STANDARD FORM
SINGLE TENANT INDUSTRIAL LEASE
(NET)
LANDLORD: ERIC AND SHIRLEY PEPYS
TENANT: GISH BIOMEDICAL, INC.
PROJECT: 22942 ARROYO VISTA
CITY, STATE: RANCHO SANTA MARGARITA, CALIFORNIA
DATE: OCTOBER 26, 2000
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TABLE OF CONTENTS
1. BASIC LEASE TERMS....................................................1
2. PREMISES.............................................................2
3. LEASE TERM...........................................................2
4. POSSESSION...........................................................2
5. RENT.................................................................3
6. PREPAID RENT.........................................................4
7. SECURITY DEPOSIT.....................................................4
8. USE OF PREMISES AND PROJECT FACILITIES...............................6
9. SURRENDER OF PREMISES; HOLDING OVER..................................7
10. SIGNAGE..............................................................8
11. TAXES................................................................8
12. UTILITIES............................................................9
13. MAINTENANCE..........................................................9
14. ALTERATIONS.........................................................11
15. RELEASE AND INDEMNITY...............................................11
16. INSURANCE...........................................................12
17. DESTRUCTION.........................................................13
18. CONDEMNATION........................................................14
19. ASSIGNMENT OR SUBLEASE..............................................15
20. DEFAULT.............................................................16
21. LANDLORD'S REMEDIES.................................................17
22. DEFAULT BY LANDLORD.................................................18
23. ENTRY OF PREMISES AND PERFORMANCE BY TENANT.........................18
24. SUBORDINATION.......................................................19
25. NOTICE..............................................................19
26. WAIVER..............................................................20
27. LIMITATION OF LIABILITY.............................................20
28. FORCE MAJEURE.......................................................20
29. PROFESSIONAL FEES...................................................20
30. EXAMINATION OF LEASE................................................21
31. ESTOPPEL CERTIFICATE................................................21
32. RULES AND REGULATIONS...............................................21
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33. LIENS...............................................................21
34. MISCELLANEOUS PROVISIONS............................................22
35. LEASE EXECUTION.....................................................23
EXHIBITS
EXHIBIT A DEPICTION OF PREMISES
EXHIBIT B DESCRIPTION OF PREMISES
EXHIBIT C WORK LETTER AGREEMENT
EXHIBIT D NOTICE OF LEASE TERM DATES
EXHIBIT E TENANT ESTOPPEL CERTIFICATE
EXHIBIT F RULES AND REGULATIONS
EXHIBIT G PROJECT SIGNAGE CRITERIA
EXHIBIT H HAZARDOUS MATERIALS ADDENDUM
EXHIBIT I HAZARDOUS MATERIALS QUESTIONNAIRE
RIDERS
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RIDER 1 OPTION TO EXTEND
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STANDARD INDUSTRIAL LEASE
(NET)
1. BASIC LEASE TERMS.
(a) DATE OF LEASE EXECUTION: 26 October 2000
(b) TENANT: Gish Biomedical, Inc., a California corporation
Address (Premises):22942 Arroyo Vista, Rancho Santa Margarita
California
Address for Notices:22942 Arroyo Vista, Rancho Santa Margarita
CA 92688
(c) LANDLORD: Eric and Shirley Pepys.
Address for Rent: Eric and Shirley Pepys
526 South Bayfront
Newport Beach, CA 92662
Address for Notices: Eric and Shirley Pepys
526 South Bayfront
Newport Beach, CA 92662
(d) TENANT'S PERMITTED USE OF PREMISES: General office, warehousing
and laboratory facilities consistent with biomedical industry
(e) PREMISES: Those Certain Premises Defined in Paragraph 2 Below.
(f) PREMISES AREA: Approximately 51,913 Rentable Square Feet
(g) TERM AND COMMENCEMENT:
Term: 10 Years and 4 Months (124 Months)
Commencement Date (for Possession): The earlier of the following
two dates:
(a) The date of final execution of this Lease by Landlord and
delivery to Tenant; or
(b) October 13, 2000
Base Rent Commencement Date: The earlier of the following two
dates:
(a) The date which is four (4) months after the date of final
execution of this Lease by Landlord and delivery to Tenant; or
(b) February 13, 2001
Option to Extend Term: One option to extend the Term for five
years (see Rider 1)
(h) MONTHLY BASIC RENT: Thirty Three Thousand, Seven Hundred
Forty Three and 45/100 Dollars ($33,743.45)
(i) ANNUAL BASIC RENT: Four Hundred Four Thousand, Nine Hundred
Twenty-One and 40/100 Dollars ($404,921.40)
(j) RENT ADJUSTMENT:
Cost of Living. The cost of living provisions of
Subparagraph 5(c) apply using the Consumer Price Index -
Urban Wage Earners and Clerical Workers (Los Angeles-
Anaheim-Riverside), all items, Base 1982-1984 ("Index"),
(1967=100), assuming a minimum of three percent (3%) and a
maximum of five percent (5%) per annum, cumulative and
compounding.
(k) PREPAID RENT (for First Month of Term Commencement): Thirty
Three Thousand, Seven Hundred Forty Three and 45/100 Dollars
($33,743.45)
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(l) SECURITY DEPOSIT: Three Hundred Thousand and 00/100
Dollars ($300,000.00) in the form of a Letter of Credit pursuant
to Pagaraph 7.
(m) BROKER(S): Cushman & Wakefield of California, Inc.,
representing Landlord
Cushman & Wakefield of California, Inc. and
Colliers Seeley International, Inc.,
co-representing Tenant
(n) GUARANTOR(S): N/A
(o) TENANT IMPROVEMENTS: All work performed by Tenant to prepare
the Premises for occupancy pursuant to the terms of the Work
Letter Agreement attached hereto as Exhibit-C.
(p) TENANT IMPROVEMENT ALLOWANCE: Landlord grants to Tenant a
Tenant Improvement Allowance pursuant to the terms of the Work
Letter Agreement attached hereto as Exhibit-C.
(q) ADDITIONAL SECTIONS: None.
(r) RIDERS: Riders numbered 1 through 1 are attached hereto and
made a part hereof.
(s) EXHIBITS: Exhibits lettered A through I, are attached hereto
and made a part hereof.
This Paragraph 1 represents a summary of the basic terms of this Lease. In
the event of any inconsistency between the terms contained in this Paragraph 1
and any specific provision of this Lease, the terms of the more specific
provision shall prevail.
2. PREMISES
--------
(a) Landlord hereby leases to Tenant and Tenant hereby leases from
Landlord, the Premises referenced in Paragraph 1 and outlined on the Depiction
of Premises attached hereto as Exhibit-A and incorporated herein by this
reference. The Premises consist of that certain building which is located at the
address designated in Subparagraph 1(b) (the "Building") and the parcel or
parcels of real property described on the Description of Premises attached
hereto as Exhibit-B and incorporated herein by this reference which is for the
exclusive use of Tenant. The Premises are improved or to be improved with
certain tenant improvements (the "Tenant Improvements") described in the Work
Letter Agreement, a copy of which is attached hereto as Exhibit-C and
incorporated herein by this reference, said Premises being agreed, for purposes
of this Lease, to have an area of approximately the number of Rentable Square
Feet designated in Subparagraph 1(f). (b) The parties agree that the letting and
hiring of the Premises is upon and subject to the terms, covenants and
conditions herein set forth and Tenant covenants as a material part of the
consideration for this Lease to keep and perform each and all of said terms,
covenants and conditions by it to be kept and performed and that this Lease is
made upon the condition of such performance.
3. LEASE TERM
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The Term of this Lease shall be for the period designated in Subparagraph
1(g) commencing on the Commencement Date, and ending on the last day of the
Term, unless the term hereby demised shall be sooner terminated as herein
provided ("Term"). Notwithstanding the foregoing, if the Commencement Date falls
on any day other than the first day of a calendar month then the Term of this
Lease shall be measured from the first day of the month following the month in
which the Commencement Date occurs. Landlord and Tenant shall execute Exhibit D
to confirm the Commencement Date and other matters.
4. POSSESSION
----------
(a) Delivery of Possession. Landlord agrees to deliver possession of the
Premises to Tenant upon the date immediately following date of final execution
of this Lease by Landlord and delivery to Tenant. Notwithstanding the foregoing,
Landlord shall not be obligated to deliver possession of the Premises to Tenant
until Landlord has received from Tenant all of the following: (i) the Security
Deposit and the first monthly installment of Annual Basic Rent; (ii) executed
copies of policies of insurance or certificates thereof as required under
Paragraph 16 of this Lease; (iii) copies of all governmental permits and
authorizations required in connection with Tenant's operation of its business
upon the Premises; and (iv) an executed original of the Hazardous Materials
Questionnaire in the form attached hereto as Exhibit I.
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(b) Late Delivery. Tenant agrees that if Landlord is unable to deliver
possession of the Premises to Tenant on or prior to the Commencement Date
specified in Subparagraph 1(g), this Lease shall not be void or voidable, nor
shall Landlord be liable to Tenant for any loss or damage resulting therefrom,
nor shall the Expiration Date of the Term be in any way extended, unless such
late delivery shall be due solely to the gross negligence or willful misconduct
of Landlord, in which event, as Tenant's sole remedy, the Commencement Date and
the Expiration Date of the Term shall be extended one (1) day for each day
Landlord delays in delivering possession of the Premises to Tenant due solely to
Landlord's gross negligence or willful misconduct. Notwithstanding anything to
the contrary in this Paragraph 4(b), Tenant may terminate this Lease if Landlord
fails to deliver possession of the Premises pursuant to Paragraph 4(a) within
fifteen (15) days of the Commencement Date (for Possession)
(c) Condition of Premises. Tenant has inspected the Premises and prepared a
punch-list of items (the "Punch-List", attached hereto as Exhibit C-5) on the
Premises that need additional work. Landlord shall cause all items set forth in
the Punch-List to be repaired or corrected within thirty (30) days of the
Commencement Date (for Possession) or as soon as reasonably practicable. Other
than the items specified in the Punch-List, by taking possession of the
Premises, Tenant will be deemed to have accepted the Premises and the Building
in their condition on the date of delivery of possession and to have
acknowledged that Landlord has installed the Tenant Improvements as required by
the Work Letter Agreement and that there are no additional items needing work or
repair. Landlord shall cause all items set forth in the Punch-List to be
repaired or corrected within thirty (30) days following the preparation of the
Punch-List or as soon as reasonably practicable after the preparation of the
Punch-List. Tenant acknowledges that neither Landlord nor any agent of Landlord
has made any representation or warranty with respect to the Premises and the
Building or any portions thereof or with respect to the suitability of same for
the conduct of Tenant's business. Without limiting the foregoing, if the
Building is newly constructed or recently renovated, Tenant's execution of the
Notice attached hereto as Exhibit D shall constitute a specific acknowledgment
and acceptance of the various start-up inconveniences that may be associated
with the use of the Premises such as certain construction obstacles, including
scaffolding, uneven air conditioning services and other typical conditions
incident to recently constructed or renovated buildings.
5. RENT
----
(a) Basic Rent. Effective as of the Base Rent Commencement Date, Tenant
agrees to pay Landlord as Annual Basic Rent for the Premises the Annual Basic
Rent designated in Subparagraph 1(h) (adjusted as hereinafter provided) in
twelve (12) equal monthly installments as designated in Subparagraph 1(j), each
in advance of the first day of each and every calendar month during the Term,
except that one month's rent shall be paid upon the execution of this Lease. If
the Term of this Lease commences on a day other than the first day of a calendar
month or ends on a day other than the last day of a calendar month, then the
rent for such periods shall be prorated in the proportion that the number of
days this Lease is in effect during such periods bears to thirty (30), and such
rent shall be paid at the commencement of such period. In addition to the Annual
Basic Rent, Tenant agrees to pay additional rent as provided in Paragraph 11
(Taxes), Paragraph 13 (Maintenance), Paragraph 16 (Insurance), effective as of
the Commencement Date (for Possession), and the amount of all rental adjustments
as and when hereinafter provided in this Lease. The Annual Basic Rent, any
additional rent payable pursuant to the provisions of this Lease, and any rental
adjustments shall be paid to Landlord, without any prior demand therefor, and
without any deduction or offset whatsoever in lawful money of the United States
of America, which shall be legal tender at the time of payment, at the address
of Landlord designated in Subparagraph 1(c) or to such other person or at such
other place as Landlord may from time to time designate in writing. Further, all
charges to be paid by Tenant hereunder, including, without limitation, payments
for real property taxes, insurance, repairs, and parking, if any, shall be
considered additional rent for the purposes of this Lease, and the word "rent"
in this Lease shall include such additional rent unless the context specifically
or clearly implies that only the Annual Basic Rent is referenced. Annual Basic
Rent shall be adjusted as provided in Subparagraph 1(j).
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(b) Late Payment. Tenant acknowledges that late payment by Tenant to
Landlord of any rent or other sums due under this Lease will cause Landlord to
incur costs not contemplated by this Lease, the exact amount of such costs being
extremely difficult and impracticable to ascertain. Such costs include, without
limitation, processing and accounting charges and late charges that may be
imposed on Landlord by the terms of any encumbrance or note secured by the
Premises. Therefore, if any installment of Annual Basic Rent is not received
within five (5) days of the date such installment is due (pursuant to Paragraph
5 (a)) or any rent or other sum due from Tenant is not received within five (5)
days of written notice from Landlord, Tenant shall pay to Landlord an additional
sum equal to 10% of such overdue payment for each month such payment remains
overdue. Landlord and Tenant hereby agree that such late charge represents a
fair and reasonable estimate of the costs that Landlord will incur by reason of
any such late payment. Additionally, all such delinquent rents or other sums,
shall bear interest at the lesser of 12% per annum or the maximum legal interest
rate. Any payments of any kind returned for insufficient funds will be subject
to an additional handling charge of $25.00.
(c) Cost of Living Rent Adjustment. If Subparagraph 1(j)1 is marked, Annual
Basic Rent, including all prior adjustments, shall be increased (but never
decreased) annually effective each anniversary of the Commencement Date for Rent
or each anniversary of the first day of the month immediately following the
month in which the Commencement Date for Rent occurs if the Commencement Date
for Rent occurs other than on the first day of a month ("Adjustment Date"), in
accordance with the percentage increase, if any, in the Index described in
Subparagraph 1(j)1 as published by the United States Department of Labor, Bureau
of Labor Statistics ("Bureau"). The Index most recently published prior to the
Adjustment Date shall be compared with the Index for the same month of the
preceding year and the Annual Basic Rent shall be increased in accordance with
the percentage increase, if any, between such Indices. Should the Bureau
discontinue the publication of the Index, or publish the same less frequently,
or alter the same in some other manner, Landlord, in its discretion, shall adopt
a substitute index or procedure which reasonably reflects and monitors consumer
prices. The foregoing notwithstanding, the Annual Basic Rent increase shall be
increased at a minimum of three percent (3%) with a maximum of five (5%) per
annum, cumulative and compounding.
6. PREPAID RENT
------------
Upon execution of this Lease, Tenant shall pay to Landlord the Prepaid Rent
set forth in Subparagraph 1(k), and if Tenant is not in default of any
provisions of this Lease, such Prepaid Rent shall be applied toward the rent due
for the first month of the Term, measured from the Base Rent Commencement Date.
Landlord's obligations with respect to the Prepaid Rent are those of a debtor
and not of a trustee, and Landlord can commingle the Prepaid Rent. Landlord
shall not be required to pay Tenant interest on the Prepaid Rent. Landlord shall
be entitled to immediately endorse and cash Tenant's Prepaid Rent; however, such
endorsement and cashing shall not constitute Landlord's acceptance of this
Lease. In the event Landlord does not accept this Lease, Landlord shall return
said Prepaid Rent. If Landlord sells the Premises and deposits with the
Purchaser the Prepaid Rent, Landlord shall be discharged from any further
liability with respect to the Prepaid Rent.
7. SECURITY DEPOSIT
----------------
(a) Upon execution of this Lease, Tenant shall deposit the Security Deposit
set forth in Subparagraph 1(l) with Landlord, as security for the performance by
Tenant of the provisions of this Lease. If Tenant is in default (beyond all
applicable cure periods), regardless of whether such default is monetary or
non-monetary, Landlord may use the Security Deposit or any portion thereof to
cure the default or to compensate Landlord for any damages sustained by Landlord
resulting from Tenant's default. Upon demand, Tenant shall immediately pay to
Landlord a sum equal to the portion of the Security Deposit expended or applied
by Landlord to maintain the Security Deposit in the amount initially deposited
with Landlord. If Tenant is not in default at the expiration or termination of
this Lease, Landlord shall return the entire Security Deposit to Tenant, net of
any portion thereof used by Landlord to cure a default by Tenant under this
Lease or compensate Landlord for any damages sustained by Landlord resulting
from such default, to Tenant. Landlord's obligations with respect to the
Security Deposit are those of a debtor and not of a trustee, and Landlord can
commingle the Security Deposit with Landlord's general funds. Landlord shall not
be required to pay Tenant interest on the Security Deposit. Landlord shall be
entitled to immediately endorse and cash Tenant's Security Deposit; however,
such endorsement and cashing shall not constitute Landlord's acceptance of this
Lease. In the event Landlord does not accept this Lease, Landlord shall return
said Security Deposit. If Landlord sells the Premises and deposits with the
purchaser the Security Deposit, Landlord shall be discharged from any further
liability with respect to the Security Deposit.
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(b) Paragraph 7(a) notwithstanding, Tenant shall post the Security Deposit
set forth in Subparagraph 1(l) with Landlord by the delivery to Landlord of an
irrevocable standby letter of credit ("Letter of Credit") in compliance with all
provisions of this Paragraph 7(b). The Letter of Credit shall reflect Landlord
as beneficiary and shall be in the principal amount of the Security Deposit. The
Letter of Credit shall be capable of being drawn upon at a location in Southern
California reasonably acceptable to Landlord. In all cases, the identity of the
issuer of the Letter of Credit shall be subject to the reasonable approval of
Landlord. The form of the Letter of Credit shall be subject to the review and
reasonable approval of Landlord, and the Letter of Credit shall contain language
allowing Landlord to draw upon the Letter of Credit upon presentation to the
issuer of Landlord's written statement that Landlord is entitled to the funds
represented by such Letter of Credit in accordance with the terms of this Lease.
Approval by Tenant prior to any drawing upon the Letter of Credit shall not be
required. The Letter of Credit shall be for an original term of not less than
one (1) year and shall permit, if appropriate based upon the length of the
remaining Term of the Lease and (if appropriate) the remaining portion of the
Option Term, Landlord to draw in full upon the Letter of Credit unless Tenant
furnishes to Landlord, at least thirty (30) days prior to the expiration of the
Letter of Credit, either an extension of the Letter of Credit from the issuer or
a substitute Letter of Credit consistent with the requirements of this Paragraph
7(b), in either case so that Landlord has in its possession at all times during
the Term and (if appropriate) during the Option Term and for a period of at
least two (2) weeks after Landlord recovers and accepts possession of the
Premises a valid Letter of Credit capable of being drawn upon in compliance with
this Paragraph 7(b).
Landlord and Tenant agree that Landlord may draw upon the Letter of Credit
without notice to Tenant upon the occurrence or nonoccurrence of any event
entitling Landlord under this Lease to apply any portion of the Security
Deposit. Landlord shall return the Letter of Credit to Tenant at such time as
Landlord is obligated to return the Security Deposit to Tenant pursuant to the
terms of this Lease. Should the terms of this Lease require an increase or
replacement of the dollar amount of the Security Deposit, Tenant shall timely
furnish to Landlord either an amendment to the Letter of Credit increasing its
principal amount consistent with the requirements of this Lease or provide
Landlord with a substitute Letter of Credit in such increased principal amount
and otherwise consistent with this Paragraph 7(b). In the event partial drawings
are not permitted upon the Letter of Credit and there occurs or does not occur
an event so that Landlord under this Lease is entitled to draw upon the Letter
of Credit, Landlord may draw upon the full amount of the Letter of Credit, apply
a portion of the funds so obtained by Landlord as authorized by this Lease,
retain the balance of the Security Deposit pursuant to this Lease and Tenant
shall thereafter post additional cash funds with Landlord in the amount of the
balance of the Security Deposit, unless Landlord, in its sole and absolute
discretion, permits Tenant to post a substitute Letter of Credit representing
the Security Deposit. In the event of a sale or other disposition of the
Premises, Landlord may require that Tenant furnish to Landlord's transferee a
substitute or amended Letter of Credit, naming such transferee as the
beneficiary and otherwise in compliance with this Paragraph 7(b).
Should the Letter of Credit be revoked, should the creditworthiness of the
issuer of the Letter of Credit become impaired (in Landlord's reasonable
judgment), should Tenant be assessed on two (2) occasions within any eighteen
(18) month period or three (3) occasions within any twenty-four (24) month
period any late charges pursuant to Paragraph 5 of this Lease and/or should
circumstances arise that create the reasonable likelihood that Landlord would be
unable to draw upon the Letter of Credit, Landlord may require that Tenant,
within fifteen (15) days of Landlord's notice, post with Landlord in cash the
full amount of the Security Deposit then required by this Lease without regard
to this Paragraph 7(b). In such event, Landlord shall return any Letter of
Credit then in its possession to Tenant. The intent of the parties by this
Paragraph 7(b) is that Landlord shall have and retain at all times during the
Term and (if appropriate) during the Option Term, and for a period of two (2)
weeks after Landlord recovers possession of the Premises, a valid Letter of
Credit capable of being drawn upon by Landlord in compliance with this Paragraph
7(b) for the purpose of immediately obtaining funds in the amount of the
Security Deposit, so that Landlord is in substantially the same position as if
Landlord had in its possession a cash payment by Tenant of the Security Deposit
in accordance with this Lease.
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The right as set forth in this Paragraph 7(b) to post a Letter of Credit in
satisfaction of Tenant's obligations regarding the Security Deposit is personal
to the original Tenant executing this Lease and may not be exercised by any
assignee or subtenant of Tenant, even if Landlord has consented to the
assignment or subletting.
(c) Reduction in Security Deposit. Provided that Tenant is not in default
(beyond all applicable cure periods), the Security Deposit shall be decreased by
the amounts set forth in this Subparagraph 7(c).
(i) Effective as of the first (1st) anniversary of the Base Rent
Commencement Date, the Letter of Credit shall be reduced by an amount equal to
One Hundred Five Thousand and 00/100 Dollars ($105,000.00) and the Security
Deposit shall then be One Hundred Ninety Five Thousand and 00/100 Dollars
($195,000.00).
(ii) Effective as of the second (2nd) anniversary of the Base Rent
Commencement Date, the Letter of Credit shall be reduced by an amount equal to
One Hundred Five Thousand and 00/100 Dollars ($105,000.00) and the Security
Deposit shall then be Ninety Thousand and 00/100 Dollars ($90,000.00).
8. USE OF PREMISES AND PROJECT FACILITIES
--------------------------------------
(a) Tenant's Use of the Premises. Tenant shall use the Premises for the use
or uses set forth in Subparagraph 1(d) above, and shall not use or permit the
Premises to be used for any other purpose without the prior written consent of
Landlord, which consent Landlord may withhold in its sole and absolute
discretion. Landlord makes no representations or warranties that said use of the
Premises is permitted by any duly constituted public authority having
jurisdiction over the Premises or the conduct of Tenant's business.
(b) Compliance. At Tenant's sole cost and expense, Tenant shall procure,
maintain and hold available for Landlord's inspection, all governmental licenses
and permits required for Tenant's use of the Premises and the proper and lawful
conduct of Tenant's business from the Premises. Tenant shall, at its sole cost
and expense, observe and comply with the Certificate of Occupancy issued for the
Building, that certain Declaration of Covenants Conditions, and Restrictions for
Rancho Santa Margarita Business Park dated as of July 1, 1986, and all laws,
statutes, zoning restrictions, ordinances, rules, regulations and requirements
of any duly constituted public authority having jurisdiction over the Premises
now or hereafter in force relating to or affecting the use, occupancy,
alteration or improvement of the Premises including, without limitation, the
provisions of Title III of the Americans with Disabilities Act of 1990, as
amended. Tenant shall not use or occupy the Premises in violation of any of the
foregoing. Tenant shall, upon written notice from Landlord, discontinue any use
of the Premises which is declared by any authority having jurisdiction over the
Premises, governmental or otherwise, to be a violation of law or of said
Certificate of Occupancy. Tenant shall comply with all rules, orders,
regulations and requirements of the Board of Fire Underwriters or any other
insurance authority having jurisdiction over the Premises or any present or
future insurer relating to the Premises. Tenant shall promptly, upon demand,
reimburse Landlord for any additional premium charged for any existing insurance
policy or endorsement required by reason of Tenant's failure to comply with the
provisions of this Paragraph 8. Tenant shall not use or allow the Premises to be
used for any unlawful purpose, nor shall Tenant cause, maintain or permit any
nuisance in, on or about the Premises. Tenant shall comply with all restrictive
covenants and obligations created by private contracts which affect the use and
operation of the Premises, including, without limitation, the Rules and
Regulations referred to in Paragraph 32 and attached hereto as Exhibit F. Tenant
shall not commit or suffer to be committed any waste in or upon the Premises and
shall keep the Premises in first-class repair and appearance. Tenant shall be
responsible for all structural engineering required to determine structural
load, as well as the expense thereof.
(c) Hazardous Materials. Tenant shall not cause or permit any Hazardous
Materials to be brought upon, stored, used, generated, released into the
environment or disposed of in, on, under or about the Premises by Tenant, its
agents, employees, contractors or invitees, without the prior written consent of
Landlord, which consent Landlord may withhold in its sole and absolute
discretion. Landlord, in its sole and absolute discretion, may consent to
<PAGE>
Tenant's generation, storage or use of Hazardous Materials on or in the Premises
provided Tenant demonstrates to Landlord, in its sole and absolute judgment,
that such Hazardous Materials (in incidental quantities) are necessary to or
required as part of Tenant's business and will be generated, used, kept, stored
and/or disposed of in a manner that complies with all laws regulating any such
Hazardous Materials and with good business practices, and provided that Tenant
first obtains the written consent of Landlord, and provided further that Tenant
indemnifies Landlord from any and all liability with respect to such Hazardous
Materials as more particularly described below. Upon the expiration or sooner
termination of this Lease, Tenant covenants to remove from the Premises, at its
sole cost and expense, any and all Hazardous Materials, including any equipment
or systems containing Hazardous Materials, which are brought upon, stored, used,
generated or released into the environment by Tenant, its agents, employees,
contractors or invitees. To the fullest extent permitted by law, Tenant hereby
indemnifies Landlord and agrees to hold Landlord and the Premises free and
harmless from and against any and all claims, judgments, damages, penalties,
fines, costs, liabilities and losses (including, without limitation, diminution
in the value of the Premises, damages for the loss or restriction of use of
rentable or usable space or of any amenity of the Premises, and sums paid in
settlement of claims, attorneys' fees, consultant fees and expert fees) which
arise during or after the Lease Term directly or indirectly from the presence of
Hazardous Materials on, in or about the Premises which is caused or permitted by
Tenant, its agents, employees, contractors or invitees. This indemnification by
Tenant of Landlord includes, without limitation, any and all costs incurred in
connection with any investigation of site conditions or any cleanup, remedial,
removal or restoration work required by any federal, state or local governmental
agency or political subdivision because of the presence of such Hazardous
Materials in, on or about the Premises, or the soil or ground water on or under
the Premises or any portion thereof. Tenant shall promptly notify Landlord of
any release of Hazardous Materials in, on or about the Premises which Tenant
becomes aware of during the Term of this Lease, whether caused by Tenant or any
other persons or entities. As used in this Lease, the term "Hazardous Materials"
shall mean and include any hazardous or toxic materials, substances or wastes,
including (A) those materials identified in Section 66680 through 66685 and
Sections 66693 through 66740 of Title 22 of the California Administrative Code,
Division 4, Chapter 30, as amended from time to time, (B) those materials
defined in Section 2550(j) of the California Health and Safety Code, (C) any
materials, substances or wastes which are toxic, ignitable, corrosive or
reactive and which are regulated by any local governmental authority, any agency
of the State of California or any agency of the United States Government, (D)
asbestos, (E) petroleum and petroleum-based products, (F) urea formaldehyde foam
insulation, (G) polychlorinated biphenyls ("PCBs"), and (H) freon and other
chlorofluorocarbons.
(d) Unless caused by Tenant, Tenant shall not have any responsibility or
liability for (i) existing violation of any applicable law relating to any part
of the Project (it being understood that the term "Project" includes, but is not
limited to, the Premises, the Building and the land underlying the Building),
including without limitation the Premises as improved by Landlord, as of the
date Tenant takes possession of the Premises, including, but not limited to,
violations of any building codes, Laws and the Americans with Disabilities Act
of 1990, 42 U.S.C. 12101 et seq. and 47 U.S.C. 225 et seq. as amended from time
to time, and any similar or successor federal, state, or local laws
(collectively the "ADA") (all of the foregoing laws are included in the term
"applicable laws"), or (ii) any hazardous substances or materials present in,
on, under or about any part of the Project as of the date Tenant takes
possession of the Premises or that we were or are brought into, onto, about, or
under any part of the Project after the date Tenant takes possession of the
Premises, except for hazardous materials brought onto the Project by Tenant or
Tenant's agents, employees or contractors.
(e) Survival. The provisions of this Paragraph 8 shall survive any
termination of this Lease.
9. SURRENDER OF PREMISES; HOLDING OVER
-----------------------------------
Upon the expiration of the Term of this Lease, Tenant shall surrender to
Landlord the Premises and all Tenant Improvements and alterations in good
condition, except for ordinary wear and tear and alterations Tenant has the
right or is obligated to remove under the provisions of Paragraph 14 herein.
Subject to Paragraph 14, Tenant shall remove all personal property, including,
without limitation, all wallpaper, paneling and other decorative improvements or
fixtures and shall perform all restoration made necessary by the removal of any
alterations or Tenant's personal property before the expiration of the Term,
including, for example, restoring all wall surfaces to their condition prior to
the commencement of this Lease. Landlord may elect to retain or dispose of in
any manner Tenant's personal property not removed from the Premises by Tenant
prior to the expiration of the Term. Tenant waives all claims against Landlord
for any damage to Tenant resulting from Landlord's retention or disposition of
Tenant's personal property. Tenant shall be liable to Landlord for Landlord's
costs for storage, removal or disposal of Tenant's personal property.
<PAGE>
If Tenant, with Landlord's consent, remains in possession of the Premises
after expiration or termination of the Term, or after the date in any notice
given by Landlord to Tenant terminating this Lease, such possession by Tenant
shall be deemed to be a month-to-month tenancy terminable on written thirty
(30)-day notice at any time, by either party. All provisions of this Lease,
except those pertaining to Term and rent, shall apply to the month-to-month
tenancy. Tenant shall pay monthly rent in an amount equal to 150% of Monthly
Basic Rent, subject to increases as provided in Subparagraph 5(c), if
applicable, for the last full calendar month during the regular Term plus 100%
of additional rent as provided in Paragraph 11 (Taxes), Paragraph 13
(Maintenance), Paragraph 16 (Insurance), subject to increase as provided
therein. If Tenant fails to surrender the Premises after expiration or
termination of the Term, Tenant shall indemnify, defend and hold harmless
Landlord from all rental loss only, including, reasonable attorney fees and
costs, but shall not be liable for any loss or liability resulting from any
claim against Landlord made by any succeeding tenant founded on or resulting
from Tenant's failure to surrender and losses to Landlord due to lost
opportunities to lease any portion of the Premises to succeeding tenants,
together with, in each case, actual attorneys' fees and costs.
10. SIGNAGE
-------
Landlord shall designate the location at or adjacent to the Premises for
two or more Tenant identification sign(s), which location shall include building
top and monument signage along Arroyo Vista . Tenant shall install and maintain
Tenant's identification sign(s) in such designated locations in accordance with
this Paragraph 11 and Exhibit G. Tenant shall have no right to install or
maintain Tenant identification signs in any other location in, on or about the
Premises and shall not display or erect any other signs, displays or other
advertising materials that are visible from the exterior of the Building. The
size, design, color and other physical aspects of permitted sign(s) shall be
subject to: (i) Landlord's written approval prior to installation, which
approval may be withheld in Landlord's discretion, (ii) any covenants,
conditions or restrictions encumbering the Premises, and (iii) any applicable
municipal or governmental permits and approvals. The cost of the sign(s),
including the installation, maintenance and removal thereof, shall be at
Tenant's sole cost and expense. If Tenant fails to install or maintain its
sign(s), or if Tenant fails to remove same upon termination of this Lease and
repair any damage caused by such removal, including, without limitation,
repainting the Building (if required by Landlord, in Landlord's sole but
reasonable judgment), Landlord may do so at Tenant's expense. Tenant shall
reimburse Landlord for all costs incurred by Landlord to effect such
installation, maintenance or removal, which amount shall be deemed additional
rent, and shall include, without limitation, all sums disbursed, incurred or
deposited by Landlord, including Landlord's costs, expenses and actual
attorneys' fees with interest thereon at the lesser of 12% per annum or the
maximum legal interest rate from the date of Landlord's demand until payment.
Any sign rights granted to Tenant under this Lease are personal to Tenant and
may not be assigned, transferred or otherwise conveyed to any assignee or
subtenant of Tenant without Landlord's prior written consent, which consent
Landlord may withhold in its sole and absolute discretion.
11. TAXES, ASSOCIATION FEES
-----------------------
(a) Personal Property Taxes. Tenant shall pay before delinquency all taxes,
assessments, license fees and public charges levied, assessed or imposed upon
its business operations as well as upon all trade fixtures, leasehold
improvements, merchandise and other personal property in or about the Premises.
(b) Real Property Taxes. Tenant shall pay, as additional rent, all Real
Property Taxes, including all taxes, assessments (general and special) and other
impositions or charges which may be taxed, charged, levied, assessed or imposed
with respect to any calendar year or part thereof included within the Term upon
all or any portion of or in relation to the Premises or any portion thereof, any
leasehold estate in the Premises or measured by rent from the Premises,
<PAGE>
including any increase caused by the transfer, sale or encumbrance of the
Premises or any portion thereof. Notwithstanding anything to the contrary in
this Paragraph 11 (b), and provided Tenant has timely paid its share of Real
Property Taxes as provided for in this Paragraph 11 (b), Real Property Taxes
shall not include tax penalties and interest incurred as a result of Landlord's
negligence, inability, unwillingness, or failure to make payments when due "Real
Property Taxes" shall also include any form of assessment, levy, penalty, charge
or tax (other than estate, inheritance, net income or franchise taxes) imposed
by any authority having a direct or indirect power to tax or charge, including,
without limitation, any city, county, state, federal or any improvement or other
district, whether such tax is: (1) determined by the area of the Premises or the
rent or other sums payable under this Lease; (2) upon or with respect to any
legal or equitable interest of Landlord in the Premises or any part thereof; (3)
upon this transaction or any document to which Tenant is a party creating a
transfer in any interest in the Premises; (4) in lieu of or as a direct
substitute in whole or in part of or in addition to any real property taxes on
the Premises; (5) based on any parking spaces or parking facilities provided in
the Premises; or (6) in consideration for services, such as police protection,
fire protection, street, sidewalk and roadway maintenance, refuse removal or
other services that may be provided by any governmental or quasi-governmental
agency from time to time which were formerly provided without charge or with
less charge to property owners or occupants. Tenant shall pay Real Property
Taxes on the date any taxes or installments of taxes are due and payable as
determined by the taxing authority, evidenced by the tax bill. Landlord shall
determine and notify Tenant of the amount of Real Property Taxes not less than
thirty (30) days in advance of the date such tax or installment of taxes is due
and payable. In the event Landlord fails to deliver such timely determination
and notice to Tenant, then Tenant shall have thirty (30) days from receipt of
such notice to remit payment of Real Property Taxes to Landlord. The foregoing
notwithstanding, upon notice from Landlord, Tenant shall pay, as additional
rent, Real Property Taxes to Landlord in advance monthly installments equal to
one twelfth (1/12) of Landlord's reasonable estimate of the Real Property Taxes
payable under this Lease, together with monthly installments of Basic Rent, and
Landlord shall hold such payments in a non-interest bearing account. Landlord
shall determine and notify Tenant of any deficiency in the impound account and
Tenant shall pay any deficiency of funds in the impound account not less than
thirty (30) days in advance of the date such tax or installment of taxes is due
and payable. In the event Landlord fails to deliver such timely deficiency
determination and notice to Tenant, then Tenant shall have thirty (30) days from
receipt of such notice to remit payment of such deficiency to Landlord. If
Landlord determines that Tenant's impound account has accrued an amount in
excess of the Real Property Taxes due and payable, then such excess shall be
credited to Tenant within said notice from Landlord.
(c) Maintenance Association. Tenant shall pay, as additional rent, all
assessments, fees and dues chargeable to the Premises by, through or for the
Santa Margarita Maintenance Association.
12. UTILITIES
---------
Tenant shall pay directly to the utility companies providing such services,
the cost of all water, gas, heat, light, power, sewer, electricity, telephone or
other service metered, chargeable or provided to the Premises. Landlord shall
not be liable in damages or otherwise for any failure or interruption of any
utility or other service furnished to the Premises. No such failure or
interruption shall entitle Tenant to terminate this Lease or abate rent in any
manner.
13. MAINTENANCE
-----------
(a) Performed by Tenant. Except as provided below, Tenant shall maintain
and repair the Premises in good condition, including, without limitation,
maintaining and repairing all walls; floors; ceilings; telephone equipment and
wiring; doors; exterior and interior windows and fixtures as well as damage
caused by Tenant, its agents, contractors, employees or invitees. Upon
expiration or termination of this Lease, Tenant shall surrender the Premises to
Landlord in the same condition as existed at the commencement of the Term,
except for reasonable wear and tear or damage caused by fire or other casualty
for which Landlord has received all funds necessary for restoration of the
Premises from insurance proceeds. If Tenant refuses or neglects to repair and
maintain the Premises as required hereunder and to the reasonable satisfaction
of Landlord, Landlord may at any time following ten (10) days from the date on
which Landlord shall make a written demand on Tenant to effect such repair and
maintenance, enter upon the Premises and make such repairs and/or maintenance
without liability to Tenant for any loss or damage which might occur to Tenant's
merchandise, fixtures or other property or to Tenant's business by reason
thereof, and upon completion thereof, Tenant shall pay to Landlord, Landlord's
costs for making such repairs plus twenty percent (20%) for overhead, upon
presentation of a bill therefor. Said bill shall include interest at the lesser
of 12% per annum or the maximum legal interest rate on said costs from the date
of completion of the maintenance and repairs by Landlord. Tenant shall, at its
own expense, provide, install and maintain in good condition all of its Personal
Property required in the conduct of its business on the Premises.
<PAGE>
(b) Performed by Landlord. Subject to reimbursement by Tenant as
hereinafter provided, Landlord shall be responsible to maintain, in good
condition, the structural parts of the Premises, which shall include only the
foundations, bearing and exterior walls (including painting), subflooring; the
roof system and skylights; the unexposed electrical, plumbing and sewerage
systems, including without limitation, those portions of the systems lying
outside the Premises; the paved and hardscaped parking and driveway areas
(including resurfacing and restriping); window frames, gutters and downspouts on
the Building; the heating, ventilating and air conditioning system servicing the
Premises; the outside areas of the Premises and every part thereof, including,
without limitation, the soil, landscaping (including replacement thereof),
sprinkler system, walkways, parking areas (including periodic sweeping), signs,
site lighting and pest control. Landlord shall not be liable for any failure to
make any such repairs or any maintenance unless such failure shall persist for
an unreasonable time after written notice of the need of such repairs or
maintenance is given to Landlord by Tenant.
(c) Reimbursement by Tenant. Prior to the commencement of each calendar
year, Landlord shall give Tenant a written estimate of the expenses Landlord
anticipates will be incurred for the ensuing calendar year with respect to the
maintenance and repair to be performed by Landlord as herein described (the
"Maintenance Expenses"). Tenant shall pay, as additional rent, such estimated
expenses in equal monthly installments in advance on or before the first day of
each month concurrent with its payment of Basic Rent. Within ninety (90) days
after the end of each calendar year, Landlord shall furnish Tenant a statement
showing in reasonable detail the actual expenses incurred for the period in
question and the parties shall within thirty (30) days thereafter make payment
or allowance as necessary to adjust Tenant's estimated payments to the actual
expenses as shown by applicable periodic statements submitted by Landlord. If
Landlord shall determine at any time that the estimate of expenses for the
current calendar year is or will become inadequate to meet all such expenses for
any reason, Landlord shall immediately determine the appropriate amount of such
inadequacy and issue a supplemental estimate as to such expenses, and Tenant
shall pay any increase in the estimated expenses as reflected by such
supplemental estimate. Tenant's failure to timely pay any of the charges in
connection with the performance of its maintenance and repair obligations to be
paid under this Paragraph 13 shall constitute a material default under this
Lease.
Landlord shall keep or cause to be kept separate and complete books of
account covering costs and expenses incurred in connection with its maintenance
and repair of the Building and outside areas, which costs and expenses shall
include, without limitation, the actual costs and expenses incurred in
connection with labor and material utilized in performance of the maintenance
and repair obligations hereinafter described, public liability, property damage
and other forms of insurance which Landlord may or is required to maintain,
reasonable reserves for replacements and/or repairs of improvements to the
outside areas, equipment and supplies, employment of such personnel as Landlord
may deem reasonably necessary, payment or provision for unemployment insurance,
worker's compensation insurance and other employee costs, depreciation of
machinery and equipment used in connection with the maintenance of the outside
areas, the cost of bookkeeping and accounting services, a management fee to
cover Landlord's management, overhead and administrative expenses, assessments
which may be levied against the Premises under any recorded covenants,
conditions and restrictions, and any other items reasonable necessary from time
to time to properly repair, replace and maintain the outside areas and any
interest paid in connection therewith. Landlord may elect to delegate its duties
hereunder to a professional property manager in which event all costs and
expenses of such property management shall be included as expenses to be
reimbursed by Tenant hereunder.
All costs and expenses incurred, by either Tenant directly or by Landlord
that are reimbursed by Tenant pursuant to the terms of this Lease, for capital
expenses whose useful life will exceed the then remaining term of this Lease
shall be defined as "Capital Expenses". Tenant and Landlord shall share such
Capital Expenses such that Tenant shall only pay or reimburse Landlord for the
portion of such Capital Expenses calculated by multiplying the Capital Expense
by a fraction the numerator of which is the remaining term of the Lease as of
the date of the Capital Expense and the denominator of which is the useful life
of the item as of the date of the Capital Expense. If Tenant has a valid option
<PAGE>
to extend the term of the Lease which option has not been exercised as of the
date of the Capital Expense, the remaining term of the Lease for Capital Expense
sharing shall not include the extension period. Upon exercise of a valid
extension option, Tenant's share of the Capital Expense shall be recalculated to
account for the extension period and, accordingly, any additional share of the
Capital Expense due from Tenant (after accounting for previous payment therefore
by Tenant) shall become immediately due and payable with interest accrued at the
rate of twelve percent (12%) per annum from the date of the Capital Expense to
the date of Landlord's statement. Tenant shall be allowed to pay any such
additional share of Capital Expense (i) within thirty (30) days of receipt of
Landlord's statement determining such additional share or (ii) in equal monthly
installments with principal and interest at the rate of twelve percent (12%) per
annum fully amortized over the lesser of the extension term or that portion of
the remaining life which falls within the extension term.
Except as provided in Paragraph 17 hereof, there shall be no abatement of
rent and no liability of Landlord by reason of any injury to or interference
with Tenant's business arising from the making of any repairs, alterations or
improvements in or to any portion of the Building or the Premises or in or to
fixtures, appurtenances and equipment therein. Tenant waives the right to make
repairs at Landlord's expense under Sections 1941 and 1942 of the California
Civil Code or any similar law, statute or ordinance now or hereafter in effect.
14. ALTERATIONS
-----------
Tenant shall not make any alterations to the Premises, including any
changes to the existing landscaping, without Landlord's prior written consent.
If Landlord gives its consent to such alterations, Landlord may post notices in
accordance with the laws of the state in which the Premises are located. Tenant
may, upon expiration or earlier termination of this Lease, remove all furniture,
fixtures, equipment and other personal property installed in the Premises by
Tenant (regardless of the method of attachment); including but not limited to
lab benches, shelves, storage racks, portable clean rooms, modular furniture,
signage and laboratory equipment. Any other alterations made shall remain on and
be surrendered with the Premises upon expiration of the Term, except that
Landlord may, within sixty (60) days before or thirty (30) days after expiration
of the Term, elect to require Tenant to remove any alterations which Tenant may
have made to the Premises. Landlord agrees that in no event shall Tenant be
obligated to remove the Tenant Improvements or any of the alterations,
improvements or additions being made to the Premises by Tenant in connection
with Tenant's initial occupancy of the Premises, if any (collectively, `Tenant's
Initial Alterations') upon expiration or earlier termination of this Lease,
except as provided for within the Work Letter attached hereto as Exhibit C. If
Landlord so elects, Tenant shall, at its own cost, restore the Premises to the
condition designated by Landlord in its election, before the last day of the
Term or within thirty (30) days after notice of its election is given, whichever
is later.
Should Landlord consent in writing to Tenant's alteration of the Premises,
Tenant shall contract with a contractor approved by Landlord for the
construction of such alterations, shall secure all appropriate governmental
approvals and permits, and shall complete such alterations with due diligence in
compliance with plans and specifications approved by Landlord, and in compliance
with all applicable laws, statutes and regulations. Tenant shall pay all costs
for such construction and shall keep the Premises free and clear of all
mechanics' liens which may result from construction by Tenant.
15. RELEASE AND INDEMNITY
---------------------
As material consideration to Landlord, Tenant agrees that Landlord, its
agents, successors-in-interest with respect to the Premises and their directors,
officers, partners, employees, shareholders, agents and representatives and the
directors, officers, partners, employees, shareholders, agents and
representatives of the partners or members of Landlord shall not be liable to
Tenant, its agents, employees, invitees, licensees and other persons claiming
under Tenant for: (i) any damage to any property entrusted to employees of the
Premises, (ii) loss or damage to any property by theft or otherwise, (iii)
consequential damages arising out of any loss of the use of the Premises or any
equipment or facilities therein, or (iv) any injury or damage to person or
property resulting from fire, explosion, falling plaster, steam, gas,
electricity, water or rain which may leak from any part of the Premises or from
pipes, appliances or plumbing work therein or from the roof, street, sub-surface
or from any other place or resulting from dampness or any other causes
whatsoever, except to the extent caused by the gross negligence or willful
misconduct of Landlord or its officers, directors, employees, agents,
contractors and representatives. Landlord or its agents shall not be liable for
interference with light or other incorporeal hereditaments, nor shall Landlord
be liable for any latent defects in the Premises. Tenant shall give prompt
notice to Landlord in case of fire or accidents in the Premises and of defects
therein or in the fixtures or equipment located therein.
<PAGE>
To the fullest extent permitted by law, Tenant agrees to indemnify, defend
(with counsel satisfactory to Landlord) and hold harmless Landlord, its agents,
successors-in-interest with respect to the Premises and their directors,
officers, partners, employees, shareholders, agents and representatives and the
directors, officers, partners, employees, shareholders, agents and
representatives of the partners or members of Landlord from (i) all claims,
actions liabilities, and proceedings arising from Tenant's use of the Premises
or the conduct of its business or from any activity, work or thing done,
permitted or suffered by Tenant, its agents, contractors, employees or invitees,
in or about the Premises and any breach or default in the performance of any
obligation to be performed by Tenant under the terms of this Lease, or arising
from any act, neglect, fault or omission of Tenant, or of its agents,
contractors, employee or invitees, and (ii) any and all costs, attorneys' fees,
expenses and liabilities incurred with respect to any such claims, actions,
liabilities, or proceedings, except to the extent caused by the gross negligence
of Landlord or its officers, directors, employees, agents, contractors and
representatives, and in the event any actions or proceedings shall be brought
against Landlord by reason of such claims, Tenant, upon notice from Landlord,
shall defend the same at Tenant's expense by counsel approved in writing by
Landlord. Tenant hereby assumes all risk of damage to property or injury to
person in, upon or about the Premises from any cause whatsoever except that
which is caused by the gross negligence or willful misconduct of Landlord, its
agents or employees, and Tenant hereby waives all its claims in respect thereof
against Landlord.
As used herein, the term "liabilities" shall include all suits, actions,
claims and demands and all expenses (including attorneys' fees and costs of
defense) incurred in or about any such liability and any action or proceeding
brought thereon. If any claim shall be made or any action or proceeding brought
against Landlord on the basis of any liability described in this Paragraph 15,
Tenant shall, upon notice from Landlord, defend the same at Tenant's expense by
counsel reasonably satisfactory to Landlord. It is understood that payment shall
not be a condition precedent to recovery upon the foregoing indemnity.
16. INSURANCE
---------
Tenant, at its cost, shall pay for and keep in full force and effect
throughout the Term of this Lease:
(a) COMMERCIAL GENERAL LIABILITY insurance with respect to the Premises and
the operations by or on behalf of Tenant in, on or about the Premises,
including, but not limited to, personal injury, product liability (if
applicable), blanket contractual, owner's protective, broad form property damage
liability, liquor liability (if applicable) and owned and non-owned automobile
liability in an amount not less than $2,000,000 per occurrence. The insurance
policy or policies shall contain the following provisions: (1) severability of
interest, (2) cross-liability, (3) an endorsement naming Landlord, Landlord's
Mortgagees and Ground Lessors (as defined in Paragraph 37(m)) if any, and any
other parties-in-interest designated by Landlord as additional insureds, (4) an
endorsement stating "such insurance as is afforded by this policy for the
benefit of Landlord and any other additional insured shall be primary as
respects any liability or claims arising out of the occupancy of the Premises by
the Tenant, or Tenant's operations and any insurance carried by Landlord, or any
other additional insured shall be non-contributory," (5) with respect to
improvements or alterations permitted under this Lease, contingent liability and
builder's risk insurance, (6) an endorsement allocating to the Premises the full
amount of liability limits required by this Lease, and (7) coverage must be on
an "occurrence basis." "Claims-Made" forms are not acceptable.
(b) WORKERS COMPENSATION COVERAGE as required by law, together with
Employers Liability coverage with a limit of not less than $1,000,000.
(c) TENANT'S PROPERTY INSURANCE: Tenant shall at all times during the Term
hereof and at its cost and expense, maintain in effect policies of insurance
covering (1) all Tenant Improvements on the Premises installed by Tenant, (2)
all personal property of Tenant located in or at the Premises, including, but
not limited to, fixtures, furnishings, equipment and furniture, in an amount not
less than their full replacement value, and (3) loss of income or business
<PAGE>
interruption insurance. These policies shall provide protection against any
peril included within the classification "All Risk," including, but not limited
to, insurance against sprinkler leakage, vandalism and malicious mischief. The
proceeds of such insurance shall be used to repair or replace the Tenant
Improvements and personal property so insured. Tenant shall, at its cost,
maintain rental abatement insurance assuring that the rent payable hereunder
will be paid to Landlord for a period of not less than twelve (12) months if
rent is to abate under any provision of this Lease or applicable law. Such
coverage shall include a sixty (60)-day extended period of indemnity
endorsement.
All policies of insurance required hereunder shall include a clause or
endorsement denying the insurer any rights of subrogation against the other
party to the extent rights have been waived by the insured before the occurrence
of injury or loss, if same are obtainable without unreasonable cost. Landlord
and Tenant each hereby waives any rights of recovery against the other for
injury or loss to such waiving party or to its property or the property of
others under its control, arising from any cause insured against under any
policy of insurance required to be carried by such waiving party under this
Lease. The foregoing waiver shall be effective whether or not the waiving party
shall actually obtain and maintain the insurance which such waiving party is
obligated to obtain and maintain under this Lease.
All insurance required to be provided by Tenant under this Lease: (a) shall
be issued by insurance companies authorized to do business in the state in which
the Premises are located and holding a General Policyholders Rating of "A" and a
Financial Rate of "X" or better, as set forth in the most recent edition of
Best's Insurance Reports; and (b) shall contain an endorsement requiring at
least thirty (30) days prior written notice to Landlord and Landlord's lender,
before cancellation or change in coverage, scope or amount of any policy. Tenant
shall deliver a certificate or copy of such policy together with evidence of
payment of all current premiums to Landlord within thirty (30) days of execution
of this Lease and within fifteen (15) days of expiration of each policy.
Tenant's failure to provide evidence of such coverage to Landlord may, in
Landlord's sole discretion, constitute a default under this Lease.
Subject to being reimbursed by Tenant, Landlord shall insure the Building
(excluding all property which Tenant is obligated to insure) by obtaining and
maintaining property insurance for any and all reasonable risks (including
earthquake and flood insurance) and public liability insurance, all in such
amounts and with such deductibles as Landlord considers appropriate. Tenant
shall pay, as additional rent, the cost of any insurance maintained by Landlord
hereunder and any other insurance Landlord may elect to obtain for the Premises
from time to time during the Term (including, without limitation, earthquake
and/or flood insurance). Tenant shall pay the cost of insurance policy premiums
on the date any premiums or installments of premiums are due and payable.
Landlord shall determine and notify Tenant of the amount of insurance premiums
not less than fifteen (15) days in advance of the date such premium or
installment of premiums is due and payable. In the event Landlord fails to
deliver such timely determination and notice to Tenant, then Tenant shall have
fifteen (15) days from receipt of such notice to remit payment of insurance
premiums to Landlord. The foregoing notwithstanding, upon notice from Landlord,
Tenant shall pay, as additional rent, insurance premiums to Landlord in advance
monthly installments equal to one twelfth (1/12) of Landlord's reasonable
estimate of the insurance premiums payable under this Lease, together with
monthly installments of Basic Rent, and Landlord shall hold such payments in a
non-interest bearing account. Upon determination of the actual insurance premium
due and payable, Landlord shall determine and notify Tenant of any deficiency in
the impound account and Tenant shall pay any deficiency of funds in the impound
account not less than fifteen (15) days in advance of the date such insurance
premium or installment of premiums is due and payable. In the event Landlord
fails to deliver such timely deficiency determination and notice to Tenant, then
Tenant shall have fifteen (15) days from receipt of such notice to remit payment
of such deficiency to Landlord. If Landlord determines that Tenant's impound
account has accrued an amount in excess of the insurance premiums due and
payable, then such excess shall be credited to Tenant within said notice from
Landlord.
Notwithstanding any contribution by Tenant to the cost of insurance
premiums as provided herein, Tenant acknowledges that it has no right to receive
any proceeds from any insurance policies carried by Landlord.
<PAGE>
17. DESTRUCTION
-----------
If during the Term of this Lease, any portion of the Premises, access to
the Premises or any part of the Building which is essential to the use of the
Premises is damaged or destroyed and such damage or destruction can, in
Landlord's reasonable estimation, be repaired within 180 days following such
damage or destruction, and Landlord receives insurance proceeds sufficient to
restore such damage this Lease shall remain in full force and effect and
Landlord shall promptly commence to repair and restore the damage or destruction
to substantially the same condition as existed prior to such damage and shall
complete such repair and restoration with due diligence in compliance with all
then existing laws. If (1) such damage or destruction cannot, in Landlord's
reasonable estimate, be repaired within 180 days following such damage or
destruction; or (2) more than forty percent (40%) of the Building is damaged or
destroyed; or (3) any Mortgagee of the Building will not allow the application
of insurance proceeds for repair and restoration; or (4) the damage or
destruction is not covered in full by Landlord's Insurance required by Paragraph
16, subject to the deductible or (5) the damage or destruction occurs within the
last twelve (12) months of the term of this Lease or any extension hereof, then
Landlord may, in its sole discretion, terminate this Lease by delivery of notice
to Tenant within 30 days of the date Landlord learns of the damage.
In the event of repair, reconstruction and restoration by Landlord as
herein provided, the rent payable under this Lease shall be abated
proportionately to the extent to which there is substantial interference with
Tenant's use of the Premises during the period of such repair, reconstruction or
restoration; provided that there shall be no abatement of rent if such damage is
the result of Tenant's negligence or intentional wrongdoing. Tenant shall not be
entitled to any compensation or damages for loss in the use of the whole or any
part of the Premises, damage to Tenant's personal Property and/or any
inconvenience or annoyance occasioned by such damage, repair, reconstruction or
restoration.
If Landlord is obligated to or elects to repair or restore as herein
provided, Landlord shall be obligated to make repair or restoration only to
those portions of the Building and the Premises which were originally provided
at Landlord's expense, and the repair and restoration of items not provided at
Landlord's expense shall be the obligation of Tenant. Tenant agrees to
coordinate the restoration and repair of those items it is required to restore
or repair with Landlord's repair and restoration work and in accordance with a
work schedule prepared by Landlord, or Landlord's contractor. Further, Tenant's
work shall be performed in accordance with the terms, standards and conditions
contained in Paragraph 14 above.
The provisions of California Civil Code Section 1932, Subsection 2, and
Section 133, Subsection 4, and any other similarly enacted statute or court
decision relating to the abatement or termination of a lease upon destruction of
the leased premises, are hereby waived by Tenant; and the provisions of this
Paragraph 17 shall govern in case of such destruction.
18. CONDEMNATION
------------
(a) Definitions. The following definitions shall apply: (1) "Condemnation"
and "Taking" means (a) the exercise of any governmental power of eminent domain,
whether by legal proceedings or otherwise by Condemnor and (b) the voluntary
sale or transfer by Landlord to any Condemnor either under threat of
Condemnation or while legal proceedings for condemnation are proceeding; (2)
"Date of Taking" means the date the Condemnor has the right to possession of the
property being condemned; (3) "Award" means all compensation, sums or anything
of value awarded, paid or received on a total or partial Condemnation; and (4)
"Condemnor" means any public or quasi-public authority, or private corporation
or individual, having a power of condemnation.
(b) Obligations to be Governed by Lease. If during the Term of this Lease
there is any Taking of all or any part of the Premises, the rights and
obligations of the parties shall be determined pursuant to this Lease.
(c) Total or Partial Taking. If the Premises are taken in their entirety by
Condemnation, this Lease shall terminate on the date of Taking. If any portion
of the Premises is taken by Condemnation, this Lease shall remain in effect,
except that Tenant may elect to terminate this Lease if the remaining portion of
the Premises is rendered unsuitable for Tenant's continued use of the Premises.
<PAGE>
If Tenant elects to terminate this Lease, Tenant must exercise its right to
terminate by giving notice to Landlord within 30 days after receipt of notice of
the Taking from Landlord. If Tenant elects to terminate this Lease, Tenant shall
also notify Landlord of the date of termination, which date shall not be earlier
than 30 days nor later than 90 days after Tenant has notified Landlord of its
election to terminate; except that this Lease shall terminate on the date of
Taking if the date of Taking falls on a date before the date of termination as
designated by Tenant. If any portion of the Premises is taken by Condemnation
and this Lease remains in full force and effect, on the date of taking the rent
shall be reduced by an amount in the same ratio as the total number of rentable
square feet in the portion of the Premises taken bears to the total number of
rentable square feet in the Premises immediately before the Date of Taking. In
the case where a portion of the Premises is taken and the Lease remains in full
force and effect, Landlord shall, at its own cost and expense, make all
alterations or repairs to the Building so as to make the portion of the Building
not taken a complete architectural unit. Such work shall not, however, exceed
the scope of work done by Landlord in originally constructing the Premises.
Monthly Basic Rent due and payable hereunder shall be temporarily abated during
such restoration period in proportion to the extent to which there is
substantial interference with Tenant's use of Premises, as reasonably determined
by Landlord or Landlord's architect. Each party hereby waives the provisions of
Section 1265.130 of the California Code of Civil Procedure and any present or
future law allowing either party to petition the Superior Court to terminate
this Lease in the event of a partial taking of the Building or Premises.
If the Premises are totally or partially taken by Condemnation, Tenant
shall have the right to assert a claim against the Condemnor for compensation
because of such taking, including a claim for the amount calculated by
multiplying the percentage of the Premises taken by the unamortized portion of
Tenant's contribution to improvements to the Premises (such portion of Tenant's
contribution will be amortized over a fifteen (15) year period on a straight
line basis) ("Tenant's Claim"). Additionally, Tenant reserves the right to
assert a claim against the Condemnor for compensation due to the taking of any
clean room located on the Premises and tenant's loss of goodwill and for
relocation benefits associated with such taking Tenant shall not otherwise
assert any claim against Landlord for any compensation because of such Taking,
and Landlord shall be entitled to receive the entire amount of its award,
excluding the portion, if any, attributable to Tenant's Claim, without any
deduction for any estate or interest of Tenant.
19. ASSIGNMENT OR SUBLEASE
----------------------
Tenant shall not assign or encumber its interest in this Lease or the
Premises or sublease all or any part of the Premises or allow any other person
or entity (except Tenant's authorized representatives, employees, invitees, or
guests) to occupy or use all or any part of the Premises without first obtaining
Landlord's consent which Landlord shall not unreasonably withhold. In addition
to any other reasonable grounds upon which Landlord may withhold its consent,
Landlord shall be deemed reasonable in withholding its consent if it determines
in its sole discretion that: (i) the financial net worth of the proposed
assignee or sublessee is not equal to or greater than Tenant's financial net
worth as of the date of this Lease as increased by the increase in the Consumer
Price Index, if any, between the date of this Lease and the date of the
assignment or sublease; (ii) the intended use of the Premises by the proposed
assignee or sublessee will require more than insignificant alteration of the
Premises; (iii) the intended uses of the Premises by the proposed assignee or
sublessee will constitute a violation of this Lease or any governmental law,
rule, ordinance or regulation governing the Premises or would involve the
storage, use or keeping of Hazardous Materials in, on or about the Premises; or
if (iv) the proposed rent for the proposed assignee or sublessee is less than
the rent then in effect under the Lease; or (vi) the proposed assignee or
sublessee is a tenant of Landlord or has negotiated to be a tenant of Landlord
any time in the six (6) months just preceding Tenant's request for Landlord's
consent. Any assignment, encumbrance or sublease without Landlord's written
consent shall be voidable and at Landlord's election, shall constitute a
default. Landlord's waiver or consent to any assignment or subletting shall not
relieve Tenant or any assignee or sublessee from any obligation under this Lease
whether or not accrued.
If Tenant is a partnership, a withdrawal or change, voluntary, involuntary
or by operation of law of any partner, or the dissolution of the partnership,
shall be deemed a voluntary assignment. If Tenant is a corporation, any
dissolution, merger, consolidation or other reorganization of Tenant, or sale or
other transfer of a controlling percentage of the capital stock of Tenant, or
<PAGE>
the sale of at least 10% of the value of the assets of Tenant shall be deemed a
voluntary assignment. The phrase "controlling percentage" means ownership of and
right to vote stock possessing at least 10% of the total combined voting power
of all classes of Tenant's capital stock issued, outstanding and entitle to vote
for election of directors. The preceding two sentences of this paragraph shall
not apply to corporations the stock of which is traded through a public
exchange. If Landlord shall consent to any assignment or sublease of this Lease,
fifty percent (50%) of all sums and other consideration payable to or for the
benefit of the Tenant from its assignees or subtenants in excess of the rent
payable by Tenant to Landlord under this Lease (excluding any sums paid to
Tenant from the assignee or sublessee for Tenants business assets not related to
Tenant's leasehold interest), less Tenant's cost of assigning or subleasing,
including, but not limited to, broker fees, attorney fees and the costs of
preparing the Premises for a new tenant and other reasonable tenant concessions
which are ordinarily considered within the local commercial real estate market,
shall be paid to Landlord, as and when such sums are due and payable.
If Tenant requests Landlord's consent to an assignment or sublease, Tenant
shall submit to Landlord, in writing, the name of the proposed assignee or
subtenant and the nature and character of the business of the proposed assignee
or subtenant, the term, use, rental rate and all other material terms and
conditions of the proposed assignment or sublease, including, without
limitation, evidence satisfactory to Landlord that the proposed assignee or
subtenant satisfies the financial criteria set forth in the first paragraph of
this Paragraph 19, sixty (60) days prior to the proposed effective date of such
assignment or sublease. Tenant shall also submit to Landlord a processing fee of
Five Hundred Dollars ($500.00) as a condition to Landlord reviewing Tenant's
proposed assignment and subletting materials. Landlord shall within thirty (30)
days after Landlord's receipt of such written request and information either (i)
consent to or refuse to consent to such assignment or sublease in writing (but
no such consent to an assignment or sublease shall relieve Tenant or any
guarantor of Tenant's obligations under this Lease of any liability hereunder),
(ii) in the event of a proposed assignment of this Lease or a proposed sublease
of the entire Premises for the entire remaining Term of this Lease, terminate
this Lease effective the first to occur of ninety (90) days following written
notice of such termination or the date that the proposed assignment or proposed
sublease would have come into effect. If Landlord should fail to notify Tenant
in writing of its decision within such thirty (30) day period after the later of
the date Landlord is notified in writing of the proposed assignment or sublease
or the date Landlord has received all required information concerning the
proposed assignee or subtenant and the proposed assignment or sublease, Landlord
shall be deemed to have refused to consent to such assignment or sublease, and
to have elected to keep this Lease in full force and effect. If Landlord
consents to any such assignment or sublease, the assignment shall be on a form
approved by Landlord, and Tenant shall pay Landlord any reasonable attorneys'
fees and costs incurred in connection with the preparation, review and/or
approval of such documentation.
Notwithstanding anything contained herein to the contrary, Tenant may,
without obtaining Landlord's consent, without constituting a default under this
Lease, and without triggering any recapture or termination rights in favor of
Landlord, assign this Lease or sublet all or any portion of the Premises to (i)
any parent, subsidiary, or affiliate entity of Tenant, (ii) any person or entity
that acquires all or substantially all of Tenant's assets, or (iii) any entity
with which Tenant merges or consolidates with, regardless of whether Tenant is
the surviving entity, provided, however that (i) at least twenty (20) days prior
to such assignment, Tenant delivers to Landlord the financial statements and
other financial and background information of Tenant and the assignee as
reasonably required by Landlord, (ii) the net worth of Tenant or any successor
or surviving entity shall be not less than the net worth of Tenant as of the
date of execution of this Lease as increased by the increase in the Consumer
Price Index, if any, between the date of this Lease and the date of the
assignment or sublease and (iii) with respect to an assignment, any such
successor or surviving entity assumes in full all of the obligations of Tenant
under this Lease and (iv) the use of the Premises under this Lease remains
unchanged ("Permitted Transfer"). In addition, an assignment or sublet shall not
include, and Landlord's consent shall not be required for any transfer of stock,
membership interest or other ownership interest in Tenant, including but not
limited to (i) any initial or subsequent public offering by Tenant, or (ii) if
Tenant is a public company, any sale or transfer of Tenant's stock or the sale
or transfer of Tenant's stock to take Tenant private.
20. DEFAULT
-------
The occurrence of any of the following shall constitute a default by
Tenant: (a) A failure to pay rent or any other charge when due, where such
failure continues for a period of five (5) days after receipt of written notice
from Landlord; (b) Abandonment of the Premises (failure to occupy and operate
<PAGE>
the Premises for ten consecutive days without paying rent shall be deemed an
abandonment); (c) The making by Tenant of any general assignment for the benefit
of creditors; the filing by or against Tenant of a petition to have Tenant
adjudged a bankrupt or a petition for reorganization or arrangement under any
law relating to bankruptcy (unless, in the case of a petition filed against
Tenant, the same is dismissed within thirty (30) days; 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, or of
substantially all of Tenant's assets located at the Premises or of Tenant's
interest in this Lease, where possession is not restored to Tenant, within
thirty (30) days; 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 (30) days; or
if this Lease shall, by operation of law or otherwise, pass to any person or
persons other than Tenant except as provided in Paragraph 19 herein; (d) The
failure of Tenant to timely comply with the provisions of Paragraph 24 or
Paragraph 31 of this Lease regarding, respectively, Subordination and Estoppel
Certificates, where such failure continues for a period of ten (10) days after
receipt of written notice from Landlord; or (e) The failure of Tenant to perform
any other provision of this Lease, where such failure continues for a period of
ten (10) days after receipt of written notice from Landlord.
21. LANDLORD'S REMEDIES
-------------------
Landlord shall have the remedies described in this Paragraph 21 if Tenant
is in default. These remedies are not exclusive; they are cumulative and in
addition to any remedies now or later allowed by law.
(a) Maintain this Lease in full force and effect and recover the rent and
other monetary charges as they become due, without terminating Tenant's right to
possession irrespective of whether Tenant shall have abandoned the Premises. If
Landlord elects not to terminate this Lease, Landlord shall have the right to
attempt to relet the Premises at such rent and upon conditions, and for such a
term, and to do all acts necessary to maintain or preserve the Premises, as
Landlord deems reasonable and necessary, without being deemed to have elected to
terminate this Lease, including re-entering the Premises to make repairs or to
maintain or modify the Premises, and removing all persons and property from the
Premises; such property may be removed and stored in a public warehouse or
elsewhere at the cost of and for the account of Tenant. Reletting may be for a
period shorter or longer than the remaining Term of this Lease, and for more or
less rent, but Landlord shall have no obligation to relet at less than
prevailing market rental rates. If reletting occurs, this Lease shall terminate
automatically when the new tenant takes possession of the Premises.
Notwithstanding that Landlord fails to elect to terminate the Lease initially,
Landlord at any time thereafter may elect to terminate the Lease by virtue of
any previous uncured default by Tenant. In the event of any such termination,
Landlord shall be entitled to recover from Tenant all damages incurred by
Landlord by reason of Tenant's default, as well as all costs of reletting,
including, without limitation, commissions, attorneys' fees, and restoration or
remodeling costs.
(b) Terminate Tenant's right to possession by any lawful means, in which
case this Lease 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 damages incurred by Landlord by reason of Tenant's
default including, without limitation thereto, the following: (i) the worth, at
the time of award, of any unpaid rent which had been earned at the time of such
termination; plus (ii) the worth, at the time of award, of the amount by which
the unpaid rent which would have been earned after termination until the time of
award exceeds the amount of such rental loss that Tenant proves could have been
reasonably avoided; plus (iii) the worth, at the time of award, of the amount by
which the unpaid rent for the balance of the Term after the time of award
exceeds the amount of such rental loss that Tenant proves could have been
reasonably avoided; plus (iv) any other amount, and court costs, necessary to
compensate Landlord for all the detriment proximately caused by Tenant's default
or which in the ordinary course of things would be likely to result therefrom
(including, without limiting the generality of the foregoing, the amount of any
commissions and/or finder's fee for a replacement tenant, maintaining the
Premises after such default, and preparing the Premises for reletting); plus (v)
at Landlord's election, such other amounts in addition to or in lieu of the
foregoing as may be permitted from time to time by applicable law. As used in
(i) and (ii) above, the "worth at the time of the award" is computed by allowing
interest at the lesser of 12% per annum or the maximum legal interest rate. As
used in (iii) above, the "worth at the time of the award" is computed by
discounting such amount at the discount rate of the Federal Reserve Bank of San
Francisco at the time of the award plus one percent (1%).
<PAGE>
(c) Collect sublease rents (or appoint a receiver to collect such rents)
and otherwise perform Tenant's obligations at the Premises, it being agreed,
however, that neither the filing of a petition for the appointment of a receiver
for Tenant nor the appointment itself shall constitute an election by Landlord
to terminate this Lease.
(d) Proceed to cure the default at Tenant's sole cost and expense. If at
any time Landlord pays any sum or incurs any expense as a result of or in
connection with curing any default of Tenant, the amount thereof shall be deemed
additional rent hereunder and shall be immediately due and payable by Tenant to
Landlord upon demand.
(e) Intentionally omitted.
The remedies of Landlord, as hereinabove provided, are cumulative and in
addition to and not exclusive of any other remedy of Landlord herein given or
which may be permitted by law. The remedies of Landlord, as hereinabove
provided, are subject to the other provisions herein. Nothing contained in this
Paragraph 21 shall constitute a waiver of Landlord's right to recover damages by
reason of Landlord's efforts to mitigate the damage to it caused by Tenant's
default; nor shall anything herein adversely affect Landlord's right, as in this
Lease elsewhere provided, to indemnification against liability for injury or
damage to persons or property occurring prior to the termination of this Lease.
22. DEFAULT BY LANDLORD
-------------------
Landlord shall not be in default hereunder unless Landlord fails to perform
the obligations required of Landlord within a reasonable time, but in no event
later than forty five (45) days after written notice by Tenant to Landlord and
to any Mortgagee or Ground Lessor (as defined in Paragraph 34(m)) 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
forty five (45) days is required for performance, then Landlord shall not be in
default if Landlord commences performance within such forty five (45) day period
and thereafter diligently prosecutes the same to completion. In no event shall
Tenant have the right to terminate this Lease as a result of Landlord's default;
Tenant's remedies shall be limited to any other remedy available at law or in
equity. Nothing herein contained shall be interpreted to mean that Tenant is
excused from paying rent due hereunder as a result of any default by Landlord.
Notwithstanding any provision of the Lease to the contrary, (i) Tenant's
remedies shall include any legal or relief other than the right to terminate the
Lease, and (ii) if Landlord should fail, within a reasonable time (not to exceed
thirty (30) days) after written notice from Tenant, to perform (or commence
performance and diligently pursue completion) of any act of Landlord's
maintenance, repair, replacement or other obligations set forth in the Lease,
then Tenant shall have the right, but not the obligation, to perform such
obligations and to deduct the reasonable cost thereof from Annual Basic Rent.
23. ENTRY OF PREMISES AND PERFORMANCE BY TENANT
-------------------------------------------
Landlord and its authorized representatives shall have the right to enter
the Premises upon at least one (1) business day's notice and accompanied by a
Tenant escort, except in cases of emergency, at all reasonable times for any of
the following purposes: (a) To determine whether the Premises are in good
condition and whether Tenant is complying with its obligations under this Lease;
(b) To do any necessary maintenance and to make any restoration to the Premises
or the Building that Landlord has the right or obligation to perform; (c) To
post "for sale" signs at any time during the Term, to post "for rent" or "for
lease" signs during the last 90 days of the Term, or during any period while
Tenant is in default; (d) To show the Premises to prospective brokers, agents,
buyers, tenants or persons interested in an exchange, at any time during the
Term; (e) To repair, maintain or improve the Premises and to erect scaffolding
and protective barricades around and about the Premises but not so as to prevent
entry to the Premises and to do any other act or thing necessary for the safety
or preservation of the Premises; or (f) To discharge Tenant's obligations
hereunder when Tenant has failed to do so in accordance with the terms of this
Lease. Landlord shall not be liable in any manner for any inconvenience,
disturbance, loss of business, nuisance or other damage arising of out
Landlord's entry onto the Premises as provided in this Paragraph 23. Tenant
shall not be entitled to an abatement or reduction of rent if Landlord exercises
any rights reserved in this Paragraph 23. Landlord shall reasonably attempt to
conduct his activities on the Premises as provided herein in a manner that will
cause the lease inconvenience, annoyance or disturbance to Tenant. For each of
these purposes, Landlord shall at all times have and retain a key with which to
unlock all the doors in, upon and about the Premises, excluding Tenant's vaults
and safes. Tenant shall not alter any lock or install a new or additional lock
or bolt on any door of the Premises without the prior written consent of
Landlord. If Landlord gives its consent, Tenant shall furnish Landlord with a
key for any such lock.
<PAGE>
All covenants and agreements to be performed by Tenant under any of the
terms of this Lease shall be performed by Tenant at Tenant's sole cost and
expense without any abatement of rent. If Tenant shall fail to pay any sum of
money to any third party which Tenant is obligated to pay under this Lease or
shall fail to perform any other act on its part to be performed hereunder, and
such failure shall continue for ten (10) days after notice thereof by Landlord
(or such other period as specifically provided herein), Landlord may, without
waiving or releasing Tenant from any obligations of Tenant, but shall not be
obligated to, make any such payment or perform any such other act on Tenant's
part to be made or performed in this Lease; provided, however, all sums so paid
by Landlord and all necessary incidental costs together with interest thereon at
the lesser of 12% or the maximum rate an individual is permitted to charge by
law, from the date of such payment by Landlord, shall be payable to Landlord on
demand. Tenant covenants to pay any such sums, and Landlord shall have (in
addition to all other rights or remedies of Landlord) the same rights and
remedies in the event of the nonpayment thereof by Tenant as in the case of
default by Tenant in the payment of rent. Further, following each second
consecutive late payment of rent, Landlord shall have the option to require that
Tenant increase the amount of the Security Deposit required under Paragraph 7 by
one hundred percent (100%), which additional Security Deposit shall be retained
by Landlord and may be applied by Landlord in the manner provided in Paragraph
7.
24. SUBORDINATION
-------------
Without the necessity of any additional document being executed by Tenant
for the purpose of effecting a subordination, and unless otherwise elected by
Landlord or any Mortgagee with a lien on the Premises or any Ground Lessor with
respect to the Premises (or any part thereof), this Lease shall be subject and
subordinate at all times to (a) all ground leases or underlying leases which may
now exist or hereafter be executed affecting the Premises, or the land upon
which the Premises is situated, or both, and (b) the lien of any mortgage or
deed of trust which may now exist or hereafter be executed in any amount for
which the Premises, ground leases or underlying leases, or Landlord's interest
or estate in any of said items is specified as security. Notwithstanding the
foregoing, Tenant acknowledges that Landlord shall have the right to subordinate
or cause to be subordinated this Lease to any such ground leases or underlying
leases or any such liens. In the event that any ground lease or underlying lease
terminates for any reason or any mortgage or Deed of Trust is foreclosed or a
conveyance in lieu of foreclosure is made for any reason, Tenant shall,
notwithstanding any subordination, attorn to and become the tenant of the
successor in interest to Landlord, at the option to such successor in interest.
Tenant covenants and agrees to execute and deliver, upon demand by Landlord and
in the form requested by Landlord any additional documents evidencing the
priority or subordination of this Lease with respect to any such ground lease or
underlying leases or the lien of any such mortgage or Deed of Trust. Tenant
hereby irrevocably appoints Landlord as attorney-in-fact of Tenant to execute,
deliver and record any such document in the name and on behalf of Tenant. Tenant
shall pay upon demand Landlord's reasonable attorneys' fees and costs in
connection with any negotiation or modification of Landlord's lender's standard
subordination agreement form.
Landlord shall, within thirty (30) days after the date of this Lease,
provide Tenant with a non-disturbance agreement in form and substance reasonably
satisfactory to Tenant pursuant to which Landlord's lenders with respect to the
Building and ground lessors, if any, each agree that Tenant's rights to
possession of the Premises pursuant to the terms of the Lease shall not be
disturbed, so long as Tenant is not in default of its obligations under the
Lease beyond any applicable notice and cure periods. Notwithstanding anything to
the contrary in this Lease, any subordination of the Lease by Tenant to ground
lessors or lienholders with respect to the Building is expressly conditioned on
Tenant's receipt of such non-disturbance agreement.
<PAGE>
25. NOTICE
------
Any notice, demand, request, consent, approval or communication desired by
either party or required to be given, shall be in writing and served personally
or sent prepaid by commercial overnight courier or prepaid certified first class
mail (return receipt requested), addressed as set forth in Subparagraph 1(b) and
1(c). Either party may change its address by notification to the other party.
Notice shall be deemed to be communicated 72 hours from the time of mailing, or
at the time of service as provided in this Paragraph 25.
26. WAIVER
------
No delay or omission in the exercise of any right or remedy by Landlord
shall impair such right or remedy or be construed as a waiver. No act or conduct
of Landlord, including, without limitation, acceptance of the keys to the
Premises, shall constitute acceptance of the surrender of the Premises by Tenant
before the expiration of the Term. Only written notice from Landlord to Tenant
shall constitute acceptance of the surrender of the Premises and accomplish
termination of this Lease. Landlord's consent to or approval of any act by
Tenant requiring Landlord's consent or approval shall not be deemed to waive or
render unnecessary Landlord's consent to or approval of any subsequent act by
Tenant. Any waiver by Landlord of any default must be in writing and shall not
be a waiver of any other default concerning the same or any other provision of
this Lease.
27. LIMITATION OF LIABILITY
-----------------------
In consideration of the benefits accruing hereunder, Tenant and all
successors and assigns of Tenant covenant and agree that, in the event of any
actual or alleged failure, breach or default hereunder by Landlord: (a) The
obligations under this Lease do not constitute personal obligations of the
individual partners, directors, officers, members or shareholders of Landlord or
the partners or the constituent members of Landlord, and Tenant shall not seek
recourse against any such parties or any of their personal assets for
satisfaction of any liability in respect to this Lease; (b) The liability of
Landlord shall be limited solely to, and Tenant's sole and exclusive remedy
shall be against, Landlord's interest in the Building and no other assets of
Landlord; (c) No partner or member of Landlord shall be sued or named as a party
in any suit or action (except as may be necessary to secure jurisdiction of the
partnership or limited liability company); (d) No service of process shall be
made against any partner or member of Landlord (except as may be necessary to
secure jurisdiction of the partnership or limited liability company); (e) No
partner or member of Landlord shall be required to answer or otherwise plead to
any service of process; (f) No judgment may be taken against any partner or
member of Landlord; (g) No writ of execution will ever be levied against the
assets of any partner or member of Landlord; (h) These covenants and agreements
are enforceable both by Landlord and also by any director, officer, member,
shareholder or partner of Landlord. Tenant agrees that each of the foregoing
provisions shall be applicable to any covenant or agreement either expressly
contained in this Lease or imposed by statute or at common law.
28. FORCE MAJEURE
-------------
Landlord shall have no liability whatsoever to Tenant on account of (a) the
inability or delay of Landlord in fulfilling any of Landlord's obligations under
his Lease by reason of strike, other labor trouble, governmental controls in
connection with a national or other public emergency, or shortages of fuel,
supplies or labor resulting therefrom or any other cause, whether similar or
dissimilar to the above, beyond Landlord's reasonable control; or (b) any
failure or defect in the supply, quantity or character of electricity or water
furnished to the Premises, by reason of any requirement, act or omission of the
public utility or others furnishing the Premises with electricity or water, or
for any reason, whether similar or dissimilar to the above, beyond Landlord's
reasonable control. If this Lease specifies a time period for performance of an
obligation of Landlord, that time period shall be extended by the period of any
delay in Landlord's performance caused by any of the events of force majeure
described above.
29. PROFESSIONAL FEES
-----------------
(a) If Landlord should engage any professional including, without
limitation, attorneys, appraisers, accountants or environmental or other
consultants for the purpose of bringing suit for possession of the Premises, for
the recovery of any sum due under this Lease, or because of the breach of any
provisions of this Lease, or for any other relief against Tenant hereunder, or
<PAGE>
in the event of any other litigation between the parties with respect to this
Lease, then all reasonable costs and expenses including, without limitation,
actual professional fees such as appraisers', accountants', attorneys and other
consultants' fee, incurred by the prevailing party therein shall be paid by the
other party, which obligation on the part of the other party shall be deemed to
have accrued on the date of the commencement of such action and shall be
enforceable whether or not the action is prosecuted to judgment. If Landlord
employs a collection agency to recover delinquent charges, Tenant agrees to pay
all collection agency fees charged to Landlord in addition to rent, late
charges, interest and other sums payable under this Lease.
(b) If Landlord is named as a defendant in any suit brought against Tenant
in connection with or arising out of Tenant's occupancy hereunder, Tenant shall
pay to Landlord its costs and expenses incurred in such suit including, without
limitation, its actual professional fees such as appraisers', accountants' and
attorneys' fees.
30. EXAMINATION OF LEASE
--------------------
Submission of this instrument for examination or signature by Tenant shall
not create a binding agreement between Landlord and Tenant nor shall it
constitute a reservation or option to lease on the part of Tenant and this
instrument shall not be effective as a lease and shall not create any
obligations on the part of Landlord or Tenant until this Lease has been validly
executed first by Tenant and second by Landlord, and delivered to Tenant.
31. ESTOPPEL CERTIFICATE
--------------------
(a) Within ten (10) days following any written request which Landlord may
make from time to time, Tenant shall execute and deliver to Landlord a statement
("Estoppel Certificate"), in a form substantially similar to the form of Exhibit
E attached hereto or in such other form as Landlord's lender or purchaser may
require, certifying: (i) the date of commencement of this Lease; (ii) the fact
that this Lease is unmodified and in full force and effect (or, if there have
been modifications, stating the nature and date of such modifications), (iii)
the date to which the rent and other sums payable under this Lease have been
paid; (iv) that there are no current defaults under this Lease by either
Landlord or Tenant except as specified in Tenant's statement; and (v) such other
matters requested by Landlord. Landlord and Tenant intend that any statement
delivered pursuant to this Paragraph 31 may be relied upon by any Mortgagee,
beneficiary, purchaser or prospective purchaser of the Premises or any interest
therein.
(b) Tenant's failure to deliver such statement within such time shall be
conclusive upon Tenant (i) that this Lease is in full force and effect, without
modification except as may be represented by Landlord, (ii) that there are no
uncured defaults in Landlord's performance, and (iii) that not more than one (1)
month's rent has been paid in advance. Tenant's failure to deliver said
statement to Landlord within ten (10) days of receipt shall constitute a default
under this Lease and Landlord shall have the remedies provided in Paragraph 21.
32. RULES AND REGULATIONS
---------------------
Tenant shall faithfully observe and comply with the "Rules and
Regulations", a copy of which is attached hereto and marked Exhibit F, and all
reasonable and nondiscriminatory modifications thereof and additions thereto
from time to time put into effect by Landlord.
33. LIENS
-----
Tenant shall, within ten (10) days after receiving notice of the filing of
any mechanic's lien for material or work claimed to have been furnished to the
Premises on Tenant's behalf or at Tenant's request, discharge the lien or post a
bond equal to the amount of the disputed claim with a bonding company reasonably
satisfactory to Landlord. If Tenant posts a bond, it shall contest the validity
of the lien with all due diligence. Tenant shall indemnify, defend and hold
Landlord harmless from any and all losses and costs incurred by Landlord as a
<PAGE>
result of any such liens attributable to Tenant. If Tenant does not discharge
any lien or post a bond for such lien within such ten (10) day period, Landlord
may discharge such lien at Tenant's expense and Tenant shall promptly reimburse
Landlord for all costs incurred by Landlord in discharging such lien including,
without limitation, attorney's fees and costs and interest on all sums expended
at the lesser of 12% per annum or the maximum legal interest rate. Tenant shall
provide Landlord with not less than ten (10) days written notice of its
intention to have work performed at or materials furnished to the Premises so
that Landlord may post appropriate notices of non-responsibility. Tenant shall
pay upon demand Landlord's reasonable attorneys' fees and costs in connection
with any request by Tenant for any subordination or clarification of any
Landlord lien right arising under this Lease or at law.
34. MISCELLANEOUS PROVISIONS
------------------------
(a) Time of Essence. Time is of the essence of each provision of this
Lease.
(b) Successors. This Lease shall be binding on and inure to the benefit of
the parties and their successors, except as provided in Paragraph 19 herein.
(c) Landlord's Consent. Any consent required by Landlord under this Lease
must be granted in writing and may be withheld by Landlord in its sole and
absolute discretion, unless otherwise expressly provided herein.
(d) Commissions. Each party represents that it has not had dealings with
any real estate broker, finder or other person with respect to this Lease in any
manner, except for the broker identified in Subparagraph 1(m). If Tenant has
dealt with any other person or real estate broker with respect to leasing or
renting the Premises, Tenant shall be solely responsible for the payment of any
fees due said person or firm and Tenant shall hold Landlord free and harmless
and indemnify and defend Landlord from any liabilities, damages or claims with
respect thereto, including attorney's fees and costs.
(e) Landlord's Successors. In the event of a sale or conveyance by Landlord
of the Premises, the same shall operate to release Landlord from any liability
under this Lease, and in such event Landlord's successor in interest shall be
solely responsible for all obligations of Landlord under this Lease.
(f) Prior Agreement or Amendments. This Lease contains all of the
agreements of the parties hereto with respect to any matter covered or mentioned
in this Lease, and no prior agreement or understanding pertaining to any such
matter shall be effective for any purpose. No provisions of this Lease may be
amended except by an agreement in writing signed by the parties hereto or their
respective successors-in-interest.
(g) Recording. Tenant shall not record this Lease nor a short form
memorandum thereof without the consent of Landlord. Landlord may record a short
form memorandum of this Lease and Tenant shall execute and acknowledge such form
if requested to do so by Landlord.
(h) Severability. Any provision of this Lease which shall prove to be
invalid, void or illegal shall in no way affect, impair or invalidate any other
provision hereof, and all other provisions of this Lease shall remain in full
force and effect.
(i) No Partnership or Joint Venture. Nothing in this Lease shall be deemed
to constitute Landlord and Tenant as partners or joint venturers. It is the
express intent of the parties hereto that their relationship with regard to this
Lease and the Premises be and remain that of lessor and lessee.
(j) Interpretation. When required by the context of this Lease, the
singular shall include the plural, and the masculine shall include the feminine
and/or neuter. "Party" shall mean Landlord or Tenant.
(k) No Light, Air or View Easement. Any diminution or blocking of light,
air or view by any structure which may be erected on lands adjacent to the
Building shall in no way affect this Lease or impose any liability on Landlord.
(l) Governing Law. This Lease shall be governed by and construed pursuant
to the laws of the State of California.
<PAGE>
(m) Mortgagee Protection. In the event of any default on the part of
Landlord, Tenant will give simultaneous notice consistent with Paragraph 25 to
any beneficiary of a deed of trust, Mortgagee, or Ground Lessor of the Premises
("Mortgagee" or Ground Lessor"), and shall offer such Mortgagee or Ground
Lessor, a reasonable opportunity to cure the default, including time to obtain
possession of the Premises by power of sale or a judicial foreclosure, or in the
event of a Ground Lessor, by appropriate judicial action, if such should prove
necessary to effect a cure.
(n) Certain Representations and Warranties of Landlord. Landlord represents
and warrants that, as of the date of this Lease, (i) there are no liens,
encumbrances, leases, mortgages, deeds or trust or other matters encumbering or
affecting Landlord's right, title or interest in or to the Premises that will
materially and adversely affect Tenant's quiet use and enjoyment of the Premises
for which a non-disturbance agreement acceptable to Tenant has not been
obtained, (ii) to Landlord's knowledge, the surface and structural elements of
the roof, bearing walls, and foundation of the Building are free of material
defects and the roof system does not suffer deferred maintenance, (iii) to
Landlord's knowledge, the Premises, all improvements thereto and all building
systems therein are in good condition and repair, and in compliance with all
applicable laws, (iv) except in compliance with applicable laws, neither
Landlord, nor to Landlord's knowledge, any prior owner, operator, tenant or
occupant of any part of the Project or any nearby property has generated, used,
treated, spilled, stored, transferred, disposed, released or caused a threatened
release in, at, under, into, from, to or on any part of the Project or any
nearby property of any hazardous substances or materials, and (v) Landlord has
not received any notice or claim to the effect that either Landlord or any part
of the Project or nearby property is or may be liable to any government
authority or private party as a result of the release or threatened release of
any hazardous substances or materials. If Tenant shall give Landlord written
notice of any noncompliance contained within this Subparagraph 34(n), which non
compliance is not a result of Tenant's particular use of or improvement to the
Premises requiring application of laws which would not otherwise be applicable
to the Premises absent such use or improvement, Landlord shall, within thirty
(30) days of receipt of such notice, take all necessary actions and make all
necessary repairs, replacements, and alterations to make the Premises, all
improvements thereto and all building systems therein in compliance, all at
Landlord's sole cost and expense and without Landlord passing through such costs
and expenses to Tenant. If Landlord does not take the corrective action within
thirty (30) days of Landlord's receipt of Tenant's notice, then Tenant shall
have the right to take the corrective actions and to deduct the reasonable cost
of said actions from Basic Annual Rent.
35. LEASE EXECUTION
---------------
(a) Tenant's Authority. If Tenant executes this Lease as a partnership or
corporation, then Tenant and the persons and/or entities executing this Lease on
behalf of Tenant represent and warrant that: (a) Tenant is a duly authorized and
existing partnership or corporation, as the case may be, and is qualified to do
business in the state in which the Building is located; (b) such persons and/or
entities executing this Lease are duly authorized to execute and deliver this
Lease on Tenant's behalf in accordance with the Tenant's partnership agreement
(if Tenant is a partnership), or a duly adopted resolution of Tenant's board of
directors and the Tenant's by-laws (if Tenant is a corporation); and (c) this
Lease is binding upon Tenant in accordance with its terms.
(b) Joint and Several Liability. If more than one person or entity executes
this Lease as Tenant: (a) each of them is and shall be jointly and severally
liable for the covenants, conditions, provisions and agreements of this Lease to
be kept, observed and performed by Tenant; and (b) the act or signature of, or
notice from or to, any one or more of them with respect to this Lease shall be
binding upon each and all of the persons and entities executing this Lease as
Tenant with the same force and effect as if each and all of them had so acted or
signed, or given or received such notice.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Lease as of the date
first above written.
"TENANT" Gish Biomedical, Inc.,
a California corporation
By: /s/ Kelly D. Scott
--------------------------------
Name: Kelly D. Scott
------------------------------
Title: President and Chief Executive Officer
--------------------------------------
By: /s/ Les Taeger
------------------------------------
Name: Les Taeger
----------------------------------
Title: Chief Financial Officer
---------------------------------
"LANDLORD" Eric and Shirley Pepys,
By: /s/ Eric Pepys
-------------------------------------
Eric Pepys
By: /s/ Shirley Pepys
-------------------------------------
Shirley Pepys
<PAGE>
EXHIBIT A
DEPICTION OF PREMISES
DRAWING OF BUILDING LAYOUT AND PROPERTY.
<PAGE>
EXHIBIT B
DESCRIPTION OF PREMISES
Assessors Parcel Map for the property: 805-063-01 22942 ARROYO VISTA RANCHO
SANTA MARGARITA CA 92688
<PAGE>
EXHIBIT C
WORK LETTER AGREEMENT
TENANT CONDUCTING OWN TENANT IMPROVEMENTS
THIS WORK LETTER AGREEMENT is entered into as dated 29 September 2000, by and
between Eric and Shirley Pepys, Landlord, and Gish Biomedical, Inc., a
California corporation, Tenant.
RECITALS:
A. Concurrently with the execution of this Work Letter Agreement, Landlord and
Tenant have entered into a lease (the "Lease") covering certain premises
(the "Premises") more particularly described in Exhibit A attached to the
Lease.
B. Tenant desires to improve the Premises on its own behalf without the benefit
of Landlord's design and construction resources.
C. In order to induce Tenant to enter into the Lease (which is hereby
incorporated by reference to the extent applicable) and in consideration of
the mutual covenants hereinafter contained, Landlord and Tenant hereby agree
as follows:
1. Minimum Standards for Tenant's Design and Construction Resources. The
following minimum standards shall apply:
(i) Only licensed architects and engineers shall be used to perform
designwork. Prior to commencement of any designwork, Tenant shall furnish a list
of all architects and engineers who will perform designwork for the improvements
to be installed under the terms and provisions of this Work Letter Agreement.
(ii) Only a licensed General Contractor may be used to perform
construction work. Prior to contracting with the General Contractor, Tenant
shall furnish Landlord with a list of Contractors (general contractor and
sub-contractors) who will perform work on the Premises. The list shall include
the Contractor license number, City Business License Number, business address,
phone number and name of the representative of Contractor.
(iii) (iii) The General Contractor and all Sub-contractors must conform
to all laws and regulations of all State, County , City or other lawful
governing authority' having jurisdiction over the Premises or the General
Contractor.
(iv)Prior to the commencement of any construction work on the Premises,
Landlord must receive (a) certificates of insurance endorsed to include Landlord
as "additional named insured" as applicable on insurance policies to be
maintained by Tenant as set forth within the Lease and (b) certificates of
insurance for the workman's compensation and liability insurance policies
maintained by the General Contractor, endorsed to include Landlord as
"additional named insured" on all liability insurance policies and which
evidence the following minimum protection:
WORKER'S COMPENSATION Statutory
EMPLOYERS LIABILITY $1,000,000 (minimum)
PUBLIC LIABILITY $1,000,000/$5,000,000 Bodily Injury
$1,000,000 Property Damage or
$5,000,000 Combined Single Limit
(v) When proceeding with Tenant Improvements, Tenant and Contractor
shall fulfill any and all further obligations contained in the Lease and its
Exhibits.
2. Completion Schedule. Within ten (10) days after the execution of the Lease
and this Work Letter Agreement, Tenant shall deliver to Landlord for
Landlord's review and approval, a schedule (the "Work Schedule") setting
forth a timetable for the planning and completion of the installation of the
Tenant Improvements (as defined in Paragraph 3 below) to be constructed in
the Premises, and the estimated Commencement Date for the Term of the Lease.
The Work Schedule shall set forth each of the various items of work to be
done by or approval to be given by Landlord and Tenant in connection with
the completion of the Tenant Improvements. The Work Schedule shall be
submitted to Landlord for its approval and, upon approval by both Landlord
and Tenant, the approved Work Schedule shall become the basis for completing
the Tenant Improvements.
<PAGE>
3. Tenant Improvements. Reference herein to "Tenant Improvements" shall include
all work to be done in the Premises pursuant to the Tenant Improvement Plans
(defined in Paragraph 4 below), including, but not limited to, partitioning,
doors, ceilings, floor coverings, wall finishes (including paint and wall
covering), electrical (including lighting, switching, telephones, outlets,
etc.), plumbing, heating, ventilating and air conditioning, fire protection,
cabinets and other millwork and sitework.
4. Tenant Improvement Plans. Immediately after the execution of the Lease and
this Work Letter Agreement, Tenant's architect shall prepare final working
drawings and specifications for the Tenant Improvements. Such final working
drawings and specifications are referred to herein as the "Tenant
Improvement Plans." The Tenant Improvement Plans must be consistent with
Landlord's standard specifications for tenant improvements for the Project
(the "Project Standards"), as the same may be changed from time to time by
Landlord.
5. Non-Standard Tenant Improvements. Landlord shall permit Tenant to deviate
from the Project Standards for the Tenant Improvements (the "Project
Non-Standards"), provided that (a) the deviations shall not be of a lesser
quality than the Project Standards; (b)the total lighting for the Premises
shall not exceed 1.65 watts per Rentable Square Foot of the Premises;(c) the
deviations conform to applicable governmental regulations and necessary
governmental permits and approvals have been secured; (d) the deviations do
not require building service beyond the levels normally provided to other
tenants in the Project; and (e) Landlord has determined in its sole
discretion that the deviations are of a nature and quality that are
consistent with the overall objectives of Landlord for the Project.
Any non-standard Tenant Improvements made shall remain on and be surrendered
with the Premises upon expiration of the Term, except that Landlord may,
upon consenting to any such non-standard Tenant Improvements, elect to
require Tenant to remove any non-standard Tenant Improvements which may have
been made to the Premises.If Landlord so elects, at its own cost Tenant
shall restore the Premises to the condition designated by Landlord in its
election, before the last day of the term or within 30 days after notice of
its election is given, whichever is later.
6. Final Pricing and Drawing Schedule. After the preparation of the space plan
and after Landlord's written approval thereof, in accordance with the Work
Schedule, Tenant shall cause its architect to prepare and submit to Landlord
the Tenant Improvement Plans. The Tenant Improvement Plans shall be approved
by Landlord and Tenant in accordance with the Work Schedule and shall
thereafter be submitted to the appropriate governmental body by Tenant's
architect for plan checking and the issuance of a building permit. Tenant,
with Landlord's cooperation, shall cause to be made to the Tenant
Improvement Plans any changes necessary to obtain the building permit.
Concurrent with the plan checking, Tenant shall have prepared a final
pricing for Landlord's approval, in accordance with the Work Schedule,
taking into account any modifications which may be required to reflect
changes in the Tenant Improvement Plans required by the City or County in
which the Premises are located. After final approval of the Tenant
Improvement Plans no further changes may be made thereto without the prior
written approval from both Landlord and Tenant, and then only after
agreement by Tenant to pay any excess costs resulting from the design and/or
construction of such changes. Tenant hereby acknowledges that any such
changes shall be subject to the terms of Paragraph 9 below.
7. Construction of Tenant Improvements. After the Tenant Improvement Plans have
been prepared and approved, the final pricing has been approved and a
building permit for the Tenant Improvements has been issued, Tenant shall
cause its contractor to begin installation of the Tenant Improvements in
accordance with the Tenant Improvement Plans. Tenant shall supervise the
completion of such work and shall use reasonable commercial efforts to
secure substantial completion of the work in accordance with the Work
Schedule. The cost of such work shall be paid as provided in Paragraph 8
below.
8. Payment for the Tenant Improvements. Landlord hereby grants to Tenant a
"Tenant Improvement Allowance" of One Hundred Fifty Five, Seven Hundred
Thirty-nine and 00/100 Dollars ($155,739.00), subject to Tenant's compliance
with the provisions of this Work Letter Agreement and provided in the event
(a) Tenant has not provided Landlord with a copy of a contract binding
Tenant for the completion of such Tenant Improvements within twelve months
from the Commencement Date of the Lease or (b) Tenant shall not fully expend
or submit for reimbursement from the Tenant Improvement Allowance within
eighteen months from the Commencement Date of the Lease, Tenant shall have
no further right to seek or obtain reimbursement from Landlord, and Landlord
shall have no further obligation or liability to reimburse Tenant for any
amounts expensed by Tenant for the Tenant Improvements. The Tenant
Improvement Allowance shall only be used for:
<PAGE>
(a) Payment of the cost of preparing the space plan and the Tenant
Improvement Plans, including mechanical, electrical, plumbing, structural
drawings and of all other aspects necessary to complete the Tenant Improvement
Plans. The Tenant Improvement Allowance will not be used for the payment of
extraordinary design work not included within the scope of Landlord's Project.
Standards or for payments to any other consultants, designers or architects
other than Landlord's architect and/or space planner.
(i) The payment of plan check, permit and license fees relating to
construction of the Tenant Improvements.
(ii) Construction of the Tenant Improvements, including, without
limitation, the following:
(aa) Installation within the Premises of all partitioning, doors,
floor coverings, ceilings, wall coverings and painting, millwork and similar
items;
(bb) All electrical wiring,lighting fixtures,outlets and switches,
and other electrical work to be installed within the Premises;
(cc) The furnishing and installation of all duct work, terminal
boxes, diffusers and accessories required for the completion of the heating,
ventilation and air conditioning systems within the Premises, including the cost
of meter and key control for after- hour air conditioning;
(dd) Any additional Tenant requirements including, but not limited
to, odor control, special heating, ventilation and air conditioning, noise or
vibration control or other special systems;
(ee) All fire and life safety control systems such as fire walls,
sprinklers, halon, fire alarms, including piping, wiring and accessories,
installed within the Premises;
(ff) All plumbing, fixtures, pipes and accessories to be installed
within the Premises;
(gg) Testing and inspection costs; and
(hh) Contractor's fees, including but not limited to any fees
based on general conditions.
(iii) All other costs expended by Landlord in the construction of the
Tenant Improvements, including those costs incurred by Landlord for construction
of elements of the Tenant Improvements in the Premises, which construction was
performed by Landlord prior to the execution of this Lease by Landlord and
Tenant and which construction is for the benefit of tenants and is customarily
performed by Landlord prior to the execution of leases for space in the Project
for reasons of economics (examples of such construction would include, but not
be limited to, the extension of mechanical [including heating, ventilating and
air conditioning systems] and electrical distribution systems outside of the
core of the Building, wall construction, column enclosures and painting outside
of the core of the Building, ceiling hanger wires and window treatment).
(iv) The cost of sitework or other improvements approved by Landlord as
equivalent to Landlord's Project Standards and included within the Tenant
Improvement Plans.
(b) The cost of each item referenced in Paragraph 8(a) above shall be
charged against the Tenant Improvement Allowance. In the event that the cost of
installing the Tenant Improvements, as established by Tenant, shall exceed the
Tenant Improvement Allowance, or if any of the Tenant Improvements are not to be
paid out of the Tenant Allowance as provided in Paragraph 8(a) above, the excess
shall be paid by Tenant prior toprior to disbursement of the Tenant Improvement
Allowance.
(c) In the event that, after the Tenant Improvement Plans have been
prepared and a price therefor established by Tenant, Tenant shall require any
changes or substitutions to the Tenant Improvement Plans, Tenant shall provide a
revised final pricing schedule to Landlord.
(d) Tenant shall submit its application for disbursement of the Tenant
Improvement Allowance upon completion of the Tenant Improvements, together with
an unconditional release of lien for each consultant and subconsultant with
statutory rights to lien, and all contractors, subcontractors and material
suppliers providing materials and/or labor to complete the Tenant Improvements
("Completed Application for Payment").
<PAGE>
(e) All bills and releases will be audited by Landlord prior to release of
the Tenant Improvement Allowance.
(f) Landlord shall remit the Tenant Improvement to Tenant within thirty
days of receipt of Tenant's Completed Application for Payment. Any unused
portion of the Tenant Improvement Allowance upon completion of the Tenant
Improvements shall not be refunded to Tenant and shall not be available to
Tenant as a credit against any obligations of Tenant under the Lease.
Completion and Rental Commencement Date. The commencement of the Term of the
Lease and Tenant's obligation for the payment of rent under the Lease shall
commence as of the date referred to in Subparagraph 1(i) of the Lease10.
Certificate of Occupancy. Upon completion of the Tenant Improvements and the
issuance by the City or other relevant government agency of a Certificate of
Occupancy or other comparable certificate authorizing occupancy of the Premises,
Tenant will promptly provide Landlord with a copy of the Certificate of
Occupancy or other such certificate, the stamped set of plans and a recorded
"Notice of Completion". The certificate of Occupancy must be approved by
Landlord before Tenant can move in.
9. Force Majeure. Landlord shall have no liability whatsoever to Tenant on
account of the inability or delay of Landlord to fulfill any of Landlord's
obligations under this Work Letter Agreement by reason of strike,other labor
trouble,inclement weather,acts of God,governmental restrictions, controls or
inaction, or shortages of fuel, supplies or labor resulting therefrom or any
other cause, whether similar or dissimilar to the above, beyond Landlord's
reasonable control. If this Work Letter Agreement specifies a time period
for performance of an obligation of Landlord, that time period shall be
extended by the period of any delay in Landlord's performance caused by any
of the events of force majeure described above.
IN WITNESS WHEREOF, this Work Letter Agreement is executed as of the date first
written above.
"TENANT" Gish Biomedical, Inc.,
a California corporation
By: /s/ Kelly D. Scott
-----------------------------------
Name: Kelly D. Scott
---------------------------------
Title: President and Chief Executive Officer
--------------------------------------
By: /s/ Les Taeger
--------------------------------------
Name: Les Taeger
------------------------------------
Title: Chief Financial Officer
-----------------------------------
"LANDLORD" Eric and Shirley Pepys,
By: /s/ Eric Pepys
--------------------------------------
Eric Pepys
By: /s/ Shirley Pepys
---------------------------------------
Shirley Pepys
<PAGE>
PUNCH-LIST
(TO BE COMPLETED BY LANDLORD)
1. Perform miscellaneous concrete epoxy repair and touch-painting on the
exterior column at front entrance
2. All lobby, office and warehouse lights to be in working order
3. Structural engineering inspection and report on hairline cracks in concrete
tilt-up panels
4. Perform one-time pest control service for ant control
5. All restroom fixtures to be in good working order
6. Inspect irrigation and drainage along south perimeter of building (check
for over watering of planter areas)
<PAGE>
EXHIBIT D
---------
NOTICE OF LEASE TERM DATES
--------------------------
Re: Lease dated 29 September 2000, by and between Eric and Shirley Pepys,
("Landlord") and Gish Biomedical, Inc., a California corporation"), concerning
the Premises located at 22942 Arroyo Vista, Rancho Santa Margarita, California
Gentlemen:
In accordance with the subject Lease, we wish to advise and/or confirm as
follows:
1. That the Premises have been accepted herewith by the Tenant as being
substantially complete in accordance with the subject Lease and that there
is no deficiency in construction.
2. That the Tenant has possession of the subject Premises and acknowledges that
under the provisions of the subject Lease the Term of the Lease shall
commence as of 13th of October 2000 for a term of 124 months, ending on 12th
of February 2011.
3. That in accordance with the subject Lease, rent commences to accrue on
13th of February 2001.
4. If the Commencement Date of the subject Lease is other than the first day of
the month, the first billing will contain a pro rata adjustment. Each
billing thereafter shall be for the full amount of the monthly installment
as provided for in said Lease.
5. Rent is due and payable in advance on the first day of each and every month
during the term of said Lease. Tenant's rent checks should be made payable
to Eric and Shirley Pepys at 526 South Bayfront, Newport Beach, CA.
AGREED AND ACCEPTED
"TENANT" Gish Biomedical, Inc.,
a California corporation
By: /s/ Kelly D.Scott
Name: Kelly D. Scott
------------------------------
Title: President and Chief Executive Officer
-------------------------------------
By: /s/ Les Taeger
----------------------------------
Name: Les Taeger
--------------------------------
Title: Chief Financial Officer
-------------------------------
"LANDLORD" Eric and Shirley Pepys,
By: /s/ Eric Pepys
------------------------------------
Eric Pepys
By: /s/ Shirley Pepys
------------------------------------
Shirley Pepys
<PAGE>
EXHIBIT E
Not Executed.
TENANT ESTOPPEL CERTIFICATE
The undersigned, Eric and Shirley Pepys, ("Landlord"), with a mailing address
c/o ________________ and Gish Biomedical, Inc., a California corporation
("Tenant"), hereby certify to ___________________, a _________________, as
follows:
1. Attached hereto is a true, correct and complete copy of that certain lease
dated _____, between Landlord and Tenant (the "Lease"), which demises
premises located ________________________ (the "Premises").
The Lease is now in full force and effect and has not been amended, modified
or supplemented, except as set forth in Paragraph 4 below.
2. The Term of the Lease commenced on ________________________, 19__.
3. The Term of the Lease shall expire on ____________________, 19__.
4. The Lease has: (initial one)
(_________) not been amended, modified, supplemented, extended, renewed or
assigned.
(_________) been amended, modified, supplemented, extended, renewed or
assigned by the following described agreements, copies of which are attached
hereto:
--------------------------------------------------------------------------.
5. Tenant has accepted and is now in possession of the Premises.
6. Tenant and Landlord acknowledge that the Lease will be assigned to
_______________ _____________ and that no modification, adjustment, revision
or cancellation of the Lease or amendments thereto shall be effective unless
written consent of ____________ is obtained, and that until further notice,
payments under the Lease may continue as heretofore.
7. The amount of fixed monthly rent is $_____________.
8. The amount of security deposits (if any) is $_____________. No other
security deposits have been made.
9. Tenant is paying the full lease rental which has been paid in full as of the
date hereof. No rent or other charges under the Lease have been paid more
than thirty (30) days in advance of its due date.
10. All work required to be performed by Landlord under the Lease has been
completed.
11. There are no defaults on the part of the Landlord or Tenant under the Lease.
12. Tenant has no defense as to its obligations under the Lease and claims
no set-off or counterclaim against Landlord.
13. Tenant has no right to any concession (rental or otherwise) or similar
compensation in connection with renting the space it occupies except as
provided in the Lease.
14. Tenant has no right or option to purchase the Premises, Building or Project,
to relocate within the Building or Project or to terminate the Lease.
15. All provisions of the Lease and the amendments thereto (if any) referred to
above are hereby ratified.
The foregoing certification is made with the knowledge that __________________
is about to fund a loan to Landlord or ________________ is about to purchase the
Project (or part thereof) from Landlord and that _________________ is relying
upon the representations herein made in funding such loan or in purchasing the
Project (or part thereof).
<PAGE>
IN WITNESS THEREOF, this certificate has been executed and delivered by the
authorized officers of the undersigned as of ______________, 19__.
Gish Biomedical, Inc.,
a California corporation
By: ___________________________________
Name: _________________________________
Title: ________________________________
By: ___________________________________
Name: _________________________________
Title: ________________________________
SAMPLE ONLY
(Not For Execution)
<PAGE>
EXHIBIT F
RULES AND REGULATIONS
1. Except as specifically provided in the Lease to which these Rules and
Regulations are attached, no sign, placard, picture, advertisement, name or
notice shall be installed or displayed on any part of the outside or inside
of the Building of the Project without the prior written consent of
landlord, which consent Landlord may withhold in its sole and absolute
discretion. Landlord shall have the right to remove, at Tenant's expense and
without notice, any sign installed or displayed in violation of this rule.
All approved signs or lettering on doors and walls shall be printed, painted
, affixed or inscribed at the expense of Tenant by a person approved by
Landlord.
2. If Landlord objects in writing to any curtains, blinds, shades, screens or
hanging plants or other similar objects attached to or used in connection
with any window or door of the Premises, or placed on any windowsill, which
is visible from the exterior of the Premises, Tenant shall immediately
discontinue such use. Tenant shall not place anything against or near glass
partitions or doors or windows which may appear unsightly from outside the
Premises.
3. Tenant shall not obstruct any sidewalks, halls, passages, exits, entrances,
stairways, elevators or escalators (if any) of the Project. The halls,
passages, exists, entrances, shopping malls, elevators, escalators and
stairways are not open to the general public, but are open, subject to
reasonable regulations, to Tenant's business invitees. Landlord shall in all
cases retain the right to control and prevent access thereto of all persons
whose presence in the judgment of Landlord would be prejudicial to the
safety, character, reputation and interest of the Project and its tenants;
provided that nothing herein contained shall be construed to prevent such
access to persons with whom any tenant normally deals in the ordinary course
of its business, unless such persons are engaged in illegal or unlawful
activities. No tenant and no employee or invitee of any tenant shall go upon
the roof(s) of the Project.
4. The directory of the Building or Project will be provided exclusively for
the display of the name and location of tenants only and Landlord reserves
the right to exclude any other names therefrom.
5. All cleaning and janitorial services for the Project and the Premises shall
be provided exclusively through Landlord, and except with the written
consent of Landlord, no person or persons other than those approved by
Landlord shall be employed by Tenant or permitted to enter the Project for
the purpose of cleaning the same. Tenant shall not cause any unnecessary
labor or carelessness or indifferent to the good order and cleanliness of
the Premises.
6. Landlord will furnish Tenant, free of charge, with two keys to each door
lock in the Premises. Landlord may make a reasonable charge for any
additional keys. Tenant shall not make or have made additional keys, and
Tenant shall not after existing locks or install any new additional locks or
bolts on any door of the Premises. Tenant, upon the termination of its
tenancy, shall deliver to Landlord the keys to all doors which have been
furnished to Tenant, and in the event of any loss of any keys so furnished
shall pay Landlord therefor.
7. If Tenant requires telegraphic, telephonic, burglar alarm or similar
services, it shall first obtain, and comply with Landlord's instructions in
their installation.
8. Freight elevator(s), if any, shall be available for use by all tenants in
the Building, subject to such reasonable scheduling as landlord, in its
discretion, shall deem appropriate. No equipment, materials, furniture,
packages, supplies, merchandise or other property will be received in the
Building or carried in the elevators except between such hours and in such
elevators as may be designated by landlord. Tenant's initial move in and
subsequent deliveries of bulky items, such as furniture, safes and similar
items shall, unless otherwise agreed in writing by Landlord, be made during
the hours of 6:00 p.m. to 6:00 a.m. or on Saturday or Sunday. Deliveries
during normal office hours shall be limited to normal office supplies and
other small items.No deliveries shall be made which impede or interfere with
other tenants or the operation of the Building.
<PAGE>
9. Tenant shall not place a load upon any floor the Premises which exceeds the
load per square foot which such floor was designed to carry and which is
allowed by law. Landlord shall have the right to prescribe the weight, size
and position of all equipment, materials, furniture or other property
brought into the Building. Heavy objects shall, if considered necessary by
Landlord, stand on such platforms as determined by Landlord to be necessary
to properly distribute the weight, which platforms shall be provided at
Tenant's expense. Business machines and mechanical equipment belonging to
Tenant, which cause noise or vibration that may be transmitted to the
structure of the building or to any space therein to such a degree as to be
objectionable to Landlord or to any tenants in the Building, shall be placed
and maintained by Tenant, at Tenant's expense, on vibration eliminators or
other devises sufficient to eliminate noise or vibration. The persons
employed to move such equipment in or out of the Building must be acceptable
to Landlord. Landlord will not be responsible for loss of, or damage to, any
such equipment or other property from any cause, and all damage done to the
Building by maintain or moving such equipment orother property shall be
repairs at the expense of Tenant.
10. Tenant shall not use or keep in the Premises any kerosene, gasoline or
inflammable or combustible fluid or material other than those limited
quantifies necessary for the operation or maintenance of office equipment.
Tenant shall not use or permit to be used in the Premises any foul or
noxious gas or substance, or permit or allow the Premises to be occupied or
used in a manner offense or objectionable to Landlord or other occupants of
the Building by reason of noise, odors or vibrations, nor shall Tenant bring
into or keep in or about the Premises any birds or animals.
11. Tenant shall not use any method of heating or air conditioning other
than that supplied by Landlord.
12. Tenant shall not waste electricity, water or air conditioning and agrees to
cooperate fully with Landlord to assure the most effective operation of the
Building's heating and air conditioning and to comply with any governmental
energy-saving rules, laws or regulations of which Tenant has actual notice,
and shall refrain from attempting to adjust controls. Tenant shall keep
corridor doors closed, and shall close window coverings at the end of each
business day.
13. Landlord reserves the right, exercisable without notice and without
liability to Tenant, to change the name and street address of the Building.
14. Landlord reserves the right to exclude from the Building between the hours
of 6 p.m. and 7 a.m. the following day, or such other hours as may be
established from time to time by Landlord, and on Sundays and legal
holidays, any person unless that person is known to the person or employee
in charge of the Building or has a pass or is properly identified. Tenant
shall be responsible for all persons for whom it request passes and shall be
liable to Landlord for all acts of such persons. Landlord shall not be
liable for damage for any error with regard to the admission to or exclusion
from the Building of any person. Landlord reserves the right to prevent
access to the Building in case of invasion, mob, riot, public excitement or
other commotion by closing the doors or by other appropriate action.
15. Tenant shall close and lock the doors of its Premises and entirely shut off
all water faucets or other water apparatus, and electricity, gas or air
outlets before Tenant and its employees leave the Premises. Tenant shall be
responsible for any damage or injuries sustained by other tenants or
occupants of the Building or by Landlord for noncompliance with this rule.
16. Tenant shall not obtain for use on the Premises ice, drinking water, food
beverage, towel or other similar services or accept barbering or
bootblacking service upon the Premises, except at such hours and under such
regulations as may be fixed by Landlord.
<PAGE>
17. The toilet rooms, toilets, urinals, wash bowls and other apparatus shall not
be used for any purpose other than that for which they were constructed and
no foreign substance of any kind whatsoever shall be thrown therein. The
expense of any breakage, stoppage or damage resulting from the violation of
this rule shall e borne by the tenant who,or whose employees or invitees,
shall have caused it.
18. Tenant shall not sell, or permit the sale at retail of newspapers,
magazines, periodicals, theater tickets or any other goods or merchandise to
the general public in or on the Premises. Tenant shall not make any
room-to-room solicitation of business from other tenants in the Project.
Tenant shall not use the Premises for any business or activity other than
that specifically provided for in this Lease.
19. Tenant shall not install any radio or television antenna, loudspeaker or
other devices on the roof(s)or exterior walls of the Building or Project.
Tenant shall not interfere with radio or television broadcasting or
reception from or in the Project or elsewhere. Notwithstanding anything to
the contrary in this Paragraph 19, Tenant shall have the right, for its
personal use and not for the use or enjoyment of any third party, to install
and use a microwave dish, antenna, or other telecommunications equipment,
which shall not be unsightly and shall be subject to Landlord's reasonable
approval and all applicable laws and regulations.
20. Tenant shall not mark, drive nails, screw or drill into the partitions,
woodwork or plaster or in any deface the Premises or any part thereof,
except in accordance with the provisions of the Lease pertaining to
alterations. Landlord reserves the right to direct electricians as to where
and how telephone and telegraph wires are to be introduced to the Premises.
Tenant shall not cut or bore holes for wires. Tenant shall not affix any
floor covering to the floor of the Premises. In any manner except as
approved by Landlord. Tenant shall repair any damage resulting from
noncompliance with this rule.
21. Tenant shall not install, maintain or operate on the exterior of the
Premises any vending machines without the written consent of Landlord.
22. Canvassing, soliciting and distribution of handbills or any other written
material, and peddling in the Project are prohibited, and Tenant shall
cooperate to prevent such activities.
23. Landlord reserves the right to exclude or expel from the Project any person
who, in Landlord's judgment, is intoxicated or under the influence of liquor
or drugs or who is in violation of any of the Rules and Regulations of the
Building.
24. Tenant shall store all its trash and garbage within its Premises or in other
facilities provided by Landlord. Tenant shall not place in any trash box or
receptacle any material which cannot be disposed of in the ordinary and
customary manner of trash and garbage disposal. All garbage and refuse
disposal shall be made in accordance with directions issued from time to
time by Landlord.
25. The Premises shall not be used for the storage of merchandise held for sale
to the general public, or for loading or for manufacturing of any kind, nor
shall the Premises be used for any improper, immoral or objectionable
purpose. No cooking shall be done or permitted on the Premises without
Landlord's consent, except the use by Tenant of Underwriters' laboratory
approved equipment for brewing coffee, tea, hot chocolate and similar
beverages shall be permitted, and the use of a microwave oven, toaster and
toaster oven for employees use shall be permitted, provided that such
equipment and use is in accordance with all applicable federal, state,
county and city laws, codes, ordinances, rules and regulations.
26. Tenant shall not use in any space or in the public halls of the Project any
hand truck except those equipped with rubber tires and side guards or such
other material-handling equipment as Landlord may approve. Tenant shall not
bring any other vehicles of any kind into the Building or Project.
<PAGE>
27. Without the written consent to Landlord, Tenant shall not use the name of
the Building or Project in connection with or in promoting or advertising
the business of Tenant except as Tenant's address.
28. Tenant shall comply with all safety, fire protection and evacuation
procedures and regulations established by Landlord or any governmental
agency.
29. Tenant assumes any and all responsibility for protecting its Premises from
theft, robbery and pilferage, which includes keeping doors locked and other
means of entry to the Premises closed.
30. To the extent Landlord reasonably deems it necessary to exercise exclusive
control over any portions of the Common Areas for the mutual benefit of the
tenants in the Project, Landlord may do so subject to non-discriminatory
additional Rules and Regulations.
31. Tenant's requirements will be attended to only upon appropriate application
to the Project management office by an authorized individual. Employees of
Landlord shall not perform any work or do anything outside of their regular
duties unless under special instructions from Landlord, and no employee of
Landlord will admit any person (Tenant or otherwise) to any office without
specific instructions from Landlord.
32. Landlord may waive any one or more of these Rules and Regulations for the
benefit of Tenant or other tenant, but no such waiver by Landlord shall be
construed as a waiver of such Rules and Regulations against any or all of
the tenants of the Project.
33. These Rules and Regulations are in addition to, and shall not be construed
to in any way modify or amend, in whole or in part, the terms covenants,
agreements and conditions of the Lease.
34. Landlord reserves the right to make such other and reasonable Rules and
Regulations as, in its judgment, may from time to time to be needed for
safety and security, for care and cleanliness of the Project and for the
preservation of good order therein. Tenant agrees to abide by all such Rules
and Regulations herein above stated and any additional rules and regulations
which are adopted.
35. Tenant shall be responsible for the observance of all of the foregoing
rules by Tenant's employees,agents, clients, customers, invitees and guests.
<PAGE>
EXHIBIT G
PROJECT SIGNAGE CRITERIA
To be determined.
Exhibit G was left blank.
<PAGE>
EXHIBIT H
HAZARDOUS MATERIALS ADDENDUM
This Exhibit H is hereby attached to and made a part of the Lease dated 29
September 2000, by and between Eric and Shirley Pepys, ("Landlord") and Gish
Biomedical, Inc., a California corporation"), concerning the Premises located at
22942 Arroyo Vista, Rancho Santa Margarita, California.
1. Tenant shall promptly notify Landlord of, and shall promptly provide
Landlord with true, correct, complete and legible copies of, all of the
following environmental items relating to the Premises which may be filed or
prepared by or on behalf of, or delivered to or served upon, Tenant: reports
filed pursuant to any self-reporting requirements, reports filed pursuant to
any applicable laws or this Lease, all permit applications, permits,
monitoring reports, workplace exposure and community exposure warnings or
notices and all other reports, disclosures, plans or documents (even those
which may be characterized as confidential) relating to water discharges,
air pollution, waste generation or disposal, underground storage tanks or
Hazardous Materials.
2. In addition to Tenant's routine reporting obligations described in Paragraph
1 above, Tenant shall promptly notify Landlord of, and shall promptly
provide Landlord with true, correct, complete and legible copies of, all of
the following environmental items relating to the Premises which may be
filed or prepared by or on behalf of, or delivered to or served upon,
Tenant: all orders, reports, notices, listings and correspondence (even
those which may be considered confidential) of or concerning the release,
investigation of, compliance, clean up, remedial and corrective actions, and
abatement of Hazardous Materials whether or not required by any applicable
laws, including, but not limited to, reports and notices required by or
given pursuant to any applicable laws, and all complaints, pleadings and
other legal documents filed against Tenant related to Tenant's use, handling
storage or disposal of Hazardous Materials. In the event of a release of any
Hazardous Materials in, on or about the Premises or the Project, Tenant
shall promptly provide Landlord with copies of all reports and
correspondence with or from all governmental agencies, authorities or any
other persons relating to such release.
3. Prior to the execution of this Lease, Tenant shall complete, execute and
deliver to Landlord a Hazardous Materials Questionnaire (the "Hazardous
Materials Questionnaire") in the form of Exhibit I, and Tenant shall certify
to Landlord all information contained in the Hazardous Materials
Questionnaire as true and correct to the best of Tenant's knowledge and
belief. The completed Hazardous Materials Questionnaire shall be deemed
incorporated into this Lease for all purposes, and Landlord shall be
entitled to rely fully on the information contained therein. On each
anniversary of the Commencement Date (each such date is hereinafter referred
to as a "Disclosure Date"), until and including the first Disclosure Date
occurring after the expiration or sooner termination of this Lease, Tenant
shall disclose to Landlord in writing the names and amounts of all Hazardous
Materials, or any combination thereof, which were stored, generated or used
or disposed of on, in, under or about the Premises for the twelve-month
period prior to and after each Disclosure Date, or which Tenant intends to
store, generate, use or dispose of on, under or about the Premises. At
Landlord's option, Tenant's disclosure obligations under this Paragraph 3
shall include a requirement that Tenant update, execute and deliver to
Landlord the Hazardous Materials Questionnaire, as the same may be modified
by Landlord from time to time.
4. Landlord and Landlord's agents and employees shall have the right, but not
the obligation, to inspect, investigate, sample and/or monitor the Premises,
including any soil, water, groundwater or other sampling, and any other
testing, digging, drilling or analyses, at any time to determine whether
Tenant is complying with the terms of this Exhibit H, and in connection
therewith, Tenant shall provide Landlord with full access to all relevant
facilities, records and personnel. If Tenant is not in compliance with any
of the provisions of this Exhibit H, Landlord and Landlord's agents and
employees shall have the right, but not the obligation, without limitation
upon any of Landlord's other rights and remedies under this Lease, to
immediately enter upon the Premises and to discharge Tenant's obligations
under this Exhibit H at Tenant's expense, notwithstanding any other
provision of this Lease. Landlord and Landlord's agents and employees shall
endeavor to minimize interference with Tenant's business but shall not be
liable for any such interference. All sums reasonably disbursed, deposited
or incurred by Landlord in connection therewith, including, but not limited
to, all costs, expenses and actual attorneys' fees, shall be due and payable
by Tenant to Landlord, as an item of additional rent, on demand by Landlord,
together with interest thereon at the maximum interest rate permitted by law
from the date of such demand until paid by Tenant.
<PAGE>
5. Landlord, at Tenant's sole cost and expense, shall have the right, but not
the obligation, to join and participate in any legal proceedings or actions
initiated in connection with any claims or causes of action arising out of
the storage, generation, use or disposal by Tenant, its agents, employees,
contractors or invitees, of Hazardous Materials in, on, under, from or about
the Premises or any other portion of the sublessees Project. If the presence
of any Hazardous Materials in, on, under or about the Premises or any other
portion of the Project caused or permitted by Tenant, its agents, employees,
contractors, sublessees or invitees, results in (i) injury to any person,
(ii) injury to or any contamination of the Premises or (iii) injury to or
contamination of any real or personal property wherever situated, Tenant, at
its sole cost and expense, shall promptly take all actions necessary to
return the Premises or such other portion of the Project, to the condition
existing prior to the introduction of such Hazardous Materials to the
Premises and to remedy or repair any such injury or contamination.
Notwithstanding the foregoing, Tenant shall not, without Landlord's prior
written consent, take any remedial action in response to the presence of any
Hazardous Materials in, on, under or about the Premises or any other portion
of the Project, or enter into any settlement agreement, consent decree or
other compromise with any governmental agency with respect to any Hazardous
Materials claims; provided, however, Landlord's prior written consent shall
not be necessary in the event that the presence of Hazardous Materials in,
on, under or about the Premises or any other portion of the Project (i)
poses an immediate threat to the health, safety or welfare of any individual
or (ii) is of such a nature that an immediate remedial response is necessary
and it is not possible to obtain Landlord's consent before taking such
action.
6. Promptly upon the expiration or sooner termination of this Lease, Tenant
shall represent to Landlord in writing that (i) Tenant has made a diligent
effort to determine whether any Hazardous Material s are in, on, under or
about the Premises or any other portion of the Project, and (ii) no
Hazardous Materials exist in, on, under or about the Premises or any other
portion of the Project other than as specifically identified to Landlord by
Tenant in writing. To ensure performance of Tenant's obligations under this
Paragraph 7, Landlord may, at any time within one (1) year of the expiration
of the Term, or upon the occurrence of an Event of Default, by notice to
Tenant, require that Tenant promptly commence and diligently prosecute to
completion an environmental evaluation of the Premises or any other portion
of the Project. In connection therewith, Landlord may require Tenant, at
Tenant's sole cost and expense, to immediately hire an outside consultant
satisfactory to Landlord to perform a complete environmental audit of the
Premises or any other portion of the Project, an executed copy of which
shall be delivered to Landlord within thirty (30) days after landlord's
request therefor. If Tenant or the environmental audit discloses the
existence of Hazardous Materials in, on, under or about the Premises or any
other portion of the Project, Tenant shall, at Landlord's request,
immediately prepare and submit to Landlord within thirty (30) days after
such request a comprehensive plan, subject to Landlord's approval,
specifying the actions to be taken by Tenant to return the Premises or any
other portion of the Project to the condition existing prior to the
introduction of such Hazardous Materials. Upon Landlord's approval, of such
clean up plan, Tenant shall, at Tenant's sole cost and expense, without
limitation on any rights and remedies of Landlord under this Lease,
immediately implement such plan and proceed to clean up Hazardous Materials
in accordance with all applicable laws and as required by such plan and this
Lease.
7. The provisions of this Exhibit H shall survive any termination of this
Lease.
/s/ EP /s/ SP /s/ KDS
------------------------ ----------------------
Landlord's Initials Tenant's Initials
<PAGE>
EXHIBIT I
HAZARDOUS MATERIALS QUESTIONNAIRE
This questionnaire is designed to solicit information regarding your proposed
use of hazardous or toxic materials. Please complete the questionnaire and
return it to SARES REGIS Group for evaluation. If your use of materials or
generation of wastes is considered to be significant, further information may be
requested regarding your plans for hazardous and toxic materials management.
Your cooperation in this matter is appreciated. If you have any questions do not
hesitate to call us for assistance.
I. PROPOSED LESSEE OR TENANT
D.B.A.:
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Name (Corporation, Individual, Corporate or Individual D.B.A., or Public Agency)
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Standard Industrial Classification Code (SIC)
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Street Address
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City, State, Zip Code
Contact Person & Title:
Telephone Number: (___) _________ Facsimile Number: (___) __________
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Street Address
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City, State, Zip Code
III. DESCRIPTION OF PROPOSED FACILITY USE
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Does the operation of your business involve the use, generation, treatment,
storage, transfer or disposal of hazardous wastes or materials? Yes _____ No
_____. If yes, or if your SIC code number is between 2000 to 4000, please
complete Section IV.
IV. PERMIT DISCLOSURE
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If your answer is yes to any of the above questions please complete Sections V
and VI.
<TABLE>
<S> <C> <C>
Quantity On A
Material Storage Method Monthly Basis
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</TABLE>
Attach additional sheets if necessary.
Is any facility modification required or planned to mitigate the release of
toxic or hazardous substance or wastes into the environment? Yes ____ No _____.
If yes, please describe the proposed facility modifications:
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VI. HAZARDOUS WASTE DISCLOSURE
Will any hazardous waste, including recyclable waste, be generated by the
operation of your business?
Yes _____ No _____. If yes, please list the hazardous waste which will be
generated at the facility, its hazard class and volume/frequency of generation
on a monthly basis.
<TABLE>
<S> <C> <C>
Waste Name Hazard Class Volume/Month
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</TABLE>
<PAGE>
Attach additional sheets if necessary.
Waste Name Storage Method
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If yes, please also describe the method(s) of disposal for each waste. Indicate
where disposal will take place and method of transportation to be used:
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Is any treatment or processing of hazardous wastes to be conducted onsite? Yes
____ No ____. If yes, please describe proposed treatment/processing methods:
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Which agencies are responsible for monitoring and evaluating compliance with
respect to the storage and disposal of hazardous materials or wastes at or from
the Premises?
(Please list all agencies)
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Have there been any agency enforcement actions regarding the company facilities,
or any existing company facilities, or any past, pending or outstanding
administrative orders or consent decrees? Yes ____ No ____. If yes, have there
been any continuing compliance obligations imposed on your company as a result
of decrees or orders? Yes ____ No ____. If yes, please describe:
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Has the company been the recipient of requests for information, notice and
demand letters, cleanup and abatement orders, or cease and desist orders or
other administrative inquiries? Yes _____ No _____. If yes, please describe:
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Are there any pending citizen lawsuits, or have any notices of violations been
provided to the company or any existing facilities pursuant to the citizens suit
provisions of any statute? Yes _____ No _____. If yes, please describe:
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<PAGE>
Have there been any previous lawsuits against the company regarding
environmental concerns?
Yes _____ No _____. If yes, please describe how these lawsuits were resolved?
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Has an environmental audit ever been conducted at any of your company's existing
facilities? Yes _____ No _____. If yes, please describe:
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Does your company carry environmental impairment insurance? Yes _____ No ___. If
yes, what is the name of the carrier and what are the effective periods and
monetary limits of such coverage?
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This Hazardous Materials Questionnaire is certified as being true and accurate
and has been completed by the party whose signature appears below on behalf of
Tenant as of the date set forth below.
Dated: ____________ Signature: _________________________________
Print Name: _________________________________
Title: _____________________________________
<PAGE>
Rider 1
OPTION TO EXTEND
1. Option Right. Landlord hereby grants to the Tenant originally named in the
Summary (the "Original Tenant") one (1) option to extend the Lease Term for a
period of five (5) years (the "Option Term"), which option shall be exercisable
only by written notice delivered by Tenant to Landlord as provided below,
provided that, as of the date of delivery of such notice, Tenant is not in
default under this Lease and Tenant has not previously been in default under
this Lease more than once. Upon the proper exercise of such option to extend,
and provided that, as of the end of the initial Lease Term, Tenant is not in
default under this Lease and Tenant has not previously been in default under
this Lease more than once, the Lease Term, as it applies to the Premises, shall
be extended for a period of five (5) years. The rights contained in this Rider
Paragraph 1 shall be personal to the Original Tenant and may only be exercised
by the Original Tenant (and not any assignee, sublessee or other transferee of
the Original Tenant's interest in this Lease) if the Original Tenant occupies
the entire Premises.
2. Option Rent. The rent payable by Tenant during the Option Term (the "Option
Rent") shall be equal to ninety percent (90%) of the annual rental rate per
rentable square foot (and the additional rent and considering any "base year" or
"expense stop" applicable thereto) at which, as of the commencement of the
Option Term, tenants are leasing non-sublease, non-encumbered, non-equity space
comparable in size, location and quality to the Premises, for a term of five (5)
years, which comparable space is located in the local market, taking into
consideration the following concessions: (a) rental abatement concessions, if
any, being granted such tenants in connection with such comparable space; and
(b) tenant improvements or allowances provided or to be provided for such
comparable space, taking into account, and deducting the value of, the existing
improvements in the Premises, such value to be based upon the age, quality and
layout of the improvements and the extent to which the same can be utilized by
Tenant based upon the fact that the precise tenant improvements existing in the
Premises are specifically suitable to Tenant ("Market Rent").
If Landlord and Tenant are unable to agree on Market Rent for purposes of
determining the Option Rent within four (4) months prior to the expiration of
the initial Lease Term, then Landlord and Tenant shall attempt to agree on a
single real estate appraiser with at least five (5) years experience in
appraising industrial or research and development buildings in the county where
the Premises are located (a "Qualified Appraiser"). If the parties agree on a
single Qualified Appraiser within fifteen (15) days, then each party shall
submit to such Qualified Appraiser its opinion of the Market Rent as of the date
of the exercise of the Option. The sole responsibility of the Qualified
Appraiser will be to determine which of the Market Rents submitted by Landlord
and Tenant most accurately reflects the Market Rent for the Premises as of the
date of the exercise of the Option. The Qualified Appraiser shall select either
Landlord's or Tenant's Market Rent. The Qualified Appraiser has no right to
propose a middle ground or any modification of the determination made by either
party. The Qualified Appraiser's choice will be submitted to the parties within
twenty (20) days after his or her engagement. Such determination will bind both
Landlord and Tenant. If the parties are unable to agree on a single Qualified
Appraiser within such fifteen (15) day period, each party will appoint a
Qualified Appraiser on the sixteenth (16th day). Each party will pay the fees
and expenses of the Qualified Appraiser it selected to select the determining
Qualified Appraiser. Each such Qualified Appraiser shall then designate a third
Qualified Appraiser, who shall make the determination as described above. Each
party will pay one-half the cost of the determining Qualified Appraiser.
3. Exercise of Option. The option contained in this Rider Paragraph 3 shall be
exercised by Tenant, if at all, only in the following manner: (i) Tenant shall
deliver written notice to Landlord not less than six (6) months prior to the
expiration of the initial Lease Term, stating that Tenant is interested in
exercising its option; (ii) Landlord, after receipt of Tenant's notice, shall
deliver notice (the "Option Rent Notice") to Tenant not less than five (5)
months prior to the expiration of the initial Lease Term, setting forth the
Option Rent; and (iii) if Tenant wishes to exercise such option, Tenant shall,
on or before the earlier of (A) the date occurring four months prior to the
expiration of the initial Lease Term, and (B) the date occurring thirty (30)
days after Tenant's receipt of the Option Rent Notice, exercise the option by
delivering written notice thereof to Landlord.
<PAGE>
"TENANT" Gish Biomedical, Inc.,
a California corporation
By: /s/ Kelly D. Scott
-----------------------------------
Name: Kelly D. Scott
---------------------------------
Title: President and Chief Executive Officer
-------------------------------------
By: /s/ Les Taeger
------------------------------------
Name: Les Taeger
----------------------------------
Title: Chief Financial Officer
---------------------------------
"LANDLORD" Eric and Shirley Pepys,
By: /s/ Eric Pepys
-----------------------------------
By: /s/ Shriley Pepys
----------------------------------
