic Lease Provision. In the event of any conflict
between any Basic Lease Provisions and the balance of the Lease, the latter
shall control.
1. DATE: July 1, 1998 (for reference purposes only)
2. PARTIES:
Landlord: British Pacific Properties Corporation, a
California corporation
Tenant: Maxim Pharmaceuticals, a Delaware
Corporation
3. PREMISES:
3.1. Building Address: 8899 University Center
Lane, San Diego,
California 92122
3.2. Floor: Fourth Floor
3.3. Suite No.: 400
3.4. Rentable Square Footage: Approximately 25,391
rentable square feet.
3.5. Parking Spaces: Ninety-eight (98) covered
and free for the Term of
the Lease, of which 20
parking spaces shall be
reserved for tenant's
exclusive use on the lower
level, adjacent to the
elevator.
4. TERM:
4.1. Term of Lease: Five (5) years with a five
(5) year option to renew
4.2. Anticipaated
Commencement Date: August 15, 1998
4.3. Termination Date: October 14, 2003
5. RENT:
5.1. Initial Monthly Base Rent: $54,336.74 ($2.14 per
rentable sq. ft. per
month)
5.2. Annual Increase to Base Rent:
<TABLE>
<CAPTION>
Monthly Monthly Base Rent per
Lease Term Base Rent Sq. Ft. of Net Rentable Area
<S> <C> <C>
08/15/98 - 10/14/98 $28,536.10 $1.12 (plus electricity)
10/15/98 - 10/14/99 $54,336.74 $2.14 (plus electricity)
10/15/99 - 10/14/00 $56,621.93 $2.23 (plus electricity)
10/15/00 - 10/14/01 $58,907.12 $2.32 (plus electricity)
10/15/01 - 10/14/02 $61,192.31 $2.41 (plus electricity)
10/15/02 - 10/14/03 $63,731.41 $2.51 (plus electricity)
</TABLE>
5.3 Notwithstanding the above, if the Commencement Date
is subsequent to August 15, 1998, the Base Rent for
the first two (2) months of the Term of the Lease
shall be $28,536.10.
5.4 Base Rent Paid
Upon Commencement: $28,536.10 for the period
August 15, 1998 through
September 15, 1998.
6. TENANT'S EXPENSE STOP BASE: To be determined based
upon actual expenses
during the base year,
which is calendar year
1998, as adjusted to
achieve 95% occupancy.
Increases in Operating
Expenses payable by
Tenant shall be limited to
six percent (6%) of their
proportionate share of the
controllable expenses over
the base year.
Controllable expenses are
all those expenses other
than taxes.
7. TENANT'S OPERATING
EXPENSE PERCENTAGE: 26.3%
8. TENANT'S ALLOWANCE
FOR LEASEHOLD IMPROVEMENTS: $192,072.20.
<PAGE>
9. SECURITY DEPOSIT: $29,156.45
10. PERMITTED USE OF PREMISES: Tenant may use the Premises
for general office use and
for no other purpose.
11. TENANT'S INITIAL LIABILITY
INSURANCE LIMITS: $3,000,000.00 per person
for personal injury or
death;
$3,000,000.00 per
occurrence for personal
injury or death; and
$1,000,000.00 per
occurrence for damage to
property
12. BROKER(S):
12.1. Landlord's Broker: Colliers International
13. GUARANTOR(S): None
14. NOTICE:
To LANDLORD:
BRITIISH PACIFIC PROPERTIES
c/o Kohler Kompany
5030 Camino de la Siesta, Suite #308
San Diego, California 92108
Attn: Bill Kohler
To TENANT:
Maxim Pharmaceuticals
8899 University Center Lane, Suite #400
San Diego, CA 92122
15. EXHIBITS AND ADDENDA: Exhibits A through F and
Addenda 1 are attached to
this Lease and
incorporated herein by
reference.
2
<PAGE>
1.
BRITISH PACIFIC CENTRE OFFICE BUILDING LEASE
This Lease, made at San Diego, California, on the 26th day of June, 1998,
between BRITISH PACIFIC PROPERTIES CORPORATION, a California corporation
("Landlord"), and Maxim Pharmaceuticals, a Delaware Corporation ("Tenant"):
W I T N E S S E T H:
1. PREMISES AND COMMON AREAS
1.1. Premises. Landlord hereby leases to Tenant and
Tenant hereby leases from Landlord, for the term, at the
rental, and upon all of the terms, covenants and conditions
set forth herein, those certain premises ("Premises"),
described in the Basic Lease Provisions and depicted on the
floor plan attached hereto as Exhibit "A," located at 8899
University Center Lane, San Diego, California, including
parking facilities, landscaping and appurtenances
("Building"). The Premises, the Building, the Common Areas
(defined below) and the land upon which the same are located,
are included within the development commonly described as
British Pacific Centre ("Project"). Unless otherwise provided
herein, any statement of square footage set forth in this
Lease, or that may have been used in calculating rental, is an
approximation which Landlord and Tenant agree is reasonable,
and the rental based thereon is not subject to revision
whether or not the actual square footage is more or less.
1.2. Common Areas. All areas of the Building and the
real property in the Project that are provided and designated
by the Landlord from time to time for the general,
non-exclusive use of Landlord, tenants of the Building and the
Project and their respective agents, employees, suppliers,
shippers, customers and invitees, including, without limiting
the generality of the foregoing, entrances and exits,
hallways, stairwells, elevators, restrooms, sidewalks,
driveways, parking areas (subject to the right of Landlord or
its licensee to control access thereto, and to charge for its
use), landscaped areas, and other areas and improvements
provided by Landlord for the common use of Landlord and
tenants and their respective employees and invitees, shall be
deemed "Common Areas." The Premises shall include the
non-exclusive right to use the Common Areas in common with and
subject to the right of other tenants in the Building and the
Project, and subject to the rules and regulations established
by Landlord.
1.3. Common Areas Rules and Regulations. Tenant agrees
to abide by and conform to the Rules and Regulations attached
hereto as Exhibit "B" with respect to the Project and Common
Areas, and to cause its employees, suppliers, shippers,
customers and invitees to so abide and conform. Landlord or
such other person(s) as Landlord may appoint shall have
exclusive control and management of the Common Areas and shall
have the right, from time to time, to modify, amend and
enforce said Rules and Regulations. Landlord shall not be
responsible to Tenant for the non-compliance with said Rules
and Regulations by other tenants of the Project, their agents,
employees and invitees. Landlord's rights pursuant to this
Paragraph 1.3 shall be subject to the condition that exercise
of any of such rights shall not unreasonably interfere with
Tenant's use of the Premises.
1.4. Condition of Premises
1.4.1. Landlord shall deliver the
Premises to Tenant in a clean condition on the Lease
Commencement Date (unless Tenant is already in
possession) and Landlord warrants to Tenant that the
plumbing, lighting, air conditioning, and heating
system in the Premises shall be in good operating
condition. In the event that it is determined that
this warranty has been violated, then it shall be the
obligation of Landlord, after receipt of written
notice from Tenant setting forth with specificity the
nature of the violation, to promptly, at Landlord's
sole cost, rectify such violation. Tenant's failure
to give such written notice to Landlord within thirty
(30) days after the Lease Commencement Date or the
date that Tenant takes possession of the Premises,
whichever is earlier, shall result in the conclusive
presumption that Landlord has complied with all of
its obligations hereunder, that the Premises are
fully completed and are suitable for Tenant's
purposes, that the Building and every part of it,
including the Premises, are in good and satisfactory
condition, and that Tenant waives any defects
therein. Notwithstanding any of the foregoing, should
a non-compliance with this warranty be of a latent
nature, such thirty (30) day time limitation shall
not apply, and Landlord shall rectify such
non-compliance, at Landlord's sole cost and expense,
promptly after receipt of written notice thereof.
1.4.2. Landlord warrants to Tenant that
the Premises, in the state existing on the date that
the Lease Term commences, but without regard to
alterations or improvements made by Tenant or to the
use for which Tenant will occupy the Premises, does
not violate any covenants or restrictions of record,
or any applicable law or ordinance in effect on the
Lease Commencement Date, that would substantially and
adversely affect the operation and profitability of
Tenant's business conducted from the Premises. In the
event that it is determined that this warranty has
been violated, then it shall be the obligation of
Landlord, after receipt of written notice from Tenant
setting forth with specificity the nature of the
violation, to promptly, at Landlord's sole cost,
rectify such violation.
1.4.3. Except as otherwise provided in
this Lease, Tenant hereby accepts the Premises and
the Building Project in their condition existing as
of the Lease Commencement Date or the date that
Tenant takes possession of the Premises, whichever is
earlier, subject to all applicable zoning, municipal,
county and state laws, ordinances and regulations
governing and regulating the use of the Premises, and
any easements, covenants or restrictions of record,
and accepts this Lease subject thereto and to all
matters disclosed thereby and by any exhibits
attached hereto. Tenant acknowledges that it has
satisfied itself by its own independent investigation
that the Premises are suitable for its intended use,
and that neither Landlord nor Landlord's agent or
agents has made any representation or warranty as to
the present or future suitability of the Premises,
Common Areas, or Building Project for the conduct of
Tenant's business.
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1.4.4. Notwithstanding anything in this
Lease to the contrary, Landlord warrants to Tenant
that on the commencement of the term hereof, the
Premises and any improvements to be constructed by
Lessor (a) shall be free from material structural
defects, (b) shall comply with all applicable
covenants and restrictions of record, statutes,
ordinances, codes, rules, regulations, orders, and
requirements, including Title 24 of the California
Administrative Code and the Americans with
Disabilities Act, and (c) are free from contamination
by any toxic or hazardous materials (hereafter
"Hazardous Materials") which now or hereafter become
regulated by any federal, state, or local government,
or agency thereof (for purposes of this subclause,
the Premises shall be deemed to include the
underlying soil and ground water). In the event of a
breach of the foregoing warranties, Landlord shall
promptly rectify such breach at its sole cost and
expense. Landlord also shall protect, indemnify,
defend, and hold Tenant harmless from and against any
and all liability, loss, suits, claims, actions,
costs, and expense (including, without limitation,
attorneys' fees) arising from (a) any breach of the
foregoing warranties and (b) any contamination of the
Premises (including the underlying land and ground
water) by any Hazardous Materials, where such
contamination was not caused by Tenant. The
provisions of this paragraph shall survive the
termination of this Lease.
1.5. Changes to Common Areas. Landlord shall have the
right, in Landlord's sole discretion, from time to time to:
(a) make changes to the Building interior and exterior and
Common Areas, including, without limitation, changes in the
location, size, shape, number, and appearance thereof,
including but not limited to the lobbies, windows, stairways,
air shafts, elevators, escalators, restrooms, driveways,
entrances, parking spaces, parking areas, loading and
unloading areas, ingress, egress, direction of traffic,
decorative walls, landscaped areas and walkways; provided,
however, Landlord shall at all times provide the parking
facilities required by applicable law; (b) close temporarily
any of the Common Areas for maintenance purposes so long as
reasonable access to the Premises remains available; (c)
designate other land and improvements outside the boundaries
of the Project to be a part of the Common Areas, provided that
such other land and improvements have a reasonable and
functional relationship to the Project; (d) add additional
buildings and improvements to the Common Areas; (e) use the
Common Areas while engaged in making additional improvements,
repairs or alterations to the Project, or any portion thereof;
and (f) do and perform such other acts and make such other
changes in, to or with respect to the Common Areas and Project
as Landlord may, in the exercise of sound business judgment
deem to be appropriate, and no such changes shall entitle
Tenant to any abatement of rent. Landlord's rights pursuant to
this Paragraph 1.5 shall be subject to the condition that
exercise of any such rights shall not unreasonably interfere
with Tenant's use of the Premises or reduce the number of
Tenant's parking spaces.
2. TERM
2.1. Length of Term. The term of this Lease ("Term")
shall be for the Term specified in the Basic Lease Provisions,
plus any partial month following the commencement of the Term
("Commencement Date") if such date is other than the first day
of a calendar month.
2.2. Commencement Date. The Commencement Date shall be
the earliest of (a) the date on which Tenant takes possession
of or commences business operations upon the Premises or any
part thereof ("Lease Commencement Date"); or (b) the date on
which Landlord's Work (as described in Section 14 below) is
substantially completed as determined by Landlord ("Rental
Commencement Date").
2.2.1. Notwithstanding the Scheduled
Commencement Date set forth in the Basic Lease
Provisions, if for any reason Landlord cannot deliver
possession of the Premises to Tenant on said date,
Landlord shall not be subject to any liability
therefor, nor shall such failure affect the validity
of this Lease or the obligations of Tenant hereunder
or extend the term hereof; but in such case, Tenant
shall not be obligated to pay rent or perform any
other obligations of Tenant under the terms of this
Lease, except as may be otherwise provided in this
Lease, until possession of the Premises is delivered
to Tenant. If, however, Landlord shall not have
delivered possession of the Premises within ninety
(90) days following said Scheduled Commencement Date
for any reason, other than Tenant's Delays as defined
in the Work Letter attached hereto as Exhibit "D,"
Tenant may, at Tenant's option, by notice in writing
to Landlord within ten (10) days thereafter, advise
Landlord of Tenant's intent to cancel this Lease.
Within ten (10) days after its receipt of such
notice, Landlord shall submit to Tenant a statement
of all costs and expenses incurred or irrevocably
committed by Landlord for non-standard improvements
to the Premises up to the date of Landlord's receipt
of Tenant's notice of intent to cancel. This Lease
shall thereafter be canceled, and the parties shall
be discharged from all obligations hereunder, if and
only if Tenant reimburses Landlord for all such costs
and expenses as stated in Landlord's notice within
ten (10) days after Tenant's receipt thereof, and
Landlord shall thereupon return any money previously
deposited by Tenant. If such written notice of intent
to cancel by Tenant is not timely received by
Landlord, or Tenant's reimbursement for such costs
and expenses is not timely received by Landlord, as
aforesaid, then in either such event Tenant's right
to cancel this Lease hereunder shall terminate and be
of no further force or effect.
2.2.2. Possession of the premises shall
be deemed delivered to Tenant when (1) the
improvements to be provided by Landlord under this
Lease are substantially completed, (2) the Building
Utilities are ready for use in the Premises, and (3)
Tenant has reasonable access to the Premises.
2.2.3. If Tenant occupies the Premises
prior to said Commencement Date, such occupancy shall
be subject to all provisions of this Lease, such
occupancy shall not change the termination date, and
Tenant shall pay rent for such occupancy.
3. RENT
3.1. Base Rent. Subject to adjustment as provided in
this Lease, Tenant shall pay to Landlord for each full
calendar month during the Term the Monthly Base Rent specified
in the Basic Lease Provisions and other charges under this
Lease. The Monthly Base Rent shall be payable in advance on
the first day of each calendar month without any deduction or
offset. The Monthly Base Rent for any fractional part of a
calendar month at the beginning or end of the term shall be
prorated based upon a 30-day month and 360-day year. Payment
of Base Rent shall be made to Landlord at its address stated
herein or to such other persons or at such other addresses as
Landlord may from time to time designate in writing to Tenant.
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3.2. Annual Increase to Base Rent
3.2.1. Cost of Living Adjustment. If
Item 5(b)(i) of the Basic Lease Provisions is
initialed, the Monthly Base Rent shall be adjusted on
each annual anniversary of the Commencement Date to
reflect increases, if any, in the cost of living. The
adjustment, shall be calculated by reference to the
Consumer Price Index of the Bureau of Labor
Statistics of the Department of Labor for All Urban
Consumers, All Items, for the Los
Angeles-Anaheim-Riverside Metropolitan Area (herein
referred to as "CPI"). On each such adjustment date,
the Monthly Base Rent shall be increased to an amount
computed by multiplying the initial Monthly Base Rent
by a fraction, the numerator of which is the CPI most
recently available and published prior to the
anniversary of the Commencement Date for which the
annual adjustment is being made, and the denominator
of which is the CPI most recently available and
published as of the Commencement Date.
Notwithstanding the foregoing, in no event shall the
Monthly Base Rent be decreased on any such adjustment
date.
3.2.2. If the Bureau of Labor Statistics
discontinues publication of the CPI, or publishes it
less frequently, or alters it in some other manner,
then Landlord shall adopt a substitute CPI that
reasonably monitors and reflects changes in consumer
prices.
3.2.3. Tenant shall continue to pay the
rent at the rate previously in effect until the
increase, if any, is determined. Within five (5) days
following the date on which the increase is
determined, Tenant shall make such payment to
Landlord as will bring the increased rental current,
commencing with the effective date of such increase
through the date of any rental installments then due.
Thereafter, the rental shall be paid at the increased
rate.
3.2.4. Percentage Adjustment. If Item
5(b) of the Basic Lease Provisions is initialed, the
Monthly Base Rent shall be adjusted on each annual
anniversary of the Commencement Date by the
percentage increase as set forth in Item 5(b) of the
Basic Lease Provisions.
3.2.5. Fixed Adjustment. As per Item
5.(2.) Tenant shall pay adjustment on a monthly basis
as specifically in the Basic Lease Provisions.
3.3. Additional Rent
3.3.1. In addition to the Monthly Base
Rent and other sums to be paid by Tenant to Landlord,
Tenant shall pay to Landlord as additional rent the
amount by which Tenant's share of Operating Expenses
(defined below) for any lease year or part thereof
during the term exceeds Tenant's Expense Stop Base,
as set forth in the Basic Lease Provisions. Tenant's
share of Operating Expenses shall be an amount equal
to the product of the Operating Expenses multiplied
by Tenant's Operating Expense Percentage specified in
the Basic Lease Provisions. For partial lease years
during the term, the annual Operating Expenses and
Tenant's Expense Stop Base shall be prorated on a
daily basis using a 30-day month and 360-day year to
determine the amount of additional rent due to
Landlord.
3.3.2. Landlord shall be entitled to
make an estimate of Operating Expenses projected for
each lease year. Landlord shall be entitled to revise
such estimate at any time and from time to time
during the lease year to increase or decrease the
estimate of Operating Expenses. If Landlord notifies
Tenant that Landlord's estimate (or any revised
estimate) of Operating Expenses would result in an
obligation of Tenant to pay additional rent, then
upon request by Landlord, Tenant shall pay
one-twelfth (1/12) of such estimated additional rent
on the first day of each month in advance together
with the Monthly Base Rent. If Landlord shall so
notify Tenant after the commencement of a lease year,
then with the next payment of rent due, Tenant shall
also pay to Landlord one-twelfth (1/12) of such
estimated additional rent for each month of such
lease year which has already elapsed.
3.3.3. Landlord shall provide Tenant
with an annual statement showing Tenant's share of
the annual Operating Expenses over Tenant's Expense
Stop Base, if any, for the prior lease year, together
with any proration. Landlord shall use all reasonable
efforts to deliver the annual statement within one
hundred twenty (120) days after the end of the lease
year; provided, however, that failure of Landlord to
deliver the annual statement within such period shall
not impair or constitute a waiver of Tenant's
obligations to pay additional rent or cause Landlord
to incur any obligation for damages. If the amount of
the additional rent due for the lease year exceeds
any amount paid by Tenant as estimated additional
rent for such lease year, then Tenant shall pay such
excess to Landlord within ten (10) days of receipt of
Landlord's statement. If the amounts paid as
estimated additional rent for a lease year exceed the
amount of Tenant's obligation shown on the annual
statement, then Tenant shall be entitled to a credit
against monthly installments of estimated additional
rent due for the then current year. If no further
sums of additional rent are or will become due
against which the excess can be credited, then,
subject to offset at Landlord's election against
other sums owed by Tenant, Landlord shall pay such
excess to Tenant within ten (10) days after delivery
of the annual statement. All obligations to pay
additional rent and/or the obligation of Landlord to
credit or reimburse Tenant for any excess payment of
estimated additional rent shall survive expiration of
the term or earlier termination of this Lease.
3.3.4. Tenant shall have a period of
thirty (30) days after delivery of the annual
statement of Operating Expenses to question or
challenge the amount shown thereon by giving written
notice to Landlord specifying the items which are
challenged. Tenant waives and relinquishes the right
to challenge or object to the amounts shown at any
time after expiration of such thirty (30) day period.
If Tenant timely challenges any item shown on the
annual statement, Tenant shall then have a period of
sixty (60) days in which to inspect, during business
hours upon reasonable written notice to Landlord at
Landlord's office, Landlord's records relating to the
challenged item or items. Tenant shall give written
notice to Landlord prior to expiration of such sixty
(60) days of whether Tenant continues to challenge
any of the items originally objected to, in which
case a certification as to proper amount shall be
made by Landlord's independent certified public
accountant, which certification shall be final and
conclusive. The cost of such review shall be paid by
Tenant, unless such review reveals an error resulting
in an overcharge to Tenant of five percent (5%) or
more, in which case the cost of such review shall be
paid by Landlord. If Tenant fails to review the
records or fails to give timely written notice to
Landlord that it continues to object, then Tenant
shall be deemed to have waived its objection and
shall have no further right to challenge or object
thereto. Notwithstanding any objection or challenge
of Tenant, Tenant shall pay the amount claimed by
Landlord to be due as and when provided for herein,
pending the resolution of Tenant's objection.
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3.3.5. "Operating Expenses" of the
Building mean any and all costs and expenses of
ownership, operation, management, maintenance and
repair of the Building, including the parking
facilities and Common Areas. Operating Expenses
include, but are not limited to, each of the
following costs and expenses:
3.3.5.1. All costs and
expenses of utilities furnished to the
Building and not separately metered to
individual tenants, including, without
limitation, all costs and expenses
attributable to supply of electrical
service, water and sewage service, natural
gas, cable television or other electronic or
microwave signal reception, telephone
service or other communication, steam, heat,
cooling, or any other service which is now
or in the future a utility furnished to the
Building.
3.3.5.2. All real
property taxes, which shall include (a) any
form of tax or assessment, license fee,
license tax, tax or excise on rent or any
other levy, charge, expense or imposition
made or required by any federal, state,
county, city, district or other political
subdivision on any interest of Landlord
and/or Tenant in the Premises or the
Building, including without limitation, the
underlying real property and appurtenances;
(b) any fee for services charged by any
governmental agency or quasi-governmental
agency for any services such as fire
protection, street, sidewalk and road
maintenance, refuse collection, school
systems, or other services provided to
property owners and residents within the
general area of the Building; (c) any
governmental impositions allocable to or
measured by the area of the Premises or the
amount of any rent payable under this Lease,
including, without limitation, any tax on
gross receipts or any excise tax or other
charges levied by any federal, state,
county, city, district or other governmental
agency or political subdivision with respect
to rent or upon or with respect to the
possession, leasing, operation, maintenance,
alteration, repair, use or occupancy of the
Premises or any portion thereof; (d) any
impositions by any governmental agency on
this Lease transaction or with respect to
any document to which Tenant is a party
creating or transferring an interest or an
estate in the Premises; and (e) any increase
in any of the foregoing based upon
construction of improvements at the Building
or changes in ownership (as defined in the
California Revenue and Taxation Code) of the
Building. Real property taxes shall not
include taxes on the Landlord's net income,
state franchise taxes or any inheritance,
estate or gift taxes.
3.3.5.3. Operating costs
and common facilities costs, which shall
include all costs of managing, operating,
maintaining and repairing the Building,
including all Common Areas and facilities of
the Building. Such costs shall include,
without limitation, all expenses for
insurance obtained by Landlord (including,
without limitation, public liability,
contractual liability, property damage, fire
and extended coverage, sprinkler damage,
theft, malicious mischief and vandalism,
flood, rental interruption, boiler and
machinery, earthquake, all risk coverage,
and other coverages in such amounts as
Landlord determines appropriate to carry in
connection with ownership and operation of a
first class building in San Diego County,
California, or such other insurance as may
be required by any present or future lender
of loans secured by the Building), labor and
supplies, license, permit and inspection
fees, all assessments and special
assessments due to deed restrictions,
declarations and/or owners associations
which accrue against the Building, the cost
of compensation (including employment taxes,
similar governmental charges, and fringe
benefits) with respect to all persons who
perform duties in connection with
landscaping, janitorial, painting, window
washing and general cleaning services,
security services and any other services
related to the operation, maintenance or
repair of the Building (as well as the cost
of all supplies, materials, tools and
equipment used in conjunction therewith),
costs of clean-up and removal of "Hazardous
Materials," "Environmental Conditions" and
"Environmental Noncompliance" (in each case
as defined in Section 12 hereof) at the
Building, the fair market rental value of
the Building management office, management
fees (at an attributed fair market rate if
Landlord itself provides such management
services), legal expenses, accounting
expenses, and consultant's fees.
3.3.5.4. If the Building
is not at least 95% occupied during all or a
portion of any lease year, then Landlord
shall make an appropriate adjustment of the
Operating Expenses for such lease year to
determine what the Operating Expenses would
have been for such year if the Building had
been 95% occupied, and the amount so
determined shall be deemed to be the amount
of the Operating Expenses for such year.
3.3.5.5. All costs and
expenses for replacements of equipment or
improvements that have a useful life of five
(5) years or less, amortized on a straight
line basis over such useful life.
3.3.5.6. All costs and
expenses for operation, management,
maintenance and repair of the parking
facilities.
3.3.5.7. Any other
service to be provided by Landlord that is
elsewhere in this Lease stated to be an
"Operating Expense."
3.3.6. Operating Expenses shall not include the
following costs and expenses:
3.3.6.1. Depreciation of
the Building.
3.3.6.2. Payments of
principal and interest on any loans secured
by the Building, commissions paid for
leasing, construction permits and fees, or
costs of alteration of the Building;
provided, however, that Operating Expenses
shall include the costs of any capital
improvements made to the Building for the
purpose of reducing Operating Expenses or
pursuant to the requirements of any
governmental entity, such costs to be
amortized over a reasonable period as
Landlord shall determine.
3.3.6.3. Any expenses
paid by Tenant directly to third parties, or
as to which Landlord is otherwise reimbursed
by any third party, any other tenant or
insurance proceeds.
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3.3.7. Additional Rent: Notwithstanding
anything in the Lease to the contrary, the following
shall not be included within Operating Expenses: (a)
leasing commission, attorneys' fees, costs,
disbursements, and other expenses incurred in
connection with negotiations or disputes with
tenants, or in connection with leasing, renovating,
or improving space for tenants or other occupants or
prospective tenants or other occupants of the
Building or Project; (b) the cost of any service sold
to any tenant (including Tenant) or other occupant
for which Landlord is entitled to be reimbursed as an
additional charge or rental over and above the basic
rent and escalations payable under the lease with
that tenant; (c) any depreciation on the Building or
Project; (d) costs of a capital nature, including but
not limited to capital improvements and alterations,
capital repairs, capital equipment, and capital tools
as determined in accordance with generally accepted
accounting principals; (e) expenses in connection
with services or other benefits of a type that are
not provided to Tenant but which are provided another
tenant or occupancy of the Building or Project; (f)
costs incurred due to Landlord's violation of any
terms or conditions of this Lease or any other lease
relating to the Building or Project; (g) Overhead
profit increments paid to Landlord's subsidiaries or
affiliates for management or other services on or to
the Building or Project or for supplies or other
materials to the extent that the cost of the
services, supplies, or materials exceeds the cost
that would have been paid had the services, supplies,
or materials been provided by unaffiliated parties on
a competitive basis; (h) all interest, loan fees, and
other carrying costs related to any mortgage or deed
of trust or related to any capital item, and all
rental and other payable due under any ground or
underlying lease, or any lease for any equipment
ordinarily considered to be of a capital nature
(except janitorial equipment which is not affixed to
the Building); (i) any compensation paid to clerks,
attendants, or other persons in commercial
concessions operated by Landlord; (j) advertising and
promotional expenditures; (k) costs of repairs and
other work occasioned by fire, windstorm, or other
casualty of an insurable nature; (l) any costs,
fines, or penalties incurred due to violations by
Landlord of any governmental rule or authority, this
Lease or any other lease in the Project, or due to
Landlord's negligence or willful misconduct; (m)
management fees to the extent they exceed management
costs charged for similar facilities in the area and
in any event, to the extent they exceed five percent
(5%) of all other Operating Expenses; (n) costs for
sculpture, paints, or other objects of art (nor
insurance thereon or extraordinary security in
connection therewith); (o) wages, salaries, or other
compensation paid to any executive employees above
the grade of building manager; (p) The cost of
correcting any building code or other violations
which were violations prior to the Commencement Date;
(q) The cost of containing, removing, or otherwise
remediating any contamination (including the
underlying land and ground water) by any toxic or
hazardous materials (including, without limitation,
asbestos and "PCB's") where such contamination was
not caused by Tenant; (r) Any other expense that
under generally accepted accounting principles and
practice consistently applied would not be considered
a normal maintenance or operating expense.
3.4. Tenant's Charges. Charges for any services, goods
or materials furnished by Landlord at Tenant's request, and
charges for services, goods and materials furnished by
Landlord as a result of extraordinary uses or demands by
Tenant in excess of those typical of other tenants in the
Building with general office usage, shall not be included in
Operating Expenses but shall be payable by Tenant as
additional rent within ten (10) days after Landlord delivers a
statement for such services, goods or materials to Tenant.
3.5. Late Charges. Tenant hereby acknowledges that late
payment by Tenant to Landlord of the Monthly Base Rent,
Tenant's share of Operating Expenses or other sums due
hereunder will cause Landlord to incur costs not contemplated
by this Lease, the exact amount of which will be extremely
difficult to ascertain. Such costs include, but are not
limited to, administrative, processing and accounting charges,
and late charges which may be imposed on Landlord by the terms
of any mortgage or trust deed covering the Project.
Accordingly, if any installment of the Monthly Base Rent,
Operating Expenses, or any other sum due from Tenant shall not
be received by Landlord or Landlord's designee within ten (10)
days after such amount shall be due, then, without any
requirement for notice to Tenant, Tenant shall pay to Landlord
a late charge equal to 10% of such overdue amount. The parties
hereby agree that such late charge represents a fair and
reasonable estimate of the costs Landlord will incur by reason
of late payment by Tenant. Acceptance of such late charge by
Landlord shall in no event constitute a waiver of Tenant's
default with respect to such overdue amount, nor prevent
Landlord from exercising any of the other rights and remedies
granted hereunder. Notwithstanding anything to the contrary in
the Lease, Landlord will grant one (1) grace period for late
rent, provided, after notice from Landlord, Tenant remits the
late rental payment within three (3) days of said notice.
3.6. Interest on Past Due Obligations. Any amount due
from Tenant to Landlord hereunder which is not paid when due
shall bear interest at the maximum rate then allowable by law
or judgment from the date of notice of delinquency from
Landlord. The payment of interest on such amounts shall not
excuse or cure any default by Tenant under this Lease;
provided, however, that interest shall not be payable on late
charges to be paid by Tenant under this Lease.
3.7. Security Deposit. Tenant shall pay to Landlord,
immediately upon execution of this Lease, the sum specified in
the Basic Lease Provisions as security for the full and
faithful performance of every provision of this Lease to be
performed by Tenant. If Tenant defaults with respect to any
provisions of this Lease, including, but not limited to, the
provisions relating to the payment of rent, Landlord may (but
shall not be required to) use, apply or retain all or any part
of this security deposit for the payment of any rent or any
other sum in default, or for the payment of any other amount
which Landlord may spend or become obligated to spend by
reason of Tenant's default, or to compensate Landlord for any
other loss or damage which Landlord may suffer by reason of
Tenant's default. If any portion of said deposit is so used or
applied, Tenant shall, within five (5) days after written
demand therefor, deposit cash with Landlord in an amount
sufficient to restore the security deposit to its original
amount and Tenant's failure to do so shall be a material
breach of this Lease. At Landlord's election, if the monthly
Base Rent shall from time to time increase during the term of
this Lease, Tenant shall, within ten (10) days after request
by Landlord, deposit with Landlord additional money as a
security deposit so that the total amount of the security
deposit held by Landlord shall bear the same proportion to the
then current Base Rent as the initial security deposit bears
to the initial Base Rent as set forth in the Basic Lease
Provisions. Landlord shall not be required to keep this
security deposit separate from its general funds, and Tenant
shall not be entitled to interest on such deposit. No trust
relationship is created hereby with respect to such security
deposit. If Tenant shall fully and faithfully perform every
provision of this Lease to be performed by it, the security
deposit or any balance thereof shall be returned to the Tenant
(or at the Landlord's option, to the last assignee of Tenant's
interests hereunder) at the expiration of the Term, provided
that Landlord may retain the security deposit until such time
as any amount due from the Tenant in accordance hereof has
been determined and paid in full.
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4. USE
4.1. Permitted Uses. Tenant shall use and occupy the
Premises during the Term of this Lease solely for and in
accordance with the use specified in the Basic Lease
Provisions and for no other use or uses without the prior
written consent of Landlord, which consent can be granted or
withheld in Landlord's absolute discretion. Tenant shall not
use or permit the use of the Premises in a manner that creates
waste or a nuisance, or that disturbs owners and/or occupants
of, or causes damage to, neighboring premises or properties.
4.2. Prohibited Uses. Notwithstanding any other
provision of this Lease, Tenant shall not use the Premises or
any part thereof for the purpose of operating an executive,
administrative or legal business center providing office
space, administrative and support services to sublessees or
other users occupying the Premises for general office
purposes.
4.3. Changes in Use. No change in the restrictions on
use of the Premises set forth in this Lease shall be permitted
without the prior written consent of Landlord, which consent
may be granted or withheld in the sole and absolute discretion
of Landlord.
4.4. Compliance With Laws. Tenant shall comply with all
laws, ordinances, rules and regulations pertaining to the use
of the Premises or the Building. Tenant shall maintain the
Premises in a clean, safe, sanitary and proper manner and
shall pay for any damage to the Premises or to any other part
of the Building caused by any negligence, willful act, misuse
or abuse by Tenant or any of its agents, employees, licensees
or invitees. Tenant shall conduct its business and occupy the
Premises, shall not create any nuisance, interfere with, annoy
or disturb any other tenant in the Building or Landlord in its
management thereof, and shall not injure the reputation of the
Building. Tenant agrees to abide by all reasonable rules and
regulations established by Landlord from time to time with
respect to the Building. A copy of the rules and regulations
in existence on the date of this Lease is attached hereto as
Exhibit "B," but Landlord reserves the right to amend the
rules and regulations at any time by giving notice of
amendment to Tenant, if Landlord determines such amendments to
be to the best interests of the Building and its tenants.
Notwithstanding anything to the contrary contained in this
Lease, throughout the term hereof, Tenant shall not be
responsible for compliance with any laws, codes, or ordinances
where such compliance is not related specifically to Tenant's
particular use and occupancy of the Premises. For example, if
any governmental authority should require buildings to be
structurally strengthened against earthquake, such compliance
shall be performed by and at the sole cost of Landlord.
Additionally, Landlord's rights pursuant to this Section 4.4
shall be subject to the condition that exercise of any of such
rights shall not unreasonably interfere with Tenant's use of
the Premises.
4.5. Insurance Use Requirements. Tenant shall neither
use nor occupy the Premises in any manner, nor commit or omit
any act, resulting in a cancellation or reduction of any
insurance or increase in premiums on any insurance policy
covering the Premises, or the property or Building. Tenant
shall, at its expense, comply with all requirements of any
insurer pertaining to the use of the Premises and reasonably
necessary for maintenance of economic and proper fire,
liability and other insurance desired to be carried by
Landlord. Tenant shall promptly, upon demand, reimburse
Landlord for any additional premium charged for any insurance
policy by reason of Tenant's failure to comply with the
provisions of this Section.
5. MAINTENANCE, REPAIR AND ALTERATION OF PREMISES
5.1. Maintenance and Repair. Landlord shall repair and
maintain the structural and mechanical portions of the
Building, including basic plumbing, heating, ventilating, air
conditioning and electrical systems installed or furnished by
Landlord, and Landlord shall keep all Common Areas in good,
clean and sanitary order, and the costs thereof shall be
includable as Operating Expenses; provided, however, that if
maintenance and repairs are caused by the act, neglect, or
omission of any duty by Tenant, its agents, servants,
employees or contractors, then Tenant shall pay to Landlord,
as additional rent, the reasonable cost of such maintenance
and repairs. Except as provided in Paragraph 8.5, there shall
be no abatement of rent or liability to Tenant on account of
any injury or interference with Tenant's business with respect
to any improvements, alterations or repairs made by Landlord
to the Project or any part thereof. Tenant expressly waives
the benefits of any statute now or hereafter in effect which
would otherwise afford to Tenant a right to make repairs at
Landlord's expense or to terminate this Lease because of
Landlord's failure to keep the Premises in good order,
condition and repair. Notwithstanding Landlord's obligation to
the keep the Premises in good condition and repair, for that
portion of the cost of any maintenance and repair of the
Premises or any equipment (wherever located) that serves only
Tenant or the Premises, Tenant shall be responsible for
payment of the cost thereof to Landlord as additional rent to
the extent such cost is attributable to causes beyond normal
wear and tear. Tenant shall be responsible for the cost of
repairing or replacing any Premises improvements that are not
ordinarily a part of the Building or that are above then
Building Standards. Landlord may, at its option, upon
reasonable notice, elect to have Tenant perform any
maintenance or repair, the cost of which is Tenant's
responsibility hereunder. Notwithstanding the provisions of
Section 5.1, if Landlord fails to perform its maintenance and
repair obligations hereunder within a reasonable time, and, as
a consequence, Tenant's use of the Premises is substantially
impaired, Tenant shall have the right to cause such repair or
maintenance to be performed at Landlord's expense and to
deduct the costs thereof, together with interest thereon at
the highest rate permitted by law, from the rent payable to
Landlord.
5.2. Alterations. Tenant shall make no alterations,
additions or improvements to the Premises (whether structural
or non-structural) without Landlord's prior written consent,
which consent may be withheld for any reason. If any
alteration, addition or improvement is made by Tenant without
such consent, Landlord shall have the right to require Tenant
to remove the same at any time during the Term. If Tenant
shall request Landlord's consent for any alterations,
additions or improvements, then Tenant shall submit detailed
plans, specifications and an itemized budget for making such
alterations, additions or improvements. Landlord may impose
any conditions to any consent as Landlord shall in its
discretion deem to be necessary or advisable, including
without limitation the hours when work may be performed. Any
approved alteration, addition or improvement shall be made
only by contractors or mechanics approved by Landlord. Tenant
shall provide Landlord with as-built plans and specifications
for any alterations, additions or improvements. Tenant
covenants and agrees that all work done by Tenant shall be
performed in full compliance with all laws, rules, orders,
ordinances, regulations, permits and requirements of any
insurance rating bureau used by insurers selected to carry
Landlord's insurance, and of any similar body. Tenant shall
pay, when due, all claims for labor or materials furnished or
alleged to have been furnished to or for Tenant at or for use
on the Premises, which claims are or
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may be secured by any mechanics or materialmen's lien
against the Premises or any interest therein. If Tenant
shall, in good faith, contest the validity of any such lien,
claim or demand, then Tenant shall, at its sole expense
defend and protect itself, Landlord, and the Premises
against the same and shall pay and satisfy any such adverse
judgment that may be rendered thereon before the enforcement
thereof against the Landlord or the Premises. In addition,
Landlord may require Tenant to pay Landlord's attorneys'
fees and costs in participating in such action if Landlord
shall decide it is to its best interest to do so. Before
commencing any work, Tenant shall give Landlord at least ten
(10) days written notice of the proposed commencement of
such work and shall, if required by Landlord, secure at
Tenant's own cost and expense, a completion and lien
indemnity bond satisfactory to Landlord for said work and
such other comprehensive general public liability insurance,
builders risk insurance, and other such insurance coverages
so as to protect the insurable interests of Landlord,
Tenant, contractors and subcontractors in amounts and on
forms as may be requested by Landlord. Landlord may enter
upon the Premises, in such case, for the purpose of posting
appropriate notices, including, but not limited to, notices
of non-responsibility.
5.3. Condition on Termination. On the last day of the
Term hereof, or on any sooner termination, Tenant shall
surrender the Premises to Landlord in the same condition as
received, ordinary wear and tear excepted, clean and free of
debris. Any damage or deterioration of the Premises shall not
be deemed ordinary wear and tear if the same could have been
prevented by good maintenance practices by Tenant. Landlord
may require the removal of any or all alterations, additions
or improvements made by Tenant prior to the termination of the
Lease and restoration of the Premises and the Project to their
prior condition (i.e., the condition as of the Commencement
Date), at Tenant's expense. All alterations, additions and
improvements which Landlord does not require Tenant to remove
shall become Landlord's property and shall be surrendered to
Landlord upon termination of the Lease. Other than personal
property, in no event shall Tenant remove any materials or
equipment from the Premises without Landlord's prior written
consent, including, but not limited to, any power wiring or
power panels, lighting or lighting fixtures, wall coverings,
window coverings, carpets, other floor coverings, heaters, air
conditioners or any other heating or air conditioning
equipment, fencing or security gates or other similar Building
operating equipment and decorations. Notwithstanding the
provisions of Section 5.3, Tenant shall not be required to
remove any alterations, additions, improvements or utility
installations for which Tenant has obtained Landlord's
consent, unless Landlord has indicated at the time of granting
such consent, that such removal will be required at the end of
the Lease Term.
6. UTILITIES AND SERVICES.
6.1. Utilities and Services Furnished by Landlord.
Provided that Tenant is not in default under this Lease,
Landlord agrees to furnish or cause to be furnished to the
occupied portion of the Premises the utilities and services
described in Exhibit "C."
6.2. Utilities and Services Furnished by Tenant. Tenant
shall pay for all water, gas, heat, light, power, telephone
and other utilities and services specially or exclusively
supplied and/or metered exclusively to the Premises or to
Tenant, together with any taxes thereon.
6.3. Interruption of Service. Unless due to Landlord's
gross negligence or willful misconduct, Landlord shall not be
liable in damages or otherwise for any failure or interruption
of any utility service being furnished to the Premises and no
such failure or interruption shall entitle Tenant to terminate
this Lease, or to an abatement of the Monthly Base Rent,
additional rent or other charges due hereunder.
7. INSURANCE AND INDEMNITY
7.1. Tenant's Liability Insurance. Tenant shall carry
at its own expense throughout the term of this Lease,
commercial general liability insurance covering the Premises
and appurtenant areas, and Tenant's use thereof, and
protecting Tenant and Landlord (as an additional insured)
against claims for bodily injury, personal injury and property
damage based upon, involving or arising out of the ownership,
use, occupancy or maintenance of the Premises and all areas
appurtenant thereto. Such insurance shall be on an occurrence
basis providing single limit coverage in an amount not less
than $1,000,000 per occurrence with an "Additional Insured -
Managers or Lessors of Premises" Endorsement and shall contain
the "Amendment of Pollution Exclusion" for damage caused by
heat, smoke or fumes from a hostile fire. 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. Such insurance shall also cover Tenant's
contractual liability under this Lease in an amount
periodically adjusted as hereinafter provided to conform to
then current standard business practices for comparable
business operations, but in no case less than the amounts
shown in the applicable Basic Lease Provisions. The liability
limit of such insurance shall not, however, limit Tenant's
liabilities assumed under this Lease. Tenant shall keep in
full force and effect a policy or policies of worker's
compensation insurance as required by law, and with employer's
liability coverage for bodily injury by accident of not less
than $3,000,000 for each accident, and for bodily injury by
disease of not less than $3,000,000 for each employee and for
the policy limit. If required by Landlord, then the amounts of
general liability and employer's liability insurance shall be
increased from time to time (but in no event more frequently
than once every three (3) years) to an amount reasonably
determined by Landlord as may be required, given the then
current economic conditions and the size of damage awards
generally, to approximate the same level of protection as was
provided on the Commencement Date.
7.2. Tenant's Casualty Insurance. Tenant shall, at
Tenant's expense, obtain and keep in force during the term of
this Lease, replacement cost, fire and extended coverage
insurance, with vandalism and malicious mischief, sprinkler
leakage and earthquake endorsements, in an amount sufficient
to cover not less than 100% of the full replacement cost, as
the same may exist from time to time, of all of Tenant's
personal property, fixtures, equipment and Tenant
improvements. Tenant agrees that all personal property of
whatever kind, including, without limitation, inventory and/or
goods stored at or about the Premises, Tenant's trade fixtures
and Tenant's interest in tenant improvements which may be at
any time located in, on or about the Premises or the Building,
whether owned by Tenant or third parties, shall be at Tenant's
sole risk or at the risk of those claiming through Tenant, and
that Landlord shall not be liable for any damage to or loss of
such property except for loss or damage arising from or caused
by the sole gross negligence of Landlord or any of Landlord's
officers, employees, agents or authorized representatives
acting within the scope of their authority.
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7.3. Form of Insurance Policies. 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 "General Policyholders
Rating" of at least B+, V, or such other rating as may be
required by any lender having a lien on the Premises, as set
forth in the most current issue of "Bests Insurance Guide."
Tenant shall not do or permit to be done anything which shall
invalidate any insurance policy referred to in this
Paragraph 7. Tenant shall provide Landlord with
copies of insurance policies or certificates of insurance
prior to the Commencement Date of the Lease and shall provide
to Landlord copies of replacement policies at least ninety
(90) days prior to the date of expiration of a policy. A
binder or certificate of insurance shall be sufficient
evidence of insurance pending issuance of a policy; provided,
however, that Tenant shall forward a copy of each policy to
Landlord when issued. Such insurance policies shall be on
forms reasonably acceptable to Landlord and shall be on an
occurrence basis. Such insurance shall name Landlord, any
management agent from time to time designated by Landlord, any
lender of Landlord as additional insureds, and shall provide
that coverage of additional insureds shall be primary and that
any insurance maintained by Landlord shall be excess only.
Such insurance shall provide that the interests of Landlord,
Tenant and other insureds shall be severable such that the act
or omission of one insured shall not avoid or reduce the
coverage of other insureds. Such insurance shall contain
endorsements (a) stating that the insurer agrees to notify
Landlord in writing not less than thirty (30) days in advance
of modification or cancellation thereof, (b) deleting any
employee exclusion on personal injury coverage, (c) including
employees as additional insureds, (d) deleting any exclusion
from liability caused by serving alcoholic beverages
incidental to Tenant's business, and (e) providing for
coverage for employer's non-owned automobile liability.
Failure of Tenant to maintain insurance coverages required by
this Lease for any time period during the Term or failure of
Tenant to deliver evidence of insurance or copies of policies
shall be material defaults under this Lease.
7.4. Landlord Insurance. Landlord shall carry such
insurance with respect to the Building, of the type and
amounts as Landlord, in its sole discretion, shall deem
reasonably appropriate. The cost of any such insurance
shall be includable as Operating Expenses pursuant to
Section 3.3 above. If Tenant fails to maintain, or to provide
Landlord with, evidence of the required insurance coverages,
Landlord shall have the right, but not the obligation, to
obtain such insurance coverages on Tenant's behalf. The
cost of such insurance coverages shall be deemed additional
rent payable by Tenant to Landlord upon demand.
7.5. Waiver of Liability of Landlord. Except in the
event of Landlord's sole gross negligence, Tenant hereby
agrees that Landlord shall not be liable for (a) injury to
Tenant's business or any loss of income therefrom, (b) loss
of or damage to the goods, wares, merchandise or other
property of Tenant, Tenant's employees, invitees,
customers, or any other person in or about the Premises or
the Project, or (c) injury to the person of Tenant,
Tenant's employees, agents, contractors, invitees,
customers, or any other person in or about the Premises or
the Project, whether such damage or injury is caused by or
results from theft, fire, steam, electricity, gas, water or
rain, or from the breakage, leakage, obstruction or other
defects of pipes, sprinklers, wires, appliances, plumbing,
air conditioning or lighting fixtures, from indoor air
pollution, electromagnetic radiation or other conditions
associated with the so-called "sick building syndrome," or
from any other cause, whether damage or injury results from
conditions arising upon the Premises or upon other portions
of the Project, or from other sources or places appurtenant
to the Premises and regardless of whether the cause of such
damage or injury or the means of repairing the same is
inaccessible to Tenant. Landlord shall not be liable for
any damages arising from any act or neglect of any other
tenant, occupant, or user of the Project, nor from the
failure of Landlord to enforce the provisions of any other
lease of any other tenant of the Project.
7.6. Indemnification. Tenant shall indemnify and
save harmless Landlord from and against any and all
liability, liens, claims, demands, expenses, fees, costs,
fines, penalties, suits, proceedings, actions and causes of
action of any and every kind and nature arising or growing
out of or relating to Tenant's use, occupancy, management
or control of the Premises or Tenant's operations, conduct
or activities in the Project. Landlord shall indemnify and
save harmless Tenant from and against any and all
liability, liens, claims, demands, expenses, fees, costs,
fines, penalties, suits, proceedings, actions and causes of
action of any and every kind and nature arising or growing
out of or relating to a breach of Landlord of its
obligations to Tenant pursuant to this Lease, or the gross
negligence or willful misconduct of Landlord.
7.7. Waiver of Subrogation. Tenant and Landlord each
hereby release and relieve the other, and waive their
entire right of recovery against the other, for direct or
consequential loss or damage arising out of or incident to
the perils covered by property insurance carried by such
party, whether due to the negligence of Landlord or Tenant
or their agents, employees, contractors and/or invitees. If
necessary all property insurance policies required under
this Lease shall be endorsed to so provide.
8. DAMAGE OR DESTRUCTION.
8.1. Definitions
8.1.1. "Premises Damage" shall mean that
the Premises are damaged or destroyed to any extent.
8.1.2. "Building Partial Damage" shall
mean that the Building of which the Premises are a
part is damaged or destroyed to the extent that the
cost to repair is less than fifty percent (50%) of
the then Replacement Cost of the Building.
8.1.3. "Building Total Destruction"
shall mean that the Building of which the Premises
are a part is damaged or destroyed to the extent that
the cost to repair is fifty percent (50%) or more of
the then Replacement Cost of the Building.
8.1.4. "Project Total Destruction" shall
mean that the Project (as defined in paragraph 1.1)
is damaged or destroyed to the extent that the cost
of repair is fifty percent (50%) or more of the then
Replacement Cost of the Project.
8.1.5. "Insured Loss" shall mean damage
or destruction caused by an event required to be
covered by the insurance described in Section 7. The
fact that an Insured Loss has a deductible amount
shall not make the loss an uninsured loss.
8.1.6. "Replacement Cost" shall mean the
amount of money necessary to be spent in order to
repair or rebuild the damaged area to the condition
that existed immediately prior to the occurrence of
the damage, excluding all improvements made by
tenants, other than those installed by Landlord at
Tenant's expense.
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8.2.1. Premises Damage; Premises Building
Partial Damage
8.2.1. Insured Loss. Subject to the
provisions of paragraphs 8.4 and 8.5, if at any
time during the term of this Lease there is damage
which is an Insured Loss and which falls into the
classification of either Premises Damage or
Building Partial Damage, then Landlord shall, as
soon as reasonably possible and to the extent the
required materials and labor are readily available
through usual commercial channels, at Landlord's
expense, repair such damage (but not Tenant's
fixtures, equipment or tenant improvements
originally paid for by Tenant) to its condition
existing at the time of the damage, and this Lease
shall continue in full force and effect.
8.2.2. Uninsured Loss. Subject to the
provisions of paragraphs 8.4 and 8.5, if at any
time during the term of this Lease there is damage
which is not an Insured Loss and which falls
within the classification of Premises Damage or
Building Partial Damage, unless caused by a
negligent or willful act of Tenant (in which event
Tenant shall make the repairs at Tenant's
expenses), which damage prevents Tenant from
making any substantial use of the Premises,
Landlord may at Landlord's option either (i)
repair such damage as soon as reasonably possible
at Landlord's expense, in which event this Lease
shall continue in full force and effect, or (ii)
give written notice to Tenant within thirty (30)
days after the date of the occurrence of such
damage of Landlord's intention to cancel and
terminate this Lease as of the date of the
occurrence of such damage, in which event Tenant
shall have the option to repair the damage at
Tenant's expense. If Tenant does not choose to
make such repairs, event this Lease shall
terminate as of the date of the occurrence of such
damage.
8.3. Building Total Destruction; Project Total
Destruction. Subject to the provisions of paragraphs 8.4
and 8.5, if at any time during the term of this Lease there
is damage, whether or not it is an Insured Loss, which
falls in the classifications of either (i) Building Total
Destruction, or (ii) Project Total Destruction, then
Landlord may at Landlord's option either (i) repair such
damage or destruction as soon as reasonably possible at
Landlord's expense (to the extent the required materials
are readily available through usual commercial channels) to
its condition existing at the time of the damage, but not
Tenant's fixtures, equipment or tenant improvements, and
this Lease shall continue in full force and effect, or (ii)
give written notice to Tenant within thirty (30) days after
the date of occurrence of such damage of Landlord's
intention to cancel and terminate this Lease, in which case
this Lease shall terminate as of the date of the occurrence
of such damage.
8.4. Damage Near End of Term
8.4.1. Subject to paragraph 8.4.2, if at
any time during the last twelve (12) months of the
term of this Lease there is substantial damage to the
Premises, Landlord or Tenant may cancel and terminate
this Lease as of the date of occurrence of such
damage by giving written notice to the other within
thirty (30) days after the date of occurrence of such
damage.
8.4.2. Notwithstanding paragraph 8.4.1,
in the event that Tenant has an option to extend or
renew this Lease, and the time within which said
option may be exercised has not yet expired, Tenant
shall exercise such option, if it is to be exercised
at all, no later than twenty (20) days after the
occurrence of an Insured Loss falling within the
classification of Premises Damage during the last
twelve (12) months of the term of this Lease. If
Tenant duly exercises such option during said twenty
(20) day period, Landlord shall, at Landlord's
expense, repair such damage, but not Tenant's
fixtures, equipment or tenant improvements, as soon
as reasonably possible and this Lease shall continue
in full force and effect. If Tenant fails to exercise
such option during said twenty (20) day period, then
Landlord may at Landlord's option terminate and
cancel this Lease as of the expiration of said twenty
(20) day period by giving written notice to Tenant of
Landlord's election to do so within ten (10) days
after the expiration of said twenty (20) day period,
notwithstanding any term or provision in the grant of
option to the contrary.
8.5. Abatement of Rent; Tenant's Remedies
8.5.1. In the event Landlord repairs or
restores the Building or Premises pursuant to the
provisions of Section 8, and any part of the Premises
are not useable (including loss of use due to loss of
access or essential services), the rent payable
hereunder (including Tenant's Share of Operating
Expenses) for the period during which such damage,
repair or restoration continues shall be abated,
provided (1) the damage was not the result of the
negligence of Tenant, and (2) such abatement shall
only be to the extent of the pro-rata share of the
Premises that is adversely affected. Except for said
abatement of rent, if any, Tenant shall have no claim
against Landlord for any damage suffered by reason of
any such damage, destruction, repair or restoration,
unless caused by Landlord's gross negligence or
willful misconduct.
8.5.2. If Landlord shall be obligated to
repair or restore the Premises under the provisions
of this Section 8 and shall not commence, in a
substantial and meaningful way, the repair or
restoration of the Premises within ninety (90) days
after such obligation shall accrue, Tenant may, at
any time prior to the commencement of such repair or
restoration, give written notice to Landlord and to
any lenders of which Tenant has actual notice of
Tenant's election to terminate this Lease on a date
not less than sixty (60) days following the giving of
such notice. If Tenant gives such notice to Landlord
and such lenders and such repair or restoration is
not commenced within thirty (30) days after receipt
of such notice, this Lease shall terminate as of the
date specified in said notice. If Landlord or a
lender commences the repair or restoration of the
Premises within thirty (30) days after receipt of
such notice, this Lease shall continue in full force
and effect. "Commence" as used in this Paragraph
shall mean either the unconditional authorization of
the preparation of the required plans, or the
beginning of the actual work on the Premises,
whichever first occurs.
8.5.2.1. Notwithstanding
anything to the contrary in Paragraph 15:
(a) If Landlord is required to or elects to
repair or restore the Premises, Landlord
shall notify Tenant within thirty (30) days
of the date of such casualty, and such
notice shall specify Landlord's architect's
or engineer's reasonable estimate as to the
time required to repair or restore the
Premises; (b) If, in the reasonable opinion
of Landlord's architect or engineer, the
Premises will take longer than one hundred
and twenty (120) days to repair or restore,
Tenant may, notwithstanding Landlord's
election to rebuild, terminate this Lease by
written notice to Landlord within five (5)
days after Tenant's receipt of Landlord's
notice. Such termination shall be effective
thirty (30) days after the giving of
Tenant's
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notice; (c) If Landlord fails to repair or
restore the premises (including reasonable
means of access thereto) within a period
which is thirty (30) days longer than the
period stated in Landlord's notice to Tenant
as the estimated rebuilding period,
Tenant, at any time thereafter until such
rebuilding is completed, may terminate this
Lease by delivering written notice to
Landlord of such termination, in which event
this Lease shall terminate as of the date of
the giving of such notice. (d) Subject to
Tenant's right of termination pursuant to
subparagraph (b) above, if the casualty to
the Premises or the Building is due to
Landlord's negligence or willful misconduct,
Landlord shall be obligated to rebuild or
restore the same notwithstanding any
insufficiency of insurance proceeds. (e)
Lessee's rights to termination hereunder
shall be in addition to its right of
termination under Section 8.5.2 of this
Lease.
8.5.3. Tenant agrees to cooperate with
Landlord in connection with any such restoration and
repair, including but not limited to the approval
and/or execution of plans and specifications
required.
8.6. Termination-Advance Payments. Upon termination
of this Lease pursuant to Section 8, an equitable
adjustment shall be made concerning advance rent and any
advance payments made by Tenant to Landlord. Landlord
shall, in addition, return to Tenant so much of Tenant's
security deposit as has not theretofore been applied by
Landlord.
8.7. Waiver. Landlord and Tenant waive the provisions
of any statute which relates to termination of leases when
leased property is destroyed and agree that such event shall
be governed by the terms of this Lease.
8.8. Insurance Limitation. Notwithstanding anything
else to the contrary contained in this Section 8, Landlord
shall have no obligation to pay for the repair or
restoration of damage or destruction to the Premises caused
by fire or other casualty more than the amount of the
insurance proceeds payable for the benefit of Landlord by
reason of such damage or destruction, plus any amounts
actually paid by Tenant as required in this Section 8 for
the excess of the cost of reconstructing tenant
improvements over the original cost of such tenant
improvements paid initially by Landlord. If the sum of such
insurance proceeds, plus the amount so paid by Tenant, are
not sufficient to cover the cost of such repairs, then
Landlord may elect to so repair or restore and the Lease
shall continue in full force and effect, or Landlord may
elect not to repair or restore and the Lease shall then
terminate. Landlord and Tenant waive the provisions of any
statute which relate to termination of leases when leased
property is destroyed and agree that such event shall be
governed by the terms of this Lease.
9. TAXES.
Tenant shall pay all taxes and license fees levied, assessed or imposed
by reason of Tenant's use of the Premises, and all taxes on Tenant's trade
fixtures, furnishings, equipment and all other personal property located on the
Premises. If any of Tenant's personal property shall be assessed with Landlord's
real property, Tenant shall pay to Landlord the taxes attributable to Tenant
within ten (10) days after receipt of a written statement setting forth the
taxes applicable to Tenant's property. Landlord shall pay all property taxes or
assessments applicable to the Project, subject to reimbursement by Tenant of
Tenant's share of such taxes in accordance with the provisions of Section 3.3.
10. ASSIGNMENT AND SUBLETTING.
10.1. Prohibition of Assignment or Sublet. Except as
otherwise provided herein, Tenant shall not assign,
transfer, mortgage or otherwise encumber, voluntarily or by
operation of law, this Lease or any interest hereof, or
sublet the Premises or any portion thereof, or permit any
other person to occupy the Premises or any portion thereof
without the express written consent of Landlord, which
consent may not be unreasonably withheld and shall, in any
event, be subject to the provisions of Section 10.2 below.
Consent to one assignment or subletting shall not
constitute a waiver of this provision or consent to any
further assignment or subletting. Tenant shall reimburse
Landlord for any reasonable costs and expenses, including
but not limited to legal expenses, incurred by Landlord in
connection with its review of any proposed assignment or
subletting, whether or not Landlord gives its consent. No
assignee for the benefit of creditors, trustee in
bankruptcy or purchaser at any execution sale, shall have
the right to possess or occupy the Premises or any part
thereof, or claim and right hereunder or assignment. For
the purposes of this Lease, provided that the use of the
Premises does not change, an assignment and sublet shall
not be deemed to include any transfer, assignment or
subletting of the Premises (or any portion thereof) to any
entity which controls, is controlled by, or is under common
control with Tenant; to any entity which result from a
merger of, reorganization of or consolidation with Tenant;
or to any entity which acquires substantially all of the
assets of Tenant, as a going concern, with respect to the
business that is being conducted in the Premises; nor shall
assignment or sublet include the transfer or sale of stock,
or the transfer of the beneficial ownership or effective
voting control of Tenant from the person(s) having
effective voting control as of the date of Tenant's
execution of this Lease, where such transfer occurs in
connection with any bona fide financing or capitalization
for the benefit of Tenant.
10.2. Procedure for Consent. In the event Tenant wishes
to sublet or assign the Premises, or any portion thereof, the
following procedure shall apply:
10.2.1. Tenant shall submit in writing
to Landlord the name of the proposed subtenant or
assignee, the nature of the business to be carried on
the Premises, a copy of the proposed sublease or
assignment, including all terms and conditions
thereof, and such reasonable financial information
regarding such subtenant or assignee as Landlord
shall request;
10.2.2. At any time within thirty (30)
days of Landlord's receipt of the information
specified in Section 10.2, Landlord may, by written
notice to Tenant, elect either to (a) consent to the
subletting or assignment of the Premises upon the
same terms and conditions as those offered to the
proposed subtenant or assignee; (b) terminate this
Lease with respect to the portion of the Premises
proposed to be subleased or assigned, with a
proportionate abatement of rent payable hereunder;
(c) consent to such subletting or assignment, in
which event such consent shall be conditioned upon
the agreement by Tenant to pay over to Landlord the
amount by which any rent or other consideration
received by Tenant from subtenant or assignee exceeds
the amount of rent payable by Tenant to Landlord
pursuant to this Lease as offset by Tenant's costs of
subletting; or (d) withhold Landlord's consent.
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10.3. Continuing Obligation of Tenant. No transfer,
even with the consent of Landlord, shall release Tenant of
its obligation to pay the rent and to perform all other
obligations of Tenant hereunder. Neither a delay in the
approval or disapproval of an assignment or subletting, nor
the acceptance by Landlord of any payment due hereunder
from any source other than Tenant shall be deemed a waiver
by Landlord of any provision of this Lease or to be a
consent to any assignment or subletting. If Tenant's
obligations under this Lease have been guaranteed by third
parties, then an assignment or sublease, and Landlord's
consent thereto, shall not be effective unless said
guarantors give their written consent to such sublease and
the terms thereof. In the event of any default under this
Lease, Landlord may proceed directly against Tenant, any
guarantors or anyone else responsible for the performance
of this Lease, including the subtenant, without first
exhausting Landlord's remedies against any other person or
entity responsible therefor to Landlord, or any security
held by Landlord or Tenant. Landlord may consent to
subsequent assignments or modifications of this Lease by
Tenant's transferee, without notifying Tenant or obtaining
its consent. Such action shall not relieve Tenant's
liability under this Lease.
10.4. Landlord's written consent to any assignment or
subletting of the Premises by Tenant shall not constitute an
acknowledgment that no Default then exists under this Lease of
the obligations to be performed by Tenant, nor shall such
consent be deemed a waiver of any then existing Default,
except as may be otherwise stated by Landlord at the time.
10.5. The discovery of the fact that any financial
statement relied upon by Landlord in giving its consent to an
assignment or subletting was materially false or misleading
shall, at Landlord's election, render Landlord's said consent
null and void.
10.6. Additional Terms. The following terms and
conditions shall apply to any subletting by Tenant of all or
any of the Premises and shall be deemed included in all
subleases under this Lease whether or not expressly
incorporated therein.
10.6.1. Tenant hereby assigns and
transfers to Landlord all of Tenant's interest in all
rentals and income arising from any sublease of all
or any portion of the Premises heretofore or
hereafter made by Tenant, and Landlord may collect
such rent and income and apply the same toward
Tenant's obligations under this Lease; provided,
however, that until a Default (as defined in Section
11) shall occur in the performance of Tenant's
obligations under this Lease, Tenant may collect and
enjoy rents accruing under such sublease. Landlord
shall not, by reason of this or any other assignment
of such sublease to Landlord, nor by reason of the
collection of the rents from a sublease, be deemed
liable to the subtenant for any failure of Tenant to
perform and comply with any of Tenant's obligations
to such subtenant under such sublease. Tenant hereby
irrevocably authorizes and directs any such
subtenant, upon receipt of a written notice from
Landlord stating that a default exists in the
performance of Tenant's obligations under this Lease,
to pay to Landlord the rents and other charges due
and to become due under the sublease. Subtenant shall
rely upon any such statement and request from
Landlord and shall pay such rents and other charges
to Landlord without any obligation or right to
inquire as to whether such default exists and
notwithstanding any notice from or claim from Tenant
to the contrary. Tenant shall have no right or claim
against said subtenant, or until the Default has been
cured, against Landlord, for any such rents and other
charges so paid by said subtenant to Landlord.
10.6.2. In the event of a default by
Tenant in the performance of its obligations under
this Lease, Landlord at its option and without any
obligation to do so may require any subtenant to
attorn to Landlord in which event Landlord shall
undertake the obligations of the sublandlord under
such sublease from the time of the exercise of said
option to the expiration of such sublease; provided,
however, Landlord shall not be liable for any prepaid
rents or security deposit previously paid by the
subtenant to such sublandlord (unless such prepaid
rents or security deposit have been delivered to
Landlord) or for any other prior defaults of such
sublandlord under such sublease.
10.6.3. Any matter or thing requiring
the consent of the sublandlord under a sublease shall
also require the consent of Landlord herein.
10.6.4. No subtenant shall further
assign or sublet all or any part of the premises
without Landlord's prior written consent.
10.7. Excess Rent. Notwithstanding any other
provision of Section 10 to the contrary, if the
consideration Tenant receives for any assignment, sublease
or transfer exceeds the rent payable under this Lease for
the same period and portion of the Premises, the excess
shall be immediately due and payable by Tenant to Landlord
as additional rent under this Lease as offset by Tenant's
costs of subletting.
10.8. No Merger. No merger shall result from
Tenant's sublease of the Premises under this Section 10,
Tenant's surrender of this Lease or the termination of this
Lease in any other manner. In any such event, Landlord may
terminate any or all subtenancies or succeed to the
interest of Tenant as sublandlord thereunder.
11. DEFAULT.
11.1. Default by Tenant. The occurrence of any one or
more of the following events shall constitute a material
Default of this Lease by Tenant:
11.1.1. The vacation or abandonment of
the Premises by Tenant. Vacation of the Premises
shall include the failure to occupy the Premises for
a continuous period of thirty (30) days or more,
whether or not the rent is paid.
11.1.2. The failure by Tenant to make
any payment of rent or any other payment required to
be made by Tenant hereunder, as and when due, where
such failure shall continue for a period of three (3)
days after written notice thereof from Landlord to
Tenant. In the event that Landlord serves Tenant with
a Notice to Pay Rent or Quit pursuant to applicable
unlawful detainer statutes such Notice to Pay Rent or
Quit shall also constitute the notice required by
this subsection.
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11.1.3. The failure by Tenant to observe
or perform any of the express or implied covenants,
conditions or provisions of this Lease to be observed
or performed by Tenant other than that referenced in
subsection 11.1.2 above, where such failure shall
continue for a period of thirty (30) days after
written notice thereof from Landlord to Tenant;
provided, however, that if the nature of Tenant's
noncompliance is such that more than thirty (30) days
are reasonably required for its cure, then Tenant
shall not be deemed to be in default if Tenant
commenced such cure within said thirty (30) day
period and thereafter diligently pursues such cure to
completion. To the extent permitted by law, such
thirty (30) day notice shall constitute the sole and
exclusive notice required to be given to Tenant under
applicable unlawful detainer statutes.
11.1.4. The making by Tenant of a
general assignment for the benefit of creditors; (b)
Tenant's becoming a "debtor" as defined in 11 U.S.C.
ss.101 or any successor statute thereto (unless, in
the case of a petition filed against Tenant, the same
is dismissed within sixty (60) days); (c) the
appointment of a trustee or receiver to take
possession of substantially all of Tenant's assets
located at the Premises or of Tenant's interest in
this Lease, where possession is not restored within
thirty (30) days; or (d) the attachment, execution or
other judicial seizure of substantially all of
Tenant's assets located at the Premises or of
Tenant's interest in this Lease, where such seizure
is not discharged within thirty (30) days. In the
event that any provision of this subsection 11.1.4 is
contrary to any applicable law, such provision shall
be of no force or effect.
11.1.5. The discovery by Landlord that
any financial statement given to Landlord by Tenant,
or is successor in interest or by any guarantor of
Tenant's obligation hereunder was materially false or
misleading.
11.1.6. If the performance of Tenant's
obligations under this Lease is guaranteed: (a) the
termination of a guarantor's liability with respect
to this Lease other than in accordance with the terms
of such guaranty, (b) a guarantor's becoming
insolvent or the subject of a bankruptcy filing, (c)
a guarantor's refusal or inability to honor the
guarantee, or (d) a guarantor's breach of its
guarantee obligation, and Tenant's failure within
sixty (60) days following written notice by or on
behalf of Landlord to Tenant of any such event, to
provide Landlord with written alternative assurance
or security, which, when coupled with the then
existing resources of Tenant, equals or exceeds the
combined financial resources of Tenant and the
guarantors that existed at the time of execution of
this Lease.
11.2. Landlord's Remedies. In the event of any
material Default of this Lease by Tenant, Landlord may at
any time thereafter, with or without notice or demand and
without limiting Landlord in the exercise of any right or
remedy which Landlord may have by reason of such default:
11.2.1. Terminate Tenant's right to
possession of the Premises by any lawful means, in
which case this Lease and the term hereof shall
terminate and Tenant shall immediately surrender
possession of the Premises to Landlord. In such event
Landlord shall be entitled to recover from Tenant all
reasonable damages incurred by Landlord by reason of
Tenant's default including, but not limited to, the
cost of recovering possession of the Premises;
expenses of reletting, including necessary renovation
and alteration of the Premises, reasonable attorneys'
fees, and any real estate commission actually paid;
the worth at the time of award by the court having
jurisdiction thereof of the amount by which the
unpaid rent for the balance of the term after the
time of such award exceeds the amount of such rental
loss for the same period that Tenant proves could be
reasonably avoided; that portion of the leasing
commission paid by Landlord pursuant to Section 27
applicable to the unexpired term of this Lease.
11.2.2. Maintain Tenant's right to
possession in which case this Lease shall continue in
effect whether or not Tenant shall have vacated or
abandoned the Premises. In such event, Landlord shall
be entitled to enforce all of Landlord's rights and
remedies under this Lease, including the right to
recover the rent as it becomes due hereunder.
11.2.3. Pursue any other remedy now or
hereafter available to Landlord under the laws or
judicial decisions of the state wherein the Premises
are located. Unpaid installments of rent and other
unpaid monetary obligations of Tenant under the terms
of this Lease shall bear interest from the date due
at the maximum rate then allowable by law.
11.2.4. The expiration or termination of
this Lease and/or the termination of Tenant's right
to possession shall not relieve Tenant from liability
under any indemnity provisions of this Lease as to
matters occurring or accruing during the Term hereof
or by reason of Tenant's occupancy of the Premises.
11.3. Inducement, Recapture and Effect of Breach.
Any agreement by Landlord for free or abated rent or other
charges applicable to the Premises, or for the giving or
paying by Landlord to or for Tenant of any cash or other
bonus, inducement or consideration for Tenant's entering
into this Lease, all of which concessions are hereinafter
referred to as "Inducement Provisions," shall be deemed
conditioned upon Tenant's full and faithful performance of
all the terms, covenants and conditions of this Lease to be
performed or observed by Tenant during the term hereof as
the same may be extended. Upon the occurrence of a breach
of this Lease by Tenant, as defined in paragraph 11.1, any
such Inducement Provision shall automatically be deemed
deleted from this Lease and of no further force or effect,
as though it had never been a part hereof, and any rent,
other charge, bonus, inducement, or consideration
theretofore abated, given or paid by Landlord under such an
Inducement Provision shall be immediately due and payable
by Tenant to Landlord, and recoverable by Landlord as
additional rent due under this Lease, notwithstanding any
subsequent cure of said breach by Tenant. The acceptance by
Landlord of rent or the cure of the breach which initiated
the operation of this paragraph shall not be deemed a
waiver by Landlord of the provisions of this paragraph
unless specifically so stated in writing by Landlord at the
time of such acceptance.
11.4. Right of Landlord to Re-Enter. In the event of
any termination of this Lease, Landlord shall have the
immediate right to enter upon and repossess the Premises,
and any personal property of Tenant may be removed from the
Premises and stored in any public warehouse at the risk and
expense of Tenant.
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11.5. Default by Landlord. Landlord shall not be in
default unless Landlord fails to perform obligations
required of Landlord within a reasonable time, but in no
event later than thirty (30) days after written notice by
Tenant to Landlord and to the holder of any first mortgage
or deed of trust covering the Premises whose name and
address shall have theretofor been furnished to Tenant in
writing, specifying wherein Landlord has failed to perform
such obligation; provided, however, that if the nature of
Landlord's obligation is such that more than thirty (30)
days are required for performance then Landlord shall not
be in default if Landlord commences performance within such
30-day period and thereafter diligently pursues the same to
completion.
12. ENVIRONMENTAL MATTERS.
12.1. Definitions. For purposes of this Section 12:
12.1.1. With the exception of standard
office products "Hazardous Materials" means any
product, 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: (a) potentially injurious to the public
health, safety or welfare, the environment or
Premises, (b) regulated or monitored by any
governmental authority, or (c) a basis for liability
of Landlord to any governmental agency or third party
under any applicable statute or common law theory.
Hazardous Materials include, but are not limited to,
substances defined as "hazardous wastes," "hazardous
substances," "toxic substances," "pollutants,"
"contaminants," "chemicals known to the State to
cause cancer or reproductive toxicity," "radioactive
materials," or other similar designations in, or
otherwise subject to regulation under, the
Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended by the
Superfund Amendments and Reauthorization Act of 1986
("CERCLA"), 42 U.S.C. ss. 9601 et seq.; the Hazardous
Substances Account Act ("HSAA"), California Health
and Safety Code ss. 25300 et seq.; the Toxic
Substance Control Act ("TSCA"), 15 U.S.C. ss. 2601 et
seq.; the Hazardous Materials Transportation Act, 49
U.S.C. ss. 1802; the Resource Conservation and
Recovery Act ("RCRA"), 42 U.S.C. ss. 9601 et seq.;
the Hazardous Waste Control Law ("HWCL"), California
Health and Safety Code ss. 25100 et seq.; the Safe
Drinking Water and Toxic Enforcement Act of 1986,
California Health and Safety Code ss. 25249.5 et
seq.; the Porter-Cologne Water Quality Control Act
("Porter-Cologne"), California Water Code ss. 13000
et seq.; the Clean Water Act ("CWA"), 33 U.S.C. ss.
1251 et seq.; the Safe Drinking Water Act, 42 U.S.C.
ss. 300f et seq.; the Clean Air Act ("CAA"), 42
U.S.C. ss. 7401 et seq.; the California Air Pollution
Control Law, California Health and Safety Code ss.
39000 et seq.; and in the plans, rules, regulations
or ordinances adopted, or other criteria and
guidelines promulgated pursuant to the preceding laws
or other similar laws, regulations, rule or ordinance
now or hereafter in effect (collectively the
"Environmental Laws"); and any other substances,
constituents or wastes subject to environmental
regulations under any applicable federal, state or
local law, regulation or ordinance now or hereafter
in effect.
12.1.2. "Environmental Conditions" means
conditions of the environment, including the ocean,
natural resources (including flora and fauna), soil,
surface water, ground water, any present or potential
drinking water supply, subsurface strata or the
ambient air, relating to or arising out of the use,
handling, storage, treatment, recycling, generation,
transportation, release, spilling, leaking, pumping,
pouring, emptying, discharging, injecting, escaping,
leaching, disposal, dumping or threatened release of
Hazardous Materials by Tenant or Tenant's successors
in interest, agents, representatives, employees or
independent contractors. With respect to claims by
employees, Environmental Conditions also includes the
exposure of persons to Hazardous Materials within a
workplace.
12.1.3. "Environmental Noncompliance"
includes, without limitation: (1) the release or
threatened release of any Hazardous Materials into
the environment, any storm drain, sewer, septic
system or publicly owned treatment works, in
violation of any effluent or emission limitations,
standards or other criteria or guidelines established
by any federal, state or local law, regulation, rule,
ordinance, plan or order; (2) any noncompliance of
physical structure, equipment, process or facility
with the requirements of building or fire codes,
zoning or land use regulations or ordinances,
conditional use permits and the like; (3) any
noncompliance with federal, state or local
requirements governing occupational safety and
health; (4) any facility operations, procedures,
designs, etc. which do not conform to the statutory
or regulatory requirements of the CAA, the CWA, the
TSCA, the RCRA, the HSAA, the HWCL, Porter-Cologne or
any other Environmental Laws intended to protect
public health, welfare and the environment; (5) the
failure to have obtained permits, variances or other
authorizations necessary for the legal operation of
any equipment, process, facility or any other
activity; (6) the operation of any facility or
equipment in violation of any permit condition,
schedule of compliance, administrative or court order
and the like.
12.1.4. "Claims" shall include, without
limitation; claims, demands, suits, causes of action
for personal injury or property damage (including any
depreciation of property values, lost use of
property, consequential damages arising directly or
indirectly out of Environmental Conditions); actual
or threatened damages to natural resources; claims
for the recovery of response costs, or administrative
or judicial orders directing the performance of
investigations, response or remedial actions under
CERCLA, RCRA, HSAA, RCRA or other Environmental Laws;
a requirement to implement "corrective action"
pursuant to any order or permit issued pursuant to
RCRA; claims for restitution, contribution or
equitable indemnity from third parties or any
governmental agency; fines, penalties, liens against
property; claims for injunctive relief or other
orders or notices of violation from federal, state or
local agencies or courts; and, with regard to any
present or former employees, exposure to or injury
from Environmental Conditions.
12.1.5. "Expenses" shall include any
liability, loss, cost or expense including, without
limitation, costs of investigation, cleanup, remedial
or response action, the costs associated with posting
financial assurances for the completion of response,
remedial or corrective actions, the preparation of
any closure or other necessary or required plans or
analyses, or other reports or analyses submitted to
or prepared by regulating agencies, including the
cost of health assessments, epidemiological studies
and the like, retention of engineers and other expert
consultants, legal counsel, capital improvements,
operation and maintenance testing and monitoring
costs, power and utility costs and pumping taxes or
fees, and administrative costs incurred by
governmental agencies.
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12.1.6. Legal Requirements. Legal requirements shall
mean all present and future laws (including but not limited
to environmental laws) and all covenants, restrictions and
conditions now or hereafter of record which may be
applicable to Tenant or to the Premises or to the use,
manner of use, occupancy, possession, operation,
maintenance, alteration, repair, or restoration of the
Premises, even if compliance therewith necessitates
structural changes within the Premises or results in
interference with the use or enjoyment of the leased
Premises. Tenant shall at its expense comply with and
conform to all legal requirements including all applicable
environmental laws.
12.3. Environmental Indemnification By Tenant.
Tenant agrees to indemnify, defend by counsel acceptable to
Landlord, and hold harmless Landlord, its subsidiaries,
affiliates, successors and assigns and their respective
directors, officers, employees, shareholders,
representatives and agents, from and against and in respect
of any and all Claims, damages (including, without
limitation, diminution in value), losses, liabilities and
Expenses, lawsuits, deficiencies, interest, penalties,
attorneys' fees and all amounts paid in defense or
settlement of the foregoing whether or not arising out of
third-party claims, which may be imposed upon or incurred
by Landlord or asserted against Landlord by any other party
or parties (including Governmental Entities), in connection
with any Environmental Conditions or the remediation of any
Environmental Conditions (whether now known or hereafter
discovered), or any Environmental Noncompliance arising out
of, resulting from, or attributable to, the assets,
business, or operations of Tenant at the Premises,
including without limitation any Claims, Expenses, losses,
liabilities, etc. resulting from the alleged exposure of
any person to Environmental Conditions, provided that such
Environmental Conditions or exposure resulted from
activities of Tenant or Tenant's agents, representatives,
employees or independent contractors. Tenant's obligations
pursuant to this Section shall exist regardless of whether
Landlord is alleged or held to be strictly and/or jointly
and severally liable.
12.3.1. Landlord shall defend,
indemnify, and hold Tenant harmless from and against
any and all liability, damages, loss, suits, claims,
actions, costs and expenses, including without
limitation any attorneys' fees, arising from any
contamination of the Premises (including the
underlying ground water and land) by any Hazardous
Materials, where such contamination was not caused by
Tenant or Tenant's agents, representatives, employees
or independent contractors. Landlord warrants that as
of the commencement of this Lease to the best of his
knowledge the Premises are free from contamination by
any Hazardous Materials. The provisions of this
paragraph shall survive the termination of this
Lease.
12.4. Tenant's Remedial Action Responsibility
12.4.1. It Tenant knows, or has
reasonable cause to believe, that a Hazardous
Material or Environmental Condition (other than
previously consented to by Landlord) has come to be
located in, on, under or about the Premises, Tenant
shall immediately notify Landlord in writing of the
condition.
12.4.2. In the event that Environmental
Noncompliance and/or Environmental Conditions
resulting from the activities of Tenant or Tenant's
agents, representatives, employees or independent
contractors is discovered or alleged to exist at the
Premises subsequent to the date hereof, Tenant will
pay all reasonable costs incurred by Landlord in
defending and correcting the conditions which
constitute Environmental Noncompliance and/or
Environmental Conditions.
12.4.3. Tenant shall be exclusively
responsible for the integrity of all facilities at
the Premises which handle, treat, store, recycle or
dispose of Hazardous Materials. Any incident
following the date hereof which results in an actual
or threatened release of Hazardous Materials into the
environment, or which results or may result in any
Environmental Conditions or Environmental
Noncompliance, or which contributes or may contribute
to known or unknown Environmental Conditions or
Environmental Noncompliance, shall be included in
Tenant's indemnification obligations to Landlord
under this Article.
12.5. Inspection Rights. Landlord shall have the
right to enter and inspect the Premises and the business
operations of Tenant, upon reasonable notice and in a
manner so as not to interfere unreasonably with the conduct
of Tenant's business, to investigate the possibility of any
Environmental Condition or Environmental Noncompliance at
the Premises. Landlord may exercise this right at its sole
discretion. During such inspection, Landlord shall have the
right to take such samples and conduct such tests as it may
determine in its sole discretion to be necessary or
advisable. The incurrence by Landlord of any expense under
the provisions of this Section 12.4 shall not impair any
claim for indemnification Landlord may have under the
provisions of this Section 12.
12.6. Survival of Article. The provisions of this
Section 12 shall survive, and remain in full force and
effect after, the termination or expiration of this Lease.
13. LANDLORD'S RIGHT TO ENTRY AND TO RELOCATE PREMISES.
Landlord and Landlord's agents have the right to enter the Premises at
any and all reasonable times to inspect the same, to supply janitorial
service and any other service to be provided by Landlord to Tenant hereunder,
to show the Premises to prospective purchasers or tenants, to post notices of
nonresponsibility, to alter, improve or repair the Premises or any other
portion of the Building, all without such entry constituting any actual or
constructive eviction of Tenant and without abatement of rent. Landlord may,
in order to carry out such purposes, erect scaffolding and other necessary
structures where reasonably required by the character of the work to be
performed, provided that Landlord shall use reasonable efforts to minimize
interference with the business of Tenant. Landlord may at any time, place on
or about the Premises or the Building any ordinary "For Sale" signs, and
Landlord may at any time during the last 120 days of the term hereof place on
or about the Premises any ordinary "For Lease" signs. Tenant hereby waives
any claim for damages, for any injury or inconvenience to or interference
with Tenant's business, any loss of occupancy or quiet enjoyment of the
Premises, and any other loss in, upon and about the Premises. Landlord's
rights pursuant to this Section 13.1 shall be subject to the condition that
exercise of any of such rights shall not unreasonably interfere with Tenant's
use of the Premises.
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14. CONSTRUCTION OF PREMISES
As promptly as may be reasonably possible, subject to delays arising from
causes beyond Landlord's reasonable control, Landlord shall commence and
complete such work ("Landlord's Work"), if any, as shall be necessary to
complete the construction of the Premises in conformity with the description of
Landlord's Work set forth in Exhibit "D" attached hereto. Landlord's Work in the
Premises shall be in conformity with Exhibit "D," and Landlord's Work shall be
deemed approved by Tenant in all respects when Tenant occupies the Premises,
except as to items which are not completed or do not conform to Exhibit "D" and
as to which Tenant shall give Landlord written notice of Tenant's reasonable
disapproval within ten (10) days after Tenant occupies the Premises. It is
acknowledged and agreed that there shall be no Landlord's Work with respect to
the Premises except as set forth in Exhibit "D".
15. SIGNS
Tenant shall not place any sign upon the Premises or the Project without
Landlord's prior written consent. Under no circumstances shall Tenant place a
sign on any roof of the Project, or upon or visible from the Common Areas or the
exterior of the Building other than as specified in the Addendum, Section 15, of
this Lease Agreement.
16. SECURITY.
Tenant acknowledges that it has been advised by Landlord to satisfy
itself with respect to the condition of the Premises from a security standpoint.
Tenant has made such an investigation as it deems necessary with reference to
security matters. Tenant expressly assumes all responsibility for the protection
of the Premises, Tenant, its employees, agents, invitees, contractors and their
property from the acts of third parties.
17. EMINENT DOMAIN
If the Premises or any portion thereof or the Project are taken under the
power of eminent domain, or sold under the threat of the exercise of said power,
this Lease shall terminate as to the part so taken as of the date the condemning
authority takes title or possession, whichever first occurs; provided that if so
much of the Premises or the Project are taken by such condemnation as would
substantially and adversely affect the operation and profitability of Tenant's
business conducted from the Premises, Tenant shall have the option, to be
exercised only in writing within thirty (30) days after Landlord shall have
given Tenant written notice of such taking (or in the absence of such notice,
within thirty (30) days after the condemning authority shall have taken
possession), to terminate this Lease as of the date the condemning authority
takes such possession. If Tenant does not terminate this Lease in accordance
with the foregoing, this Lease shall remain in full force and effect as to the
portion of the Premises remaining, except that the rent and Tenant's share of
Operating Expenses shall be reduced in the proportion that the floor area of the
Premises taken bears to the total floor area of the Premises. 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. Landlord shall have
the option in its sole discretion to terminate this Lease as of the taking of
possession by the condemning authority, by giving written notice to Tenant of
such election within thirty (30) days after receipt of notice of taking by
condemnation of any part of the Premises or the Project. Any award for the
taking of all or any part of the Premises or the Project under the power of
eminent domain or any payment made under threat of the exercise of such power
shall be the property of Landlord, whether such award shall be made as
compensation for diminution in value of the leasehold or for the taking of the
fee, or as severance damages; provided, however, that Tenant shall be entitled
to any separate award for loss of or damage to Tenant's trade fixtures,
removable personal property or for damages for cessation or interruption of
Tenant's business.
In the event that this Lease is not terminated by reason of such
condemnation, Landlord shall to the extent of severance damages received by
Landlord in connection with such condemnation, repair any damage to the Premises
caused by such condemnation except to the extent that Tenant has been reimbursed
therefor by the condemning authority. Tenant shall pay any amount in excess of
such severance damages required to complete such repair.
18. SUBORDINATION
Subject to a receipt of a non-disturbance agreement to Tenant, this Lease
and any Option granted hereby shall be, at Landlord's option, either superior or
subordinate to any mortgage or deed of trust that may exist or hereafter be
placed upon the Building or any part thereof and to any and all advances to be
made thereunder and to the interest thereon and to all renewals, replacements
and extensions thereof. Subject to a receipt of a non-disturbance agreement to
Tenant, Tenant shall, upon written demand by Landlord, execute such instruments
as may be required at any time and, from time to time, to subordinate the rights
and interests of Tenant under this Lease to the lien of any such mortgage or
deed of trust, or, if requested by Landlord, to subordinate any such mortgage or
deed of trust to this Lease. Provided, however, that Tenant shall, in the event
any proceedings are brought for the foreclosure of any such mortgage or deed of
trust, attorn to the purchaser upon foreclosure sale or sale under power of
sale, and shall recognize such purchaser as Landlord under this Lease.
19. ESTOPPEL CERTIFICATE
Provided the information contained therein is true, Tenant shall at any
time and, from time to time, upon not less than fifteen (15) days' prior written
notice from Landlord execute, acknowledge and deliver to Landlord a statement in
writing (a) certifying that this Lease is unmodified and in full force and
effect (or, if modified, stating the nature of such modification and certifying
that this Lease, as so modified, is in full force and effect) and the dates to
which the rent and any other charges are paid in advance, if any, (b)
acknowledging that there are not, to Tenant's knowledge, any uncured default on
the part of Landlord, or specifying such defaults if any are claimed, and (c)
containing any other information that Landlord may reasonably require. Any such
statement may be relied upon conclusively by any prospective purchaser or
encumbrancer of the Building. Tenant's failure to deliver such statement within
such time shall be conclusive upon Tenant (a) that this Lease is in full force
and effect, without modification, except as may be represented by Landlord, (b)
that there are no uncured defaults in Landlord's performance, (c) that not more
than one month's rent has been paid in advance, and (d) that any other
information included in such statement by Landlord is true and correct.
20. ATTORNEYS' FEES
If either party named herein brings an action to enforce the terms hereof
or declare rights hereunder, the prevailing party in any such action, trial or
appeal thereon, shall be entitled to reasonable attorneys' fees to be paid by
the losing party as fixed by the court in the same or a separate suit, and
whether or not such action is pursued to decision or judgment. The attorneys'
fee award shall not be computed in accordance with any court fee schedule, but
shall be such as to fully reimburse all attorneys' fees reasonably incurred in
good faith. Landlord shall be entitled to reasonable attorneys' fees and all
other costs and expenses incurred in the preparation and service of notices of
default and consultations in connection therewith, whether or not a legal action
is subsequently commenced in connection with such default.
15
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21. PARKING
So long as Tenant is not in default, and subject to such rules and
regulations as may be established by Landlord from time to time, Tenant shall be
entitled to use, on a monthly basis, the number of parking spaces in the
Project's on-site parking facilities specified in the Basic Lease Provisions.
Landlord shall have the right to designate the location of such parking spaces
and may reserve certain spaces from Tenant's use, as Landlord, in its sole
discretion, may determine.
22. NOTICE
22.1. Manner of Service. All notices, demands or
requests from one party to another shall be in writing and
may be personally delivered or sent by mail, certified or
registered, postage prepaid, to the addresses specified in
the Basic Lease Provisions.
22.2. Change of Place of Service. Each party shall
have the right, from time to time, to designate a different
address by notice given in conformity with this Section to
the other party.
23. HOLDING OVER BY TENANT
Tenant agrees upon the expiration or termination of this Lease,
immediately and peaceably to yield up and surrender the Premises; notice to quit
or vacate is hereby expressly waived. Tenant shall be liable to Landlord for any
and all damages incurred by Landlord as the result of any failure by Tenant to
timely surrender possession of the Premises as required herein. If Tenant, with
Landlord's consent, remains in possession of the Premises or any part thereof
after the expiration of the Term hereof, such occupancy shall be a tenancy from
month to month upon all the provisions of this Lease pertaining to the
obligations of Tenant, except that the rent payable shall be one hundred
twenty-five percent (125%) of the rent payable immediately preceding the
termination date of this Lease, and all options, if any, granted under the terms
of this Lease shall be deemed terminated and of no further effect during said
month to month tenancy.
24. WAIVER
No waiver by Landlord of any provision hereof shall be deemed a waiver of
any other provision hereof or of any subsequent breach by Tenant of the same or
any other provision. Landlord's consent to, or approval of, any act shall not be
deemed to render unnecessary the obtaining of Landlord's consent to or approval
of any subsequent act by Tenant. The acceptance of rent hereunder by Landlord
shall not be a waiver of any preceding breach by Tenant of any provision hereof,
other than the failure of Tenant to pay the particular rent so accepted,
regardless of Landlord's knowledge of such preceding breach at the time of
acceptance of such rent.
25. TIME OF THE ESSENCE
TIME IS OF THE ESSENCE OF THIS LEASE WITH RESPECT TO THE OBLIGATIONS TO
BE PERFORMED UNDER THIS LEASE.
26. SUCCESSORS AND ASSIGNS
The covenants and conditions herein contained shall, subject to the
provisions as to assignments, apply to and bind the heirs, successors,
executors, administrators and assigns of the respective parties hereof. If more
than one person or entity is indicated as Tenant herein, each person or entity
subscribing as Tenant shall be jointly and severally liable for all obligations
of Tenant hereunder.
27. LANDLORD'S RESERVATIONS
In addition to its other rights retained or reserved herein, Landlord
shall have the right to change the name, number or designation of the Building
or the Project without notice or liability to Tenant. In addition, Tenant shall
not, without Landlord's prior written consent, use the name of the Building or
the Project for any purpose other than as the address of the business to be
conducted by Tenant at the Premises, and in no event shall Tenant acquire any
rights in or to such names. Landlord shall have the right to (a) at Tenant's
expense, provide and install Building standard graphics or art on the door to
the Premises and/or such portions of the Common Areas as Landlord shall
reasonably deem appropriate; (b) permit any Tenant the exclusive right to
conduct any business as long as such exclusive does not conflict with any rights
expressly given herein; (c) place such signs, notices or displays as Landlord
reasonably deems necessary or advisable upon the roof, exterior of the buildings
or the Project or on pole signs in the Common Areas; (d) reasonably designate,
limit, restrict and control any business and any service in or to the Building
or its tenants; (e) keep, and to use in appropriate instances, keys to all doors
into and within the Premises. Tenant hereby agrees that no locks shall be
changed or added without the prior written consent of Landlord. Landlord
reserves to itself the right, from time to time, to grant such easements, rights
and dedications that Landlord deems necessary or desirable and to cause the
recordation of Parcel Maps and restrictions, so long as such easements, rights,
dedications, Maps and restrictions do not unreasonably interfere with the use of
the Premises by Tenant. Tenant shall sign any of the aforementioned documents
within ten (10) days after written request by Landlord, and failure to do so
shall constitute a material default under this Lease by Tenant without the need
for further notice to Tenant.
28. BROKERAGE COMMISSION
With the exception of the real estate brokerage commission, if any,
payable to the party identified in the Basic Lease Provisions, pursuant to
separate written agreement with Landlord, and which commission Landlord hereby
agrees to pay, Tenant and Landlord each represent and warrant to the other that
neither has had any dealings with any person, firm, broker or finder in
connection with the negotiation of this Lease and/or the consummation of the
transaction contemplated hereby, and no other broker or other person, firm or
entity is entitled to any commission or finder's fee in connection with said
transaction and Tenant and Landlord do each hereby indemnify and hold the other
harmless from and against any costs, expenses, attorneys' fees or liability for
compensation or charges which may be claimed by any such unnamed broker, finder
or other similar party by reason of any dealings or actions of the indemnifying
party.
29. WAIVER OF RIGHT TO JURY TRIAL
Landlord and Tenant each waives the right to trial by jury.
30. GOVERNING LAW
This Lease shall be governed by, construed and enforced in accordance
with the laws of the State of California.
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31. CAPTIONS AND INTERPRETATIONS
The section and paragraph captions contained in this Lease are for
convenience only and shall not be considered in the construction or
interpretation of any provision hereof.
32. SEVERABILITY
If any term, covenant, condition or provision of this Lease is held by a
court of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the provisions shall remain in full force and effect and shall in
no way be affected, impaired or invalidated.
33. LEASE NOT EFFECTIVE UNTIL EXECUTED
Submission by Landlord of this Lease for examination or signature by
Tenant shall not constitute an option and this Lease shall not become effective
until executed by both Tenant and Landlord and delivery of the fully executed
instrument to such parties. This Lease shall not be deemed to be executed by
Landlord until signed by an authorized officer of Landlord.
34. EXHIBITS AND ADDENDA TO LEASE
All Exhibits or Addenda referenced in this Lease (or which are executed
concurrently herewith and attached hereto and refer to this Lease) are
incorporated herein by reference and shall constitute a part of this Lease.
35. RECORDATION OF LEASE
Neither this Lease nor any Memorandum hereof shall be recorded without
the express written consent of Landlord.
36. ENTIRE AGREEMENT
This Lease constitutes the entire agreement between the parties hereto
pertaining to the subject matter hereof, fully supersedes any and all prior
negotiations, understandings, representations, warranties and agreements between
the parties hereto, or any of them, pertaining to the subject matter hereof, and
may be modified only by written agreement, signed by all of the parties hereto.
37. COVENANTS AND REPRESENTS.
Notwithstanding anything to the contrary contained in this Lease:
37.1. Landlord. Landlord covenants and represents to
Tenant that it has good and marketable title to the Project at
the commencement of this Lease, free and clear of all ground
leases, liens and encumbrances affecting the Premises or the
rights granted to Tenant.
37.2. Reciprocal. Landlord and Tenant covenant and
represent that they have full and complete authority to enter
into this Lease under all of the terms, covenants and
provisions set forth herein and so long as Tenant and Landlord
perform each and every term, provision, and condition herein
contained on the part of Tenant and Landlord to be performed.
Tenant may peacefully and quietly enjoy the Premises without
hindrance or molestation by Landlord or Landlord's agents.
LANDLORD AND TENANT HAVE CAREFULLY READ AND REVIEWED THIS LEASE
AND EACH TERM AND PROVISION CONTAINED HEREIN, AND BY THE EXECUTION
OF THIS LEASE SHOW THEIR INFORMED AND VOLUNTARY CONSENT THERETO.
THE PARTIES HEREBY AGREE THAT, AT THE TIME THIS LEASE IS EXECUTED,
THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE AND EFFECTUATE
THE INTENT AND PURPOSE OF LANDLORD AND TENANT WITH RESPECT TO THE
PREMISES.
IN WITNESS WHEREOF, the parties hereto have executed this Lease
the day and year first hereinabove written.
EXECUTED AT EXECUTED AT
San Diego, California West Vancouver, BC
- ----------------------------- ----------------------------------
ON ON
July 2, 1998 July 22, 1998
- ----------------------------- ----------------------------------
BY TENANT: BY LANDLORD:
MAXIM PHARMACEUTICALS BRITISH PACIFIC PROPERTIES
a Delaware Corporation a California Corporation
By: /s/Dale A. Sander By: /s/ William R. Byers
------------------------- ---------------------------------
Name: Dale A. Sander Name: William R. Byers
------------------------- ---------------------------------
Title: Chief Financial Officer Title: Secretary - Treasurer
------------------------- ---------------------------------
By: By: /s/ Walter D. Thorneloe
------------------------- ---------------------------------
Name: Name: Walter D. Thorneloe
------------------------- ----------------------------
Title: Title: Vice President-Development
------------------------- ----------------------------
17
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EXHIBIT A
FLOOR PLAN WITH PREMISES DEPICTED
<PAGE>
EXHIBIT B
RULES AND REGULATIONS FOR BRITISH PACIFIC CENTRE
1. No tenant or its agents or employees shall loiter in the mall areas or
other Common Areas of the Building, nor shall they in any way obstruct
the sidewalks, entry passages, pedestrian passageways, driveways,
entrances and exits to the Building, and they shall use the same only
as passageways to and from their respective premises. Landlord
reserves the right to exclude or expel from the Building any person
who, in the judgment of Landlord, is intoxicated or under the
influence of liquor or drugs, or who shall in any manner do any act in
violation of the rules and regulations of the Building.
2. No sash doors, sashes, windows, glass doors, lights and skylights that
reflect or admit light into the Common Areas of the Building shall be
covered or obstructed by any tenant, and doors leading into the Common
Areas from tenant premises shall not be left open by any tenant.
3. Water closets and urinals shall not be used for any purpose other than
those for which they were constructed, and no rubbish, newspapers,
food or other substances of any kind shall be thrown into them. No
tenant or his agents and employees shall throw or discard cigar or
cigarette butts or other substances or litter of any kind in or about
the Building, except in receptacles placed therein for such purposes
by Landlord or governmental authorities. All garbage, including wet
garbage, refuse or trash shall be placed by each tenant in the
receptacles provided by Landlord for that purpose and only during
those times prescribed by Landlord.
4. Tenants shall not mark, drive nails, screw or drill into, paint or in
any way deface any exterior walls, roof foundations, bearing walls or
pillars without the prior written consent of Landlord. No boring or
cutting for wires shall be allowed, except with the consent of
Landlord. The expense of repairing any breakage, stoppage or damage
resulting from a violation of this rule or the preceding rule shall be
borne by the tenant violating or responsible for the violation of such
rule.
5. Tenant shall not alter any lock or install new or additional locks or
bolts in or about the Premises, without the written approval of
Landlord.
6. No curtains, blinds, screens, shades or other window coverings shall
be attached to or hung in any window visible from the exterior of the
Premises without the prior written consent of Landlord.
7. No tenant shall do anything in any premises, or bring or keep anything
therein, which will in any way increase or tend to increase the risk
of fire or the rate of fire insurance or which shall conflict with
applicable law, rules or regulations established by any governmental
body or official having jurisdiction, the regulations of the fire
department or the provisions or requirements of any insurance policy
on such premises or any part thereof. Tenant shall not use any
machinery in its premises, even though the installation may have been
originally permitted, which may cause any unreasonable noise or jar,
or tremor to the floors or walls, or which by its weight might injure
the walls or floors of such premises or any other portion of the
Building.
8. Landlord may limit the weight, size and position of all safes,
fixtures and other equipment used in any premises. In the event any
tenant shall require extra heavy equipment, such tenant shall notify
Landlord of such fact and shall pay the cost of any structural bracing
required to accommodate the same. All damage done to such premises or
to any other portion of the Building resulting from installing,
removing or maintaining extra heavy equipment shall be repaired at the
expense of the tenant which maintains such equipment.
9. No tenant or its agents and employees shall make or permit any loud,
unusual or improper noises in the Building, nor interfere in any way
with other tenants or those having business with them, nor bring into
nor keep within the Building any animal or bird (with the exception of
the authorized pet store), or any bicycle or other vehicle, except
such vehicles as tenants are permitted to park in the Building parking
lot, and shall park only in the areas designated from time to time for
employee parking generally. No aerial shall be erected on the roof or
exterior walls of any premises, or on the ground, without in each
instance, the written consent of Landlord. Any aerial so installed
without such written consent shall be subject to removal without
notice at any time.
10. All freight must be moved into, within and out of tenant premises only
during such hours and according to such regulations and may be posted
from time to time in Landlord's general offices.
11. Tenant shall not employ any service or contractor for services or work
to be performed in the Building, except as approved by Landlord.
12. Tenant shall return all keys at the termination of its tenancy and
shall be responsible for the cost of replacing any keys that are lost.
13. Tenant shall not suffer or permit smoking or carrying of lighted
cigars or cigarettes in areas designated by Landlord or by applicable
governmental agencies as non-smoking areas.
14. Tenant shall not use any method of heating or air conditioning other
than as provided by Landlord.
15. Tenant shall not install, maintain or operate any vending machine upon
the Premises without Landlord's written consent.
16. The Premises shall not be used for lodging, manufacturing or food
preparation.
17. Tenants are required to observe all security regulations issued by
Landlord and to comply with instructions and/or directions of the duly
authorized security personnel for the protection of the Building and
all tenants therein. Access by any tenant to his premises or the
Building before or after hours of operation of the Building shall be
subject to clearance by the security personnel of the Building and to
compliance with such procedures as may be imposed by such personnel,
including presentation of identification to such personnel.
18. No waiver of any rule or regulation by Landlord shall be effective
unless expressed in writing and signed by Landlord.
B-1
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19. Landlord reserves the right, but shall not have the obligation, to
close and keep locked any and all entrances and exit doors and gates
of the Building and gates or doors closing the parking areas thereof
during such hours as Landlord may deem to be advisable for the
adequate protection of the Building and all tenants therein.
20. Parking areas shall be used only for parking by vehicles no longer
than full size, passenger automobiles.
21. 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 designed by Landlord for such activities.
22. Parking stickers or identification devices shall be the property of
Landlord and be returned to Landlord by the holder thereof upon
termination of the holder's parking privileges. Tenant will pay such
replacement charge as is reasonably established by Landlord for the
loss of such devices.
23. Landlord reserves the right to refuse the sale of monthly
identification devices to any person or entity that willfully refuses
to comply with the applicable rules, regulations, laws and/or
agreements.
24. Landlord reserves the right to relocate all or a part of parking
spaces from floor to floor, within one floor, and/or to reasonably
adjacent offsite location(s), and to reasonably allocate them between
compact and standard size spaces, as long as the same complies with
applicable laws, ordinances and regulations.
25. Users of the parking area will obey all posted signs and park only in
the areas designated for vehicle parking.
26. Unless otherwise instructed, every person using the parking area is
required to park and lock his own vehicle. Landlord will not be
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.
27. Validation, if established, will be permissible only by such method or
methods as Landlord and/or its licensee may establish at rates
generally applicable to visitor parking.
28. The maintenance, washing, waxing or cleaning of vehicles in the
parking structure or Common Areas is prohibited.
29. Tenant shall be responsible for seeing that all of its employees,
agents and invitees comply with the applicable parking rules,
regulations, laws and agreements.
30. Such parking use as is herein provided is intended merely as a license
only and no bailment is intended or shall be created hereby.
31. Landlord reserves the right at any time to change or rescind any one
or more of these rules and regulations or to make such other and
further reasonable rules and regulations as in Landlord's judgment may
from time to time be necessary for the management, safety, care and
cleanliness of the Building, for the preservation of good order
therein and for the convenience of tenants and visitors to the
Building. Any such amendments, deletions or additions to these rules
and regulations shall be effective immediately upon delivery of
written notice thereof to tenants.
32. Each tenant shall abide by any additional rules or regulations which
are ordered or requested by any governmental or military authority.
33. Landlord shall not be responsible to any tenant or any other person
for the non-observance or violation of these rules and regulations by
any other tenant or other person.
34. A copy of these rules and regulations shall be attached to and form a
part of each tenant lease at the Building. Each tenant who executes a
lease of space at the Building shall be deemed to have read these
rules and regulations and to have agreed to abide by them as a
condition to its occupancy of space at the Building.
In the event of any conflict between these rules and regulations, or any
amendments or additions thereto, and the provision of any tenant's lease, such
lease provisions shall control.
B-2
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EXHIBIT C
STANDARDS FOR UTILITIES AND SERVICES
Landlord shall provide the utilities and services set forth in this
Exhibit at all times during the term of the Lease, subject to the provisions of
the Lease concerning Landlord's inability to supply such utilities and services
due to causes beyond Landlord's control. Landlord reserves the right to adopt
such reasonable nondiscriminatory modifications and additions to the following
standards as it deems necessary and appropriate from time to time. Landlord
shall not be obligated to supply any utilities or services to Tenant at any time
during which Tenant is in default under the terms of the Lease.
1. Landlord shall provide automatic elevator services on Monday
through Friday from 7:00 a.m. to 6:00 p.m. and on Saturday from 9:00 a.m. to
1:00 p.m.; provided, however, that Landlord shall not be obligated to provide
such elevator services on the following federal holidays: New Year's Day,
President's Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day,
Day after Thanksgiving, and Christmas Day (such times referred to in this
Exhibit as "Business Hours"). At all other times Landlord shall provide at least
one elevator operated by security personnel or by an automatic security access
system.
2. Landlord shall provide to the Premises, during Business Hours (and
at other times for an additional charge to be fixed by Landlord), heating,
ventilation, and air conditioning ("HVAC") when and to the extent in the
judgment of Landlord any such sources may be required for the comfortable
occupancy of the Premises for general office purposes. Landlord shall not be
responsible for room temperatures and conditions in the Premises if the lighting
or receptacle load for Tenant's equipment and fixtures exceed those listed in
Section 3 of this Exhibit, if the Premises are used for other than general
office purposes or if the building standard blinds and curtains in the Premises
are not used and/or closed to screen the rays of direct sunlight. If any lights,
machines or equipment (excluding desktop computers) are used by Tenant in the
Premises which materially affect the temperature otherwise maintained by the
Building HVAC or generate substantially more heat in the Premises than would be
generated by the Building standard lights and usual fractional horsepower office
equipment, Landlord shall have the right to install any machinery and equipment
which Landlord reasonably deems necessary to restore temperature balance
(including, without limitation, modifications to the standard air conditioning
equipment) and the cost thereof, including the cost of installation and any
additional cost of operation and maintenance occasioned thereby, shall be paid
by Tenant to Landlord upon demand by Landlord.
3. Landlord shall furnish to the Premises during Business Hours
electric current for routine lighting and operation of general office machines
such as typewriters, dictating equipment, desk model adding machines, and
similar devices which operate on 110 volt alternating current electrical power
with demands, wattages and ampere draws which do not exceed the reasonable
capacity of building standard office lighting and receptacles and are not in
excess of limits imposed or recommended by governmental authorities. Landlord
shall replace bulbs and/or ballasts in building standard florescent lighting
fixtures within the Premises. Tenant shall be responsible for replacing all
other non building standard items (non standard bulbs, ballasts, ceiling tiles,
etc.). Landlord shall furnish to the lavatories within the Premises or within
the Common Areas water for normal lavatory and drinking purposes.
4. No special electrical equipment, air conditioning systems, heating
systems, or space heaters shall be installed nor shall any changes be made the
HVAC, electrical or plumbing systems in the Building without the prior written
approval of Landlord in accordance with the provisions of the Lease governing
alterations requested by Tenant. Tenant shall not without the prior written
consent of Landlord, which consent shall not be unreasonably withheld, use any
apparatus, machines or devices in the Premises (including, without limitation,
photocopier or duplicating machines, computers, printers, vending machines, or
other equipment) which uses current in excess of 110 volts AC or which has a
demand, wattage or ampere draw which exceeds the electrical systems installed in
the Building or in any way which will increase the amount of electricity or
water usually supplied for the use of the Premises for general office purposes.
5. Landlord may impose reasonable conditions upon any consent for use
of any apparatus, machine or device which exceeds the limitations set forth in
this Exhibit. Tenant agrees to cooperate fully with Landlord at all times to
abide by all regulations and requirements which Landlord may prescribe for
proper functioning and protection of the Building HVAC, electrical and plumbing
systems. Tenant shall comply with all laws, statutes, ordinances and
governmental rules and regulations now in force or which may be enacted or
promulgated in connection with building services furnished to the Premises,
including, without limitation, any governmental rule or regulation relating to
the heating or cooling of the Building.
6. Landlord shall provide janitorial services to the Premises on each
day Sunday through Thursday (except for the above listed federal holidays)
provided the Premises are used exclusively for the uses permitted by the Lease
and are kept in reasonable order by Tenant. Tenant shall pay to Landlord any
extra cost for cleaning or removal of any rubbish or garbage to the extent the
nature or amount of such cleaning, refuse or garbage exceeds the amount which is
generally produced by use of the Premises for general office purposes.
<PAGE>
EXHIBIT D
WORK LETTER
CONCURRENTLY WITH THE EXECUTION OF THIS WORK LETTER AGREEMENT (the "Work
Letter Agreement"), Landlord and Tenant have executed a Standard Form Lease (the
"Lease"), covering the Premises. Unless the context otherwise requires, the
terms defined in the Lease shall have the same meanings when used herein. This
Work Letter Agreement is incorporated into the Lease as Exhibit "D" thereto.
Tenant desires that certain work be performed by Landlord in the Premises to
make the Premises ready for Tenant.
NOW, THEREFORE, in consideration of the mutual covenants contained in the
Lease and in this Work Letter Agreement, Landlord and Tenant agree as follows:
1. Definitions.
34.1. "Approved Plans" are defined in Section 5.1 below.
34.2. "Estimated Work Cost" is defined in Section 4.2 below.
34.3. "Preliminary Plans" are defined in Section 3.1 below.
34.4. "Space Planner" shall mean Landlord's Space Planner.
34.5. "Contractor" shall mean Landlord's Contractor, Kohler
Kompany, and regardless of what other subcontractors may be
selected, all mechanical engineering and construction work
shall be performed by Jackson & Blanc.
34.6. "Standards" shall mean Landlord's usual specifications for
standard leasehold improvements in the Building.
34.7. "Tenant Improvements" shall mean all improvements made to
the Premises other than those that are physically in place
at the Premises as of the date of the execution of the
Lease.
34.8. "Tenant's Allowance",shall be paid by Landlord toward the
cost of completion of the Tenant Improvements and other
associated costs of Tenant's move. In no event shall
Tenant's Allowance exceed $192,072.20.
34.9. "Tenant's Programming Information" shall mean all
information necessary for the preparation of the Preliminary
Plans, including without limitation electrical requirements,
telephone, special heat generating equipment, plumbing
requirements, special finishes, number and sizes of offices,
number of secretarial stations and special data processing
requirements.
34.10.Tenant approval, authorization, consent or other required
action shall mean such action taken or authorized by Tenant.
Landlord shall have the right to rely on such approval,
authorization, consent or other action, until Tenant advises
Landlord in writing that some other person has such
authority.
34.11.Other terms are defined in this Work Letter Agreement. In
addition, terms defined in the Lease shall have the same
meanings where used herein, unless the context otherwise
requires.
35. Schedule.
35.1. Landlord shall furnish to Tenant the Estimated Work Cost
within ten (10) days following Landlord's receipt of
Tenant's Preliminary Plans.
35.2. Tenant shall furnish to Landlord written notice of its
acceptance or rejection of the Estimated Work Cost within
five (5) days after receipt of same from Landlord.
35.3. If Tenant rejects the Estimated Work Cost, Tenant shall meet
with the Space Planner and Landlord's Contractor to revise
the Preliminary Plans within five (5) days after furnishing
such rejection to Landlord.
35.4. Landlord shall cause its architect and engineer to prepare,
and Landlord shall furnish to Tenant, construction drawings
and specifications for Tenant Improvements based on the
Preliminary Plans within seven (7) days following Tenant's
approval of the Preliminary Plans.
35.5. Tenant shall furnish to Landlord written notice of its
acceptance or rejection of the construction drawings within
five (5) days after receipt of same from Landlord.
35.6. Landlord shall prepare and furnish to Tenant a final cost
proposal based upon the Approved Plans within five (5) days
after Tenant's approval or deemed approval of the Approved
Plans.
35.7. If the final cost proposal is greater than the Estimated
Work Cost, Tenant shall furnish to Landlord written notice
of its acceptance or rejection of the final cost proposal
within five (5) days after receipt of same from Landlord.
35.8. Landlord shall cause its Contractor to complete the
construction of the Tenant Improvements within forty-five
(45) days following approval of the Approved Plans, and/or
approval of the final cost proposal, whichever is later.
36. Preliminary Plans.
D-1
<PAGE>
36.1. Tenant shall furnish to Landlord Tenant's Programming
Information by the time set forth in Section 2.1 above.
Promptly thereafter, Tenant shall cause the Space Planner to
prepare preliminary space plans and specifications (the
"Preliminary Plans") for all leasehold improvements to be
constructed by Landlord for Tenant in the Premises, which
Preliminary Plans shall be sufficient to obtain a
preliminary cost estimate for the construction and
installation of the Tenant Improvements as shown thereon.
The cost of the preparation of Preliminary Plans shall be
charged against the Tenant's Allowance. Tenant shall furnish
the Preliminary Plans to Landlord by the time set forth in
Section 2.2 above. Landlord shall furnish the Estimated Work
Cost to Tenant by the time set forth in Section 2.3 above.
36.2. In the preparation of Preliminary Plans and Approved Plans,
no deviation shall be permitted from the Standards with
respect to entry doors and hardware, entry graphics, ceiling
systems, life safety systems or perimeter window coverings.
Subject to Landlord's approval, Tenant may deviate from the
Standards as to partitions, floor coverings, wall finishes,
special lighting fixtures or other items as to which
deviations may be permitted, provided that no deviation
shall be of lesser quality than the Standards. Landlord will
not approve of any deviations which (a) do not conform to
applicable governmental regulations or are disapproved by
any governmental agency, (b) that require Building service
beyond the level normally provided to other tenants in the
Building, (c) that because of fabrication time or other
factors would delay the construction schedule (unless Tenant
agrees that the Commencement Date will not be extended by
such delay), or (d) that in Landlord's reasonable opinion
are of a nature or quality that are inconsistent with
Landlord's overall plan or objectives for the Building.
37. Tenant's Allowance.
37.1. Landlord shall pay for the construction and installation of
the Tenant Improvements up to but not in excess of the
Tenant's Allowance. Tenant shall pay the cost of all Tenant
Improvements in excess of the Tenant's Allowance. The cost
of Tenant Improvements shall include the cost of all labor
and materials for the construction and installation of the
Tenant Improvements; the cost of all permits, licenses and
fees; all amounts paid to Landlord's Contractors under and
pursuant to contracts for the construction and installation
of the Tenant Improvements; all architectural, engineering,
space planning and other consultants' fees; all amounts paid
for mechanical drawings, plans, specifications, shop
drawings, designs and layouts; and incidental costs related
to the foregoing.
37.2. Landlord shall obtain an estimate of the cost of Tenant
Improvements as shown on the Preliminary Plans. Landlord
shall promptly notify Tenant of the amount of such cost
estimate plus the amount required to pay for the preparation
of architectural and engineering construction drawings for
the Tenant Improvements (the "Estimated Work Cost").
LANDLORD CANNOT AND DOES NOT GUARANTY THE ACCURACY OF SUCH
ESTIMATED WORK COST. If the Estimated Work Cost is less than
or equal to the Tenant's Allowance then Landlord shall
proceed in accordance with Section 5 below.
37.3. If the Estimated Work Cost is greater than the Tenant's
Allowance, then Tenant shall give written notice to Landlord
of Tenant's acceptance or rejection of the Estimated Work
Cost within the time period set forth in Section 2.4 above.
Unless Landlord receives Tenant's written rejection within
such period, the Estimated Work Cost shall be deemed
accepted by Tenant. If within such period Landlord receives
Tenant's written rejection of the Estimated Work Cost, then
within the time period set forth in Section 2.5 above,
Tenant shall meet with the Space Planner and the Landlord's
Contractor to revise the Preliminary Plans. At such
meetings, Tenant may, at Tenant's option, elect to eliminate
one or more items shown on the Preliminary Plans so as to
reduce the Estimated Work Cost. All costs of
Tenant-initiated changes requiring revisions, including
engineering, estimating, coordination, layout and printing
of drawings, specification changes and any other incidental
expenses, shall be included in the cost of the Tenant
Improvements. Following such revisions, Landlord shall
submit a new Estimated Work Cost to Tenant, and the same
procedure will be followed as set forth above until Tenant
has accepted a proposal. Any time consumed in revising plans
or in revising the Estimated Work Cost shall be considered a
Tenant Delay (as defined in Section 6.2 hereof) and shall
not delay the Commencement Date of the Lease. If Tenant does
not so elect to revise the Preliminary Plans, or if Tenant
does so elect but the Estimated Work Cost after accounting
for the revisions is still greater than the Tenant's
Allowance, or if Tenant otherwise approves or is deemed to
have approved of the Estimated Work Cost, then Tenant shall
forthwith deposit with Landlord an amount (the "Construction
Deposit") equal to the difference between the Tenant's
Allowance and the Estimated Work Cost (as the same may have
been revised), whereupon Landlord shall proceed in
accordance with Section 5 below.
37.4. The Tenant's Allowance shall be available only for the cost
of Tenant Improvements as described in Section 4.1 above. If
the cost of Tenant Improvements is less than the Tenant's
Allowance, the difference shall be retained by Landlord.
38. Construction of Tenant Improvements.
38.1. Landlord shall cause its architect and engineer to prepare
construction drawings and specifications for the Tenant
Improvements based strictly on the Preliminary Plans within
the time period set forth in Section 2.6 above. Prior to the
commencement of construction, Tenant shall be given an
opportunity to review the construction drawings to confirm
that they conform to the Preliminary Plans. Tenant shall
have the time period set forth in Section 2.7 above in which
to give written notice to Landlord of Tenant's acceptance or
rejection of the construction drawings. Unless Landlord
receives Tenant's written rejection within such period, the
construction drawings shall be deemed approved by Tenant
("Approved Plans"). Such Approved Plans shall create no
responsibility or liability on the part of Landlord for the
completeness of such plans, their design sufficiency or
compliance with applicable statutes, ordinances or
regulations.
38.2. Within the time period set forth in Section 2.8 above,
Landlord shall prepare a final cost proposal based upon the
Approved Plans. The final cost proposal shall contain a
complete cost breakdown by line item, including without
limitation costs of architectural and engineering fees, plan
check and permit fees and other governmental fees, sales and
use taxes and all other costs to be expended by or on behalf
of Landlord in connection with the construction and
installation of the Tenant Improvements. If the final cost
proposal is less than or equal to the Estimated Work
D-2
<PAGE>
Cost, Landlord shall authorize construction to commence. If
the final cost proposal is greater than the Estimated Work
Cost, Tenant shall have the time period set forth in Section
2.9 above in which to give written notice to Landlord of
Tenant's acceptance or rejection of the final cost proposal.
If Tenant rejects such cost proposal, Tenant shall meet with
Landlord, the Space Planner and Landlord's Contractor to
make revisions. All costs of Tenant-initiated changes
requiring such revisions shall be included in the cost of
the Tenant Improvements. Following such revisions, Landlord
shall submit a new cost proposal to Tenant, and the same
procedure will be followed as set forth above until Tenant
has accepted a proposal. Any time consumed in revising the
drawings or revising the estimated cost of construction
shall be considered a Tenant Delay and shall not delay the
Commencement Date of the Lease.
38.3. No work shall commence until the Approved Plans are filed
with the governmental agencies having jurisdiction thereof,
all required building permits have been obtained, and the
Space Planner has certified that to the best of its
knowledge, if performed in accordance with the Approved
Plans, the work will comply with all laws, codes,
regulations and statutes applicable to such work.
38.4. Landlord shall cause the Tenant Improvements to be
constructed or installed in the Premises by its designated
general Contractor in accordance with the Approved Plans.
38.5. Landlord shall have no obligation to Tenant for defects in
design, workmanship or materials, but shall use its
reasonable best efforts to enforce the Contractor's
obligations therefor and shall, as appropriate under the
terms of the Lease, assign to Tenant any manufacturer's
warranties with respect to the work.
38.6. Upon substantial completion of the construction and
installation of the Tenant Improvements, Tenant shall pay to
Landlord on demand the amount, if any, by which the actual
costs incurred by or on behalf of Landlord in connection
with the construction and installation of the Tenant
Improvements, including the costs of any authorized change
orders as defined below, exceeds the sum of the Tenant's
Allowance and any amounts previously delivered by Tenant to
Landlord pursuant to Section 4.3 above.
38.7. Any changes to the construction work may be made only upon
written request by Tenant approved in writing by Landlord,
or as may be required by any governmental agency, or as may
be required due to structural or unanticipated field
conditions, in each instance evidenced by a written change
order describing the change.
39. Completion and Delays.
39.1. The work to be performed by Landlord under this Work Letter
Agreement shall be deemed substantially completed on the
date on which Landlord delivers to Tenant either (a) an
occupancy permit (permanent or temporary) from the
governmental agency responsible for issuing the same, or (b)
a certification from Landlord's Space Planner stating that
the Premises are substantially complete and ready for
occupancy in accordance with the Approved Plans, or that any
remaining work fully described by the Space Planner on a
"punch list" thereafter to be completed with due diligence
by the Landlord's Contractor will not substantially
adversely affect Tenant's ability to occupy said Premises.
39.2. If Landlord is delayed in substantially completing any work
as a result of any of the following circumstances or events
("Tenant Delays"), the Commencement Date shall not be
deferred by reason of such delay, to wit:
39.2.1. Tenant's failure to furnish information in
accordance with Section 2 above;
39.2.2. Tenant's request for any special, long-lead
materials or installations as part of the Tenant
Improvements that do not conform to the Standards;
39.2.3. Tenant's changes in any drawings, plans or
specifications, after the date of submission of the
Approved Plans;
39.2.4. Any changes initiated by Tenant by reason of
Tenant's disapproval of cost proposals or resulting
in the preparation of revised cost proposals;
39.2.5. Field changes to the construction work;
39.2.6. The delivery, installation or completion of any
Tenant-finish work performed by Tenant's employees
or agents;
39.2.7. The performance of any Additional Tenant Work, or
any failure to complete or delay in completion of
such work; or
39.2.8. Any other act or omission of Tenant.
39.3. If, for any reason, Landlord cannot complete the Tenant
Improvements by the Estimated Commencement Date, deliver
possession of the Premises to Tenant on the Estimated
Commencement Date, or perform any other covenant contained
in this Work Letter Agreement or in the Lease related to the
work described in this Work Letter Agreement, Landlord shall
not be in breach of this Work Letter Agreement or the Lease,
and shall not be subject to any liability therefor, nor
shall such failure affect the validity of this Lease or the
obligations of Tenant hereunder, except that in any such
case (unless caused by Tenant Delays), Tenant shall not be
obligated to pay rent or perform any other obligation of
Tenant under the terms of the Lease (other than payment and
performance due in advance of occupancy as provided in the
Lease or this Work Letter Agreement), until possession of
the Premises is tendered to Tenant.
40. General.
40.1. All drawings, space plans, plans and specifications for any
improvements or installations in the Premises are expressly
subject to Landlord's prior written approval. Any approval
by Landlord or Landlord's architects or engineers of any of
Tenant's drawings, plans or specifications which are
prepared in connection with construction of improvements in
the Premises shall not in any way bind Landlord or
constitute a representation or warranty by Landlord as to
the adequacy or sufficiency of such drawings, plans or
specifications, or the improvements to which they relate,
for any use, purpose or condition, but such approval shall
merely evidence the consent of Landlord to Tenant's
construction of improvements in the Premises in accordance
with such drawings, plans or specifications.
40.2. Any failure by Tenant to pay any amounts due hereunder shall
have the same effect under the Lease as a failure to pay
rent. Any such failure, or the failure by Tenant to perform
any of its other obligations hereunder, shall constitute an
event of default under the Lease, entitling Landlord to all
of its remedies under the Lease, at law and in equity.
D-3
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Work Letter Agreement,
at San Diego, California, concurrently with their execution of the Lease.
TENANT: LANDLORD:
MAXIM PHARMACEUTICALS, BRITISH PACIFIC PROPERTIES CORPORATION,
a Delaware Corporation a California corporation
By: /s/Dale A. Sander By: /s/ William R. Byers
------------------------- -----------------------------
Dale A. Sander Name: William R. Byers
Chief Financial Officer ----------------------------
Title: Secretary-Treasurer
---------------------------
By: By: /s/ Walter D. Thorneloe
---------------------------- -----------------------------
Name: Name: Walter D. Thorneloe
---------------------------- -----------------------------
Title: Title: Vice President-Development
---------------------------- -----------------------------
D-4
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
<S> <C> <C>
1. PREMISES AND COMMON AREAS 1
1.1 Premises 1
1.2 Common Areas 1
1.3 Common Areas Rules and Regulations 1
1.4 Conditions of Premises 1
1.5 Changes to Common Areas 2
2. TERM 2
2.1 Length of Term 2
2.2 Commencement Date 2
3. RENT 2
3.1 Base Rent 2
3.2 Annual Increase to Base Rent 3
3.3 Additional Rent 3
3.4 Tenant's Charges 5
3.5 Late Charges 5
3.6 Interest on Past Due Obligations 5
3.7 Security Deposit 5
4. USE 6
4.1 Permitted Uses 6
4.2 Prohibited Uses 6
4.3 Changes in Use 6
4.4 Compliance With Laws 6
4.5 Insurance Use Requirements 6
5. MAINTENANCE, REPAIR AND ALTERATION OF PREMISES 6
5.1 Maintenance and Repair 6
5.2 Alterations 6
5.3 Condition on Termination 7
6. UTILITIES AND SERVICES 7
6.1 Utilities and Services Furnished by Landlord 7
6.2 Utilities and Services Furnished by Tenant 7
6.3 Interruption of Service 7
7. INSURANCE AND INDEMNITY 7
7.1 Tenant's Liability Insurance 7
7.2 Tenant's Casualty Insurance 7
7.3 Form of Insurance Policies 8
7.4 Landlord Insurance 8
7.5 Waiver of Liability of Landlord 8
7.6 Indemnity by Tenant of Landlord 8
7.7 Waiver of Subrogation 8
8. DAMAGE OR DESTRUCTION 8
8.1 Definitions 8
8.2 Premises Damage; Premises Building Partial Damage 9
8.3 Building Total Destruction; Project Total Destruction 9
8.4 Damage Near End of Term 9
8.5 Abatement of Rent; Tenant's Remedies 9
8.6 Termination-Advance Payments 10
8.7 Waiver 10
8.8 Insurance Limitation 10
9. TAXES 10
</TABLE>
<TABLE>
<S> <C> <C>
10. ASSIGNMENT AND SUBLETTING 10
10.1 Prohibition of Assignment or Sublet 10
10.2 Procedure for Consent 10
10.3 Continuing Obligation of Tenant 11
10.4 Landlord's Consent - Default 11
10.5 Landlord's Consent - Financial Statements 11
10.6 Additional Terms and Conditions Applicable to Subletting 11
10.7 Excess Rent 11
10.8 No Merger 11
11. DEFAULT 11
11.1 Default by Tenant 11
11.2 Landlord's Remedies 12
11.3 Inducement, Recapture and Effect of Breach. 12
11.4 Right of Landlord to Re-Enter 12
11.5 Default by Landlord 13
12. ENVIRONMENTAL MATTERS 13
12.1 Definitions 13
12.2 Legal Requirements 14
12.3 Environmental Indemnification By Tenant 14
12.4 Tenant's Remedial Action Responsibility 14
12.5 Inspection Rights 14
12.6 Survival of Article 14
13. LANDLORD'S RIGHT TO ENTRY AND TO RELOCATE PREMISES 14
14. CONSTRUCTION OF PREMISES 15
15. SIGNS 15
16. SECURITY. 15
17. EMINENT DOMAIN 15
18. SUBORDINATION 15
19. ESTOPPEL CERTIFICATE 15
20. ATTORNEYS' FEES 15
21. PARKING 16
22. NOTICE 16
22.1 Manner of Service 16
22.2 Change of Place of Service 16
23. HOLDING OVER BY TENANT 16
24. WAIVER 16
25. TIME OF THE ESSENCE 16
26. SUCCESSORS AND ASSIGNS 16
27. LANDLORD'S RESERVATIONS 16
28. BROKERAGE COMMISSION 16
29. WAIVER OF RIGHT TO JURY TRIAL 16
30. GOVERNING LAW 16
31. CAPTIONS AND INTERPRETATIONS 17
32. SEVERABILITY 17
33. LEASE NOT EFFECTIVE UNTIL EXECUTED 17
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C> <C>
34. EXHIBITS AND ADDENDA TO LEASE 17
35. RECORDATION OF LEASE 17
36. ENTIRE AGREEMENT 17
37. COVENANTS AND REPRESENTS 17
</TABLE>
EXHIBITS
<TABLE>
<CAPTION>
Section
<S> <C>
A Premises Floor Plan 1.1
B Rules and Regulations 4.3
C Standards for Utilities and Services 6.1
D Work Letter Agreement 14.
E Form of Tenant's Estoppel Certificate 19.
F Notice of Lease Term Dates
</TABLE>
ADDENDA
<TABLE>
<S> <C>
Rent Section 3
Utilities & Services Section 6
Signage Section 15
Parking Section 20
Right of First Refusal Section 38
Option to Extend Lease Term Section 39
</TABLE>
iii
<PAGE>
ADDENDUM
This ADDENDUM is attached to and made a part of that certain British
Pacific Centre Office Building Lease ("Lease") dated as of July 1, 1998, by and
between British Pacific Properties Corporation, a California corporation,
("Landlord"), and Maxim Pharmaceuticals, a Delaware Corporation, ("Tenant").
SECTION 3. RENT
3.1 Base Rent. (Continued) Tenant shall pay to Landlord, immediately
upon commencement of this Lease, the Initial Monthly Base Rent payable for the
first full calendar month of the Term of this Lease.
SECTION 6. UTILITIES AND SERVICES.
6.1 Utilities and Services Furnished by Landlord. (Continued)
6.1.2 Tenant shall be responsible for the cost of their
separately metered electricity relating to the use of lighting and
electrical outlets within their leased premises. This amount shall be
in excess of their Base Rent and be payable directly to the utility
service provider as determined by Landlord.
SECTION 15. SIGNAGE (EXHIBIT G)
Tenant shall be permitted to place two (2) non-illuminated sign on the
building, one to be located on the fourth floor facier facing University Center
Lane; one to be located on the fourth floor facier on the east side of the
building. Such signage design and installation shall be in compliance with
Landlord's sign criteria, CC&R's criteria, City of San Diego Code and any other
governmental authority. In addition all such signage cost for the manufacture
and installation shall be borne by Tenant, as well as the eventual removal of
said signage due to lease termination, sublease or assignment. All signage
rights shall be personal to Tenant. Tenant shall be provided the right to place
one signage placque in the garage elevator lobby and have the right to replace
the fourth floor elevator button with the Company name.
SECTION 20. PARKING (Continued)
Notwithstanding any other provision in this Section to the contrary,
Tenant and Tenant's Invitees shall be entitled to use, free of charge, the
number of parking spaces located in the Project's on-site parking facilities as
specified in the Basic Lease Provisions for the Term of this Lease.
SECTION 38. FIRST RIGHTS ON ADDITIONAL SPACE
If Landlord at any time during the term of this Lease proposes to lease
space located in the Building to a person other than the Tenant, Landlord shall
first offer to Tenant to lease the space to Tenant on the terms determined
according to the procedure set forth below.
A. Landlord shall deliver a written notice (the "Option Notice") to
tenant stating (1) Landlord's bona fide intention to lease the space to the
proposed transferee, (ii) the description of the space proposed to be leased,
(iii) the exact terms on which the space is proposed to be leased, and (iv) the
name and address of the proposed tenant.
B. Within ten (10) days after receipt of the Option Notice, Tenant
shall have the right, but not the obligation, to elect to lease the space on the
terms set forth in the Option Notice. IF the Option Notice provides for
consideration other than the payment of cash, Tenant may elect to pay equivalent
consideration in cash equal to the good faith estimate of the present fair
market value of the non-cash consideration offered. If Tenant exercises the
right within the ten day period, Landlord and Tenant shall promptly enter a
lease on the terms set forth in the Option Notice.
C. Landlord shall not enter into a lease for the space with any other
person or entity on basic terms materially less favorable to Landlord than those
set forth in the Option Notice without giving Tenant at least five (5) business
days prior written notice of such proposed lease and the opportunity (during
such five (5) business day period by delivery of written notice to Landlord) to
agree to lease the space on the same terms and conditions as those of such
proposed lease.
D. Notwithstanding the foregoing, Tenant's rights pursuant to this
Section 38 shall be subordinate to any other tenant's similar rights that exist
as of the date this Lease is executed.
SECTION 39. OPTION TO EXTEND LEASE TERM
39.1 Option to Extend Term and Method of Exercise. Provided Tenant is
not in default under this Lease, Tenant shall be entitled to extend the Term of
this Lease (the "Option Term") for a five (5) year period. Such Option Term
shall be exercised by Tenant by delivery of written notice to Landlord at least
six (6) months and no more than (9) months prior to the then scheduled
expiration date of the Term. The option to extend is personal to Tenant and may
not be exercised by any transferee of Tenant, even if Landlord has consented to
the transfer.
39.2 Effect of Exercise.
(a) Incorporation of Lease by Reference. All of the terms,
covenants and conditions (including, without limitation, defined terms)
contained in this Lease shall be applicable to each Option Term in the
event of exercise by Tenant" provided, however, that the Term and the
Monthly Base Rent shall be modified as provided herein.
1
<PAGE>
(b) Rent. Subject to adjustment as hereafter provided, the
Monthly Base Rent effective as of the commencement date of the Option
Term shall be the prevailing Market Rent described below.
(c) Prevailing Market Rent. The "Prevailing Market Rent" shall
be equal to the rental per square foot of Rentable Square Footage per
year as of the date which is six months prior to the expiration of the
Term of the Lease, including any previously exercised extensions
thereof, at which Landlord is actually leasing comparable improved
space in the Building for a term comparable to the period of the
extension permitted by exercise of the option, multiplied by the
Rentable Square Footage of the Premises; provided, however, that in no
event shall the Prevailing Market Rent be less than the rent in effect
under this Lease immediately prior to the commencement of the Option
Term. If there is no such comparable improved space in the Building
offered to prospective tenants by Landlord for a comparable term, then
the Prevailing Market Rent shall be based upon the rent as of six
months prior to the end of the Term as aforesaid, prevailing for
comparable improved office space in first class office buildings
located in the business district in the University Towne Centre area of
San Diego, California. In determining the Prevailing Market Rent,
whether for comparable improved space within the Building or in the
business district, the following factors shall be taken into account:
(i) The particular configuration, frontage along a
public thoroughfare, signage visible to the public, parking
facilities, and general level of quality of improvements and
location of each comparison building shall be relevant.
(ii)No rent which has not been set or adjusted during
the twelve month period immediately preceding the expiration
date of the initial term shall be considered prevailing or
current.
If Tenant has timely exercised the option, Landlord shall notify Tenant
in writing of the proposed new, Monthly Base Rent determined by Landlord for the
Option Term at least ninety (90) days prior to the Commencement Date of the
Option Term. Unless Tenant objects to the amount determined by Landlord within
fifteen (15) days after receipt of such notice, the amount stated in such notice
shall be the new Monthly Base Rent. If Tenant objects to Landlord's proposal,
then the new Monthly Base Rent shall be determined by an MAI Appraiser chosen by
Landlord and approved by Tenant. If Tenant does not disapprove of Landlord's
choice of any appraiser by delivery of written notice of disapproval naming a
Tenant's appraiser within five (5) days after written notice of such choice by
Landlord, then Landlord's appraiser shall be deemed to e approved by Tenant. If
Tenant does disapprove of Landlord's choice of an appraiser within the said five
(5) days, then Tenant's notice of disapproval shall name an MAI Appraiser
designated by tenant. Within ten (10) days after the date of Tenant's notice of
disapproval, Landlord's appraiser and Tenant's appraiser together shall select a
neutral third MAI Appraiser. If they are unable to agree on a third MAI
Appraiser within the said ten (10) days, then upon the application of either
party, the third MAI Appraiser shall be designated by the Presiding Judge of the
Superior Court for San Diego County, California. Landlords' appraiser and
Tenant's appraiser each shall determine a Prevailing Market Rent, to be
submitted in writing to Landlord, Tenant and the third MAI Appraiser within
thirty (30) days after the date of Tenant's notice of disapproval. Within
fifteen (15) days after receipt of those two appraisals, the third MAI Appraiser
shall select one of the other of those two appraisals, and the one so selected
shall be and become the Prevailing Market Rent effective as of the commencement
date of the Option Term. The cost of the third (3rd) MAI Appraiser shall be
split equally by Landlord and Tenant, and Landlord and Tenant shall each be
responsible for the fees and costs of the appraiser which it appoints. If the
Monthly Base Rent shall not have been determined by the commencement date of the
Option Term, then until it is determined, Tenant shall pay Monthly Base Rent
when due during the Option Term determined using Landlord's proposed Monthly
Base Rent, and when the actual adjusted Monthly Base Rent is determined, Tenant
shall pay to Landlord any additional rent due for the months which are elapsed
in the Option Term, or Landlord shall credit any excess payment for the elapsed
months to the next Monthly Base Rent becoming due.
39.3 Effect of Default. If Tenant is in material default or any event
or condition has occurred which after notice or passage of time or both shall
constitute a default during the time period when it may otherwise exercise the
option, then any attempt to exercise the option shall be null, void and of no
force or effect. If Tenant exercises the option and if Tenant is in material
default or any event or condition has occurred which after notice or passage of
time or both shall constitute a material default at any time after exercise of
the option or on the first day for commencement of the Option Term, then the
exercise of the option by tenant shall be null, void and of no force or effect.
If Tenant has been in default in payment of any sum required by this Lease where
a late charge has become due under this Lease for more than three times during
any twelve-month period, then the provisions of this option to extend the Term
shall be canceled and shall be of no force or effect. No condition of the
Premises, including, without limitation, any alteration or improvement made by
Tenant, oral intention expressed by Tenant or detrimental reliance by Tenant on
any statement, act or omission by Landlord shall best any rights in tenant for
exercise of this option or to possess the premises during any period set for
extension of the Term in this option, or estop Landlord from eviction of tenant
after the end of the Term of this Lease then in effect, or give rise to any
equitable defense to such eviction. Tenant hereby waives any and all equitable
remedies with respect to this option unless Tenant has complied in all respect
with the written notice requirements set forth herein. The sole and exclusive
method for exercise of the option contained herein shall be delivery of the
written notice called for herein by Tenant to Landlord on a timely basis.
Landlord and Tenant hereby agree that time is of the essence with respect to
delivery of any notice of exercise by Tenant to Landlord. The date for delivery
of any notice required or permitted in this option shall be determined by the
provisions for delivery of notice contained in this Lease.
40.1 Condition. This Lease Agreement is conditioned upon execution of
the Lease Termination Agreement, attached as Exhibit H.
2
<PAGE>
EXHIBIT E
BRITISH PACIFIC CENTRE
FORM OF TENANT'S ESTOPPEL CERTIFICATE
The undersigned as Tenant under that certain Office Lease (the "Lease")
made and entered into as of August 11, 1998 and between BRITISH PACIFIC
PROPERTIES CORPORATION, a California Corporation, as Landlord, and the
undersigned as Tenant, for Premises on the second floor of the Office Building
located at 8899 University Center Lane, San Diego, California 92122 certifies as
follows:
1. Attached hereto as Exhibit A is a true and correct copy of the Lease
and all amendments and modifications thereto. The documents contained in Exhibit
A represent the entire agreement between the parties as to the Premises.
2. The undersigned has commenced occupancy of the Premises described in
the Lease, currently occupies the Premises, and the Lease Term commenced on
____________________.
3. The Lease is in full force and effect and has not been modified,
supplemented or amended in any way except as provided in Exhibit A.
4. Tenant has not transferred, assigned, or sublet any portion of the
Premises nor entered into any license or concession agreements with respect
thereto except as follows:
5. Tenant shall not modify the documents contained in Exhibit A or
prepay any amounts owing under the Lease to Landlord in excess of thirty (30)
days without the prior written consent of Landlord's mortgagee.
6. Base Rent became payable on _____________________.
7. The Lease Term expires on ______________________.
8. All conditions of the Lease to be performed by Landlord necessary to
the enforceability of the Lease have been satisfied and Landlord is not in
default thereunder.
9. No rental has been paid in advance and no security has been
deposited with Landlord except as provided in the Lease.
10. As of the date hereof, there are no existing defenses or offsets
that the undersigned has, which preclude enforcement of the Lease by Landlord.
11. All monthly installments of Base Rent, all Additional Rent and all
monthly installments of estimated Additional Rent have been paid when due
through _________________. The current monthly installment of Base Rent is
$____________________.
12. The undersigned acknowledges that this Estoppel certificate may be
delivered to Landlord's prospective mortgagee, or a prospective purchaser, and
acknowledges that it recognizes that if same is done, said mortgagee,
prospective mortgagee, or prospective purchaser will be relying upon the
statements contained herein in making the loan or acquiring the property of
which the Premises are a part, and in accepting an assignment of the Lease as
collateral security, and that receipt by it of this certificate is a condition
of making of the loan or acquisition of such property.
13. If Tenant is a corporation or partnership, each individual
executing this Estoppel Certificate on behalf of Tenant hereby represents and
warrants that Tenant is a duly formed and existing entity qualified to do
business in California and that Tenant has full right and authority to execute
and deliver this Estoppel Certificate and that each person signing on behalf of
Tenant is authorized to do so.
Executed at ________________________ on the ____________________ day of
__________________, 19____.
"Tenant":
------------------------------------------
a ________________________________________
By:_______________________________________
Its:______________________________________
By:_______________________________________
Its:______________________________________
<PAGE>
EXHIBIT F
BRITISH PACIFIC CENTRE
NOTICE OF LEASE TERM DATES
To:_____________________________
_____________________________
_____________________________
_____________________________
Re: Office Lease dated July 1, between BRITISH PACIFIC
PROPERTIES CORPORATION, a California Corporation
("Landlord"), and MAXIM PHARMACEUTICALS, a California
Corporation ("Tenant") concerning Suite #400 on the
second floor of the Office Building located at 8899
University Center Lane, San Diego, California 92122.
Ladies and Gentlemen:
In accordance with the Office Lease (the "Lease"), we wish to advise
you and/or confirm as follows:
1. That the Premises are Ready for Occupancy, and that the
Lease Term shall commence as of __________________ for a
term of __________________________ (______) months ending on
2. That in accordance with the Lease, Rent commenced to accrue
on _____________________
3. If the Lease Commencement Date is other than the first day of
the month, the first billing will contain a pro rata
adjustment. Each billing thereafter, with the exception of the
final billing, shall be for the full amount of the monthly
installment as provided for in the Lease.
4. Rent is due and payable in advance on the first day of each
and every month during the Lease Term. Your rent checks
should be made payable to ____________________________________
at ________________________________
5. The exact number of rentable square feet within the Premises
is ________________ square feet.
6. Tenant's Share as adjusted based upon the exact number of
rentable square feet within the Premises is ________________
and ___________________________ percent (___________%).
"Landlord":
BRITISH PACIFIC PROPERTIES CORPORATION,
a California Corporation
By: _____________________________________________
Its: ____________________________________________
Landlord's Federal Taxpayer Identification No.:
_________________________________________________
Agreed to and Accepted as of ________________________, 19______.
"Tenant": _____________________________________________________
a _____________________________________________________________
By: ___________________________________________________________
Its: __________________________________________________________
By: ___________________________________________________________
Its: __________________________________________________________
<PAGE>
LEASE TERMINATION AGREEMENT
This Lease Termination Agreement (this "Agreement"), dated July 2, 1998,
for reference purposes only, is entered into by and between BRITISH PACIFIC
PROPERTIES, INC., a California corporation ("Landlord"), and MAXIM
PHARMACEUTICALS, INC., a California corporation ("Tenant") with reference to
that certain Office Lease, as amended, between Landlord and Tenant dated as
of January 13, 1998 (the "Lease"), with respect to certain premises
consisting of 12,407 rentable square feet, known as Suite 200 (the
"Premises") at 8899 University Center Lane, San Diego 92122 (the "Building").
All capitalized terms used herein shall have the same meaning as set forth in
the Lease.
RECITALS
Concurrent with the execution of this Agreement, Landlord and Tenant are
entering into a new Office Lease Agreement with respect to premises located
on the fourth (4th) floor of the Building. Therefore, Landlord and Tenant now
desire to terminate the Lease upon the terms and conditions state herein
below.
AGREEMENT
1. Landlord and Tenant hereby terminate the Lease effective as of the time
the fourth floor of the New Space is "Ready to Occupy" (anticipated move and
occupancy date: August 15, 1998) (the "Termination Date"), upon the following
terms and conditions:
a. Concurrent with the execution of this Agreement by Tenant, Tenant will
enter into an Office Lease (the "New Lease") with respect to Suite 400
in the Building (the "New Premises").
* Ready to Occupy shall be defined as space that is substantially complete
with only minor items that are to be performed.
2. Effective on the Termination Date, Tenant shall have five (5) business
days to surrender the possession of the Premises to Landlord pursuant to the
provisions of Section 5.3 of the Lease, and shall relinquish any claim of a
right of possession of the Premises as if the date of this occurrence were
originally set forth in the Lease as the termination of the Lease Term. The
parties hereto agree that the Lease shall be terminated and canceled as of
such date, and that Tenant's obligations under the Lease shall be thereafter
terminated, except any obligations or liability that, by express provision in
the Lease, survive termination of the Lease.
3. This Agreement shall be deemed to have been made in and shall be construed
in accordance with the laws of the State of California. This Agreement shall
be binding upon and inure to benefit of the parties and their respective
successors and assigns.
4. Landlord and Tenant represent and warrant to each other that they have
full right, power and authority to enter into this Lease Termination
Agreement without the consent of approval of any other entity or person and
make these representations knowing that the other party will rely thereon.
Landlord and Tenant each further represent and warrant that the
<PAGE>
signatory on their behalf has full right, power and authority to act for and
on behalf of such party in entering into this Lease Termination Agreement.
5. Tenant hereby warrants and represents to Landlord that Tenant has not done
or suffered anything to be done whereby the Premises have been encumbered in
any way whatsoever.
6. Upon the Termination Date, Landlord and Tenant release and forever
discharge each other (including their respective shareholders, directors,
officers, agents, employees, attorneys, predecessors, successors, assigns,
guarantors and affiliated or related entities or persons) from every Claim
(as hereinafter defined) or any kind and nature arising out of, resulting
from or related to, whether directly or indirectly, the Lease, including,
without limitation, Tenant's occupancy of or interest in the Premises and/or
the Building, the relationship of the parties hereto as Landlord or Tenant
under the Lease, or any other relationship with respect to the Lease or the
Premises, excepting only (1) the obligations created under this Agreement,
and (2) obligations of Landlord and Tenant accrued, but not fully discharged,
by the Termination Date, and for purposes of items (1) and (2) immediately
preceding, the same shall be released and forever discharged upon the
performance of the terms of this Agreement and payment of rent and charges
under the Lease due and owing through the Termination Date, except to the
extent forgiven or waived under the specific provisions hereof. For purpose
of this Agreement, the term "Claim" shall mean any claim, demand, obligation,
debt, loss, controversy, promise, agreement, default, breach, liability,
damage, cost, expense, injury, compensation, action, cause of action,
contribution or reimbursement. The parties expressly state and intend that
the term "Claim" includes, without limitation, any known or unknown,
suspected Claims.
This general release shall be governed by the laws of the State of
California. This release extends to all rights granted under California Civil
Code Section 1542 which rights are hereby expressly waived by the parties.
California Civil Code Section 1542 reads as follows:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW
OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH
IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR."
The parties each understand that the facts upon which the release in this
Agreement is made may hereby turn out to be other than or different from the
facts now known or believed by each party to be true and each party accepts
and assumes the risk of the facts to be different than now known, or believed
to be true.
7. Each party represents that it has not made any assignment, sublease,
transfer, conveyance or other disposition (the "Transfer") of the Lease,
any interest in the Lease or any Claim, arising from or related to the Lease.
Each party agrees to indemnify and hold harmless all persons and/or entities
which it is hereby releasing from any Claim arising from such Transfer. This
obligation to indemnify and hold harmless shall include the obligation to pay
reasonable attorneys' fees and costs actually incurred by the indemnified
party, whether or not litigation is commenced.
8. The parties have read this Agreement including the release contained
herein, and upon the advice of counsel, they have freely and voluntarily
entered into this Agreement. If either party commences an action against the
other party arising out of or in connection with this
<PAGE>
Agreement, the prevailing party shall be entitled to recover from the losing
party all reasonable attorney's fees and costs of suit.
9. THE ECONOMIC AND OTHER SUBSTANTIVE TERMS AND PROVISIONS OF THIS AGREEMENT
AND OF THE TRANSACTION CONTEMPLATED HEREUNDER ARE CONFIDENTIAL AND WILL BE
TREATED AS SUCH BY THE PARTIES TO THIS AGREEMENT, THEIR OFFICERS, DIRECTORS,
AGENTS AND EMPLOYEES. Notwithstanding the foregoing, such terms and provisions
of this Agreement may be disclosed (i) with the prior written consent of the
other parties hereto, and/or (ii) on a "need to know" basis to any lender or
other party whose consent or agreement is required to consummate the
transaction contemplated by this Agreement, provided such party shall be
advised the disclosure is made on a confidential basis, and/or (iii) as may
be required by law.
10. This Agreement sets forth all terms, conditions, and understandings
between the parties, and there are no terms, conditions or understandings,
either oral or written, between the parties other than as set forth herein.
No alteration, amendment, change or addition to this Agreement shall be
binding unless reduced to writing and signed by each of the parties hereto.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the day and year set forth above.
LANDLORD: TENANT:
British Pacific Properties, Maxim Pharmaceuticals, Inc.,
a California corporation a Delaware corporation
By: /s/ WILLIAM R. BYERS By /s/ DALE A. SANDER
------------------------ --------------------------
Its: SECRETARY-TREASURER Its: CHIEF FINANCIAL OFFICER
----------------------- -------------------------
<PAGE>
EXHIBIT G
SIGN CRITERIA
BRITISH PACIFIC CENTRE
8899 UNIVERSITY CENTER LANE
SIZE: Same as existing "Merrill" sign.
FONT TYPE: Same as existing "Merrill" sign.
APPLICATION: Glue on marble. No penetration to building.
CONSTRUCTION: 1 1/2" thick-plastic structure laminated to
styrofoam backing (Wilson Art or Formica).
No illumination on signage.
COLOR: Same as existing "Merrill" sign.
APPROVAL TO SIGNAGE: Kohler Kompany, such approval not be
unreasonably withheld.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE INTERIM
FINANCIAL STATEMENTS FOR THE PERIOD ENDED JUNE 30, 1998 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> JUN-30-1998
<CASH> 11,395,805
<SECURITIES> 20,043,202
<RECEIVABLES> 28,754
<ALLOWANCES> 0
<INVENTORY> 594,250
<CURRENT-ASSETS> 33,508,656
<PP&E> 1,419,416
<DEPRECIATION> 269,712
<TOTAL-ASSETS> 41,093,997
<CURRENT-LIABILITIES> 5,236,645
<BONDS> 814,578
0
0
<COMMON> 9,385
<OTHER-SE> 35,033,389
<TOTAL-LIABILITY-AND-EQUITY> 41,093,997
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 12,477,924
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 59,049
<INCOME-PRETAX> (13,628,268)
<INCOME-TAX> 0
<INCOME-CONTINUING> (13,628,268)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (13,628,268)
<EPS-PRIMARY> (1.51)
<EPS-DILUTED> (1.51)
</TABLE>
