<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 1995
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File Number: 0-11749
SCIOS NOVA INC.
----------------------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 95-3701481
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(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
2450 BAYSHORE PARKWAY, MOUNTAIN VIEW, CALIFORNIA 94043
----------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: 415-966-1550
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
Yes X No
------- -------
The number of shares outstanding of Registrant's Common Stock, $.001 par value,
on March 31, 1995 was 35,496,030.
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<PAGE>
SCIOS NOVA INC.
AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
1.
<PAGE>
SCIOS NOVA INC.
AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands, except share data)
ASSETS
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
----------- -----------
(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $8,062 $29,674
Available-for-sale securities 26,825 22,441
Accounts receivable 3,262 3,529
Other receivables 136 70
Prepaid expenses 1,092 1,147
----------- -----------
Total current assets 39,377 56,861
Available-for-sale securities, non-current 59,154 52,324
Investment in affiliates 2,806 --
Property and equipment, net 36,935 35,118
Other assets 1,713 1,793
----------- -----------
TOTAL ASSETS $139,985 $146,096
----------- -----------
----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $1,369 $3,301
Other accrued liabilities 7,790 11,557
Deferred contract revenue 2,267 2,444
Current portion of long-term debt 629 617
----------- -----------
Total current liabilities 12,055 17,919
Long-term debt 1,578 1,739
Stockholders' equity:
Preferred stock; $.001 par value; 20,000,000
shares authorized; issued and outstanding:
20,553 and 21,053, respectively -- --
Common stock; $.001 par value; 150,000,000
shares authorized; issued and outstanding:
35,496,030 and 35,283,200, respectively 35 35
Additional paid-in capital 396,593 391,745
Notes receivable (27) (27)
Unrealized losses on securities (616) (2,309)
Accumulated deficit (269,633) (263,006)
----------- -----------
Total stockholders' equity 126,352 126,438
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $139,985 $146,096
----------- -----------
----------- -----------
</TABLE>
See notes to consolidated financial statements.
2.
<PAGE>
SCIOS NOVA INC.
AND SUBSIDIARIES
Consolidated Statements of Operations
(In thousands, except share data)
<TABLE>
<CAPTION>
Three months ended
March 31,
1995 1994
------------ ------------
(Unaudited)
<S> <C> <C>
Revenues:
Product sales $11,885 $12,158
Co-promotion commissions 708 643
Research & development contracts 1,087 1,909
------------ ------------
13,680 14,710
------------ ------------
Costs and expenses:
Cost of goods sold 7,521 7,692
Research and development 6,964 8,668
Marketing, general and administration 4,577 3,608
Profit distribution to third parties 1,288 1,469
------------ ------------
20,350 21,437
------------ ------------
Loss from operations (6,670) (6,727)
Other income:
Investment income 1,421 1,336
Realized losses on securities (453) (24)
Other income (expense), net 53 (2)
------------ ------------
1,021 1,310
Equity in net loss of affiliates (978) --
Minority interests -- 132
------------ ------------
Net loss ($6,627) ($5,285)
------------ ------------
------------ ------------
Net loss per common share ($0.19) ($0.15)
------------ ------------
------------ ------------
Weighted average number of
common shares outstanding 35,349,500 35,140,454
------------ ------------
------------ ------------
</TABLE>
See notes to consolidated financial statements.
3.
<PAGE>
SCIOS NOVA INC.
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(In thousands)
<TABLE>
<CAPTION>
Three months ended
March 31,
1995 1994
---- ----
(Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net loss $(6,627) $(5,285)
Adjustments to reconcile net income to net
cash used by operating activities:
Depreciation and amortization 871 1,156
Retirement of capital equipment 13 --
Deferred contract revenue (177) (117)
Equity in net loss of affiliates 978 --
Minority interests -- 374
Change in assets and liabilities:
Accounts receivable 267 (199)
Other receivables (66) 666
Prepaid expenses 55 (334)
Other assets 80 19
Accounts payable (1,932) (1,349)
Other accrued liabilities (1,969) 241
-------- --------
Net cash used by operating activities (8,507) (4,828)
-------- --------
Cash flows from investing activities:
Warrant exercise (166) --
Payments for property and equipment, net (3,614) (1,035)
Sales of marketable securities 41,870 54,700
Purchases of marketable securities (51,391) (56,806)
-------- --------
Net cash used by investment activities (13,301) (3,141)
-------- --------
Cash flows from financing activities:
Issuance of common stock and collection
of notes receivable from stockholders, net 357 40
Debt repayments (161) (172)
-------- --------
Net cash provided (used) by financing activities 196 (132)
-------- --------
Net decrease in cash and cash equivalents (21,612) (8,101)
Cash and cash equivalents at beginning of period 29,674 13,587
-------- --------
Cash and cash equivalents at end of period $ 8,062 $ 5,486
-------- --------
Supplemental cashflow data:
Net unrealized securities gains (losses) $ 1,692 $ (684)
Increase in investment in affiliates $ 3,618 --
</TABLE>
See notes to consolidated financial statements.
4.
<PAGE>
SCIOS NOVA INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(unaudited)
1. Basis of Presentation and Accounting Policies
The unaudited consolidated financial statements of Scios Nova Inc.
("Scios Nova" or the "Company") reflect, in the opinion of management, all
adjustments, consisting only of normal and recurring adjustments, necessary
to present fairly the Company's financial position at March 31, 1995 and
the Company's results of operations for the three-month periods ended
March 31, 1995 and 1994. Interim-period results are not necessarily
indicative of results of operations or cash flows for a full-year period.
These financial statements and the notes thereto should be read in
conjunction with the Company's annual report on Form 10-K for the year
ended December 31, 1994.
The year-end balance sheet data was derived from audited financial
statements, but does not include all disclosures required by generally
accepted accounting principles.
The Company has adopted Financial Accounting Standards Board ("FASB")
Statement of Financial Accounting Standards No. 115, "Accounting for
Certain Investments in Debt and Equity Securities". All marketable
securities at March 31, 1995 were deemed by management to be available for
sale and therefore are reported at fair value with net unrealized gains or
losses reported in stockholders' equity.
2. The Company's ownership in Guilford Pharmaceuticals Inc. ("Guilford")
declined from 62% to 29% as a result of Guilford's initial public offering
in 1994. Consequently, the Company adopted the equity method of accounting
for its investment in Guilford. During the first quarter of 1995, in
accordance with Staff Accounting Bulletin 5:H, the Company recorded an
increase in its proportionate share of Guilford's equity amounting to $3.6
million. Prior to the offering, the financial results of Guilford were
fully consolidated with those of the Company.
5.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
OPERATING RESULTS
The net loss for the quarter ended March 31, 1995 was $6.6 million compared
to a net loss of $5.3 million in the corresponding quarter of 1994. The $1.3
million increase in the net loss was principally the result of the Company's
recognition of its proportionate share of the losses of Guilford and its
realized losses on the disposition of securities. The loss from operations of
$6.7 million for the first three months of 1995 was unchanged from the loss for
the corresponding period in 1994.
Total revenues for the three months ended March 31, 1995 declined to $13.7
million from 1994's revenue of $14.7 million. The decrease in revenues from
1994 to 1995 was the result of a $1.0 million milestone payment received from
Pfizer Inc in 1994.
Product sales were $11.9 million and $12.2 million for the three months
ended March 31, 1995 and 1994, respectively. The decline in sales was
principally due to an increase in product returns in 1995. Gross margins were
37% for the first quarter of both 1995 and 1994. Over time, competition from
generic drugs is expected to adversely affect sales volumes and product gross
margins.
The decline in revenues period-to-period was offset by a decline in costs
and expenses. Total costs and expenses for the period ended March 31, 1995 were
$20.4 million versus $21.4 million for the same period in 1994. Research and
development spending declined from $8.7 million in the first quarter of 1994 to
$7.0 million in 1995 as a result of the closing of the Baltimore research and
development facility in the fourth quarter of 1994. Marketing, general and
administrative spending of $4.6 million and $3.6 million for the three-month
periods ended March 31, 1995 and 1994, respectively, increased year-to-year
primarily because of higher sales and marketing spending.
Other income decreased to $1.0 million in the quarter ended March 31, 1995
from $1.3 million in the comparable quarter of 1994. The reduction from 1994 to
1995 was principally due to losses realized on the sale of securities in the
first quarter of 1995. The equity in the net loss of affiliates of $1.0 million
in 1995 is the Company's proportional share of Guilford's losses. The $0.1 of
minority interest in 1994 was the minority owners share of Guilford losses when
Guilford's results were fully consolidated.
6.
<PAGE>
Scios Nova's operating results have fluctuated from period to period and
are expected to continue to fluctuate in the future as a result of among other
things: the outcome and timing of clinical trials and the regulatory approval
process; the timing and composition of funding under the Company's collaborative
research and development agreements; the level of sales of products under
license from SmithKline Beecham Corporation ("SB Products"), which face
increasing price pressure from competitive generic drugs and from government and
private cost-control initiatives and the level of commissions resulting from the
Company's 1993 co-promotion agreement for HALDOL-Registered Trademark-
Decanoate. In addition, because the Company participates in a highly dynamic
industry, the Company's common stock price may also experience significant
volatility as a result of industry developments.
LIQUIDITY AND CAPITAL RESOURCES
Combined cash, cash equivalents and marketable securities (both current and
non-current) totaled $94 million at March 31, 1995, a decrease of $10.4 million
from December 31, 1994. The decrease was principally attributable to $8.5
million to fund operating activities and $3.6 million for capital acquisitions
which were partially offset by a $1.7 million unrealized gain on marketable
securities resulting from a change in market interest rates during the quarter.
Capital spending of $3.6 million included $3.1 million for the purchase of the
Baltimore research and development facility pursuant to an option contained in
the lease. During 1995, the Company will lease the facility and/or sell it.
In March 1995, the Company leased an additional 27,000 square feet of
office and lab space near its Mountain View headquarters. The Company expects
to spend approximately $0.5 million on capital improvements to this facility in
the second quarter of 1995. Additional spending to add manufacturing capacity
at this location may be undertaken later in the year, if warranted by research
and development project progress.
The $2.8 million increase in investment in affiliates reflects the write-up
of the Company's equity investment in Guilford as a result of Guilford's 1994
public stock offering, reduced by the Company's proportional share of Guilford's
losses since the offering.
The $1.8 million increase in net property and equipment balances from
December 31, 1994 to March 31, 1995 is principally due to the purchase of the
Baltimore facility, offset in part by the write-off of surplus equipment sold
during the quarter.
The decrease in accounts payable of $1.9 million during the quarter was the
result of payment of year-end 1994 accruals.
7.
<PAGE>
The decrease in other accrued liabilities of $3.8 million from December 31,
1994 to March 31, 1995 was the result of reductions in the Baltimore
restructuring reserve of $1.8 million, accrued compensation of $1.7 million and
accrued clinical trial costs of $0.3 million. Of the $1.8 million change in the
restructuring reserve, severance and related costs accounted for 34%, asset
write-downs 49%, facility carrying costs 12% and chemical disposal and other
expenses 5%. The asset write-downs of $0.9 million were non-cash expenses.
The increase in additional paid-in capital of $4.8 million is the result of
the write-up of the Company's equity investment in Guilford, incentive
compensation stock payments and proceeds from the exercise of employee stock
options.
The unrealized losses on securities of $0.6 million at March 31, 1995
represent the difference between the cost and market value of the Company's
marketable securities at quarter end. The $1.7 million decrease from December
31, 1994 to March 31, 1995 resulted from a reduction in market interest rates
which took place during the quarter.
The Company's cash resources of $94 million at March 31, 1995, together
with revenues from product sales, collaborative agreements and interest income,
will be used to fund current and new clinical trials for proprietary products
under development, to support continuing research and development programs and
for other general purposes. The Company believes its cash resources will be
sufficient to meet its operating and capital requirements for at least the next
two years.
The Company has experienced net operating losses since its inception and
expects to continue to incur losses for at least several more years. The
Company's ability to achieve and sustain profitability will depend upon a number
of factors, particularly the success and timeliness of its product development,
regulatory approval and product introduction efforts. In January 1995, the
Company completed patient enrollment in its Phase III double-blind clinical
study of AURICULIN-Registered Trademark- anaritide for the treatment of acute
renal (kidney) failure. Results of the study are expected to be available in
the second quarter of 1995. Actions taken by the Company based on its analysis
of such results can be expected to have a significant effect on the Company's
future operating results. Other contributing factors will be the Company's
success in developing new revenue sources to support research and development
programs and its success in marketing and promoting the SB Products, HALDOL
Decanoate and any other third-party products that may be licensed by the
Company.
The Company may need to seek additional funding to support future
operations, including the commercialization of products currently under
development. Potential funding sources include collaborative arrangements and
additional public or private financings, including additional equity financings.
There can be no assurances that such additional funding, if required, can be
obtained on reasonable terms.
8.
<PAGE>
SCIOS NOVA INC.
AND SUBSIDIARIES
PART II. OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
10.1 Assignment of Lease dated March 22, 1995 for premises
located at 820 West Maude Avenue, Sunnyvale, California.
10.2 Special Warranty Deed of Improvements dated February 24,
1995 from Rouse-Teachers Properties, Inc. ("RTP") to the
registrant and Assignment of Ground Lease dated February
22, 1995 from RTP to the registrant.
10.3 Lease Agreement dated January 20, 1995 between the
registrant and PDL-RTKL Associates, a Maryland General
Partnership.
11.1 Computation of Per Share Earnings for the three-month
periods ended March 31, 1995 and March 31, 1994.
(b) Reports on Form 8-K
None
9.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
SCIOS NOVA INC.
Date: April 28, 1995 RICHARD L. CASEY
-------------------------------------------
Richard L. Casey
Chairman of the Board, President and Chief
Executive Officer
Date: April 28, 1995 W. VIRGINIA WALKER
-------------------------------------------
W. Virginia Walker
Vice President of Finance and Administration
(Principal Financial Officer)
10.
<PAGE>
INDEX TO EXHIBITS
SCIOS NOVA INC.
Quarterly Report on Form 10-Q
For the Quarter Ended March 31, 1995
<TABLE>
<CAPTION>
Exhibit Description Method of Filing
- ------- ----------- ----------------
<S> <C> <C>
10.1 Assignment of Lease dated March 22, 1995 Filed herewith electronically
for premises located at 820 West Maude
Avenue, Sunnyvale, California.
10.2 Special Warranty Deed of Improvements Filed herewith electronically
dated February 24, 1995 from Rouse-
Teachers Properties, Inc. ("RTP") to
the registrant and Assignment of Ground
Lease dated February 22, 1995 from RTP
to the registrant.
10.3 Lease Agreement dated January 20, 1995 Filed herewith electronically
between the registrant and PDL-RTKL
Associates, a Maryland General Partnership.
11.1 Computation of Per Share Earnings for the Filed herewith electronically
three-month periods ended March 31, 1995
and March 31, 1994.
</TABLE>
11.
<PAGE>
ASSIGNMENT OF LEASE
This ASSIGNMENT OF LEASE (hereinafter "Assignment") is made on March 22,
1995, between ALPHA 1 BIOMEDICALS, INC. (hereinafter "Assignor"), whose address
is Two Democracy Center, 6903 Rockledge Drive, Suite 1200, Bethesda, Maryland
20817, and SCIOS NOVA INC. (hereinafter "Assignee"), whose address is 2450
Bayshore Parkway, Mountain View, California 94043, who agree as follows:
1. RECITALS. This Assignment is made with reference to the following
facts and objectives:
1.1 Assignor, as Tenant, entered into a written lease dated
January 22, 1993, and subsequent Amendment Nos. 1, 2 and 3 (collectively the
"Master Lease," attached hereto as Exhibit A), in which Landlord (John
Arrillaga, Trustee, or his Successor Trustee, UTA dated 7/20/77 [John Arrillaga
Separate Property Trust] as amended, and Richard T. Peery, Trustee, or his
Successor Trustee, UTA dated 7/20/77 [Richard T. Peery Separate Property Trust]
as amended, collectively the "Landlord") leased to Assignor and Assignor leased
from Landlord premises located in the City of Sunnyvale, County of Santa Clara,
State of California ("Premises"), described as follows:
a portion of that certain 51,680 square foot, one-story building located at
820 West Maude Avenue, Suite 101, Sunnyvale, California 94086, consisting
of approximately 26,920 square feet of space;
1.2 Assignor desires to assign all its right, title, and interest
in the Master Lease to Assignee.
2. EFFECTIVE DATE OF ASSIGNMENT. This Assignment shall take effect
on March 22, 1995, and Assignor shall give possession of the Premises to
Assignee on that date.
3. ASSIGNMENT AND ASSUMPTION. Subject to the terms hereof and to
obtaining the consent of Landlord to this Assignment in the form attached as
Exhibit B, (the "Landlord's Consent"), Assignor assigns and transfers to
Assignee all its right, title, and interest in the Master Lease, and Assignee
accepts the assignment and assumes and agrees to perform, from the date this
Assignment becomes effective, as a direct obligation to Landlord, all the
provisions of the Master Lease as modified by the Landlord's Consent or this
Assignment.
4. HAZARDOUS MATERIALS. Assignor represents and warrants that, to
the best of its knowledge and during the term of its occupancy: (i) no hazardous
waste or substance was stored, treated or disposed of on the Premises, and that
no underground tanks were placed on the Premises; (ii) the Premises is in
complete compliance with all applicable statutes and regulations, including
environmental, health and safety requirements, (iii) Assignor's business on the
Premises disposed of its waste in accordance with all applicable statutes,
ordinances and regulations; (iv)
<PAGE>
Assignor has had no notice of any pending or threatened action or proceeding
arising out of the condition of the Premises or alleged violation of
environmental, health or safety statutes, ordinances or regulations; (v) no
condition exists which might threaten the ability of Assignee to acquire all
governmental permits required to operate a business similar to the business of
Assignor on the Premises. Assignor and Assignee agree that in terms of
allocating their responsibility for Hazardous Materials under the Master Lease
(including Section 48), Assignor shall remain responsible for all Hazardous
Materials conditions relating to the Premises existing as of the Effective Date,
and that Assignee shall be responsible only for changes in the hazardous
materials condition of the Premises which result from the operations of Assignee
after the Effective Date of this Assignment.
5. TENANT IMPROVEMENTS; FURNITURE, FIXTURES AND EQUIPMENT. In
exchange for $100,000.00 consideration to be paid to Assignor by Assignee upon
commencement of and as a precondition to the assignment term, Assignor assigns
and transfers to Assignee all its right, title and interest in all existing
tenant improvements in the Premises, in their as-is condition, plus the list of
existing furniture, fixtures and equipment listed on attached Exhibit C.
6. ASSIGNEE TO HOLD ASSIGNOR HARMLESS. Subject to Sections 3 and 4,
if Assignee defaults in its obligations under the Master Lease as modified by
this Assignment or the Landlord's Consent and Assignor in its sole discretion
pays rent to Landlord or fulfills any of Assignee's other obligations in order
to prevent Assignee from being in default, Assignee immediately shall reimburse
Assignor for the amount of rent or costs incurred by Assignor in fulfilling
Assignee's obligations under this Assignment, together with interest on those
sums at the rate of 10% per annum. Assignor and Assignee shall each indemnify
and hold harmless the other and its employees, representatives, directors,
officers and agents (collectively "Agents"), against and from any and all
losses, claims, liabilities, judgments, costs, demands, causes of action, and
expenses (including, without limitation, reasonable attorneys' fees and
consultants' fees) (collectively "Claims") arising from or related to the
following: (a) each such party's use of the Premises or from any activity done,
permitted or suffered by such party in, on or about the Premises, the Building,
or the Property; (b) any act or omission by such party and/or their respective
Agents in connection with or related to this Assignment, the Building, or the
Property; (c) any breach or default of such party in the terms of this
Assignment; and (d) any action or proceeding brought by Landlord pursuant to the
parties' joint and several indemnification of Landlord pursuant to Section 5 of
the Landlord's Consent arising as a result of the foregoing. If any action or
proceeding is brought against a party for which it is entitled to be indemnified
hereunder, (the "Indemnified Party"), upon notice from the other party (the
"Indemnifying Party"), the Indemnifying Party shall defend the same at such
party's expense with counsel reasonably satisfactory to the Indemnified Party.
The obligations of Assignor and Assignee under this Section 6 shall survive any
termination of the Assignment or the Master Lease.
2
<PAGE>
7. DEFAULT OF LEASE; NOTICE TO ASSIGNOR
7.1 NOTICE TO ASSIGNOR. If Assignee or Assignor receives a
notice of default from Landlord, each shall promptly send a copy to the other.
7.2 ASSIGNOR'S REMEDIES AGAINST ASSIGNEE. If Assignee defaults
under the Master Lease as modified by this Assignment or the Landlord's Consent,
Assignor shall have the rights against Assignee that are available by law and
those contained in the Master Lease, including, without limitation, Assignor's
right to reenter and retake possession of the Premises from Assignee.
8. PREPAID RENT; SECURITY DEPOSIT; BROKERS; PRORATIONS; REMOVAL.
8.1 PREPAID RENT; SECURITY DEPOSIT. The parties acknowledge
that Landlord now holds the sum of $67,300.00 as a Security Deposit, to be
applied subject to the provisions of the Master Lease. Upon commencement of and
as a precondition to the assignment term, Assignee shall reimburse Assignor in
said amount of $67,300.00 for the existing Security Deposit paid under the terms
of the Master Lease. Assignor releases all claims to that sum currently held by
Landlord, and the sum shall be held by Landlord for the benefit of Assignee,
subject to the provisions of the Master Lease.
8.2 BROKERS. Assignor shall be responsible for all compensation
of all brokers relating to this Assignment transaction, specifically including
Cornish & Carey, Catalyst Group and Northbridge Group.
8.3 PRORATIONS. Property taxes, property insurance and any
other expenses billed by Landlord under the Master Lease shall be prorated
between Assignor and Assignee as of the Effective Date.
8.4 REMOVAL OF PROPERTY. Not later than March 21, 1995,
Assignor shall remove from the Premises the items of personal property listed on
Exhibit D.
9. INSURANCE. Assignee shall carry insurance per the Master Lease
and name Assignor as an additional insured. Assignee shall, within 10 days of
the execution hereof, provide Landlord with a certificate of insurance from its
insurer which confirms that the insurance coverage required to be carried by
Tenant under the Master Lease is in full force and effect.
10. MISCELLANEOUS.
10.1 ATTORNEYS' FEES. If either party commences an action
against the other party arising out of or in connection with this Assignment,
the prevailing party shall be entitled to recover from the losing party
reasonable attorneys' fees and costs of suit.
3
<PAGE>
10.2 NOTICE. Any notice, demand, request, consent, approval, or
communication that either party desires or is required to give to the other
party shall be in writing and either be served personally or sent by registered
or certified prepaid, first-class mail. Any notice, demand, request, consent,
approval, or communication that either party desires or is required to give to
the other party shall be addressed to the other party at the address set forth
in the introductory paragraph of this Agreement. Either party may change its
address by notifying the other party of the change of address. Notice shall be
deemed communicated upon receipt if mailed as provided in this paragraph.
10.3 SUCCESSORS. This Assignment shall be binding on and inure
to the benefit of the parties and their successors.
10.4 GOVERNING LAWS. This Assignment shall be interpreted and
governed by the laws of the state of California as applied to contracts between
residents of California that is to be performed in California.
IN WITNESS WHEREOF, Assignor and Assignee have executed this Agreement as
of the day and year first hereinabove set forth.
ASSIGNOR: ASSIGNEE:
ALPHA 1 BIOMEDICALS, INC., SCIOS NOVA INC.,
a Delaware corporation a Delaware corporation
By/S/ROBERT J. LANHAM By /S/RICHARD L. CASEY
------------------------- -------------------------
Robert J. Lanham Richard L. Casey
Vice President Chairman, President &
Finance & Administration Chief Executive Officer
Exhibits:
A: Master Lease
B: Landlord's Consent to Assignment
C: Personal Property Sold to Assignee
D: Personal Property to be Removed
4
<PAGE>
EXHIBIT A
PROP #090
UNIT #2
TENANT #9002
LEASE AGREEMENT
THIS LEASE, made this 22nd day of January, 1993 between JOHN ARRILLAGA, Trustee,
or his Successor Trustee, UTA dated 7/20/77 (JOHN ARRILLAGA SEPARATE PROPERTY
TRUST) as amended, and RICHARD T. PEERY, Trustee, or his Successor Trustee, UTA
dated 7/20/77 (RICHARD T. PEERY, SEPARATE PROPERTY TRUST) as amended,
hereinafter called Landlord and ALPHA 1 BIOMEDICALS, INC., a Delaware
corporation, hereinafter called Tenant.
WITNESSETH:
Landlord hereby leases to Tenant and Tenant hereby hires and takes from
Landlord those certain premises (the "Premises") outlined in red on Exhibit "A",
attached hereto and incorporated herein by this reference thereto more
particularly described as follows:
A portion of that certain 51,680+ square foot, one-story building
located at 810 W. Maude Ave., Ste. 101, Sunnyvale, California,
consisting of approximately 15,018+ square feet of space. Said
Premises is more particularly shown within the area outlined in Red on
EXHIBIT A. The entire parcel, of which the Premises is a part, is
shown within the area outlined in Green on EXHIBIT A attached hereto.
The Premises is leased on an "as-is" basis, in its present condition,
and in the configuration as shown in Red on EXHIBIT B attached hereto.
The word "Premises" as used throughout this lease is hereby defined to
include the nonexclusive use of sidewalks and driveways in front of or adjacent
to the Premises, and the nonexclusive use of the area directly underneath or
over such sidewalks and driveways. The leased area of the Premises shall be
measured from outside of exterior walls to outside of exterior walls, and shall
include any atriums, covered entrances or egresses and covered loading areas.
Said letting and hiring is upon and subject to the terms, covenants and
conditions hereinafter set forth and Tenant covenants as a material part of the
consideration for this Lease to perform and observe each and all said terms,
covenants and conditions. This Lease is made upon the conditions of such
performance and observance.
1. USE Tenant shall use the Premises only in conformance with applicable
governmental laws, regulations, rules and ordinances for the purpose of general
office, light manufacturing, research and development, and storage and other
uses necessary for Tenant to conduct Tenant's business in accordance with all
applicable governmental laws and ordinances and for no other purpose. Tenant
shall not do or permit to be done in or about the Premises nor bring or keep or
permit to be brought or kept in or about the Premises anything which is
prohibited by or will in any way increase the existing rate of (or otherwise
effect) fire or any insurance covering the Premises or any part thereof, or any
of its contents, or will cause a cancellation of any insurance covering the
Premises or any part thereof, or any of its contents. Tenant shall not do or
permit to be done anything in, on or about the Premises which will in any way
obstruct or interfere with the rights of other tenants or occupants of the
Premises or neighboring premises or injure or annoy them, or use or allow the
Premises to be used for any improper, immoral, unlawful or objectionable
purpose, nor shall Tenant cause, maintain or permit any nuisance in, on or about
the Premises. No sale by auction shall be permitted on the Premises. Tenant
shall not place any loads upon the floors, walls, or ceiling which endanger the
structure, or place any harmful fluids or other material in the drainage system
of the building,
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or overload existing electrical or other mechanical systems. No waste materials
or refuse shall be dumped upon or permitted to remain upon any part of the
Premises or outside of the building in which the Premises are a part, except in
trash containers placed inside exterior enclosures designated by Landlord for
that purpose or inside of the building proper where designated by Landlord. No
materials, supplies, equipment, finished products or semi-finished products, raw
materials or articles of any nature shall be stored upon or permitted to remain
outside the Premises. Tenant shall not place anything or allow anything to be
placed near the glass of any window, door partition or wall which may appear
unsightly from outside the Premises. No loudspeaker or other device, system or
apparatus which can be heard outside the Premises shall be used in or at the
Premises without the prior written consent of Landlord. Tenant shall not commit
or suffer to be committed any waste in or upon the Premises. Tenant shall
indemnify, defend and hold Landlord harmless against any loss, expense, damage,
reasonable attorneys' fees, or liability arising out of failure of Tenant to
comply with any applicable law. Tenant shall comply with any covenant,
condition, or restriction ("CC&R's") affecting the Premises. The provisions of
this paragraph are for the benefit of Landlord only and shall not be construed
to be for the benefit of any tenant or occupant of the Premises.
2. TERM
A. The term of this lease shall be for a period of FIVE YEARS SIX MONTHS
(5Y 6M) years (unless sooner terminated as hereinafter provided) and, subject to
Paragraphs 2B and 3, shall commence on the 1st day of March, 1993 and end on the
31st day of August, 1998.
B. Possession of the Premises shall be deemed tendered and the term of
the Lease shall commence on March 1, 1993.
3. RENT
A. BASIC RENT. Tenant agrees to pay Landlord at such place as Landlord
may designate without deduction, offset, prior notice, or demand, and Landlord
agrees to accept as Basis Rent for the leased Premises the total sum of EIGHT
HUNDRED FIFTY SIX THOUSAND TWENTY SIX AND NO/100 Dollars ($856,026.00) in lawful
money of the United States of America, payable as follows:
SEE PARAGRAPH 39 FOR BASIS RENT SCHEDULE.
B. TIME FOR PAYMENT. Full monthly rent is due in advance on the first
day of each calendar month. In the event that the term of this Lease commences
on a date other than the first day of the calendar month, on the date of
commencement of the term hereof Tenant shall pay to Landlord as rent for the
period from such date of commencement to the first day of the next succeeding
calendar month that proportion of the monthly rent hereunder which the number of
days between such date of commencement and the first day of the next succeeding
calendar month bears to thirty (30). In the event that the term of this Lease
for any reason ends on a date than the last day of a calendar month, on the
first day of the last calendar month term hereof Tenant shall pay to Landlord as
rent for the period from said first day of said last calendar month to and
including the last day of the term hereof that proportion of the monthly rent
hereunder which the number of days between said first day of said last calendar
month and the last day of the term hereof bears to thirty (30).
C. LATE CHARGE. Notwithstanding any other provision of this Lease, if
Tenant is in default in the payment of rental as set forth in this Paragraph 4
when due, or any part thereof, Tenant agrees to pay Landlord, in addition to the
delinquent rental due, a late charge for each rental payment in default ten (10)
days. Said late charge shall equal ten (10%) of each rental payment so in
default.
D. ADDITIONAL RENT. Beginning with commencement date of the term of
this Lease, Tenant shall pay to the Landlord or to Landlord's designated agent
in addition to the Basic Rent and as Additional Rent the following:
(a) All Taxes relating to the Premises as set forth in Paragraph 9, and
(b) All insurance premiums relating to the Premises, as set forth in
Paragraph 12, and
(c) All charges, costs and expenses, which Tenant is required to pay
hereunder, together with all interest and penalties, costs and expenses
including reasonable attorneys' fees and legal expenses, that may accrue thereto
in the event of Tenant's failure to pay such amounts, and all damages,
reasonable costs and expenses which Landlord may incur by reason of default of
Tenant or failure on Tenant's part to comply with the terms of this Lease. In
the event of nonpayment by Tenant of Additional Rent, Landlord shall have all
the rights and remedies with respect thereto as Landlord has for nonpayment of
rent.
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The Additional Rent due hereunder shall be paid to Landlord or Landlord's
agent (i) within ten days after presentation of invoice from Landlord or
Landlord's agent setting forth such Additional Rent and/or (ii) at the option of
Landlord, Tenant shall pay to Landlord monthly, in advance, Tenant's prorata
share of an amount estimated by Landlord to be Landlord's approximate average
monthly expenditure for such Additional Rent items, which estimated amount shall
be reconciled at the end of each calendar year as compared to Landlord's actual
expenditure for said Additional Rent items, with Tenant paying to Landlord, upon
demand, any amount of actual expenses by Landlord in excess of said estimated
amount, or Landlord refunding to Tenant (providing Tenant is not in default in
the performance of any of the terms, covenants and conditions of this Lease) any
amount of estimated payments made by Tenant in excess of Landlord's actual
expenditures for said Additional Rent items.
The respective obligations of Landlord and Tenant under this paragraph
shall survive the expiration or other termination of the term of this Lease, and
if the term hereof shall expire or shall otherwise terminate on a day other than
the last day of a calendar year, the actual Additional Rent incurred for the
calendar year in which the term hereof expires or otherwise terminates shall be
determined and settled on the basis of the statement of actual Additional Rent
for such calendar year and shall be prorated in the proportion which the number
of days in such calendar year preceding such expiration or termination bears to
365.
E. PLACE OF PAYMENT OF RENT AND ADDITIONAL RENT. All Basic Rent
hereunder and all payments hereunder for Additional Rent shall be paid to
Landlord at the office of Landlord at PEERY/ARRILLAGA, P.O. BOX 60000, FILE
1504, SAN FRANCISCO, CALIFORNIA 94160 or to such other person or to such other
place as Landlord may from time to time designate in writing.
F. SECURITY DEPOSIT. Concurrently with Tenant's execution of this
Lease, Tenant shall deposit with Landlord the sum of THIRTY ONE THOUSAND FIVE
HUNDRED THIRTY SEVEN AND 80/100 Dollars ($31,537.80). Said sum shall be held by
Landlord as a Security Deposit for the faithful performance by Tenant of all
terms, covenants, and conditions of this Lease to be kept and performed by
Tenant during the term hereof. If Tenant defaults with respect to any provision
of this Lease, including, but not limited to, the provisions relating to the
payment of rent and any of the monetary sums due herewith, Landlord may (but
shall not be required to) use, apply or retain all or any part of this Security
Deposit for the payment of any other amount which Landlord may spend by reason
of Tenant's default or to compensate Landlord for any other loss or damage which
Landlord may suffer by reason of Tenant's default. If any portion of said
Deposit is so used or applied, Tenant shall, within ten (10) days after written
demand therefor, deposit cash with Landlord in the amount sufficient to restore
the Security Deposit to its original amount. Tenant's failure to do so shall be
a material breach of this Lease. Landlord shall not be required to keep this
Security Deposit separate from its general funds, and Tenant shall not be
entitled to interest on such Deposit. If Tenant fully and faithfully performs
every provision of this Lease to be performed by it, the Security Deposit or any
balance thereof shall be returned to Tenant (or at Landlord's option, the last
assignee of Tenant's interest hereunder) at the expiration of the Lease term and
after Tenant has vacated the Premises. In the event of termination of
Landlord's interest in this Lease, Landlord shall transfer said Deposit to
Landlord's successor in interest whereupon Tenant agrees to release Landlord
from liability for the return of such Deposit or the accounting therefor.
4. ACCEPTANCE AND SURRENDER OF PREMISES By entry hereunder, Tenant accepts
the Premises as being in good and sanitary order, condition and repair and
accepts the building and improvements included in the Premises in their present
condition and without representation or warranty by Landlord as to the condition
of such building or as to the use or occupancy which may be made thereof. Any
exceptions to the foregoing must be by written agreement executed by Landlord
and Tenant. Tenant agrees on the last day of the Lease term, or on the sooner
termination of this Lease, to surrender the Premises promptly and peaceably to
Landlord in good condition and repair (damage by Acts of God, fire, normal wear
and tear excepted), with all interior walls painted, or cleaned so that they
appear freshly painted, and repaired and replaced, if damaged; all floors
cleaned and waxed; all carpets cleaned and shampooed; all broken, marred or
nonconforming acoustical ceiling tiles replaced; all windows washed; the air
conditioning and heating systems serviced by a reputable and licensed service
firm and in good operating condition and repair; the plumbing and electrical
systems and lighting in good order and repair, including replacement of any
burned out or broken light bulbs or ballasts; the lawn and shrubs in good
condition including the replacement of any dead or damaged plantings; the
sidewalk, driveways and parking areas in good order, condition and repair;
together with all alterations, additions, and improvements which may have been
made in, to, or on the Premises (except moveable trade fixtures installed at the
expense of Tenant) except that Tenant shall ascertain from Landlord within
thirty (30) days before the end of the term of this Lease whether Landlord
desires to have the Premises or any part or parts thereof restored to their
condition and configuration as when the Premises were delivered to Tenant
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and if Landlord shall so desire, then Tenant shall restore said Premises or such
part or parts thereof before the end of this Lease at Tenant's sole cost and
expense. Tenant, on or before the end of the term or sooner termination of this
Lease, shall remove all of Tenant's personal property and trade fixtures from
the Premises, and all property not so removed on or before the end of the term
or sooner termination of this Lease shall be deemed abandoned by Tenant and
title to same shall thereupon pass to Landlord without compensation to Tenant.
Landlord may, upon termination of this Lease, remove all moveable furniture and
equipment so abandoned by Tenant, at Tenant's sole cost, and repair any damage
caused by such removal at Tenant's sole cost. If the Premises be not
surrendered at the end of the term or sooner termination of this Lease, Tenant
shall indemnify Landlord against loss or liability resulting from the delay by
Tenant in so surrendering the Premises including, without limitation, any claims
made by any succeeding tenant founded on such delay. Nothing contained herein
shall be construed as an extension of the term hereof or as a consent of
Landlord to any holding over by Tenant. The voluntary or other surrender of
this Lease or the Premises by Tenant or a mutual cancellation of this Lease
shall not work as a merger and, at the option of Landlord, shall either
terminate all or any existing subleases or subtenancies or operate as an
assignment to Landlord of all or any such subleases or subtenancies.
5. ALTERATIONS AND ADDITIONS Tenant shall not make, or suffer to be made,
any alteration or addition to the Premises, or any part thereof, without the
written consent of Landlord first had and obtained by Tenant (such consent not
to be unreasonably withheld), but at the cost of Tenant, and any addition to, or
alteration of, the Premises, except moveable furniture and trade fixtures, shall
at once become a part of the Premises and belong to Landlord. Landlord reserves
the right to approve all contractors and mechanics proposed by Tenant to make
such alterations and additions. Tenant shall retain title to all moveable
furniture and trade fixtures placed in the Premises. All heating, lighting,
electrical, air conditioning, floor to ceiling partitioning, drapery, carpeting,
and floor installations made by Tenant, together with all property that has
become an integral part of the Premises, shall not be deemed trade fixtures.
Tenant agrees that it will not proceed to make such alteration or additions,
without having obtained consent from Landlord to do so, and until five (5) days
from the receipt of such consent, in order that Landlord may post appropriate
notices to avoid any liability to contractors or material suppliers for payment
for Tenant's improvements. Tenant will at all times permit such notices to be
posted and to remain posted until the completion of work. Tenant shall, if
required by Landlord, secure at Tenant's own cost and expense, a completion and
lien indemnity bond, satisfactory to Landlord, for such work. Tenant further
covenants and agrees that any mechanic's lien filed against the Premises for
work claimed to have been done for, or materials claimed to have been furnished
to Tenant, will be discharged by Tenant, by bond or otherwise, within ten (10)
days after the filing thereof, at the cost and expense of Tenant. Any
exceptions to the foregoing must be made in writing and executed by both
Landlord and Tenant.
6. TENANT MAINTENANCE Tenant shall, at its sole cost and expense, keep and
maintain the Premises (including appurtenances) and every part thereof in a high
standard of maintenance and repair, and in good sanitary condition. Tenant's
maintenance and repair responsibilities herein referred to include, but are not
limited to, janitorization, plumbing systems within the Premises (such as water
and drain lines, sinks), electrical systems within the Premises (such as
outlets, lighting fixtures, lamps, bulbs, tubes, ballasts), heating and
airconditioning controls within in the Premises (such as mixing boxes,
thermostats, time clocks, supply and return grills), all interior improvements
within the premises including but not limited to: wall coverings, window
coverings, acoustical ceilings, vinyl tile, carpeting, partitioning, doors,
(both interior and exterior, including closing mechanisms, latches, locks), and
all other interior improvements of any nature whatsoever. Tenant agrees to
provide carpet shields under all rolling chairs or to otherwise be responsible
for wear and tear of the carpet caused by such rolling chairs if such wear and
tear exceeds that caused by normal foot traffic in surrounding areas. Areas of
excessive wear shall be replaced at Tenant's sole expense upon Lease
termination.
SEE PARAGRAPH 45.
7. TAXES
A. As Additional Rent and in accordance with Paragraph 4D of this Lease,
Tenant shall pay to Landlord, or if Landlord so directs, directly to the Tax
Collector, all Real Property relating to the Premises. In the event the
Premises leased hereunder consist of only a portion of the entire tax parcel,
Tenant shall pay to Landlord Tenant's proportionate share of such real estate
taxes allocated to the leased Premises by square footage or other reasonable
basis as calculated and determined by Landlord. If the tax billing pertains
100% to the leased Premises, and Landlord chooses to have Tenant pay said real
estate taxes directly to the Tax Collector, then in such event it shall be the
responsibility of Tenant to obtain the tax and assessment bills and pay, prior
to delinquency, the applicable
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real property taxes and assessments pertaining to the leased Premises, and
failure to receive a bill for taxes and/or assessments shall not provide a basis
for cancellation of or nonresponsibility for payment of penalties for nonpayment
or late payment by Tenant. The term "Real Property Taxes", as used herein,
shall mean (i) all taxes, assessments, levies and other charges of any kind or
nature whatsoever, general and special, foreseen and unforeseen (including all
installments of principal and interest required to pay any general or special
assessments for public improvements and any increases resulting from
reassessments caused by any change in ownership of the Premises) now or
hereafter imposed by any governmental or quasi-governmental authority or special
district having the direct or indirect power to tax or levy assessments, which
are levied or assessed against, or with respect to the value, occupancy or use
of, all or any portion of the Premises (as now constructed or as may at any time
hereinafter be constructed, altered, or otherwise changed) or Landlord's
interest therein; any improvements located within the Premises (regardless of
ownership); the fixtures, equipment and other property of Landlord, real or
personal, that are an integral part of and located in the Premises; or parking
areas, public utilities, or energy within the Premises; (ii) all charges, levies
or fees imposed by reason of environmental regulation or other governmental
control of the Premises; and (iii) all costs and fees (including reasonable
attorneys' fees) incurred by Landlord in reasonably contesting any Real Property
Tax and in negotiating with public authorities as to any Real Property Tax. If
at any time during the term of this Lease the taxation or assessment of the
Premises prevailing as of the commencement date of this Lease shall be altered
so that in lieu of or in addition to any Real Property Tax described above there
shall be levied, assessed or imposed (whether by reason of a change in the
method of taxation or assessment, creation of a new tax or charge, or any other
cause) an alternate or additional tax or charge (i) on the value, use or
occupancy of the Premises or Landlord's interest therein or (ii) on or measured
by the gross receipts, income or rentals from the Premises, on Landlord's
business of leasing the Premises, or computed in any manner with respect to the
operation of the Premises, then any such tax or charge, however designated,shall
be included within the meaning of the term "Real Property Taxes" for purposes of
this Lease. If any Real Property Tax is based upon property or rents unrelated
to the Premises, then only that part of such Real Property Tax that is fairly
allocable to the Premises shall be included within the meaning of the term "Real
Property Taxes". Notwithstanding the foregoing, the term "Real Property Taxes"
shall not include estate, inheritance, gift or franchise taxes of Landlord or
the federal or state net income tax imposed on Landlord's income from all
sources.
B. TAXES ON TENANT'S PROPERTY Tenant shall be liable for and shall pay
ten days before delinquency, taxes levied against any personal property or trade
fixtures placed by Tenant in or about the Premises. If any such taxes on
Tenant's personal property or trade fixtures are levied against Landlord or
Landlord's property or if the assessed value of the Premises is increased by the
inclusion therein of a value placed upon such personal property or trade
fixtures of Tenant and if Landlord, after written notice to Tenant, pays the
taxes based on such increased assessment, which Landlord shall have the right to
do regardless of the validity thereof, but only under proper protest if
requested by Tenant, Tenant shall upon demand, as the case may be, repay to
Landlord the taxes so levied against Landlord, or the proportion of such taxes
resulting from such increase in the assessment; provided that in any such event
Tenant shall have the right, in the name of Landlord and with Landlord's full
cooperation, to bring suit in any court of competent jurisdiction to recover the
amount of such taxes so paid under protest, and any amount so recovered shall
belong to Tenant.
8. LIABILITY INSURANCE Tenant, at Tenant's expense, agrees to keep in force
during the term of this Lease a policy of comprehensive general liability
insurance for bodily injury and property damage occurring in, on or about the
Premises, including parking and landscaped areas, in the amount of $2,000,000
combined single limit. Such insurance shall be primary and noncontributory as
respects any insurance carried by Landlord. The policy or policies effecting
such insurance shall name Landlord as additional insureds, and shall insure any
liability of Landlord, contingent or otherwise, as respects acts or omissions of
Tenant, its agents, employees or invitees or otherwise by any conduct or
transactions of any said persons in or about concerning the Premises, including
any failure of Tenant to observe or perform any of its obligations hereunder;
shall be issued by an insurance company admitted to transact business in the
State of California; and shall provide that the insurance effected shall not be
canceled, except upon thirty (30) days' prior written notice to Landlord. A
certificate of insurance of said policy shall be delivered to Landlord. If,
during the term of this Lease, in the considered opinion of Landlord's Lender,
insurance advisor, or counsel, the amount of insurance described in this
Paragraph 8 is not adequate, Tenant agrees to increase said coverage to such
reasonable amount as Landlord's Lender, insurance advisor, or counsel shall deem
adequate.
9. TENANT'S PERSONAL PROPERTY INSURANCE AND WORKMAN'S COMPENSATION INSURANCE
Tenant shall maintain a policy or policies of fire and property damage insurance
in "all risk" form with a sprinkler leakage endorsement insuring the personal
property, inventory, trade fixtures, and leasehold
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improvements within the leased Premises for the full replacement value thereof.
The proceeds from any such policies shall be used for the repair or replacement
of such items so insured.
Tenant shall also maintain a policy or policies of workman's compensation
insurance and any other employee benefit insurance sufficient to comply with all
laws.
10. PROPERTY INSURANCE Landlord shall purchase and keep in force, and as
Additional Rent and in accordance with Paragraph 4D of this Lease, Tenant shall
pay to Landlord Tenant's proportionate share (allocated to the leased Premises
by square footage or other equitable basis as calculated and determined by
Landlord) of the cost of, policy or policies of insurance covering loss or
damage to the Premises (excluding routine maintenance and repairs and incidental
damage or destruction caused by accidents or vandalism for which Tenant is
responsible under Paragraph 7) in the amount of the full replacement value
thereof, providing protection against those perils included within the
classification of "all risks" insurance and flood and/or earthquake insurance,
if available, plus a policy of rental income insurance in the amount of one
hundred (100%) percent of twelve (12) months Basic Rent, plus sums paid as
Additional Rent. If such insurance cost is increased due to Tenant's use of the
Premises, Tenant agrees to pay to Landlord the full cost of such increase.
Tenant shall have no interest in nor any right to the proceeds of any insurance
procured by Landlord for the Premises.
Landlord and Tenant do each hereby respectively release the other, to the
extent in insurance coverage of the releasing party, from any liability for loss
or damage caused by fire or any of the extended casualties included in the
releasing party's insurance policies, irrespective of the cause of such fire or
casualty; provided, however, that if the insurance policy of either releasing
party prohibits such waiver, then this waiver shall not take effect until
consent to such waiver os obtained. If such waiver is prohibited, the insured
party affected shall promptly notify the other party thereof.
11. INDEMNIFICATION Landlord shall not be liable to Tenant and Tenant hereby
waives all claims against Landlord for any injury to or death of any person or
damage to or destruction of property in or about the Premises by or from any
cause whatsoever, including, without limitation, gas, fire, oil, electricity or
leakage of any character from the roof, walls, basement or other portion of the
Premises but excluding, however, the negligence of Landlord, its agents,
servants, employees, invitees, or contractors of which negligence Landlord has
knowledge and reasonable time to correct. Except as to injury to persons or
damage to property the principal cause of which is the negligence of Landlord,
Tenant shall hold Landlord harmless from and defend Landlord against any and all
expenses, including reasonable attorneys' fees, in connection therewith, arising
out of any injury to or death of any person or damage to or destruction of
property occurring in, on or about the Premises, or any part thereof, from any
cause whatsoever.
12. COMPLIANCE Tenant, at its sole cost and expense, shall promptly with all
laws, statutes, ordinances and governmental rules, regulations or requirements
now or hereafter in effect; with the requirements of any board of fire
underwriters or other similar body now or hereafter constituted; and with any
direction or occupancy certificate issued pursuant to law by any public officer;
provided, however, that no such failure shall be deemed a breach of the
provisions if Tenant, immediately upon notification, commences to remedy or
rectify said failure. The judgement of any court of competent jurisdiction or
the admission of Tenant in any action against Tenant, whether Landlord be a
party thereto or not, that Tenant has violated any such law, statute, ordinance
or governmental rule, regulation, requirement, direction or provision, shall be
conclusive of that fact as between Landlord and Tenant. Tenant shall, at its
sole cost and expense, comply with any and all requirements pertaining to said
Premises, of any insurance organization or company, necessary for the
maintenance of reasonable fire and public liability insurance covering
requirements pertaining to said Premises, of any insurance organization or
company, necessary for the maintenance of reasonable fire and public liability
insurance covering the Premises.
13. LIENS Tenant shall keep the Premises free from any liens arising out of
any work performed, materials furnished or obligation incurred by Tenant. In
the event that Tenant shall not, within ten (10) days following the imposition
of such lien, cause the same to be released of record, Landlord shall have, in
addition to all other remedies provided herein and by law, the right, but no
obligation, to cause the same to be released by such means as it shall deem
proper, including payment of the claim giving rise to such lien. All sums paid
by Landlord for such purpose, and all expenses incurred by it in connection
therewith, shall be payable to Landlord by Tenant on demand with interest at the
prime rate of interest as quoted by the Bank of America.
14. ASSIGNMENT AND SUBLETTING Tenant shall not assign, transfer, or
hypothecate the leasehold estate under this Lease, or any interest therein, and
shall not sublet the Premises, or any part thereof, or any right or privilege
appurtenant thereto, or suffer any other person or entity to occupy or use the
Premises, or any portion
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thereof, without, in each case, the prior written consent of Landlord which
consent will not be unreasonably withheld. As a condition for granting this
consent to any assignment, transfer, or subletting, Landlord may require that
Tenant agrees to pay Landlord, as additional rent, all rents or additional
consideration received by Tenant from its assignees, transferees, or subtenants
in excess of the rent payable by Tenant to Landlord hereunder. Tenant shall, by
thirty (30) days written notice, advise Landlord of its intent to assign or
transfer Tenant's interest in the Lease or sublet the Premises or any portion
thereof for any part of the term hereof. Within thirty (30) days after receipt
of said written notice, Landlord may, in its sole discretion, elect to terminate
this Lease as to the portion of the Premises described in Tenant's notice on the
date specified in Tenant's notice by giving written notice of such election to
terminate. If no such notice to terminate is given to Tenant within said thirty
(30) day period, Tenant may proceed to locate an acceptable sublessee, assignee,
or other transferee for presentment to Landlord for Landlord's approval, all in
accordance with the terms, covenants, and conditions of this paragraph 14. If
Tenant intends to sublet the entire Premises and Landlord elects to terminate
this Lease, this Lease shall be terminated on the date specified in Tenant's
notice. If, however, this Lease shall terminate pursuant to the foregoing with
respect to less than all the Premises, the rent, as defined and reserved
hereinabove shall be adjusted on a pro rata basis to the number of square feet
retained by Tenant, and this Lease as so amended shall continue in full force
and effect. In the event Tenant is allowed to assign, transfer or sublet the
whole or any part of the Premises, with the prior written consent of Landlord,
no assignee, transferee or subtenant shall assign or transfer this Lease, either
in whole or in part, or sublet the whole or any part of the Premises, without
also having obtained the prior written consent of Landlord. A consent of
Landlord to one assignment, transfer, hypothecation, subletting, occupation or
use by any other person shall not release Tenant from any of Tenant's
obligations hereunder or be deemed to be a consent to any subsequent similar or
dissimilar assignment, transfer, hypothecation, subletting, occupation or use by
any other person. Any such assignment, transfer, hypothecation, subletting,
occupation or use without such consent shall be void and shall constitute a
breach of this Lease by Tenant and shall, at the option of Landlord exercised by
written notice to Tenant, terminate this Lease. The leasehold estate under this
Lease shall not, nor shall any interest therein, be assignable for any purpose
by operation of law without the written consent of Landlord. As a condition to
its content, Landlord may require Tenant to pay all expenses in connection with
the assignment, and Landlord may require Tenant's assignee or transferee (or
other assignees or transferees) to assume in writing all of the obligations
under this Lease and for Tenant to remain liable to Landlord under the Lease.
15. SUBORDINATION AND MORTGAGES In the event Landlord's title or leasehold
interest is now or hereafter encumbered by a deed of trust, upon the interest of
Landlord in the land and buildings in which the demised Premises are located, to
secure a loan from a lender (hereinafter referred to as "Lender") to Landlord,
Tenant shall, at the request of Landlord or Lender, execute in writing an
agreement subordinating its rights under this Lease to the lien of such deed of
trust, or, if so requested, agreeing that the lien of Lender's deed of trust
shall be or remain subject and subordinate to the rights of Tenant under this
Lease. Notwithstanding any such subordination, Tenant's possession under this
Lease shall not be disturbed if Tenant is not in default and so long as Tenant
shall pay all rent and observe and perform all of the provisions set forth in
this Lease.
16. ENTRY BY LANDLORD Landlord reserves, and shall at all reasonable
times after at least 24 hours notice (except in emergencies) have, the right to
enter the Premises to inspect then; to perform any services to be provided by
Landlord hereunder, to make repairs or provide any services to a contiguous
tenant(s); to submit the Premises to prospective purchasers, mortgagors or
tenants; to post notices of nonresponsibility; and to alter, improve or repair
the Premises or other parts of the building, all without abatement of rent, and
may erect scaffolding and other necessary structures in or through the Premises
where reasonably required by the character of the work to be performed;
provided, however that the business of Tenant shall be interfered with to the
least extent that is reasonably practical. Any entry to the Premises by
Landlord for the purposes provided for herein shall not under any circumstances
be construed or deemed to be a forcible or unlawful entry into or a detainer of
the Premises or an eviction, actual or constructive, of Tenant from the Premises
or any portion thereof.
17. BANKRUPTCY AND DEFAULT The commencement of a bankruptcy action or
liquidation action or reorganization action or insolvency action or an
assignment of or by Tenant for the benefit of creditors, or any similar action
taken by Tenant, or the insolvency of Tenant, shall, at Landlord's option,
constitute a breach of this Lease by Tenant. If the trustee or receiver
appointed to serve during a bankruptcy, liquidation, reorganization, insolvency
or similar action elects to reject the Tenant's unexpired Lease, the trustee or
receiver shall notify Landlord in writing of its election within thirty (30)
days after an order for relief in a liquidation action or within thirty (30 days
after the commencement of any action.
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Within thirty (30) days after court approval of the assumption of this
Lease, the trustee or receiver shall cure (or provide adequate assurance to the
reasonable satisfaction of Landlord that the trustee or receiver shall cure) any
and all previous defaults under the unexpired Lease and shall compensate
Landlord for all actual pecuniary loss and shall provide adequate assurance of
future performance under said Lease to the reasonable satisfaction of Landlord.
Adequate assurance of future performance, as used herein, includes, but shall
not be limited to: (i) assurance of source and payment of rent, and other
consideration due under this Lease; (ii) assurance that the assumption or
assignment of this Lease will not breach substantially any provision, such as
radius, location, use, or exclusivity provision, in any agreement relating to
the above described Premises.
Nothing contained in this section shall affect the existing right of the
Landlord to refuse to accept an assignment upon commencement of or in connection
with a bankruptcy, liquidation, reorganization or insolvency action or an
assignment of Tenant for the benefit of creditors or other similar act. Nothing
contained in this Lease shall be construed as giving or granting or creating an
equity in the demised Premises to Tenant. In no event shall the leasehold
estate under this Lease, or any interest therein, be assigned by voluntary or
involuntary bankruptcy proceeding without the prior written consent of Landlord.
In no event shall this Lease or any rights or privileges hereunder be an asset
of Tenant under any bankruptcy, insolvency or reorganization proceedings.
The failure to perform or honor any covenant, condition or representation
made under this Lease shall constitute a default hereunder by Tenant upon
expiration of the appropriate grace period hereinafter provided. Tenant shall
have a period of five (5) days from the date of written notice from Landlord
within which to cure any default in the payment of rental or adjustment thereto.
Tenant shall have a period of thirty (30) days from the date of written notice
from Landlord within which to cure any other default under this Lease; provided,
however, that if the nature of Tenant's failure is such that more than thirty
(30) days is reasonably required to cure the same, Tenant shall not be in
default so long as Tenant commences performance with in such thirty (30) day
period and thereafter prosecutes the same to completion. Upon an uncured
default of this Lease by Tenant, Landlord shall have the following rights and
remedies in addition to any other rights or remedies available to Landlord at
law or in equity:
(a) The rights and remedies provided for by California Civil Code Section
1951.2, including but not limited to, recovery of 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 rental loss for the same period that Tenant
proves could be reasonably avoided, as computed pursuant to subsection (b) of
said Section 1951.2. Any proof by Tenant under subparagraphs (2) and (3) of
Section 1951.2 of the California Civil Code of the amount of rental loss that
could reasonably avoided shall be made in the following manner: Landlord and
Tenant shall each select a licensed real estate broker in the business of
renting property of the same type and use as the Premises and in the same
geographic vicinity. Such two real estate brokers shall select a third licensed
real estate broker, and the three licensed real estate brokers so selected shall
determine the amount of rental loss that could be reasonably avoided from the
balance of the term of this Lease after the time of award. The decision of the
majority of said licensed real estate brokers shall be final and binding upon
the parties hereto.
(b) The rights and remedies provided by California Civil Code Section
which allows Landlord to continue the Lease in effect and to enforce all of its
rights and remedies under the Lease, including the right to recover rent as it
becomes due, for so long as Landlord does not terminate Tenant's right to
possession; acts of maintenance or preservation, efforts to relet the Premises,
or the appointment of a receiver upon Landlord's initiative to protect its
interest under this Lease shall not constitute a termination of Tenant's right
to possession.
(c) The right to terminate this Lease by giving notice to Tenant in
accordance with applicable law.
(d) To the extent permitted by law the right and power, to enter the
Premises and remove therefrom all persons and property, to store such property
in a public warehouse or elsewhere at the cost of and for the account of Tenant,
and to sell such property and apply such proceeds therefrom pursuant to
applicable California law. Landlord, may from time to time sublet the Premises
or any part thereof for such term or terms (which may extend beyond the term of
this Lease) and at such rent and such other terms as Landlord in its reasonable
sole discretion may deem advisable, with the right to make alterations and
repairs to the Premises. Upon each subletting, (i) Tenant shall be immediately
liable to pay Landlord, in addition to indebtedness other than rent due
hereunder, the reasonable cost of such subletting, including, but not limited
to, reasonable attorneys' fees, and any real estate commissions actually paid,
and the cost of such reasonable alterations and repairs incurred by Landlord and
the amount, if any, by which the rent hereunder for the period of such
subletting (to the extent such period does not exceed the term hereof) exceeds
the amount to be paid as rent for the Premises for such period or (ii) at the
option of Landlord, rents received from subletting shall be applied first to
payment of indebtedness other than rent due hereunder from Tenant to Landlord;
second, to the payment of any costs of such subletting and of such alterations
and repairs; third to payment of rent due and unpaid hereunder; and the residue,
if any, shall be held by Landlord and applied in payment of future rent as the
same becomes due hereunder. If Tenant has been credited with any rent to be
received by such subletting under option (i) and such rent shall not be promptly
paid to Landlord by the subtenant(s), or if such rentals
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received from such subletting under option (ii) during any month be less than
that to be paid during that month by Tenant hereunder, Tenant shall pay any such
deficiency to Landlord. Such deficiency shall be calculated and paid monthly.
No taking possession of the Premises by Landlord, shall be construed as an
election on its part to terminate this Lease unless a written notice of such
intention be given to Tenant. Notwithstanding any such subletting without
termination, Landlord at any time hereafter elect to terminate this Lease for
such previous breach.
(e) The right to have receiver appointed for Tenant upon application by
Landlord, to take possession of the Premises and to apply any rental collected
from the Premises and to exercise all other rights and remedies granted to
Landlord pursuant to subparagraph d above.
18. ABANDONMENT Tenant shall not vacate or abandon the Premises at any time
during the term of this Lease (except that Tenant may vacate so long as it pays
rent, provides an on-site security guard during normal business hours from
Monday through Friday, and otherwise performs its obligations hereunder) and if
Tenant shall abandon, vacate or surrender said Premises, or be dispossessed by
the process of law, or otherwise, any personal property belonging to Tenant and
left on the Premises shall be deemed to be abandoned, at the option of Landlord,
except such property as may be mortgaged to Landlord.
19. DESTRUCTION In the event the Premises are destroyed in whole or in part
from any cause, except for routine maintenance and repairs and incidental damage
and destruction caused from vandalism and accidents for which Tenant is
responsible under Paragraph 6, Landlord may, at its option:
(a) Rebuild or restore the Premises to their condition prior to the damage
or destruction, or
(b) Terminate this Lease. (providing that the Premises is damaged to the
extent of 33 1/3% of the replacement cost).
If Landlord does not give Tenant notice in writing within thirty (30) days
from the destruction of the Premises of its election to either rebuild and
restore them, or to terminate this Lease, Landlord shall be deemed to have
elected to rebuild or restore them, in which event Landlord agrees, at its
expense, promptly to rebuild or restore the Premises to their condition prior to
the damage or destruction. Tenant shall be entitled to a reduction in rent
while such repair is being made in the proportion that the area of the Premises
rendered untenantable by such damage bears to the total area of the Premises.
If Landlord initially estimates that the rebuilding or restoration will exceed
180 days or if Landlord does not complete the rebuilding or restoration within
one hundred eighty (180) days following the date of destruction (such period of
time to be extended for delays caused by the fault or neglect of Tenant or
because of Acts of God, acts of public agencies, labor disputes, strikes, fires,
freight embargos, rainy or stormy weather, inability to obtain materials,
supplies or fuels, acts of contractors or subcontractors, or delay of the
contractors or subcontractors due to such causes or other contingencies beyond
the control of Landlord), then Tenant shall have the right to terminate this
Lease by giving fifteen (15) days prior written notice to Landlord.
Notwithstanding anything herein to the contrary, Landlord's obligation to
rebuild or restore shall be limited to the building and interior improvements
constructed by Landlord as they existed as of the commencement date of the Lease
and shall not include restoration of Tenant's trade fixtures, equipment,
merchandise, or any improvements, alterations or additions made by Tenant to the
Premises, which Tenant shall forthwith replace or fully repair at Tenant's sole
cost and expense provided this Lease is not canceled according to the
provisions above.
Unless this Lease is terminated pursuant to the foregoing provisions, this
Lease shall remain in full force and effect. Tenant hereby expressly waives the
provisions of Section 1932, Subdivision 2, in Section 1933, Subdivision 4 of the
California Civil Code.
In the event that the building in which the Premises are situated is
damaged or destroyed to the extent of not less than 33% of the replacement cost
thereof, Landlord may elect to terminate this Lease, whether the Premises be
injured or not. In the event the destruction of the Premises is caused by
Tenant, Tenant shall pay deductible portion of Landlord's insurance proceeds.
20. EMINENT DOMAIN If all or any part of the Premises shall be taken by any
public or quasi-public authority under the power of eminent domain or conveyance
in lieu thereof, this Lease shall terminate as to any portion of the Premises so
taken or conveyed on the date when title vests in the condemnor, and Landlord
shall be entitled to any and all payment, income, rent, award, or any interest
therein whatsoever which may be paid or made on connection with such taking or
conveyance, and Tenant shall have no claim against Landlord or otherwise for the
value of any unexpired term of this Lease. Notwithstanding the foregoing
paragraph, any compensation specifically awarded Tenant for loss of business,
Tenant's personal property, moving cost or loss of goodwill, shall be and remain
the property of Tenant.
If any action or proceeding is commenced for such taking of the Premises
or any part thereof, or if Landlord is advised in writing by an entity or body
having the right or power of condemnation of its intention to condemn
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the premises or any portion thereof, then Landlord shall have the right to
terminate this Lease by giving Tenant written notice thereof within sixty (60)
days of the date of receipt of said written advice, or commencement of said
action or proceeding, or taking conveyance, which termination shall take place
as of the first to occur of the last day of the calendar month next following
the month in which such notice is given or the date on which title to the
Premises shall vest in the condemnor.
In the event of such a partial taking or conveyance of the Premises, if
the portion of the Premises taken or conveyed is so substantial that the Tenant
can no longer reasonably conduct its business, Tenant shall have the privilege
of terminating this Lease within sixty (60) days from the date of such taking or
conveyance, upon written notice to Landlord of its intention so to do, and upon
such notice of this Lease shall terminate on the last day of the calendar month
next following the month in which such notice is given, upon payment by Tenant
of the rent from the date of such taking or conveyance to the date of
termination.
If a portion of the Premises be taken by condemnation or conveyance in
lieu thereof and neither Landlord nor Tenant shall terminate this Lease as
provided herein, this Lease shall continue in full force and effect as to the
part of the Premises not so taken or conveyed, and the rent herein shall be
apportioned as of the date of such taking or conveyance so that thereafter the
rent to be paid by Tenant shall be in the ratio that the area of the portion of
the Premises not so taken or conveyed to the total area of the Premises prior to
such taking.
21. SALE OR CONVEYANCE BY LANDLORD In the event of a sale or conveyance of
the Premises or any interest therein, by any owner of the reversion then
consulting Landlord, the transferor shall thereby be released from any further
liability upon any of the terms, covenants or conditions (express or implied)
herein contained in favor of Tenant, and in such event, insofar as such transfer
is concerned, Tenant agrees to look solely to the responsibility of the
successor in interest of such a transferor in and to the Premises and this
Lease. This Lease shall not be affected by any such sale or conveyance, and
Tenant agrees to attorn to the successor in interest of such transferor.
22. ATTORNMENT TO LENDER OR THIRD PARTY In the event the interest of
Landlord in the land and buildings in which the leased Premises are located
(whether such interest of Landlord is a fee title interest or a leasehold
interest) is encumbered by deed of trust, and such interest is acquired by the
lender or any third party through judicial foreclosure or by exercise of a power
of sale at private trustee's foreclosure sale, Tenant hereby agrees to attorn to
the purchaser at any such foreclosure sale and to recognize such purchaser as
the Landlord under this Lease. In the event the lien of the deed of trust
securing the loan from a lender to Landlord is prior and paramount to the Lease,
this Lease shall nonetheless continue in full force and effect for the remainder
of the unexpired term hereof, at the same rental herein reserved and upon all
the other terms, conditions and covenants herein contained.
23. HOLDING OVER Any holding over by Tenant after expiration or other
termination of the term of this Lease with the written consent of Landlord
delivered to Tenant shall not constitute a renewal or extension of the Lease or
give Tenant any rights in or to the leased Premises except as expressly provided
in this Lease. Any holding over after the expiration or other termination of
the term of this Lease, with consent of Landlord, shall be construed to be a
tenancy from month to month, on the same terms and conditions herein specified
insofar as applicable except that the monthly Basic Rent shall be increased to
an amount equal to one hundred fifty (150%) percent of the monthly Basic Rent
required during the last month of the Lease term.
24. CERTIFICATE OF ESTOPPEL Tenant shall at any time upon not less than ten
(10) days prior written notice to Landlord execute, acknowledge and deliver to
Landlord a statement in writing (i) certifying that this Lease is unmodified and
in full force and effect (or, if modified, stating the nature of such
modification and certifying that this Lease, as so modified, is in full force
and effect) and the date to which the rent and other charges are paid in
advance, if any, and (ii) acknowledging that there are not, to Tenant's
knowledge, any uncured defaults on the part of Landlord hereunder, or specifying
such defaults, if any, are claimed. Any such statement may be conclusively
relied upon by any prospective purchaser or encumbrancer of the Premises.
Tenant's failure to deliver such statement within such time shall be conclusive
upon Tenant that this Lease is in full force and effect, without modification
except as may be represented by Landlord; that there are no uncured defaults in
Landlord's performance, and that not more than one month's rent has been paid in
advance.
25. CONSTRUCTION CHANGES It is understood that the description of the
Premises and the location of ductwork, plumbing and other facilities therein are
subject to such minor changes as Landlord or Landlord's architect determines to
be desirable in the course of construction of the Premises, and no such changes
shall affect this Lease
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or entitle Tenant to any reduction of rent hereunder or result in any liability
of Landlord to Tenant. Landlord does not guarantee the accuracy of any drawings
supplied to Tenant and verification of the accuracy of such drawings rests with
Tenant.
26. RIGHT OF LANDLORD TO PERFORM All terms, covenants and conditions of this
Lease to be performed or observed by Tenant shall be performed or observed by
Tenant at Tenant's sole cost and expense and without any reduction of rent. If
Tenant shall fail to pay any sum of money, or other rent, required to be paid
by it hereunder or shall fail to perform any other term or covenant hereunder on
its part to be performed, and such failure shall continue for five (5) days
after written notice thereof by Landlord, Landlord, without waiving or releasing
Tenant from any obligation of Tenant hereunder, may, but shall not be obligated
to, make any such payment or perform other any other term or covenant on
Tenant's part to be performed. All sums so paid by Landlord and all necessary
costs of such performance by Landlord together with interest thereon at the rate
of the prime rate of interest per annum as quoted by the Bank of America from
the date of such payment on performance by Landlord, shall be paid (and Tenant
covenants to make such payment) to Landlord on demand by Landlord, and Landlord
shall have (in addition to any other right or remedy of Landlord) the same
rights and remedies in the event of nonpayment by Tenant as in the case of
failure by Tenant in the payment of rent hereunder.
27. ATTORNEYS' FEES
A. In the event that either Landlord or Tenant should bring suit for the
possession of the Premises, for the recovery of any sum due under this Lease, or
because of the breach of any provision of this Lease, or for any other relief
against the other party hereunder, then all costs and expenses, including
reasonable attorneys' fees, 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 judgement.
B. Should Landlord be named as a defendant in any suit 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 a reasonable
attorneys' fee.
28. WAIVER The waiver by either party of the other party's failure to
perform or observe any term, covenant or condition herein contained to be
performed or observed by such waiving party shall not be deemed to be a waiver
of such term, covenant or condition or condition or of any subsequent failure of
the party failing to perform or observe the same or any other such term,
covenant or condition therein contained, and no custom or practice which may
develop between the parties hereto during the term hereof shall be deemed a
waiver of, or in any way affect, the right of either party to insist upon
performance and observance by the other party in strict accordance with the
terms hereof.
29. NOTICES All notices, demands, requests, advises or designations which
may be or are required to be given by either party to the other hereunder shall
be in writing. All notices, demands, requests, advises or designations by
Landlord to Tenant shall be sufficiently given, made or delivered if personally
served on Tenant by leaving the same at the Premises of if sent by United States
certified or registered mail, postage prepaid, addressed to Tenant. All
notices, demands, requests, advices or designations by Tenant to Landlord shall
be sent by United States certified or registered mail, postage prepaid,
addressed to Landlord at its offices at PEERY/ARRILLAGA, 2560 COLLEGE BOULEVARD,
#101, SANTA CLARA, CA 95054. Each notice, request, demand, advice or
designation referred to in this paragraph shall be deemed received on the date
of the personal service or mailing thereof in the manner herein provided, as the
case may be.
30. EXAMINATION OF LEASE Submission of this instrument for examination or
signature by Tenant does not constitute a reservation of or option for a lease,
and this instrument is not effective as a lease or until its execution and
delivery by both Landlord and Tenant.
31. DEFAULT BY LANDLORD Landlord shall not be in default unless Landlord
fails to perform obligations required of Landlord within a reasonable time, but
in no event earlier than thirty (30 days after written notice by Tenant to
Landlord and to the holder of any first mortgage or deed of trust covering the
Premises whose name and address shall have heretofore been furnished to Tenant
in writing, specifying wherein Landlord has failed to perform such obligations;
provided, however, that if the nature of Landlord's obligations is such that
more than thirty (30) days are required for performance, then Landlord shall not
be in default if Landlord commences performance within such thirty (30) day
period and thereafter diligently prosecuted the same to completion.
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32. CORPORATE AUTHORITY If Tenant is a corporation (or a partnership), each
individual executing this Lease on behalf of said corporation (or partnership)
represents and warrants that he is duly authorized to execute and deliver this
Lease on behalf of said corporation (or partnership) in accordance with the
by-laws of said corporation (or partnership in accordance with the partnership
agreement) and that this Lease is binding upon said corporation (or partnership)
in accordance with its terms. If Tenant is a corporation, Tenant shall, within
thirty (30) days after execution of this Lease, deliver to Landlord a certified
copy of the resolution of the Board of Directors of said corporation authorizing
or ratifying the execution of this Lease.
33. LIMITATION OF LIABILITY In consideration of the benefits accruing
hereunder, Tenant and all successors and assigns covenant and agree that, in
the event of any actual or alleged failure, breach or default hereunder by
Landlord:
(a) the sole and exclusive remedy shall be against Landlord and Landlord's
assets;
(b) no partner 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);
(c) no service of process shall be made against any partner of Landlord
(except as may be necessary to secure jurisdiction of the partnership);
(d) no partner of Landlord shall be required to answer or otherwise plead
to any service of process;
(e) no judgement will be taken against any partner of Landlord;
(f) any judgement taken against any partner of Landlord may be vacated and
set aside at any time without hearing;
(g) no writ of execution will ever be levied against the assets of any
partner of Landlord;
(h) these covenants and agreements are enforceable both by Landlord and
also by any partner of Landlord.
Tenant agrees that each of the foregoing covenants and agreements shall be
applicable to any covenant or agreement either expressly contained in this
Lease or imposed by statute or at common law.
34. SIGNS No sign, placard, picture, advertisement, name or notice shall be
inscribed, displayed or printed or affixed on to or to any part of the outside
of the Premises or any exterior windows of the Premises without written consent
of Landlord first had and obtained and Landlord shall have the right to remove
any such sign, placard, picture, advertisement, name or notice without notice to
and at the expense of Tenant. If Tenant is allowed to print or affix or in any
way place a sign in, on, or about the Premises, upon expiration or sooner
termination of this Lease, Tenant at Tenant's sole cost and expense shall both
remove such sign and repair all damage in such a manner as to restore all
aspects of the appearance of the Premises to the condition prior to the
placement of said sign.
All approved signs or lettering on outside doors shall be printed, affixed
or inscribed at the expense of Tenant by a person approved of by Landlord.
Tenant shall not place anything or allow anything to be placed near the
glass of any window, door partition or wall which may appear unsightly from
outside the Premises. Tenant shall have the right to place Tenant's business
name, building number and street address on the exterior windows of the
Premises. In addition, Tenant shall have the right to use twenty five percent
(25%) of the building monument sign. Tenant shall comply with any government
rules and regulations regarding signage. Tenant's sign shall be provided for by
Tenant at Tenant's sole cost and expense.
35. MISCELLANEOUS AND GENERAL PROVISION
A. USE OF BUILDING NAME. Tenant shall not, without the written consent
of Landlord, use the name of the building for any purpose other than as the
address of the business conducted by Tenant in the Premises.
B. CHOICE OF LAW; SEVERABILITY. This Lease shall in all respects be
governed by and construed in accordance with the laws of State of California.
If any provision of this Lease shall be invalid, unenforceable or in effective
for any reason whatsoever, all other provisions hereof shall be and remain in
full force and effect.
C. DEFINITION OF TERMS. The term "Premises" includes the space leased
hereby and any improvements now or hereafter installed therein or attached
thereto. The term "Landlord" or any pronoun used in place thereof includes the
plural as well as the singular and the successors and assigns of Landlord. The
term "Tenant" or any pronoun used in place thereof includes the plural as well
as the singular and individuals, firms, associations, partnerships and
corporation, and their and each of their respective heirs, executors,
administrators, successors and permitted assigns, according to the context
hereof, and the provisions of this Lease shall inure to the benefit of and bind
such heirs, executors, administrators, successors and permitted assigns.
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The term "person" includes the plural as well as the singular and
individuals, firms, associations, partnerships and corporations. Words used in
any gender include other genders. If there be more than one Tenant the
obligations of Tenant hereunder are joint and several. The paragraph headings
of this Lease are for convenience of reference only and shall have no effect
upon the construction or interpretation of any provision hereof.
D. TIME OF ESSENCE. Time is of the essence of this Lease and of each
and all of its provisions.
E. QUITCLAIM. At the expiration or earlier termination of this Lease,
Tenant shall execute, acknowledge and deliver to Landlord, within ten (10) days
after written demand from Landlord to Tenant, any quitclaim deed or other
document required by any reputable title company, licensed to operate in the
State of California, to remove the cloud or encumbrance created by this Lease
from the real estate property of which Tenant's Premises are a part.
F. INCORPORATION OF PRIOR AGREEMENTS; AMENDMENTS. This instrument along
with any exhibits and attachments hereto constitutes the entire agreement
between Landlord and Tenant relative to the Premises and this agreement and the
exhibits and attachments may be altered, amended or revoked only by an
instrument in writing signed by both Landlord and Tenant. Landlord and Tenant
agree hereby that all prior or contemporaneous oral agreements between and among
themselves and their agents or representatives relative to the leasing of the
Premises are merged in or revoked by this agreement.
G. RECORDING. Neither Landlord nor Tenant shall record this Lease or a
short form memorandum hereof without the consent of the other.
H. AMENDMENTS FOR FINANCING. Tenant further agrees to execute any
amendments required by a lender to enable Landlord to obtain financing, so long
as Tenant's rights hereunder are not substantially affected.
I. ADDITIONAL PARAGRAPHS. Paragraphs 39 through 49 are added hereto and
are included as a part of this Lease.
J. CLAUSES, PLATS AND RIDERS. Clauses, plats and riders, if any, signed
by Landlord and Tenant and endorsed on or affixed to this Lease are a part
hereof.
K. DIMINUTION OF LIGHT, AIR OR VIEW. Tenant covenants and agrees that
no diminution or shutting off of light, air or view by any structure which may
be hereafter erected (whether or not by Landlord) shall in any way affect this
Lease, entitle Tenant to any reduction of rent hereunder or result in any
liability of Landlord to Tenant.
IN WITNESS WHEREOF, Landlord and Tenant have executed and delivered this
Lease as of the day and year first above written.
LANDLORD: TENANT:
JOHN ARRILLAGA SEPARATE PROPERTY TRUST ALPHA 1 BIOMEDICALS, INC.,
a Delaware corporation
By /S/JOHN ARRILLAGA By /S/R.J. LANHAM
------------------------- ------------------------
John Arrillaga, Trustee
Title: Vice President, Finance
RICHARD T. PEERY SEPARATE PROPERTY TRUST Type or Print Name R.J. LANHAM
By /S/RICHARD T. PEERY
--------------------------------
Richard T. Peery, Trustee
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Paragraphs 36 through 46 to Lease Agreement Dated January 22, 1993, By and
Between John Arrillaga and Richard T. Peery Separate Property Trusts, as
Landlord, and Alpha 1 Biomedicals, a California corporation, as Tenant for
15,018+- Square Feet of Space Located at 810 W. Maude, Ste. 101, Sunnyvale,
California.
36. BASIC RENT In accordance with Paragraph 4(a) herein, the total aggregate
sum of EIGHT HUNDRED FIFTY SIX THOUSAND TWENTY SIX AND NO/100 DOLLARS
($856,026.00), shall be payable as follows:
For the period March 1, 1993 through August 31, 1993 No Basic Rent will
be due; however, Tenant will be responsible for all additional rent expenses as
outlined in Paragraph 4(d).
On September 1, 1993, the sum of TWELVE THOUSAND SEVEN HUNDRED SIXTY
FIVE AND 30/100 DOLLARS ($12,765.30) shall be due, and a like sum due on the
first day of each month thereafter, through and including August 1, 1994.
On September 1, 1994, the sum of THIRTEEN THOUSAND FIVE HUNDRED SIXTEEN
AND 20/100 DOLLARS ($13,516.20) shall be due, and a like sum due on the first
day of each month thereafter, through and including August 1, 1995.
On September 1, 1995, the sum of FOURTEEN THOUSAND TWO HUNDRED SIXTY
SEVEN AND 10/100 DOLLARS ($14,267.10) shall be due, and a like sum due on the
first day of each month thereafter, through and including August 1, 1996.
On September 1, 1996, the sum of FIFTEEN THOUSAND EIGHTEEN AND NO/100
DOLLARS ($15,018.00) shall be due, and a like sum due on the first day of each
month thereafter, through and including August 1, 1997.
On September 1, 1997, the sum of FIFTEEN THOUSAND SEVEN HUNDRED SIXTY
EIGHT AND 90/100 DOLLARS ($15,768.90) shall be due, and a like sum due on the
first day of each month thereafter, through and including August 1, 1998; or
until the entire aggregate sum of EIGHT HUNDRED FIFTY SIX THOUSAND TWENTY SIX
AND NO/100 DOLLARS ($856,026.00) has been paid.
37. "AS-IS" BASIS It is hereby agreed that the Premises leased hereunder is
leased strictly on an "as-is" basis and in its present condition, and in the
configuration as shown on Exhibit B attached hereto, and by reference made a
part hereof. Landlord shall not be required to make, nor be responsible for any
cost, in connection with any repair, restoration, and/or improvement to the
Premises in order for this Lease to commence. Landlord makes no warranty or
representation of any kind or nature whatsoever as to the condition or repair of
the Premises, nor as to the use or occupancy which may be made thereof.
38. CONSENT Whenever the consent of one party to the other is required
hereunder, such consent shall not be unreasonably withheld.
39. RULES AND REGULATIONS AND COMMON AREA Subject to the terms and
conditions of this Lease and such Rules and Regulations as Landlord may from
time to time Prescribe, Tenant and Tenant s employees, invitees and customers
shall in common with other occupants of the Parcel/Building in which the
premises are located, and their respective employees, invitees and customers,
and others entitled to the use thereof, have the non-exclusive right to use the
access roads, parking areas, and facilities provided and designated by Landlord
for the general use and convenience of the occupants of the Parcel/Building in
which the Premises are located, which areas and facilities are referred to
herein as "Common Area". This right shall terminate upon the termination of
this Lease. Landlord reserves the right from time to time to make changes in
the shape, size, location, amount and extent of Common Area. Landlord further
reserves the right to promulgate such reasonable rules and regulations relating
to the use of the Common Area, and any part or parts thereof, as Landlord may
deem appropriate for the best interests of the occupants of the Parcel/Building.
Such Rules and Regulations may be amended by Landlord from time to time, with or
without advance notice, and all amendments shall be effective upon delivery of a
copy to Tenant. Landlord shall not be responsible to Tenant for the
non-performance by any other tenant or occupant of the Parcel/Building of any of
said Rules and Regulations.
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Landlord shall operate, manage and maintain the Common Area. The manner in
which the Common Area shall be maintained and the expenditures for such
maintenance shall be at the discretion of Landlord.
40. EXPENSES OF OPERATION, MANAGEMENT, AND MAINTENANCE OF THE COMMON
AREAS OF THE PARCEL AND BUILDING IN WHICH THE PREMISES ARE LOCATED As
Additional Rent and in accordance with Paragraph 4D of this Lease, Tenant shall
pay to Landlord Tenant's proportionate share (calculated on a square footage or
other equitable basis as calculated by Landlord) of all expenses of operation,
management, maintenance and repair of the Common Areas of the Parcel/Building,
which Landlord shall undertake, including, but not limited to, license, permit,
and inspection fees; security; utility charges associated with exterior
landscaping and lighting (including water and sewer charges); all charges
incurred in the maintenance of landscaped areas, lakes, parking lots, sidewalks,
driveways, maintenance, repair and replacement of all fixtures and electrical,
mechanical and plumbing systems; structural elements and exterior surfaces of
the buildings; salaries and employee benefits of personnel and payroll taxes
applicable thereto; supplies, materials, equipment and tools; the cost of
capital expenditures which have the effect of reducing operating expenses,
provided, however, that in the event Landlord makes such capital improvements,
Landlord may amortize its investment in said improvements (together with
interest at the rate of fifteen (15%) percent per annum on the unamortized
balance) as an operating expense in accordance with standard accounting
practices, provided, that such amortization is not at a rate greater than the
anticipated savings in the operating expenses.
Notwithstanding anything to the contrary in Paragraph 7 or 43, in the event the
entire roof membrane over the Premises leased by Tenant is replaced, at Tenant's
sole cost and expense, the following provisions (i) through (iii) shall apply
from the date immediately following said replacement: (i) Tenant shall be
responsible for paying 100% of any and all costs of maintenance, repairs and
replacement of said roof membrane; (ii) Tenant shall pay its pro rata share of
any such expense for the roof membrane covering the common area (if any) of the
building and (iii) Tenant shall not be responsible for paying for any such
expense for the maintenance, repair and or replacement of the roof covering the
portion of the building not leased by Tenant or which area is not part of the
common area of the building, provided, however, if Tenant causes damage to the
roof membrane covering the building or the common area, Tenant shall pay 100% of
the cost to repair or replace the roof membrane.
"Additional Rent" as used herein shall not include Landlord's debt repayments;
interest on charges, expenses directly or indirectly incurred by Landlord for
the benefit of any other tenant; cost for the installation of partitioning or
any other tenant improvements; cost of attracting tenants; depreciation;
interest; or executive salaries.
As Additional Rent and in accordance with Paragraph 4D of this Lease, Tenant
shall pay its proportionate share (calculated on a square footage or other
equitable basis as calculated by Landlord) of the cost of operation (including
common utilities), management, maintenance, and repair of the building
(including common areas such as lobbies, restrooms, janitor's closets, hallways,
elevators, mechanical and telephone rooms, stairwells, entrances, spaces above
the ceilings and janitorization of said common areas) in which the Premises are
located. The maintenance items herein referred to include, but are not limited
to, all windows, window frames, plate glass, glazing, truck doors, main plumbing
systems of the building (such as water drain lines, sinks, toilets, faucets,
drains, showers and water fountains), main electrical systems (such as panels
and conduits), heating and airconditioning systems (such as compressors, fans,
air handlers, ducts, boilers, heaters), store fronts, roofs, downspouts,
building common area interiors (such as wall coverings, window coverings, floor
coverings and partitioning), ceilings, building exterior doors, skylights (if
any), automatic fire extinguishing systems, and elevators (if any); license,
permit and inspection fees; security, salaries and employee benefits of
personnel and payroll taxes applicable thereto; supplies, materials, equipment
and tools; the cost of capital expenditures which have the effect of reducing
operating expenses, provided, however, that in the event Landlord makes such
capital improvements, Landlord may amortize its investment in said improvements
(together with interest at the rate of fifteen (15%) percent per annum on the
unamortized balance) as an operating expense in accordance with standard
accounting practices, provided, that such amortization is not at a rate greater
than the anticipated savings in the operating expenses. Tenant hereby waives
all rights hereunder, and benefits of, subsection 1 of Section 1932 and Sections
1941 and 1942 of the California Civil Code and under any similar law, statute or
ordinance now or hereafter in effect.
Notwithstanding anything to the contrary in the Lease, in no event shall Tenant
have any obligation to incur, pay directly, or reimburse Landlord for, all or
any portion of the claims, costs, losses, fees, charges, maintenance costs,
repair costs, and expenses (collectively "Costs") for which Landlord has billed
and or has the right to bill another Tenant.
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<PAGE>
41. UTILITIES OF THE BUILDING IN WHICH THE PREMISES ARE LOCATED As
Additional Rent and in accordance with Paragraph 4D of this Lease Tenant shall
pay its proportionate share (calculated on a square footage or other equitable
basis as calculated by Landlord) of the cost of all utility charges such as
water, gas, electricity, telephone, telex and other electronic communications
service, sewer service, waste pick-up and any other utilities, materials or
services furnished directly to the building in which the Premises are located,
including without limitation, any temporary or permanent utility surcharge or
other exactions whether or not hereinafter imposed.
Landlord shall not be liable for and Tenant shall not be entitled to any
abatement or reduction of rent by reason of any interruption or failure of
utility services to the Premises when such interruption or failure is caused by
accident, breakage, repair, strikes, lockouts, or other labor disturbances or
labor disputes of any nature, or by any other cause, similar or dissimilar,
beyond the reasonable control of Landlord.
Provided that Tenant is not in default in the performance or observance of any
of the terms, covenants or conditions of this Lease to be performed or observed
by it. Landlord shall furnish to the Premises between the hours of 8:00 am and
6:00 pm, Mondays through Fridays (holidays excepted) and subject to the rules
and regulations of the Complex hereinbefore referred to, reasonable quantities
of water, gas and electricity suitable for the intended use of the Premises and
heat and airconditioning required in Landlord's judgment for the comfortable use
and occupation of the Premises for such purposes. Tenant agrees that at all
times it will cooperate fully with Landlord and abide by all regulations and
requirements that Landlord may prescribe for the proper functioning and
protection of the building heating, ventilating and airconditioning systems.
Whenever heat generating machines, equipment, or any other devices (including
exhaust fans) are used in the Premises by Tenant which affect the temperature or
otherwise maintained by the airconditioning system, Landlord shall have the
right to install supplementary airconditioning units in the Premises and the
cost thereof, including the cost of installation and the cost of operation and
maintenance thereof, shall be paid by Tenant to Landlord upon demand by
Landlord. Tenant will not, without the written consent of Landlord, use any
apparatus or device in the Premises (including, without limitation), electronic
data processing machines or machines using current in excess of 110 Volts which
will in any way increase the amount of electricity, gas, water or
airconditioning usually furnished or supplied to premises being used as general
office space, or connect with electric current (except through existing
electrical outlets in the Premises), or with gas or water pipes any apparatus or
device for the purposes of using electric current, gas, or water. If Tenant
shall require water, gas, or electric current in excess of that usually
furnished or supplied to premises being used as general office space, Tenant
shall first obtain the written consent of Landlord, which consent shall not be
unreasonably withheld and Landlord may cause an electric current, gas or water
meter to be installed in the Premises in order to measure the amount of electric
current, gas or water consumed for any such excess use. The cost of any such
meter and of the installation, maintenance and repair thereof, all charges for
such excess water, gas and electric current consumed (as shown by such meters
and at the rates then charged by the furnishing public utility); and any
additional expense incurred by Landlord in keeping account of electric current,
gas, or water so consumed shall be paid by Tenant, and Tenant agrees to pay
Landlord therefor promptly upon demand by Landlord.
42. PARKING Tenant shall have the right to the nonexclusive use of sixty
four (64) parking spaces in the common parking area of the building. Tenant
agrees that Tenant, Tenant's employees, agents, representatives, and/or invitees
shall not use parking spaces in excess of said 64 parking spaces allocated to
Tenant hereunder. Landlord shall have the right, at Landlord's sole discretion,
to specifically designate the location of Tenant's parking spaces within the
common parking area of the building in the event of a dispute among the tenants
occupying the building referred to herein, in which event Tenant agrees that
Tenant, Tenant's employees, agents, representatives and/or invitees shall not
use any parking spaces other than those parking spaces specifically designated
by Landlord for Tenant's use. Said parking spaces, if specifically designated
by Landlord to Tenant, may be relocated by Landlord at any time, and from time
to time. Landlord reserves the right, at Landlord's sole discretion, to rescind
any specific designation of parking spaces, thereby returning Tenant's parking
spaces to the common parking area. Landlord shall give Tenant written notice of
any change in Tenant's parking spaces. Tenant shall not, at any time, park, or
permit to be parked, any trucks or vehicles adjacent to the loading area so as
to interfere in any way with the use of such areas, nor shall Tenant, at any
time, park or permit the parking of Tenant's trucks and other vehicles or the
trucks and vehicles of Tenant's suppliers or others, in any portion of the
common areas not designated by Landlord for such use by Tenant. Tenant shall
not park nor permit to be parked, any inoperative vehicles or equipment on any
portion of the common parking area or other common areas of the building.
Tenant agrees to assume responsibility for compliance by its employees with the
parking provision contained herein. If Tenant or its employees park in other
than designated parking areas, then Landlord may charge Tenant, as an additional
charge, and Tenant agrees to pay Ten Dollars ($10.00) per day for each day or
partial day each such vehicle is parking in any area other than that
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designated. Tenant hereby authorizes Landlord, at Tenant's sole expense, to tow
away from the building any vehicle belonging to Tenant or Tenant's employees
parked in violation of these provisions, or to attach violation stickers or
notices to such vehicles. Tenant shall use the parking area for vehicle parking
only and shall not use the parking areas for storage.
43. FIRST OPTION TO EXTEND LEASE FOR FIVE (5) YEARS Provided Tenant is not
in default of any of the terms, covenants, and conditions of this Lease
Agreement, Landlord hereby grants to Tenant an Option to Extend this Lease
Agreement for an additional five (5) year period upon the following terms and
conditions:
A. Tenant shall give Landlord written notice of Tenant's exercise of this
Option to Extend not later than February 28, 1998, in which event the Lease
shall be considered extended for an additional five (5) years upon the same
terms and conditions, absent this Paragraph 46, and subject to the rental set
forth below. In the event that Tenant fails to timely exercise Tenant's option
as set forth herein in writing, Tenant shall have no further Option to Extend
this Lease, and this Lease shall continue in full force and effect for the full
remaining term hereof, absent of this Paragraph 46.
B. The following summarizes the per square foot charge by period under
the Lease Agreement that would be applied to the Option to Extend:
<TABLE>
<CAPTION>
Period PSF Rate
<S> <C>
09/01/98-08/31/99 $1.10
09/01/99-08/31/00 $1.15
09/01/00-08/31/01 $1.20
09/01/01-08/31/02 $1.25
09/01/02-08/31/03 $1.30
</TABLE>
C. The option rights of Tenant under this and the extended term
thereunder, are granted for Tenant's personal benefit and may not be assigned
or transferred by Tenant, except to a parent corporation, subsidiary
corporation, or corporation with which Tenant merges or consolidates or to whom
Tenant sells all or substantially all of its assets as provided for in
Paragraph 16, either voluntarily or by operation of law, in any manner
whatsoever. In the event that Landlord consents to a sublease or assignment
under Paragraph 16, the option granted herein and any extended term thereunder
shall be void and of no force and effect, whether or not Tenant shall have
purported to exercise such option prior to such assignment or sublease, except
an assignment or sublease to a parent corporation, subsidiary corporation, or
corporation with which Tenant merges or consolidates or to whom Tenant sells
all or substantially all of its assets.
D. INCREASED SECURITY DEPOSIT In the event the term of Tenant's Lease is
extended pursuant to this Paragraph 46, Tenant's security deposit shall be
increased to equal twice the Basic Rental due for the last month of the extended
term (i.e. $19,523.40 per month X 2 = $39,046.80).
44. SECOND OPTION TO EXTEND LEASE FOR FIVE (5) YEARS Provided Tenant is
not in default of any of the terms, covenants, and conditions of this Lease
Agreement and Tenant exercised it's First Option to Renew as set forth in
Paragraph 46 above, Landlord hereby grants to Tenant a Second Option to Extend
this Lease Agreement for an additional five (5) year period upon the following
terms and conditions:
A. Tenant shall give Landlord written notice of Tenant's exercise of
this Option to Extend not later than February 28, 2003, in which event the Lease
shall be considered extended for an additional five (5) years upon the same
terms and conditions, absent this Paragraph 47, and subject to the rental set
forth below. In the event that Tenant fails to timely exercise Tenant's option
as set forth herein in writing, Tenant shall have no further Option to Extend
this Lease, and this Lease shall continue in full force and effect for the full
remaining term hereof, absent of this Paragraph 47.
B. The following summarizes the per square foot charge by period under
the Lease Agreement that would be applied to the Option to Extend:
<TABLE>
<CAPTION>
Period PSF Rate
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<PAGE>
<S> <C>
09/01/03-08/31/04 $1.35
09/01/04-08/31/05 $1.40
09/01/05-08/31/06 $1.45
09/01/06-08/31/07 $1.50
09/01/07-08/31/08 $1.55
</TABLE>
C. The option rights of Tenant under this paragraph, and the extended
term thereunder, are granted for Tenant's personal benefit and may not be
assigned or transferred by Tenant, except to a parent corporation, subsidiary
corporation, or corporation with which Tenant merges or consolidates or to whom
Tenant sells all or substantially all of its assets as provided for in Paragraph
16, either voluntarily or by operation of law, in any manner whatsoever. In the
event that Landlord consents to a sublease or assignment under Paragraph 16, the
option granted herein and any extended term thereunder shall be void and of no
force and effect, whether or not Tenant shall have purported to exercise such
option prior to such assignment or sublease, except an assignment or a parent
corporation, subsidiary corporation, or corporation with which Tenant merges or
consolidates or to whom Tenant sells all or substantially all of its assets.
D. INCREASED SECURITY DEPOSIT In the event the term of Tenant's Lease
is extended pursuant to this Paragraph 47, Tenant's security deposit shall be
increased to equal twice the Basic Rental due for the last month of the extended
term (i.e. $23,277.90 per month X 2 = $46,555.80).
45. HAZARDOUS MATERIALS Landlord and Tenant agree as follows with respect to
the existence or use of "Hazardous Materials" (as defined herein) on the
Premises and real property located beneath said Premises (hereinafter
collectively referred to as the "Property"):
As used herein, the term "Hazardous Materials" shall mean any hazardous or toxic
substance, material or waste which is or becomes subject to or regulated by any
local governmental authority, the State of California, or the United States
Government. The term "Hazardous Materials" includes, without limitation any
material or hazardous substance which is (i) listed under Article 9 or defined
as "hazardous" or "extremely hazardous" pursuant to Article 11 of Title 22 of
the California Administrative Code, Division 4, Chapter 30, (ii) listed or
defined as a "hazardous waste" pursuant to the Federal Resource Conservation and
Recovery Act, Section 42 U.S.C. Section 6901 et. seq., (iii) listed or defined
as a "hazardous substance" pursuant to the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. Section 9601 et. seq. (42 U.S.C.
Section 9601), (iv) petroleum or any derivative of petroleum, or (v) asbestos.
Tenant shall have no obligation to "clean up", to comply with any law regarding,
or to reimburse, release, indemnify, or defend Landlord with respect to any
hazardous materials or wastes which Tenant (prior to and during the term of the
Lease) or other parties on the Premises did not store, dispose, or transport in,
use, or cause to be on the Premises in violation of applicable law, provided,
Tenant obtains a statement from a professional, licensed environmental engineer,
(which engineer is preapproved by Landlord prior to any such report or analysis
being made by said engineer; Landlord will not be unreasonable in granting its
approval) stating that the toxic waste problem was not caused by or contributed
to by Tenant, its subtenants, or affiliates. Tenant will be responsible for
paying any and all related costs associated with the required analysis to allow
the approved engineer to make its determination.
Tenant will be 100 percent liable and responsible for any and all "cleanup" of
said toxic waste and/or hazardous materials contamination which Tenant, its
agents, or its future subtenants and/or assignees, if any, does store, dispose,
or transport in, use or cause to be on the Premises (reference to "on the
Premises" as used herein, includes on, under or about the Property and
Improvements), ( or which originate on Premises during the term of this Lease
from any source whatsoever, including third party dumping). Tenant shall
indemnify Landlord and hold Landlord harmless from any liabilities, demands,
costs, expenses and damages, including, without limitation, attorney fees
incurred as a result of any claims resulting from such contamination.
Tenant also agrees not to use or dispose of any toxic waste or hazardous
materials on the Premises without first obtaining Landlord's written consent. In
the event consent is granted by Landlord, Tenant agrees to complete complete
with governmental regulations, and prior to the termination of said Lease Tenant
22
<PAGE>
agrees to follow the proper closure procedures and will obtain a clearance from
the local fire department and/or the appropriate city agency. If Tenant uses
hazardous materials, Tenant also agrees to install, at Tenant's expense, such
toxic waste and/or hazardous materials monitoring devices as Landlord deems
necessary. It is agreed that the Tenant's responsibilities related to toxic
waste and hazardous materials will survive the termination date of the Lease and
that Landlord may obtain specific performance of Tenant's responsibilities under
this Paragraph 48.
46. TENANT IMPROVEMENTS TO BE INSTALLED AND PAID FOR BY TENANT Subject to
the indemnification provided to Landlord by Tenant as stated in Paragraph 48
above, Landlord agrees that Tenant, at its sole cost and expense, may install a
tank farm on the Leased Premises, provided Tenant obtains all the required and
necessary governing agency(ies) permits and approval(s) and further provided
Tenant complies with all governing agency(ies) regulations related to: (i) the
installation, maintenance and removal of said tank farm and (ii) the related
Hazardous materials used therein. Tenant agrees that prior to the installation
of the tank farm Tenant must obtain from landlord written approval regarding the
location of said tank farm and must provide Landlord with a copy of all the
required permits and approvals as noted herein. Tenant shall determine from
Landlord, within 30 days prior to Lease termination, if Landlord wants Tenant to
remove said tank farm. In the event Landlord wants the tank farm to remain, it
shall remain and Tenant's interest, but not liabilities, shall transfer to
Landlord, In the event Landlord wants said tank farm removed, Tenant shall
remove the tank farm, at its sole cost and expense, prior to or by the
termination date of said Lease.
23
<PAGE>
AMENDMENT NO. 1
TO LEASE
THIS AMENDMENT NO. 1 is made and entered into this 1st day of September
1993, by and between JOHN ARRILLAGA, Trustee, or his Successor Trustee UTA dated
7/20/77 (JOHN ARRILLAGA SEPARATE PROPERTY TRUST) as amended, and RICHARD T.
PEERY, Trustee, or his Successor Trustee UTA dated 7/20/77 (RICHARD T. PEERY
SEPARATE PROPERTY TRUST) as amended, collectively as LANDLORD, and ALPHA 1
BIOMEDICALS, INC., a Delaware corporation, as TENANT.
RECITALS
A. WHEREAS, by Lease Agreement dated January 22, 1993 Landlord leased to
Tenant approximately 15,018+/- square feet of that certain 51,680+/- square foot
building located at 810 W. Maude Ave., Sunnyvale, California, the details of
which are more particularly set forth in said January 22, 1993 Lease Agreement,
and
B. WHEREAS, it is now the desire of the parties hereto to amend the Lease
by changing the classification of parking spaces as set forth in Paragraph 42 of
said Lease Agreement from sixty-four (64) nonexclusive parking spaces to eight
(8) exclusive parking spaces and fifty-six (56) nonexclusive parking spaces as
hereinafter set forth.
AGREEMENT
NOW THEREFORE, for valuable consideration, receipt of which is hereby
acknowledged, and in consideration of the hereinafter mutual promises, the
parties hereto do agree as follows:
1. AMENDMENT TO PARAGRAPH 40 "PARKING": It is agreed between the Parties
that the first sentence of said Paragraph 42 shall be deleted and replaced with
the following: "Tenant shall have the right to the exclusive use of eight (8)
parking spaces to be labeled by Tenant, at Tenant's sole cost and expense, as
"Alpha 1 Visitor" and Tenant shall have the right to the nonexclusive use of one
fifty-six (56) non-exclusive parking spaces in the common parking area of the
Leased Premises." Said exclusive parking spaces are more particularly shown
within the area outlined in Red on EXHIBIT A. It is agreed that Landlord shall
not be responsible nor liable, in any manner whatsoever, for the enforcement of
the reserved use of the exclusive parking spaces. Prior to Lease termination
Tenant shall, at its sole cost and expense, remove the "Alpha 1 Visitor"
labeling from the reserve parking spaces and return the entire parking area in
the condition required under Lease Paragraph 4 "Acceptance and Surrender of
Premises." With the exception of the aforementioned changes to said Paragraph
42 the remainder of said Paragraph remains in full force and effect.
EXCEPT AS MODIFIED HEREIN, all other terms, covenants, and conditions of
said January 22, 1993 Lease Agreement shall remain in full force and effect.
24
<PAGE>
IN WITNESS WHEREOF, Landlord and Tenant have executed this Amendment No. 1
to Lease as of the day and year first hereinabove set forth.
LANDLORD: TENANT:
JOHN ARRILLAGA SEPARATE ALPHA 1 BIOMEDICALS, INC.
PROPERTY TRUST a Delaware corporation
By_________________________________
By___________________________________
John Arrillaga, Trustee
___________________________________
Print or Type Name
RICHARD T. PEERY SEPARATE Title:_____________________________
PROPERTY TRUST
By___________________________________
Dated:_______________________________
Richard T. Peery, Trustee
25
<PAGE>
AMENDMENT NO 2.
TO LEASE
THIS AMENDMENT NO.1 is made and entered into this 27th day of December, 1993, by
and between JOHN ARRILLAGA, Trustee, or his Successor Trustee UTA dated 7/20/77
(JOHN ARRILLAGA SEPARATE PROPERTY TRUST) as amended, and RICHARD T. PEERY,
Trustee, or his Successor Trustee UTA dated 7/20/77 (RICHARD T. PEERY SEPARATE
PROPERTY TRUST) as amended, collectively as LANDLORD, and ALPHA 1 BIOMEDICALS,
INC., a Delaware corporation, as TENANT.
RECITALS
A. WHEREAS, by Lease agreement dated January 22, 1993 Landlord leased to
Tenant approximately 15,018+/- square feet of that certain 51,680+/- square foot
building located at 810 W. Maude Ave., Sunnyvale, California, the details of
which are more particularly set forth in said January 22, 1993 Lease Agreement,
and
B. WHEREAS, the Lease was amended by changing the classification of
parking spaces as set forth in Paragraph 42 of said Lease Agreement from sixty-
four (64) nonexclusive parking spaces to eight (8) exclusive parking spaces and
fifty-six (56) nonexclusive parking spaces, and
C. WHEREAS, it is now the desire of both parties hereto to amend the
Lease by: (i) changing the street address of Tenant's Leased Premises, (ii)
increasing the total square footage leased by 11,902+/-, or from 15,018+/- to
26,920+/- square feet, (iii) extending the Lease Term three (3) years five (5)
months commencing on September 1, 1998 and ending on January 31, 2002, (iv)
amending the Basic Rent schedule to reflect the increases in square footage and
Term, (v) deleting Paragraph 43 ("FIRST OPTION TO EXTEND LEASE FOR FIVE (5)
YEARS") in its entirety, and (vi) replacing Paragraph 44 ("SECOND OPTION TO
EXTEND LEASE FOR FIVE (5) YEARS") as hereinafter set forth.
AGREEMENT
NOW THEREFORE, for valuable consideration, receipt of which is hereby
acknowledged, and in consideration of the hereinafter mutual promises, the
parties hereto do agree as follows:
1. CHANGE IN STREET ADDRESS OF LEASED PREMISES: By direction of the City
of Sunnyvale Building Inspection Superintendent, the street address for Tenant's
Leased Premises is changed from 810 West Maude to 820 West Maude Avenue,
Sunnyvale, California, 94086.
2. INCREASED PREMISES: Effective February 1, 1994, the size of the Leased
Premises shall be increased by 11,902+/- square feet, or from 15,018+/- square
feet to 26,920+/- square feet of space. The additional 11,902+/- square feet of
space is leased on an "as-is" basis, in its present condition and configuration,
as set forth in Blue on EXHIBIT B attached hereto, with the entire interior
Leased Premises shown in Red on EXHIBIT B. Total said Premises of 26,920+/-
square feet are more particularly shown within the area outlined in Red on
EXHIBIT A. The entire Parcel, of which the Leased Premises is a part, is shown
within the area outlined in Green on EXHIBIT A.
3. EXTENDED TERM: Paragraph 2 ("TERM") shall be amended to extend the
Term of this Lease three years and five months commencing September 1, 1998 and
terminating January 31, 2002.
4. BASIC RENT SCHEDULE: The Basic Rent schedule, as shown in Paragraph
3(A) of the Lease Agreement, shall be amended as follows:
On February 1, 1994, the sum of TWENTY-TWO THOUSAND EIGHT HUNDRED EIGHTY-
TWO DOLLARS ($22,882.00) shall be due, and a like sum due on the first day of
each month thereafter, through and including August 1, 1994.
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On September 1, 1994, the sum of TWENTY-FOUR THOUSAND TWO HUNDRED TWENTY-
EIGHT DOLLARS ($24,228.00) shall be due, and a like sum due on the first day of
each month thereafter, through and including August 1, 1995.
On September 1, 1995, the sum of TWENTY-FIVE THOUSAND FIVE HUNDRED SEVENTY-
FOUR DOLLARS ($25,574.00) shall be due, and a like sum due on the first day of
each month thereafter, through and including August 1, 1996.
On September 1, 1996, the sum of TWENTY-SIX THOUSAND NINE HUNDRED TWENTY
DOLLARS ($26,920.00) shall be due, and a like sum due on the first day of each
month thereafter, through and including August 1, 1997.
On September 1, 1997, the sum of TWENTY-EIGHT THOUSAND TWO HUNDRED SIXTY-
SIX DOLLARS ($28,266.00) shall be due, and a like sum due on the first day of
each month thereafter, through and including August 1, 1998.
On September 1, 1998, the sum of TWENTY-NINE THOUSAND SIX HUNDRED TWELVE
DOLLARS ($29,612.00) shall be due, and a like sum due on the first day of each
month thereafter, through and including August 1, 1999.
On September 1, 1999, the sum of THIRTY THOUSAND NINE HUNDRED FIFTY-EIGHT
DOLLARS ($30,958.00) shall be due, and a like sum due on the first day of each
month thereafter, through and including August 1, 2000.
On September 1, 2000, the sum of THIRTY-TWO THOUSAND THREE HUNDRED FOUR
DOLLARS ($32,304.00) shall be due, and a like sum due on the first day of each
month thereafter, through and including August 1, 2001.
On September 1, 2001, the sum of THIRTY-THREE THOUSAND SIX HUNDRED FIFTY
DOLLARS ($33,650.00) shall be due, and a like sum due on the first day of each
month thereafter, through and including August 1, 2002.
As a result of the increase in square feet leased, the Aggregate Rental
shall be increased by $1,908,568.50, or from $858,026.00 to $2,766,594.50.
5. INCREASED PARKING: Tenant's nonexclusive parking spaces shall be
increased by forty-two (42) spaces or form sixty-four (64) spaces to one hundred
six (106) spaces; Tenant's exclusive parking space shall remain at eight (8)
spaces for total of one hundred fourteen (114) parking spaces.
6. SECURITY DEPOSIT: Tenant's security deposit shall be increased by
$35,762.20, or from $31,537.80 to $67,300.00, payable February 1, 1994.
7. DELETE PARAGRAPH 43 ("FIRST OPTION TO EXTEND LEASE FOE FIVE (5)
YEARS"): Lease Paragraph 43 ("First Option to Extend Lease for Five (5) Years")
of Lease Agreement dated January 22, 1993 shall be deleted in its entirety
effective December 27, 1993.
8. REPLACEMENT OF LEASE PARAGRAPH 44 ("OPTION TO EXTEND LEASE FOR FIVE
(5) YEARS"): Lease Paragraph 44 ("OPTION TO EXTEND LEASE FOR FIVE (5) YEARS")
shall be considered null void and shall be replaced with the following:
"44. SECOND OPTION TO EXTEND LEASE FOR SIX (6) YEARS SEVEN (7) MONTHS": Provided
Tenant is not in default of any of the terms, covenants, and conditions of this
Lease Agreement, Landlord hereby grants to Tenant a Second Option to Extend this
Lease Agreement for an additional six (6) years seven (7) months upon the
following terms and conditions:
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A. Tenant shall give the Landlord written notice of Tenant's exercise of
this Option to Extend not later than August 31, 2001, in which event the Lease
shall be considered extended for an additional six (6) years seven (7) months
upon the same terms and conditions, absent this Paragraph 44, and subject to the
rental set forth below. In the event that Tenant fails to timely exercise
Tenant's option as set forth herein in writing, Tenant shall have no further
Option to Extend this Lease, and this Lease shall continue in full force and
effect for the full remaining term hereof, absent of this Paragraph 44.
B. The following summarizes the per foot charge by period under the Lease
Agreement that would be applied to the Option to Extend:
PERIOD PSF RATE
2/01/02-08/31/02 $1.25
09/01/02-08/31/03 $1.30
09/01/03-08/31/04 $1.35
09/01/04-08/31/05 $1.40
09/01/05-08/31/06 $1.45
09/01/06-08/31/07 $1.50
09/01/07-08/31/08 $1.55
C. The option rights of Tenant under this paragraph, and the extended term
thereunder, are granted for Tenant's personal benefit and may not be assigned or
transferred by Tenant, except to a parent corporation, or corporation with which
Tenant merges or consolidates or to whom Tenant sells all or substantially all
of its assets as provided for in Paragraph 14, either voluntarily or by
operation of law, in any manner whatsoever. In the event that Landlord consents
to a sublease or assignment under Paragraph 14, the option granted herein and
any extended term thereunder shall be void and of no force and effect, whether
or not Tenant shall have purported to exercise such option prior to such
assignment or sublease. except as assignment or sublease to a parent
corporation, subsidiary corporation, or corporation with which Tenant merges or
consolidates or to whom Tenant sells all or substantially all of its assets.
D. INCREASED SECURITY DEPOSIT: In the event the term of Tenant's Lease is
extended pursuant to this Paragraph 44, Tenant's security deposit shall be
increased to equal twice the Basic Rental due for the last month of the extended
term (i.e. $23,277.90 per month X 2 = $46,555.80)."
EXCEPT AS MODIFIED HEREIN, all other terms, covenants, and conditions of
said January 22, 1993 Lease Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Amendment No. 2
to Lease as of the day and year first hereinabove set forth.
LANDLORD: TENANT:
JOHN ARRILLAGA SEPARATE ALPHA 1 BIOMEDICALS, INC.
PROPERTY TRUST A DELAWARE CORPORATION
By /S/JOHN ARRILLAGA By /S/R.J. LANHAM
--------------------------------- ---------------------------------
John Arrillaga, Trustee R.J. LANHAM
Vice President Finance & Administration
RICHARD T. PEERY SEPARATE
PROPERTY TRUST
By /S/RICHARD T. PEERY
---------------------------------
Richard T. Peery, Trustee Dated: 1/11/94
---------------------
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<PAGE>
AMENDMENT NO. 3
TO LEASE
THIS AMENDMENT NO. 3 is made and entered into this 1st day of March 1994,
by and between JOHN ARRILLAGA, Trustee, or his Successor Trustee UTA dated
7/20/77 (JOHN ARRILLAGA SEPARATE PROPERTY TRUST) as amended, and RICHARD T.
PEERY, Trustee, or his Successor Trustee UTA dated 7/20/77 (RICHARD T. PEERY
SEPARATE PROPERTY TRUST) as amended, collectively as LANDLORD, and ALPHA 1
BIOMEDICALS, INC., a Delaware corporation, as TENANT.
RECITALS
A. WHEREAS, by Lease Agreement dated January 22, 1993 Landlord leased to
Tenant approximately 15,018+/- square feet of that certain 51,680+/- square foot
building located at 810 W. Maude Ave., Sunnyvale, California, the details of
which are more particularly set forth in said January 22, 1993 Lease Agreement,
and
B. WHEREAS, the Lease was amended by Amendment No. 1 dated September 1,
1993 by changing the classification of parking spaces as set forth in Paragraph
42 of said Lease Agreement from sixty-four (64) nonexclusive parking spaces to
eight (8) exclusive parking spaces and fifty-six (56) nonexclusive parking
spaces, and
C. WHEREAS, the Lease was amended by Amendment No. 2 dated December 27,
1993 by: (i) changing the street address of Tenant's Lease Premises, (ii)
increasing the total square footage leased by 11,902+/-, or from 15,018+/- to
26,920+/- square feet, (iii) extending the Lease Term three (3) years five (5)
months commencing on September 1, 1998 and ending on January 31, 2002, (iv)
amending the Basic Rent schedule to reflect the increases in square footage and
Term, (v) deleting Paragraph 43 ("FIRST OPTION TO EXTEND LEASE FOR FIVE (5)
YEARS") in its entirety, and (vi) replacing Paragraph 44 ("SECOND OPTION TO
EXTEND LEASE FOR FIVE (5) YEARS"), and
D. WHEREAS, it is now the desire of both parties hereto to amend the
Lease by changing the increased square footage commencement date pursuant to
Amendment No. 2 from February 1, 1994 to March 1, 1994 and amending the Basic
Rent schedule and Aggregate Rent to reflect said change in date as hereinafter
set forth.
AGREEMENT
NOW THEREFORE, for valuable consideration, receipt of which is hereby
acknowledged, and in consideration of the hereinafter mutual promises, the
parties hereto do agree as follows:
1. COMMENCEMENT DATE OF INCREASED PREMISES PURSUANT TO AMENDMENT NO. 2:
Pursuant to Amendment No. 2, said Lease Agreement was amended to increase the
square footage from 15,018+/- to 26,920+/- square feet of space effective
February 1, 1994. The commencement date of said increase is hereby amended to
commence effective March 1, 1994.
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<PAGE>
2. BASIC RENT SCHEDULE. The monthly Basic Rent schedule shall be amended
as follows:
On March 1, 1994, the sum of TWENTY-TWO THOUSAND EIGHT HUNDRED EIGHTY-TWO
DOLLARS ($22,882.00) shall be due, and a like sum due on the first day of each
month thereafter, through and including August 1, 1994.
On September 1, 1994, the sum of TWENTY-FOUR THOUSAND TWO HUNDRED TWENTY-
EIGHT DOLLARS ($24,228.00) shall be due, and a like sum due on the fist day of
each month thereafter, through and including August 1, 1995.
On September 1, 1995, the sum of TWENTY-FIVE THOUSAND FIVE HUNDRED SEVENTY-
FOUR DOLLARS ($25,574.00) shall be due, and a like sum due on the first day of
each month thereafter, through and including August 1, 1996.
On September 1, 1996, the sum of TWENTY-SIX THOUSAND NINE HUNDRED TWENTY
DOLLARS ($26,920.00) shall be due, and a like sum due on the first day of each
month thereafter, through and including August 1, 1997.
On September 1, 1997, the sum of TWENTY-EIGHT THOUSAND TWO HUNDRED SIXTY-
SIX DOLLARS ($28,266.00) shall be due, and a like sum due on the first day of
each month thereafter, through and including August 1, 1998.
On September 1, 1998, the sum of TWENTY-NINE THOUSAND SIX HUNDRED TWELVE
DOLLARS ($29,612.00) shall be due, and a like sum due on the first day of each
month thereafter, through and including August 1, 1999.
On September 1, 1999, the sum of THIRTY THOUSAND NINE HUNDRED FIFTY-EIGHT
DOLLARS ($30,958.00) shall be due, and a like sum due on the first day of each
month thereafter, through and including August 1, 2000.
On September 1, 2000, the sum of THIRTY-TWO THOUSAND THREE HUNDRED FOUR
DOLLARS ($32,304.00) shall be due, and a like sum due on the first day of each
month thereafter, through and including August 1, 2001.
On September 1, 2001, the sum of THIRTY-THREE THOUSAND SIX HUNDRED FIFTY
DOLLARS ($33,650.00) shall be due, and a like sum due on the first day of each
month thereafter, through and including August 1, 2002.
As a result of the adjustment of the commencement date of the increase in
square feet leased, the Aggregate Rental shall be decreased by $10,116.70, or
from $2,766,594.50 to $2,756,477.80.
EXCEPT AS MODIFIED HEREIN, all other terms, covenants, and conditions
of said January 22, 1993 Lease Agreement shall remain in full force and effect.
30
Initial:_________
<PAGE>
IN WITNESS WHEREOF, Landlord and Tenant have executed this Amendment No. 3
to Lease as of the day and year first hereinabove set forth.
LANDLORD: TENANT:
JOHN ARRILLAGA SEPARATE ALPHA 1 BIOMEDICALS, INC.
PROPERTY TRUST a Delaware corporation
By_____________________________ By_____________________________
John Arrillaga, Trustee
_______________________________
Print or Type Name
RICHARD T. PEERY SEPARATE Title:_________________________
PROPERTY TRUST
By_____________________________ Dated:_________________________
31
Initial:___________________
<PAGE>
EXHIBIT B
CONSENT TO ASSIGNMENT
This Consent to Assignment, dated March 20, 1995, (this "Consent") by and
between John Arrillaga, as Trustee, or his Successor Trustee, UTA dated 7/20/77
(John Arrillaga Separate Property Trust), as amended, and Richard T. Peery, as
Trustee, or his Successor Trustee, UTA dated 7/20/77 (Richard T. Peery Separate
Property Trust), as amended (collectively as "Landlord"), Alpha 1 Biomedicals,
Inc., a Delaware corporation ("Tenant"), and Scios Nova, Inc., a Delaware
corporation ("Assignee"), with reference to the following facts:
A. Landlord and Tenant entered into that certain Lease Agreement dated
January 22, 1993 and subsequent Amendment Nos. 1, 2 and 3 thereto (collectively
the "Master Lease"), relating to those certain premises consisting of
approximately 26,920+- square feet of space located at 820 W. Maude Avenue,
Sunnyvale, California ("Premises").
B. Tenant and Assignee intend to enter or have entered into an
assignment agreement in the form of and on terms set forth in that certain
agreement attached hereto as EXHIBIT A ("Assignment"). Subject to the terms
of the Assignment and this Consent, Assignee will assume all obligations under
the Master Lease as of the Effective Date (as defined within the Assignment).
C. Tenant has requested that Landlord consent to the Assignment, and
Landlord agrees to consent to the Assignment subject to the terms and conditions
set forth below; however, Landlord shall not be a party to or in any manner
whatsoever be responsible or liable to Tenant or Assignee for the terms and
conditions of said Assignment.
NOW, THEREFORE, in consideration of the foregoing, and in consideration of
the mutual agreements and covenants hereinafter set forth, Landlord, Tenant and
Assignee agree as follows:
1. DEFINITIONS. Unless otherwise defined in this Consent, all
defined terms used in this Consent shall have the same meaning and definition
given them in the Master Lease.
2. MASTER LEASE. The Assignment is and shall be at all times subject
and subordinate to the Master Lease. Assignee acknowledges and agrees that the
term of the Assignment shall automatically terminate upon the termination of the
Master Lease for any reason whatsoever. To the best of Landlord's knowledge,
Tenant is not in default of the Master Lease as of March 20, 1995.
3. CONSENT OF LANDLORD. Landlord hereby consents to the assignment
of the Master Lease to Assignee pursuant to the terms of this Consent.
Landlord's consent shall not release Tenant from any of its obligations under
the Master Lease or release or alter the liability of Tenant to pay rent and all
other sums due under the Master Lease and to perform and comply with all other
obligations of Tenant under the Master Lease. As between Landlord and Tenant,
the Assignment shall not alter, amend or otherwise modify any provisions of the
Master Lease. Landlord shall have no obligation to any party in connection with
the Premises other than those obligations set forth in the Master Lease and this
Consent.
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4. ASSIGNMENT OF RENT.
4.1 Subject to the terms of Section 4.2, Tenant hereby irrevocably
assigns and transfers to Landlord Tenant's rights under the Assignment to all
rentals and other sums due Tenant from Assignee under the Assignment.
4.2 Landlord and Tenant agree that Tenant may receive, collect and
enjoy the rentals and other sums due under the Master Lease from Assignee.
However, if Tenant shall default in the performance of its obligations under the
Master Lease, then Landlord may, at its sole option, receive and collect,
directly from Assignee, all rentals and other sums due or to be due Tenant under
the Assignment. Landlord shall not by reason of the assignment of all rentals
and other sums due Tenant under the Assignment nor by reason of the collection
of said rentals or other sums from the Assignee, (a) be bound by or become a
party to the Assignment, (b) be deemed to have accepted the attornment of
Assignee, or (c) be deemed liable to Assignee for any failure of the Tenant to
perform and comply with Tenant's obligations under the Assignment. Tenant
hereby irrevocably authorizes and directs Assignee, upon receipt of any written
notice from Landlord stating that a default exists in the performance of
Tenant's obligations under the Master Lease, to pay to Landlord the rents and
other income due and to become due under the Assignment. Tenant agrees that
Assignee shall have the right to rely solely upon such notice from Landlord, and
upon receipt of such notice Assignee agrees to pay directly to Landlord the rent
and other income due and to become due under the Assignment. Notwithstanding
the foregoing, even if Tenant shall not be in default in performance of its
obligations under the Master Lease, Landlord at Tenant's election may receive
and collect directly from Assignee, all rentals and other sums due or to be due
Tenant under the Assignment without Landlord assuming any obligation or
liability to Tenant of any type whatsoever.
4.3 SECURITY DEPOSIT. Tenant and Assignee agree that upon the
Effective Date, Assignee shall pay to Tenant an amount equal to Tenant's
Security Deposit required under the Master Lease, and pursuant to Paragraph 4F
of the Master Lease, Landlord shall, at the termination of the Master Lease,
return the Security Deposit or any balance thereof to Assignee.
5. INDEMNIFICATION. Tenant and Assignee shall jointly and severally
indemnify and hold harmless Landlord and its employees representatives,
directors, officers and agents (collectively "Agents"), against and from any and
all losses, claims liabilities, judgments, costs, demands, causes of action, and
expenses (including, without limitation, reasonable attorneys' fees and
consultants' fees) (collectively "Claims") arising from or related to the
following: (a) Assignee's use of the Premises or from any activity done,
permitted or suffered by Assignee in, on or about the Premises, the Building, or
the Property; (b) any act or omission by Tenant, Assignee and/or their
respective Agents in connection with or related to the Assignment of the Master
Lease, the Building, or the Property; (c) any breach or default in the terms of
the Assignment; and (d) any action or proceeding brought on account of any
matter referred to in items (a), (b), (c) and/or (d). If any action or
proceeding is brought against Landlord by reason of any such Claims, upon notice
from Landlord, Tenant and/or
Initial: _______
33
<PAGE>
Assignee, jointly and severally, shall defend the same at Tenant's and/or
Assignee's expense with counsel reasonably satisfactory to Landlord. The
obligations of Tenant and Assignee under this Section 5 shall survive any
termination of the Assignment or the Master Lease.
6. INSURANCE. Notwithstanding any provision to the contrary in the
Assignment, Tenant shall, within ten (10) days of its execution hereof, provide
Landlord with a certificate of insurance from Tenant's insurer which confirms
that the insurance coverage required to be carried by Tenant under the Master
Lease remains in full force and effect, and is not diminished or reduced by the
assignment of the Master Lease to Assignee and which names Landlord as
additional insured.
7. EXPENSE UNDER THE ASSIGNMENT. This Consent is conditional upon
Landlord's receipt of Landlord's reasonable costs and attorney's fees, to which
Landlord is entitled under Paragraph 16 of the Master Lease. Tenant shall
immediately reimburse Master Lessor for such fees and costs upon receipt of
Master Lessor's statement.
8. NO AMENDMENT. Except as specifically provided for within this
Section 8 and Section 9, in no event shall Landlord's consent to this Assignment
be, or be construed as, a modification in and to the terms of the Master Lease,
and in the event of any inconsistency between the terms of the approved
Assignment and the terms of the Master Lease, the terms of the Master Lease
shall prevail.
8.1 USE. The permitted Use of the Premises, as provided for in
Paragraph 1 of the Master Lease, shall be deemed to include the following and
Landlord consents to Assignee's use of the Premises in the following ways:
8.1.1 Pharmaceutical research, development and manufacturing,
including but not limited to, molecular biology, cell biology, tissue culture,
organic and peptide chemistry, recombinant expression, fermentation and
purification, and analytical support activities as allowed by the governing
agency; and
8.1.2 Subject to governmental regulation, Assignee shall have
the right to use the existing external storage area of the Premises for the
storage of materials used by Assignee in the above research, development and
manufacturing.
8.2 SECOND OPTION TO EXTEND LEASE FOR SIX (6) YEARS SEVEN (7)
MONTHS. Provided Tenant and/or Assignee are not in default of any of the
terms, covenants, and conditions of said Master lease, the rights extended to
Tenant relating to the provisions of Master Lease Paragraph 47, "Second Option
to Extend Lease for Six (6) Years Seven (7) Months", as amended, shall be
extended to Assignee.
8.3 FURNITURE, FIXTURES AND EQUIPMENT. Pursuant to the
Assignment, Assignee is acquiring Tenant's interest in certain movable and
attached furniture, fixtures and equipment (the "Equipment") as listed on
EXHIBIT B attached hereto. As consideration for Landlord extending the Option
to Extend to Assignee as provided for in Section 8.2 above,
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<PAGE>
Assignee has agreed that, subject to the terms of this Section 8.3, the
ownership of said Equipment shall revert to Landlord if Assignee fails to
exercise its Option to Extend within eighteen (18) months of the Effective Date
of the Assignment; however, Assignee shall have the right of use of said
furniture, fixtures and equipment throughout the remaining Term of the Master
Lease and any extension thereof. Provided Assignee exercises its Option to
Extend within said eighteen (18) month period, Assignee shall retain ownership
of said Equipment, and shall have the right, subject to the terms of Master
Lease Paragraph 5, "Acceptance and Surrender of Premises", to remove said
Equipment at the termination of said Master Lease. Notwithstanding anything to
the contrary above, in the event Assignee elects not to remove said Equipment
upon Lease Termination, Landlord shall retain its rights as stated in Master
Lease Paragraph 5 to require Tenant and/or Assignee to remove the Equipment.
8.4 REMOVAL OF FERMENTATION TANKS AND RELATED ATTACHABLE
MANUFACTURING EQUIPMENT. Notwithstanding anything to the contrary in the
Master Lease, Assignee may remove, at any time prior to Lease termination, any
and all fermentation tanks and related attachable manufacturing equipment it
installs in the Leased Premises; provided, however, Assignee and Tenant shall
jointly and severally remain responsible and liable to Landlord for any and all
damage caused to the Premises by the installation and/or removal of said tanks
and related attachable manufacturing equipment; furthermore, Landlord retains
the right, as described in Lease Paragraphs 5 and 49, to require the removal of
said tanks and related attachable manufacturing equipment by Tenant and/or
Assignee in the event Assignee elects not to remove the same.
8.5 DEFAULT OF LEASE. Landlord agrees that Assignee shall have
the right to cure any default of Tenant under the Master Lease. In the event
Tenant is liquidated or files for protection under bankruptcy laws, Landlord
shall also send notices of Tenant's default(s) to Assignee.
9. HAZARDOUS MATERIALS. The parties agree as follows with respect to
the existence or use of Hazardous Materials on the Premises, the Building, or
the Property:
9.1 Commencing with the Assignment of said Lease, Assignee, at its
sole cost, shall comply with all laws relating to the storage, use, and disposal
of Hazardous Materials that Assignee, its agents, employees, contractors,
invitees or other parties bring or permit to be brought onto the Premises, the
Building, or the Property. If Assignee intends to store, use, or dispose of any
Hazardous Materials, Assignee shall first notify Landlord in writing. Such
Hazardous Materials shall not be stored, used, or disposed of on the Premises
without Landlord's advance written approval. Notwithstanding anything to the
contrary in the Master Lease, Assignee and Assignor shall be subject to the
following provisions:
9.2 Any handling, transportation, storage, treatment, disposal or
use of Hazardous Materials by Assignee shall strictly comply with all applicable
Hazardous Materials Laws. Assignee and Assignor shall indemnify, defend upon
demand with counsel reasonably acceptable to, and hold harmless Landlord from
and against any liabilities, losses,
35
<PAGE>
claims, damages, lost profits, consequential damages, interest, penalties,
fines, monetary sanctions, attorneys' fees, experts' fees, court costs,
remediation costs, investigation costs, and other expenses which result from or
arise in any manner whatsoever out of the use, storage, treatment,
transportation, release, or disposal of Hazardous Materials on or about the
Premises or Property by Assignee after the date of Assignment.
9.3 If the presence of Hazardous Materials on the Premises, the
Building or the Property caused or permitted by Assignee after the date of the
Assignment results in contamination or deterioration of water or soil resulting
in a level of contamination greater than the levels established as acceptable by
any governmental agency having jurisdiction over such contamination, Assignee
shall promptly take any and all action necessary to investigate and remediate
such contamination if required by Law or as a condition to the issuance or
continuing effectiveness of any governmental approval which relates to the use
of the Premises, the Building or the Property or any part thereof. Assignee and
Assignor shall further be jointly and severally responsible for, and shall
defend, indemnify and hold Landlord and its agents harmless from and against all
claims, costs and liabilities, including attorneys' fees and costs, arising out
of or in connection with any investigation and remediation required hereunder to
return the Premises, the Building or the Property to its condition existing
prior to the appearance of such Hazardous Materials. Notwithstanding anything
to the contrary above, Assignee, shall not be responsible or liable to remediate
or restore the Premises, Building, or the Property, or to indemnify Landlord and
its agents under any provision of this Consent or of the Master Lease for any
Hazardous Materials contamination caused by Tenant or which occurred prior to
the Assignment of said Lease or for any off-site migration of Hazardous
Materials onto the Property which was not caused by or contributed to by
Assignee.
9.4 Assignee shall give written notice to Landlord as soon as
reasonably practicable of (i) any communication received from any governmental
authority concerning Hazardous Materials which relates to the Premises, the
Building or the Property, and (ii) any contamination thereof by Hazardous
Materials which constitutes a violation of any Hazardous Materials Law.
Assignee may use small quantities of household chemicals such as adhesives,
lubricants, and cleaning fluids in order to conduct its business at the Premises
and such other Hazardous Materials as are necessary for the operation of
Assignee's business of which Landlord receives notice prior to such Hazardous
Materials being brought onto the Premises and which Landlord consents in writing
may be brought onto the Premises. At any time during the Lease Term, Assignee
shall, within five (5) days after written request therefor received from
Landlord, disclose in writing all Hazardous Materials that are being used by
Assignee on the Premises, the nature of such use, and the manner of storage and
disposal.
9.5 Landlord may cause testing wells to be installed on the
Premises or Property, and may cause the ground water to be tested to detect the
presence of Hazardous Material by the use of such tests as are then customarily
used for such purposes. If Assignee so requests, Landlord shall supply Assignee
with copies of such test results. The cost of such tests and of the
installation, maintenance, repair and replacement of such wells shall be paid
36
<PAGE>
by Assignee if such tests disclose the existence of facts which give rise to
liability of Assignee pursuant to its indemnity as described under Section 9.
9.6 As used herein, the term "Hazardous Material, means any
hazardous or toxic substance, material or waste which is or becomes regulated by
any local governmental authority, the State of California or the United States
Government.
The term "Hazardous Material, includes, without limitation,
petroleum products, asbestos, PCB'S, and any material or substance which is (i)
listed under Article 9 or defined as hazardous or extremely hazardous pursuant
to Article 11 of Title 22 of the California Administrative Code, Division 4,
Chapter 20; (ii) defined as a "hazardous waste" pursuant to Section 1004 of the
Federal Resource Conservation and Recovery Act, 42 U.S.C. 6901 et seq. (42
U.S.C. 6903); or (iii) defined as a "hazardous substance" pursuant to Section
101 of the Comprehensive Environmental Response, Compensation and Liability Act,
42 U.S.C. 6901 et seq. (42 U.S.C. 9601). As used herein, the term "Hazardous
Material Law" shall mean any statute, law, ordinance, or regulation of any
government body or agency (including the U.S. Environmental Protection Agency,
the California Regional Water Quality Control Board, and the California
Department of Health Services) which regulates the use, storage, release or
disposal of any Hazardous Material.
9.7 The obligations of Assignor and Assignee under this Section 9
on Hazardous Materials shall survive the expiration or earlier termination of
the Assignment or the Lease Term. In the event of any inconsistency between any
part of this Consent, the Master Lease and this Section 9, the terms of this
Section 9 shall control. Pursuant to Section 9, Assignor and Assignee shall
jointly and severally be responsible for and shall defend, indemnify, and hold
Landlord and its agents harmless from and against all claims, costs and
liabilities, including attorney's fees and costs, arising out of or in
connection with the storage, use, or disposal of Hazardous Materials in or about
the Premises by Assignee, its agents, employees, contractors, or invitees which
occur after the date of the Assignment. Assignee's responsibility and duty as
set forth in this Section 9 shall not relieve Tenant of its responsibilities and
duties pursuant to Paragraph 48 of the Master Lease.
10. MISCELLANEOUS PROVISIONS.
10.1 Tenant and Assignee agree not to amend, modify, supplement, or
otherwise change in any respect the Assignment except with the prior written
consent of Landlord.
10.2 This Consent, together with the provisions of the Master
Lease, contains the entire agreement between the parties hereto regarding the
matters which are the subject of this Consent.
10.3 No assignment of this Consent shall be permitted, except with
the prior written consent of all parties hereto. Subject to the foregoing, the
terms, covenants and
37
<PAGE>
conditions of this Consent shall apply to and bind the heirs, successors, the
executors and administrators of all the parties hereto.
10.4 The parties hereto acknowledge and agree that no rule or
construction to the effect that any ambiguities are to be resolved against the
drafting party, shall be employed in the interpretation of this Consent.
10.5 If any provision of this Consent is determined to be illegal
or unenforceable, such determination shall not affect any other provisions of
this Consent and all such other provisions shall remain in full force and
effect.
10.7 In the event of any legal action or proceeding, including,
without limitation, arbitration and declaratory relief, is commenced for the
purpose of enforcing any rights or remedies pursuant to this Consent, the
prevailing party or parties shall be entitled to recover from the non-prevailing
party or parties reasonable attorneys' fees, as well as cost of suit, in such
action or proceeding, whether or not such action is prosecuted by judgement.
10.8 This Consent shall be governed by California Law as applied to
contracts between parties resident in California and to be performed entirely in
California.
11. REPLACE EXHIBIT B TO THE MASTER LEASE. The parties hereto agree
that the attached EXHIBIT I reflecting the current interior configuration of
the Leased Premises shall replace the existing EXHIBIT B to the Master Lease.
The interior configuration and improvements reflected on said EXHIBIT I shall
be the configuration that Assignee and /or Tenant shall be responsible for
returning the interior of the Premises to upon Lease termination and the
improvements reflected thereon (specifically the Lab areas) shall remain in
place upon Lease termination. The foregoing shall not relieve Assignee or
Tenant from their obligations under Paragraph 5 ("ACCEPTANCE AND SURRENDER OF
PREMISES") of the Master Lease. Tenant or Assignee shall deliver to Landlord a
1/8 inch scale sepia of EXHIBIT I to Landlord by April 15, 1995.
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38
<PAGE>
IN WITNESS WHEREOF, Landlord, Tenant and Assignee have executed this Consent as
of the date and year first hereinabove written.
LANDLORD:
JOHN ARRILLAGA SEPARATE
PROPERTY TRUST
By: /S/JOHN ARRILLAGA
--------------------------------
John Arrillaga, Trustee
RICHARD T. PEERY SEPARATE
PROPERTY TRUST
By: /S/RICHARD T. PEERY
--------------------------------
Richard T. Peery, Trustee
TENANT:
ALPHA 1 BIOMEDICALS, INC.,
a Delaware corporation
By: /S/ROBERT J. LANHAM
--------------------------------------
Robert J. Lanham, Vice President, Finance
and Administration
ASSIGNEE:
SCIOS NOVA, INC.,
a Delaware corporation
By: /S/RICHARD L. CASEY
--------------------
Its:CHAIRMAN AND CEO
39
<PAGE>
EXHIBIT C
to Assignment of Lease Agreement dated March 22, 1995, by and between Alpha 1
Biomedicals, Inc., Assignor, and Scios Nova Inc., Assignee, relating to 26,920
square feet of space located at 820 West Maude Avenue, Sunnyvale, California.
Existing furniture, fixture and equipment identified in Paragraph 5 of the above
Assignment of Lease:
1. Existing lunch room furniture, open office systems furniture, and
reception work station;
2. 4,000 pound lift truck and pallet Jack;
3. Merlin phone system with voicemail, paging, conference call, etc.,
installed throughout the Premises;
4. Existing dual chamber walk-in cold box (8 and 12 foot chambers);
5. Blue print cabinet.
40
<PAGE>
EXHIBIT D
ASSIGNOR'S PROPERTY TO BE REMOVED
Alpha 1 Logo Oil Painting
Copy machine Xerox model 5322
Air compressor on outside pad
Exterior cyclone fencing at side of building
55 gallon drums of diesel fuel (2)
Dryers (2)
Carboys (4)
Empty 55 gallon drums (2)
Gangbox marked Al Smith Inc.
All chemicals and solvents
Blue drums labeled "PCBs" and "Alpha 1" (2)
Dumpsters
41
<PAGE>
SPECIAL WARRANTY DEED OF IMPROVEMENTS
THIS SPECIAL WARRANTY DEED OF IMPROVEMENTS (this "Deed") is
made this 24th day of February, 1995, from ROUSE-TEACHERS PROPERTIES, INC.
(formerly known as McCormick Properties, Inc.), a Maryland corporation
("Grantor") to SN PROPERTIES, INC., a Maryland corporation ("Grantee").
FOR AND IN consideration of the sum of Three Million and 00/100
Dollars ($3,000,000.00), and other good and valuable consideration, the receipt
and adequacy of which are hereby acknowledged, Grantor hereby GRANTS, CONVEYS,
and ASSIGNS to Grantee, its successors and assigns, in fee simple, all of
Grantor's estate, right, title, and interest in and to all buildings,
structures, and other improvements and fixtures located on the Land described on
EXHIBIT A attached hereto and made a part hereof, including all fixtures,
surface and subsurface improvements and foundations (the "Improvements").
TOGETHER WITH all rights, alleys, ways, waters, easements,
privileges, appurtenances, and advantages thereto belonging or in anywise
appertaining.
SUBJECT TO the terms and conditions of all matters set forth on
EXHIBIT B hereto, including but without limitation, all matters of public
record, easements and rights of way, and the Declaration of Covenants and
Easements for Holabird Industrial Park dated June 6, 1979, by The Mayor and City
Council of Baltimore, recorded among the Land Records of Baltimore City at WA
Liber 3767, folio 589 (the "Protective Covenants") and the right, title, and
interest of the Mayor and City Council of Baltimore (the "City") in the Land.
TO HAVE AND TO HOLD the Improvements herein conveyed unto the
Grantee, its successors and assigns, in fee simple, forever.
Grantor covenants to warrant specially the Improvements and to
execute such further assurances of the Improvements as may be requisite.
Grantee joins in this Deed for the purpose of acknowledging its
consent to the terms and conditions contained in the Protective Covenants.
This Deed does not convey the Land described on EXHIBIT A or any
interest therein and is subject to the right, title, and interest of the City in
the Land.
<PAGE>
IN WITNESS WHEREOF, Grantor and Grantee have caused this Deed to
be executed and ensealed, intending it to be a sealed instrument, by their duly
authorized officers.
ATTEST: ROUSE-TEACHERS PROPERTIES, INC.
(formerly known as McCormick
Properties, Inc.), a Maryland
corporation
/s/GREGORY E. ZIMMERMAN By: /s/DUKE KASSOLIS (SEAL)
- ----------------------- --------------------------
Assistant Secretary Vice President
[SIGNATURES CONTINUE ON NEXT PAGE]
-2-
<PAGE>
SN PROPERTIES, INC., a Maryland
corporation
/s/JOHN H. NEWMAN By:/s/ VIRGINIA WALKER (SEAL)
- ------------------------- ----------------------------
[ ] Secretary Name: Virginia Walker
Title: Vice President
[ACKNOWLEDGMENTS FOLLOW]
-3-
<PAGE>
State of Maryland, Howard County, to wit:
I HEREBY CERTIFY that on , 199_, before me, a
Notary Public of the State of Maryland, personally appeared ____________________
who acknowledged himself to be a Vice President of Rouse-Teachers Properties,
Inc. (formerly known as McCormick Properties, Inc.), a Maryland corporation (the
"Corporation"), and that he, as such Vice President, being authorized so to do,
executed the foregoing Deed for the purposes therein contained by signing, in my
presence, the name of the Corporation by himself as Vice President, and
certified that this conveyance is not part of a transaction in which there is a
sale, lease, exchange or other transfer of all or substantially all of the
property and assets of the Corporation.
WITNESS my hand and Notarial Seal.
-----------------------------------
Notary Public
My Commission Expires:
[ACKNOWLEDGMENTS CONTINUE ON FOLLOWING PAGE]
-4-
<PAGE>
State of California, County, to wit:
I HEREBY CERTIFY that on , 199_, before me, a Notary
Public of the State of California, personally appeared
, who acknowledged himself to be a
of SN Properties, Inc., a Maryland corporation, and that he, as such, being
authorized so to do, executed the foregoing Deed for the purposes therein
contained by signing, in my presence, the name of the Corporation by
himself as .
WITNESS my hand and Notarial Seal.
-----------------------------------
Notary Public
My commission expires:
-5-
<PAGE>
I HEREBY CERTIFY THAT I AM AN ATTORNEY ADMITTED BEFORE THE BAR OF
the Court of Appeals of Maryland and that I prepared the foregoing Deed.
-----------------------------------
Gregory E. Zimmerman
-6-
<PAGE>
EXHIBIT A
DESCRIPTION OF THE LAND
Lot No. 2 of the Amended Final Subdivision of Lots 3A, 3B, 3C, and
3D Section 1 of Holabird Industrial Park recorded on February 3, 1995, among the
Land Records of Baltimore City at Plat Pocket Folder SEB No. 3488.
-7-
<PAGE>
EXHIBIT B
TITLE EXCEPTIONS
1. Rights of any parties in possession or as lessee of any unrecorded
leases.
2. Benefit charges assessed for water and sewer facilities and taxes not
delinquent, including without limitation, all assessments and taxes for
subsequent to the levy year 1994-1995, and all subsequent years.
3. Applicable zoning and building restrictions and other laws,
ordinances and regulations of governmental bodies having jurisdiction over the
Improvements.
4. Roads, ways, streams or easements if any not shown of record,
riparian rights and the title to any filled-in lands.
5. The terms, conditions, easements, setback lines and other criteria as
shown on a plat entitled, "Subdivision Plan for McCormick Properties, Inc.,"
recorded among the Land Records of Baltimore City (the "Land Records") in SEB
Plat Book No. 2825.
6. The terms, conditions, easements, setback lines and other criteria as
shown on a plat entitled, "Amended Final Subdivision of Lots 2, 3, 4 and 5 of
Section 1 Holabird Industrial Park," recorded among the Land Records in SEB plat
2819.
7. The access easement as well as the cost of maintenance thereof and
other terms, conditions, easements, setback lines and other criteria as shown on
a plat entitled Amended Final Subdivision of Lots 3A, 3B, 3C and 3D, Section 1,
Holabird Industrial Park dated November 16, 1990 and revised December 5, 1994
and December 6, 1994, recorded among the Land Records prior to this Deed.
8. The legal operation and effect of a Right of Way Agreement from the
Department of Housing and Community Development of Baltimore City to Baltimore
Gas and Electric Company, dated October 6, 1981 and recorded among the Land
Records in CWMjr Liber 4110, folio 526.
9. The legal operation and effect of a Declaration of Covenants and
Easements for Holabird Industrial Park dated June 6, 1979 by The Mayor and City
Council of Baltimore, recorded among the Land Records in WA Liber 3767, folio
589.
10. The legal operation and effect of a Quit Claim Deed from the United
States of America to The Mayor and City Council of
-8-
<PAGE>
Baltimore dated October 18, 1977, and recorded among the Land Records in RHB
Liber 3535, folio 477.
11. The legal operation and effect of an Agreement by and between the
United States of America and The Mayor and City Council of Baltimore dated
September 29, 1938 and recorded among the Land Records in MLP Liber 5869, folio
490, and amended by an Agreement by and between the United States of American
and The Mayor and City Council of Baltimore dated November 29, 1940 and recorded
among the Land Records in MLP Liber 6118, folio 433, and further amended by
another Agreement by and between the same parties dated May 14, 1941 and
recorded in MLP Liber 6177, folio 177.
12. Declarations of Taking by United States of America dated June 23, 1941
and September 13, 1941.
-9-
<PAGE>
ASSIGNMENT OF LESSEE'S INTEREST UNDER GROUND LEASE
THIS ASSIGNMENT OF LESSEE'S INTEREST UNDER GROUND LEASE (this
"Assignment") is made this 22nd day of February, 1995, by ROUSE-TEACHERS
PROPERTIES, INC., (formerly known as McCormick Properties, Inc.), a Maryland
corporation ("Assignor") to SN PROPERTIES, INC., a Maryland corporation
("Assignee").
RECITALS
A. By Lease Agreement dated August 11, 1982, The Mayor and City
Council of Baltimore (the "City") leased to McCormick Properties, Inc.
("McCormick") a certain parcel of land located at 6200 Freeport Avenue,
Baltimore City, Maryland and more particularly described therein as the "Initial
Parcel" for a term of thirty (30) years with five (5) ten (10) year renewal
periods. The Lease Agreement was amended by a First Amendment to Lease
Agreement dated September 27, 1989 (the "First Amendment"), and a Second
Amendment to Lease (the "Second Amendment") dated of even date herewith
(collectively, the "Ground Lease"). A copy of the Ground Lease is attached
hereto and made a part hereof as EXHIBIT A.
B. By subdivision plat recorded among the Land Records of
Baltimore City prior to this Deed, the Initial Parcel has been subdivided and in
the Second Amendment, Assignor and the City have amended the Ground Lease to
reflect the change in the legal description of the Initial Parcel. A legal
description of the Initial Parcel as subdivided is attached hereto and made a
part hereof as EXHIBIT B.
C. Under the terms of the Ground Lease, McCormick agreed to
construct and lease a single story industrial building on the Initial Parcel
(the "Building"). Assignor is the successor to McCormick and owns the Building
in fee simple.
D. By Lease Agreement dated September 30, 1985, amended on
February 26, 1986, May 30, 1986, June 26, 1986, July 1, 1986, November 13, 1986,
August 7, 1987, and September 16, 1991, McCormick leased the Building to Nova
Pharmaceutical Corporation ("Nova"), and Nova assigned the Lease Agreement to
Scios Nova, Inc. ("Scios") by Assignment and Assumption Agreement of Lease
Agreement dated October 1, 1992 (collectively, the "Lease").
E. Under the Lease, Scios had an option to purchase the Building
in fee simple and to purchase Assignor's interest under the Ground Lease.
Assignee is a wholly-owned subsidiary of Scios. By Special Warranty Deed of
Improvements of even date herewith, Assignor has conveyed the Building to
Assignee (the "Deed").
<PAGE>
F. Assignor desires to assign all of its right, title and
interest as lessee under the Ground Lease to Assignee and Assignee desires to
accept such assignment and has agreed to assume all of Assignor's obligations
under the Ground Lease, in accordance with this Assignment.
NOW, THEREFORE, for and in consideration of the Recitals
hereinabove set forth which are incorporated into the body of this Assignment,
and other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties agree as follows:
1. ASSIGNMENT. Assignor hereby assigns, transfers and
conveys to Assignee all of Assignor's right, title and interest as lessee under
the Ground Lease. Assignee hereby accepts said assignment and hereby agrees to
be bound by all of the terms and provisions of the Ground Lease.
2. ASSUMPTION. Assignee hereby assumes and agrees to be
bound by and to perform all of the agreements, covenants, and obligations of
Assignor as lessee under the Ground Lease. Assignee shall make all payments of
rent, additional rent, and all other sums sue under the Ground Lease in
accordance with the terms of the Ground Lease and shall send the same directly
to the City as provided in the Ground Lease.
3. INDEMNIFICATION. Scios and Assignee hereby indemnify and
hold Assignor harmless from and against any loss, claim, damage, or expense,
including reasonable attorney's fees, which Assignor may suffer, incur, or
expend, arising out of any failure on the part of Assignee to perform fully its
obligations hereunder.
4. REPRESENTATIONS OF ASSIGNOR. Assignor hereby represents
to Assignee as follows:
4.1. The Ground Lease comprises the Original Lease, the
First Amendment, and the Second Amendment, and the same is in full force and has
not been further modified, amended, supplemented, extended, or renewed.
4.2. To the actual knowledge of Assignor, there exists no
default under the Ground Lease on the part of either Assignor or the City.
5. BROKER'S INDEMNIFICATION. Assignor and Assignee each
warrant to the other that it has not employed the services of any real estate
broker with respect to this Assignment or the sale of the Building and has not
assumed any obligation for the payment of any brokerage commissions on the sale.
Each party agrees to indemnify and hold the other harmless from and against all
claims of any person, firm or corporation claiming any brokerage commission,
finder's fee or similar compensation based upon any alleged negotiation or
dealings with that party
-2-
<PAGE>
contrary to the foregoing representations. The representations and agreement
made in this paragraph shall survive the closing and the conveyance of the
Building by the Deed and this Assignment.
6. SUCCESSOR AND ASSIGNS. This Assignment shall be binding
upon and inure to the benefit of Assignor and Assignee and their respective
successor and assigns and all references to "Assignor" and "Assignee" shall
include the respective successors and assigns of each party.
7. GOVERNING LAW. This Assignment shall be governed by and
construed in accordance with the laws of the State of Maryland.
8. PROTECTIVE COVENANTS. Assignee acknowledges that it will
be bound by the terms and conditions of the Declaration of Covenants and
Easements for Holabird Industrial Park dated June 6, 1979 by The Mayor and City
Council of Baltimore and recorded among the Land Records of Baltimore City at WA
Liber 3767, folio 589.
9. COUNTERPARTS. This Assignment may be executed in
several counterparts, each of which shall be an original, but all of which shall
constitute one instrument.
IN WITNESS WHEREOF, the parties hereto have set their hands
and seals, intending this to be a sealed instrument, as of the day and year
first above-written.
ATTEST: ROUSE-TEACHERS PROPERTIES,
INC. (formerly known as
McCormick Properties, Inc.),
a Maryland corporation
/S/ GREGORY E. ZIMMERMAN By: /S/DUKE KASSOLIS (SEAL)
- ------------------------ --------------------------
Assistant Secretary Vice President
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
-3-
<PAGE>
SN PROPERTIES, INC., a Maryland
corporation
By: (SEAL)
- ------------------ ------------------------------------
[ ] Secretary Name:
Title:
SCIOS NOVA, INC., a Delaware
corporation
By: (SEAL)
- ---------------- ---------------------------------------
[ ] Secretary Name:
Title:
-4-
<PAGE>
[ACKNOWLEDGMENTS FOLLOW]
-5-
<PAGE>
State of Maryland, Howard County, to wit:
I HEREBY CERTIFY that on , 199_, before me, a Notary
Public of the State of Maryland, personally appeared _______________________,
who acknowledged himself to be a Vice President of Rouse-Teachers Properties,
Inc., (formerly known as McCormick Properties, Inc.), a Maryland corporation,
and that he, as such Vice President, being authorized so to do, executed the
foregoing Deed for the purposes therein contained by signing, in my presence,
the name of the Corporation by himself as Vice President, and certified that
this conveyance is not part of a transaction in which there is a sale, lease,
exchange or other transfer of all or substantially all of the property and
assets of the Corporation.
WITNESS my hand and Notarial Seal.
-----------------------------------
Notary Public
My Commission Expires:
-6-
<PAGE>
[ACKNOWLEDGMENTS CONTINUE ON NEXT PAGE]
State of California, County, to wit:
I HEREBY CERTIFY that on , 199_, before me, a Notary
Public of the State of California, personally appeared , who
acknowledged himself to be of SN Properties, Inc., a Maryland
corporation, and that he, as such being authorized so to do,
executed the foregoing Deed for the purposes therein contained by signing, in my
presence, the name of the Corporation by himself as .
WITNESS my hand and Notarial Seal.
-----------------------------------
Notary Public
My Commission Expires:
-7-
<PAGE>
[ACKNOWLEDGMENTS CONTINUE ON NEXT PAGE]
-8-
<PAGE>
State of California, County, to wit:
I HEREBY CERTIFY that on , 199_, before me, a Notary
Public of the State of California, personally appeared
, who acknowledged himself to be of Scios Nova, Inc., a Delaware
corporation, and that he, as such being authorized so to do,
executed the foregoing Deed for the purposes therein contained by signing, in my
presence, the name of the Corporation by himself as .
WITNESS my hand and Notarial Seal.
-----------------------------------
Notary Public
My Commission Expires:
-9-
<PAGE>
CONSENT OF LANDLORD
The Mayor and City Council of Baltimore sign below to evidence
their consent to the provisions of the foregoing Assignment of Lessee's Interest
Under Ground Lease and hereby acknowledge that Assignor has paid all rent due
and has performed all terms to be performed by tenant under the Ground Lease
through the date hereof, hereby release Assignor from its obligations under the
Ground Lease, and hereby agree to hold Assignee solely liable for the terms,
covenants, and conditions to be performed by the tenant under the Ground Lease
from and after the date hereof.
ATTEST: THE MAYOR AND CITY COUNCIL OF
BALTIMORE
/S/G. LOUISE GREEN By: /S/
- --------------------------- ----------------------------------
Approved: Approved as to form and legal
sufficiency:
BALTIMORE DEVELOPMENT
CORPORATION
By: /S/ By: /S/
----------------------- ----------------------------------
Name: Assistant City Solicitor
Title:
Approved:
BOARD OF ESTIMATES
/S/SHIRLEY WILLIAMS
- -------------------------------
Clerk
-10-
<PAGE>
EXHIBIT B
DESCRIPTION OF THE LAND
Lot No. 2 of the Amended Final Subdivision of Lots 3A, 3B, 3C, and
3D Section 1 of Holabird Industrial Park
- 11 -
<PAGE>
LEASE AGREEMENT
THIS LEASE AGREEMENT is made and entered into on this 20th day of
January, 1995, by and between PDL-RTKL ASSOCIATES, a Maryland General
Partnership having an office at 32 Lafayette Place, Greenwich, Connecticut
06830, hereinafter called "Landlord", and Scios Nova, Inc., hereinafter called
"Tenant".
W I T N E S S E T H :
1.1 For purposes of this Lease and all agreements supplemental to
this Lease, the following terms shall have the respective meanings set forth in
this Section:
ADDITIONAL RENT: As defined in Section 5.1.
BASE OPERATING FACTOR: As defined in Section 7.1.
BASE TAX FACTOR: As defined in Section 6.1.
BASIC RENT: As defined in Section 5.1.
BUILDING: As defined in Section 2.1.
BUILDING EQUIPMENT: All machinery, equipment, personal property,
fixtures and systems of every kind and nature whatsoever now or hereafter
attached to or used in connection with the operation or maintenance of the
Building, including, without limitation, all electrical, heating, mechanical,
sanitary, sprinkler, utility, power, plumbing, cleaning, fire prevention,
refrigeration, ventilating, air cooling, air-conditioning and elevator systems
and equipment and any and all renewals and replacements of any thereof; but
excluding (i) Tenant's Property, (ii) property of any other tenant, (iii)
property of contractors servicing the Building and (iv) improvements for water,
gas, steam and electricity and other similar equipment owned by any public
utility company or any governmental agency or body.
BUSINESS DAYS: As defined in Section 14.1.
BUSINESS HOURS: As defined in Section 14.1.
BUILDING SERVICES: As set forth in Article XIV.
COMMON AREA: The areas of the Building intended for the general
common use and benefit of all tenants of the Building, including, without
limitation, all stairs, landings, roofs, utility and mechanical rooms and
equipment, service closets, corridors, elevators, lobbies, lavatories and other
public parts of the Building.
<PAGE>
COMMON FACILITIES: The Common Area and the Building Equipment.
COMMENCEMENT DATE: As defined in Section 3.1.
ESCALATION YEAR: Each 12-month period commencing on March 1 which
shall include any part of the Term.
EVENT OF DEFAULT: As defined in Section 20.1.
EXPIRATION DATE: As defined in Section 3.1.
FIXTURES: All fixtures, equipment, improvements and appurtenances
attached to or built into the Premises at the commencement of or during the
Term, whether or not at the expense of Tenant, including, without limitation,
all electrical, plumbing, heating and sprinkling equipment and fixtures,
outlets, venetian blinds, partitions, railways, gates, doors, vaults, paneling,
molding, shelving, radiator enclosures, cork, rubber, linoleum and composition
floors, ventilating, silencing, air-conditioning and cooling equipment, and all
fixtures, equipment, improvements and appurtenances of a similar nature or
purpose (specifically excluding moveable partitions) whether or not attached to
or built into the Premises.
IMPROVEMENTS: All improvements, alterations, additions,
installations, substitutions, betterments and decorations, made by or on behalf
of Tenant, including, without limitation Tenant's Work.
HEREIN, HEREOF, HEREBY, HEREUNDER AND WORDS OF SIMILAR IMPORT:
Refer to this Lease as a whole and not to any particular Article or Section
unless expressly so stated.
INSURANCE REQUIREMENTS: All requirements of any insurance policy
covering or applicable to all or any part of the Project or the Premises or the
use thereof, all requirements of the issuer of any such policy and all orders,
rules, regulations, recommendations and other requirements of the local board of
fire underwriters or any other body exercising the same or similar functions and
having jurisdiction or cognizance of all or any part of the Project or the
Premises.
LAND: As defined in Section 2.1.
LANDLORD'S STATEMENT: An instrument containing a computation of
any additional Rent due pursuant to the provisions of Article VI or Article VII.
LANDLORD'S WORK: As defined in the Work Letter.
LEGAL REQUIREMENTS: Laws, statutes and ordinances
<PAGE>
(including building codes and zoning regulations and ordinances) and the orders,
rules, regulations, directives and requirements of all federal, state, county
and city departments, bureaus, boards, agencies, offices, commissions and other
subdivisions thereof, or of any official thereof, or of any other governmental,
public or quasi-public authority, whether now or hereafter in force, which may
be applicable to the Project or the Premises or any part thereof and all
requirements, obligations and conditions of all instruments of record affecting
the Project, including without limitation (i) the Disposition Agreement, dated
June 19, 1974, between Area 9A Associates and the Mayor and City Council of
Baltimore recorded among the Land Records of Baltimore City, Maryland, in Liber
3141, Folio 347, as amended by agreement dated June 19, 1974, recorded among
said Land Records in Liber 3141, Folio 387, (ii) the Disposition Agreement dated
as of March 4, 1981, among Landlord, The Mayor and City Council of Baltimore and
Charles Center - Inner Harbor Management, Inc., recorded among said Land Records
in Liber 4026, Folio 129, and (iii) the Inner Harbor Project I Renewal Plan,
approved June 16, 1967, as amended. The use restrictions applicable to the
Premises contained in said Disposition Agreements and Renewal Plan are set forth
on Exhibit D hereto.
NET RENT: As defined in Paragraph (c) of Section 21.3.
OPERATING EXPENSES: As defined in Section 7.1.
PARKING GARAGE: The multi-level parking garage on the parcels of
land adjacent to the Land to the north.
PROJECT: The Land, the Building, the Parking Garage and all
easements, rights, privileges and appurtenances thereto, including without
limitation, all rights and easements granted by the City of Baltimore in and to
the public park area adjacent to the Land on the south and west and in and to
the pedestrian overpass over Pratt Street from the Project.
PREMISES: As defined in Section 2.1.
PREMISES AREA: Shall be deemed to be 7,070 sq. feet
PUBLIC AREAS: As defined in Exhibit E.
REAL PROPERTY: The Land and the Building.
RENT: As defined in Section 5.1.
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RULES AND REGULATIONS: As defined in Section 28.1
SUCCESSOR LANDLORD: As defined in Section 24.4.
SUPERIOR LEASE: Any present or future ground lease, operating
lease, superior lease, overriding lease or underlying lease or grant of term of
the Real Property, or any part thereof, and any renewals, modifications,
replacements, substitutions and extensions thereof.
SUPERIOR LESSOR: The landlord under a Superior Lease.
SUPERIOR MORTGAGE: Any mortgage or building loan agreement,
including leasehold mortgages and spreader and consolidation agreements, which
may now or hereafter affect the Real Property, or any part thereof, or a
Superior Lease, and any renewals, modifications, replacements, substitutions and
extensions thereof.
SUPERIOR MORTGAGEE: The holder of a Superior Mortgage.
TAXES: As defined in Section 6.1.
TENANT'S OPERATING PAYMENT: As defined in Section 7.2:
TENANT'S PROPERTY: All Fixtures, Improvements, trade fixtures,
furniture, furnishings and other personal property (i) installed at the sole
expense of Tenant, or anyone claiming through or under Tenant, (ii) with respect
to which Tenant, or anyone claiming through or under Tenant, has not been
granted any credit or allowance by Landlord, (iii) which are removable without
material damage to the Premises and (iv) which are not replacements of any
property of Land-lord, whether any such replacement is made at Tenant's expense
or otherwise.
TENANT'S PROPORTIONATE SHARE: 5.25%
TENANT'S TAX PAYMENT: As defined in Section 6.2.
TENANT'S WORK: As defined in the Work Letter.
TERM: As defined in Section 3.1.
TRANSFEREE: As defined in Section 31.9.
UNAVOIDABLE DELAYS: Any delays caused by Tenant, war, civil
commotion, riot, acts of God, strikes or other
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labor disputes, governmental restrictions, regulations or actions, fire or other
casualty, shortage or unavailability of labor or materials obtainable on
reasonable terms or any other factors beyond the control of Landlord, whether
similar or not to any of those listed above.
WORK LETTER: As defined in Section 4.1 and set forth on Exhibit C.
ARTICLE II
PREMISES
2.1 Landlord hereby leases to Tenant and Tenant hereby hires from
Landlord certain premises consisting of a portion of the third (3rd) floor, as
substantially set forth on Exhibit A hereto ("Premises"), of the building
("Building") constructed on the parcel of land and the air rights parcel
described on Exhibit B hereto (collectively, "Land") being a portion of the
block bounded by Pratt, Commerce, Lombard and Gay Streets, in the City of
Baltimore, State of Maryland, together with the right to the use of and benefit
from, in common with others, the Common Facilities.
ARTICLE III
LEASE TERM
3.1 The term of this Lease ("Term") shall commence on the earlier
of sixty (60) days after delivery of possession of the Premises to Tenant for
performance of Tenant's work, as herein defined, or the date Tenant commences
occupancy for the business of Tenant ("Commencement Date") or if said date be a
Saturday, Sunday or holiday, the first business day thereafter, and shall end at
midnight on the date which is sixty (60) months after the Commencement Date
("Expiration Date"), unless the Term shall be extended pursuant to Section 31.17
or shall sooner terminate pursuant to any of the terms of this Lease or pursuant
to law.
ARTICLE IV
CONSTRUCTION AND ACCEPTANCE
OF THE PREMISES
4.1 Landlord agrees to perform work and make installations in the
Premises, if any, to the extent set forth on Exhibit C hereto ("Work Letter").
Landlord warrants that all portions of the Building's mechanical systems serving
the
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Premises shall be in working order as of the Commencement Date.
4.2 By occupying the Premises or any portion thereof for
performance of Tenant's Work as set forth on Exhibit C, Tenant shall be deemed
to have accepted the Premises, or such portion, and to have acknowledged that
the same and the Building fully comply with Landlord's obligations hereunder to
construct and deliver the Premises, or such portion. Landlord shall have the
right to enter the Premises to complete or repair any unfinished items or
defects and entry by Landlord, its agents, servants, employees or contractors
for such purpose shall not constitute an actual or constructive eviction in
whole or in part, or entitle Tenant to any abatement or diminution of rent or
relieve Tenant of any of its obligations under this Lease, or impose any
liability upon Landlord or its agents, servants, employees or contractors.
4.3 Landlord and Tenant each agree that at the request of either,
they will execute and deliver a confirmatory agreement acknowledging that Tenant
has accepted possession of the Premises and that this Lease is operative.
ARTICLE V
RENT
5.1 Commencing on March 1, 1995, Tenant shall pay to Landlord
without notice or demand or set-off, in lawful money of the United States of
America, by check drawn on a bank or trust company having an office in either
the State of Maryland, the State of Connecticut or the State of New York, at the
office of Landlord or at such other place as Landlord may designate, the
following sums (collectively, "Rent"):
(a) Fixed Rent ("Basic Rent") at the following rates:
(b) additional rent ("Additional Rent") consisting of all other
sums of money as shall become due from and be payable by Tenant hereunder (for
default in the payment of which Landlord shall have the same remedies as for a
default in the payment of Basic Rent).
5.2 Basic Rent shall be payable in advance in equal monthly
installments beginning on the Commencement Date and continuing on the first day
of each calendar month thereafter during the Term. If any installment of Basic
Rent remains
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unpaid for a period of 10 days after notice of such default or any payment of
Additional Rent remains unpaid for a period of 15 days after notice of such
default, Tenant shall pay (i) a late charge equal to 2% of said installment
[except that such late charge will not be imposed on the first two such late
installments] and (ii) interest thereon at a rate equal to the lesser of 2% per
annum above the rate from time to time announced by Nations Bank or any
successor thereto in Baltimore as its "prime rate" or the maximum legal rate
then prevailing, from the date on which such installment or payment is due to
the date of payment thereof, and such interest shall be deemed to be Additional
Rent.
ARTICLE VI
TAX PAYMENTS
6.1 For purposes of this Lease:
A. The term "Base Tax Factor" shall mean Taxes, as hereafter
defined, for the Tax Year July 1, 1994 through June 30, 1995.
B. The term "Taxes" shall mean all real estate taxes, improvement
district taxes, assessments (special or otherwise), ad valorem charges, front
foot benefit charges, water and sewer rents, rates and charges (other than
charges which are based on consumption and included in Operating Expenses), city
and county taxes, minor privilege permits and any other governmental liens,
impositions or charges of a similar or dissimilar nature, whether general,
special, ordinary, foreseen or unforeseen, and any payments in lieu of such
charges, which may be levied, assessed or imposed on or with respect to all or
any part of the Real Property by the City of Baltimore, State of Maryland, or
any other taxing authority, whether or not the same constitute on or more tax
lots. If, however, by law, any assessment may be divided and paid in
installments, then, for the purposes of this Article, (i) such assessment shall
be deemed to have been so divided, (ii) such assessment shall be deemed payable
in the maximum number of installments permitted by each Escalation Year the
installment(s) of such assessment becoming payable during such Escalation Year,
together with interest payable during such
Escalation Year on such installment(s) and on all installments thereafter
becoming due as provided by law, all as if such assessment had been so divided.
If at any time during the Term the methods of taxation prevailing at the date
hereof shall be altered so that in lieu of or as an addition to or as a
substitute for the whole or any part of the Taxes now levied, assessed or
imposed on all or any part of the Real
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Property, there shall be levied, assessed or imposed (i) a tax, assessment,
levy, imposition or charge based on the rents received therefrom whether or not
wholly or partially as a capital levy or otherwise, or (ii) a tax, assessment,
levy, imposition or charge measured or based in whole or in part upon all or any
part of the Real Property and imposed on Landlord, or (iii) a license fee
measured by the rent payable by Tenant or Landlord, or (iv) any other tax, levy,
imposition, charge or license fee however described or imposed, then all such
taxes, assessments, levies, impositions, charges or license fees or the part
thereof so measured or based, shall be deemed to be Taxes. In no event,
however, shall Tenant be required to pay Landlord's income taxes unless such
income tax is in lieu of or partial substitution for Taxes, nor shall Taxes
include franchise, gift, transfer, stock transfer, excise, estate, succession or
inheritance taxes, Federal, State or local income taxes, or penalties or
interest for late payment of Taxes.
6.2 A. If Taxes payable in any Escalation Year falling wholly or
partially within the Term shall be in such amount as shall constitute an
increase above the Base Tax Factor, Tenant shall pay as Additional Rent for such
Escalation Year a sum ("Tenant's Tax Payment") equal to Tenant's Proportionate
Share of the amount by which Taxes for such Escalation Year exceed the Base Tax
Factor. For purposes of calculating the taxes payable in the First Escalation
Year only, any increase in taxes taking place during such Escalation Year shall
be deemed to have occurred on December 1.
B. Landlord shall furnish to Tenant prior to the commencement
of each Escalation Year, or partial Escalation Year, a Landlord's Statement
setting forth Tenant's Tax Payment for such Escalation Year. Tenant's Tax
Payment shall commence as of the first day of the relevant Escalation Year and
shall be payable in 12 equal monthly installments, in advance, on the first day
of each month during such Escalation Year based on Landlord's Statement. If
Landlord's Statement for any Escalation Year is furnished to Tenant after
commencement of such Escalation Year, then (i) until the first day of the month
following the month in which Landlord's Statement is furnished to Tenant, Tenant
shall pay to Landlord on the first day of each month an amount equal to 1/12th
of Tenant's Tax Payment for the preceding Escalation Year; (ii) promptly after
the Landlord's Statement for such Escalation Year is furnished to Tenant or
together therewith, Landlord shall give notice to Tenant stating whether the
installments of Tenant's Tax Payment previously made for such Escalation Year
were greater or less than the installments of Tenant's Tax Payment to be made
for such Escalation Year in accordance with Landlord's Statement, and if there
shall be a deficiency,
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Tenant shall pay the amount together with the next installment of Basic Rent
becoming due hereunder, or if there shall have been an overpayment, Landlord
shall credit the amount thereof against subsequent payments under this Section
6.2, (or, if the Term has expired, and Tenant has no further obligation to
Landlord under this Lease, pay the same in cash to Tenant within thirty (30)
business days); and (iii) on the first day of the month following the month in
which Landlord's Statement is furnished to Tenant, and monthly thereafter
throughout the remainder of such Escalation Year, Tenant shall pay to Landlord
an amount equal to 1/12th of Tenant's Tax Payment for such Escalation Year shown
on Landlord's Statement. If there shall be any increase in Taxes for any fiscal
tax year falling wholly or partially within an Escalation Year, whether during
or after such Escalation Year, of if there shall be any decrease during any
Escalation Year in the taxes for any fiscal tax year falling wholly or partially
within such Escalation Year, Landlord shall furnish to Tenant a revised
Landlord's Statement for such Escalation Year, and Tenant's Tax Payment for such
Escalation Year shall be adjusted and paid or refunded, as the case may be,
substantially in the same manner as provided in the preceding sentence. Any
Additional Rent payable by Tenant pursuant to this Section 6.2 shall be
collectible by Landlord in the same manner as Basic Rent. Notwithstanding
anything to the contrary contained in this Subsection 6.2B., Tenant shall be
permitted at Tenant's option to make Tenant's Tax Payment in a lump sum rather
than monthly, if, and so long as, (i) such is permitted by the Superior
Mortgagee (as hereinafter defined) and (ii) Tenant shall have made each and
every payment within fifteen (15) days after request by Landlord therefor, and
provided that such lump sum payment shall be made prior to the date on which the
taxes for such Escalation Year would be payable to the taxing authority without
penalty, assuming payment thereof were made in full and not in installments.
C. If, as a result of any application or proceeding brought by or
on behalf of Landlord for reduction in the assessed valuation of the Real
Property affecting any Escalation Year, there shall be a decrease in Taxes for
any Escalation Year with respect to which Landlord shall have previously
rendered a Landlord's Statement, Landlord's Statement next following such
decrease shall include an adjustment for such Escalation Year reflecting such
decrease in Taxes (less all costs and expenses, including counsel fees, incurred
by Landlord in connection with such application or proceeding) but in no event
shall such adjustment result in a credit to Tenant in excess of Tenants's Tax
Payment for such Escalation Year. Nothing herein shall obligate Landlord to
file any application or institute any proceeding seeking a reduction in assessed
valuation.
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6.3 If the Rent Commencement Date or Expiration Date shall occur on
a date other than March 1 or the last day of February, respectively, any
Additional Rent under Section 6.2 for the Escalation Year in which the Rent
Commencement Date of Expiration Date shall occur, as the case may be, shall be
appropriately prorated. In the event of a termination of the Lease, any
Additional Rent under this Article VI shall be paid or adjusted within 30 days
after submission of a Landlord's Statement. In no event shall Basic Rent ever
be reduced by operation of this Article VI. The rights and obligations of
Landlord and Tenant under the provisions of this Article VI with respect to any
Additional Rent shall survive the Expiration Date or any sooner termination of
the Term.
6.4 A. Landlord's Statements with respect to Tenant's Tax Payment
shall be rendered to Tenant annually in accordance with the provisions of
Section 31.12. Landlord's failure to render Landlord's Statements with respect
to increases in Taxes for any Escalation Year shall not prejudice Landlord's
right to thereafter render a Landlord's Statement with respect thereto or with
respect to any subsequent Escalation Year. Nothing herein contained shall
restrict Landlord from issuing Landlord's Statements at any time during any
Escalation Year that there is an increase in Taxes or at any time thereafter.
B. Each Landlord's Statement rendered pursuant to this
Article VI shall be conclusive and binding upon Tenant unless, within 30 days
after receipt of such Landlord's Statement, Tenant shall notify Landlord that it
disputes the correctness of Landlord's Statement, specifying the respects in
which Landlord's Statement is claimed to be incorrect. In the event that
Landlord and Tenant are unable to resolve such dispute, the same shall be
submitted to arbitration in accordance with the provisions of Article XXII
hereof. Pending the determination of such dispute by agreement or arbitration,
Tenant shall pay Additional Rent under this Article VI in accordance with the
applicable Landlord's Statement, and such payment shall be without prejudice to
Tenant's position. If the disputes shall be determined in Tenant's favor,
Landlord shall forthwith pay to Tenant the amount of Tenant's overpayment of
Additional Rent resulting from compliance with Landlord's Statement.
6.5 Tenant shall be liable for all taxes levied against Tenant's
Property and for all sales, use or excise taxes levied against Tenant or
Tenant's Property. If any such taxes for which Tenant is liable are levied
against Landlord, the Real Property, the Project or any of Landlord's other
property and if Landlord elects to pay the same, or if the assessed value of the
Real Property, the Project or Landlord's
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other property is increased by inclusion of Tenant's Property and Landlord
elects to pay the taxes based on such increase, Tenant shall pay to Landlord,
upon demand, as Additional Rent, that part of the aforesaid taxes attributable
to Tenant's Property. Landlord shall give Tenant notice of the inclusion of
Tenant's Property in any assessment of Real Property, the Project, or Landlord's
other property, sufficient to enable Tenant to protest the amount thereof, in
Landlord's name if necessary, but at Tenant's expense.
ARTICLE VII
OPERATING EXPENSE ESCALATION
7.1 For purposes of this Lease:
A. The term "Base Operating Factor" shall mean Operating Expenses,
as hereinafter defined, for the calendar year 1995.
B. The term "Operating Expenses" shall mean all operating expenses
of the Building and such additional facilities in subsequent years as may be
determined by Landlord to be reasonably necessary or desirable for the
management, maintenance or operation of the Real Property and all expenses and
costs (but not specific costs which are allocated or separately billed to and
paid by specific tenants) of every kind and nature which Landlord shall pay or
become obligated to pay because of or in connection with owning, operating,
managing, painting, repairing, insuring and cleaning the Building. Operating
Expenses shall be reasonably consistent with like expenses of other Class A
buildings in Downtown Baltimore, but with variations resulting from building
size, age of building, services provided and security needs based upon tenant
mix. Operating Expenses shall include, but not be limited to, the following:
(i) all supplies and material used, and labor charges incurred, in
the operation, maintenance, decoration, repairing and cleaning of the Building,
including janitorial service for all floor areas;
(ii) cost of all equipment purchased or rented which is utilized in
the performance of Landlord's obligations hereunder, and the cost of maintenance
and operation of any such equipment;
(iii) cost of all management, maintenance and service agreements
for the Building and the equipment therein, including, without limitation, alarm
service, security service, window cleaning, and elevator maintenance;
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(iv) accounting costs, including the cost of audits by certified
public accountants, and legal and engineering fees and expenses incurred in
connection with the operation and management of the Real Property;
(v) wages, salaries, commissions (exclusive of leasing
commissions), and related expenses of all on-site and off-site agents or
employees engaged in the operation, maintenance, security and the costs of
management in the Building;
(vi) cost of all insurance coverage for the Building;
(vii) cost of repairs, replacements and general maintenance to the
Building, structural or non-structural, including without limitation the
mechanical, electrical and heating, ventilating and air-conditioning equipment
and/or systems (excluding repairs and general maintenance paid by proceeds of
insurance or by tenants or other third parties, and alterations attributable
solely to tenants);
(viii) any and all Common Area maintenance or redecoration
(including repainting) and exterior and interior landscaping;
(ix) cost of removal of trash, rubbish, garbage and other refuse
from the Building as well as removal of ice and snow from the sidewalks on or
adjacent to the Land;
(x) amortization of the cost of capital improvements made to the
Building subsequent to the Commencement Date which will improve operating
efficiencies (including legal, architectural and engineering fees incurred in
connection therewith) as determined under generally acceptable management
practices in the Metropolitan Baltimore area, or which may be required by any
Legal Requirement or Insurance Requirement;
(xi) all charges for electricity (except as otherwise specifically
paid for by individual tenants) and gas, water, sewerage service, heating,
ventilation and air-conditioning and other utilities furnished to the Building;
(xii) every other expense which would be considered as an expense
of maintaining, operating, leasing, insuring, managing or repairing the
Building, and
(xiii) 15% percent of items (i) through (xii) above for overhead
and administration.
Provided, however, that the foregoing costs and expenses shall
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exclude or have deducted therefrom, as the case may be,
(a) advertising and promotional expenditures;
(b) refinancing costs and mortgage interest and amortization
payments;
(c) attorneys' fees and disbursements and court costs in connection
with enforcing leases;
(d) depreciation, except as provided above;
(e) leasing commissions;
(f) costs incurred in performing work or furnishing services for
any tenant (including Tenant), whether at such tenant's or at
Landlord's expense, to the extent that such work or service
is in excess of any work or service that Landlord is obligated
to furnish Tenant at Landlord's expense;
(g) costs incurred pursuant to Paragraph E
of the Rider;
(h) capital improvements, other than as provided above in
subsection 7.1 B(x);
(i) expenditures for correcting construction defects in the
Building or the Building Equipment, the need for which is
discovered within 12 months after the Commencement Date.
(j) expenditures for any alteration, renovation, redecoration,
subdivision, layout and finish of any tenant's space in the
Building performed in connection with initial occupancy of such
space by a new tenant or in connection with a renewal of a
lease for such space with the existing tenant thereof;
(k) costs of any curative action required, or repair, replacement
or alteration made, by Landlord to remedy damage caused by or
resulting from the negligence of Landlord, its agents, servants
or employees;
(l) Taxes; and
(m) fines and penalties imposed for non-payment or
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delay in payment of Taxes, failure or delay in complying with
Legal Requirements or Insurance Requirements or any
requirements of any Superior Lease or Superior Mortgage.
7.2 A. For each Escalation Year or any part thereof during the
Term, Tenant shall pay as Additional Rent a sum ("Tenant's Operating Payment")
equal to Tenant's Proportionate Share of the amount by which Operating Expenses
for such Escalation Year exceed the Base Operating Factor.
B. Landlord shall furnish to Tenant, prior to the
commencement of each Escalation Year or partial Escalation Year a written
statement setting forth Landlord's estimate of Tenant's Operating Payment for
such Escalation Year. Tenant shall pay to Landlord on the first day of each
month during such Escalation Year an amount equal to 1/12th of Landlord's
estimate of Tenant's Operating Payment for such Escalation Year. If, however,
Landlord shall furnish any such estimate for an Escalation Year subsequent to
the commencement thereof, then (i) until the first day of the month following
the month in which such estimate is furnished to Tenant, Tenant shall pay to
Landlord on the first day of each month an amount equal to the monthly sum
payable by Tenant to Landlord under this Section 7.2 in respect of the last
month of the preceding Escalation Year; (ii) promptly after such estimate is
furnished to Tenant or together therewith, Landlord shall give notice to Tenant
stating whether the installments of Tenant's operating Payment previously made
for such Escalation Year were greater or less than the installments of Tenant's
Operating Payment to be made for such Escalation Year in accordance with such
estimate, and if there shall be a deficiency, Tenant shall pay the amount
thereof together with the next installment of Basic Rent becoming due hereunder,
or if there shall have been an overpayment, Landlord shall credit the amount
thereof against subsequent payments under this Section 7.2 (or if the Term has
expired and Tenant has no further obligation to Landlord under the Lease, pay
the same in cash to Tenant within thirty (30) business days); and (iii) on the
first day of the month following the month in which such estimate is furnished
to Tenant and monthly thereafter throughout the remainder of such Escalation
Year, Tenant shall pay to Landlord an amount equal to 1/12th of Tenant's
Operating Payment shown on such estimate. Landlord may at any time or from time
to time furnish to Tenant a revised statement of Landlord's estimate of Tenant's
Operating Payment for such Escalation Year, and in such case, Tenant's Operating
Payment for such Escalation Year shall be adjusted and paid or refunded, as the
case may be, substantially in the same manner as provided in the preceding
sentence. Any Additional Rent payable to Tenant pursuant to this Section 7.2
shall be collectible by Landlord in the same manner as Basic Rent.
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C. After the end of each Escalation Year Landlord shall furnish to
Tenant a Landlord's Statement for such Escalation Year for computing Tenant's
Operating Payment. Each such year-end Landlord's Statement shall be accompanied
by a computation of operating expenses for the Building prepared by Landlord's
managing agent, showing various categories of operating expenses in reasonable
detail, from which Landlord shall make the computation of Operating Expenses
hereunder. If such Landlord's Statement shall show that the sums paid by Tenant
under Subsection 7.2(b) exceed the payments by Tenant of Tenant's Operating
Payment for such Escalation Year, Landlord shall promptly either refund to
Tenant the amount of such excess or permit Tenant to credit the amount of such
excess against subsequent payments under this Section 7.2, and if the Landlord's
Statement for such Escalation Year shall show that the sums so paid by Tenant
were less than Tenant's Operating Payment for such Escalation Year, Tenant shall
pay the amount of such deficiency together with the next installment of Basic
Rent becoming due hereunder.
7.3 If the Rent Commencement Date or the Expiration Date shall
occur on a date other than March 1 or the last day of February, respectively,
any Additional Rent under Section 7.2 for the Escalation Year in which such Rent
Commencement Date or Expiration Date shall occur, as the case may be, shall be
appropriately prorated. In the event of a termination of this Lease, any
Additional Rent under this Article VII shall be paid or adjusted within 30 days
after submission of a Landlord's Statement. In no event shall Basic Rent ever
be reduced by operation of this Article VII. The rights and obligations of
Landlord and Tenant under the provision of this Article VII with respect to any
Additional Rent shall survive the Expiration Date or any sooner termination of
the Term.
7.4 A. Landlord's Statements with respect to Tenant's Operating
Payment shall be rendered in accordance with the provisions of Section 31.12.
Landlord's failure to render Landlord's Statements with respect to increases in
Operating Expenses for any Escalation Year shall not prejudice Landlord's right
to thereafter render a Landlord's Statement with respect thereto or with respect
to any subsequent Escalation Year. Nothing herein contained shall restrict
Landlord from issuing Landlord's Statements at any time there is an increase in
Operating Expenses during any Escalation Year or any time thereafter.
B. Each Landlord's Statement rendered pursuant to this
Article VII shall be conclusive and binding upon Tenant unless within 60 days
after receipt of such Landlord's Statement Tenant shall notify Landlord that it
disputes the correctness of Landlord's Statement, specifying the particular
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respects in which Landlord's Statement is claimed to be incorrect. In the event
that Landlord and Tenant are unable to resolve such dispute, the same shall be
submitted to arbitration in accordance with the provisions of Article XXII
hereof. Pending the determination of such dispute by agreement or arbitration,
Tenant shall pay Additional Rent under this Article VII in accordance with the
applicable Landlord's Statement and such payment shall be without prejudice to
Tenant's position. If the dispute shall be determined in Tenant's favor,
Landlord shall forthwith pay to Tenant the amount of Tenant's overpayment of
Additional rent resulting from compliance with Landlord's Statement.
ARTICLE VIII
USE OF THE PREMISES
8.1 Tenant covenants that throughout the Term it will use the
Premises for general, clerical, administrative, and executive offices consistent
with a first class office building in the Baltimore area and for no other
purpose.
8.2 Tenant, at its sole cost and expense, shall comply with all
Legal Requirements and all Insurance Requirements relating to or affecting the
Premises and shall give Landlord prompt notice of any lack of compliance with
any of the foregoing, except that Tenant shall not be under any obligation to
comply with any Legal Requirements or Insurance Requirements requiring any
structural alteration of the Premises solely by reason of the use thereof for
any of the permitted purposes specified in Section 8.1 unless said alteration
(i) is necessitated by a condition which has been otherwise created by, or at
the instance of, Tenant, (ii) is attributable to the use or manner of use to
which Tenant puts the Premises, other than as permitted by Section 8.1, (iii)
is required by reason of a breach of Tenant's obligations hereunder, or (iv)
is occasioned, in whole or in part by any act, omission or negligence of Tenant
or any person claiming through or under Tenant, or any of their employees,
agents, contractors, invitees or licensees. Tenant shall pay all costs,
expenses, fines, penalties and damages which may be imposed upon Landlord or a
Superior Lessor or a Superior Mortgagee by reason of or arising out of Tenant's
failure fully and promptly to comply with the provisions of this Section 8.2.
Subject to the provision of this Article, Landlord, at its expense, shall
comply with all other Legal Requirements and Insurance Requirements, but may
defer compliance as long as Landlord shall be contesting the validity or
applicability thereof.
8.3 Tenant shall be solely responsible for
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obtaining any permits and/or licenses necessary for the conduct of its business
in the Premises or any part thereof (including, without limitation, a
certificate of occupancy or equivalent thereof necessary in connection with the
making of Improvements to the Premises other than Improvements to be performed
by Landlord pursuant to the Work Letter) and Tenant shall at all times comply
with the terms and conditions of all such permits and licenses, but in no event
shall failure by Tenant to procure and maintain such licenses or permits affect
Tenant's obligations hereunder. Landlord agrees to cooperate with Tenant in
Tenant's endeavor to procure such permits and licenses.
8.4 Tenant shall not abandon the Premises and shall not vacate the
Premises without giving Landlord reasonable advance notice. Tenant shall
operate and conduct its business at the Premises in an efficient, dignified,
tasteful and reputable manner and in accordance with high standards of
operation. All property kept, stored or maintained within the Premises by
Tenant or anyone claiming through or under Tenant or any of their respective
agents, employees or contractors shall be at Tenant's sole risk.
8.5 Tenant shall not use, occupy, suffer or permit the Premises, or
any part thereof to be used in any manner, or suffer or permit anything to be
brought into or kept therein, which would, in Landlord's reasonable judgment,
(i) violate any of the provisions of any Superior Lease or Superior Mortgage,
(ii) violate any Legal Requirement or Insurance Requirement, (provided, however,
that with respect to the foregoing clauses (i) and (ii) Tenant would have
knowledge of any such violation), (iii) make void or voidable any insurance
policy then in force with respect to the Real Property, the Premises or the
Project, (iv) make unobtainable from reputable insurance companies authorized to
do business in the State of Maryland at standard rates any fire insurance with
extended coverage or liability, elevator, boiler or other insurance, (v) cause
or be likely to cause, injury or damage to the Project or any part thereof, (vi)
constitute a public or private nuisance, (vii) violate any certificate of
occupancy for the Premises, the Building or the Project, (viii) emit or
discharge objectionable noise, vibrations, fumes, vapors or odors into the
Building or the Project, (ix) impair or interfere with any of the Building
services, including the furnishing of electrical energy, or the proper and
economical cleaning, heating, ventilating, air-conditioning or other servicing
of the Building, the Premises or the Project (x) impair or interfere with the
use of any other areas of the Building or the Project by, or occasion
discomfort, annoyance or inconvenience to, Landlord or any other tenant, (xi)
cause Tenant to default in any of its other obligations under this Lease or
(xii) adversely affect the appearance, character or
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reputation of the Project as a first class office building retail-garage
complex. If anything is done, omitted to be done, or suffered to be done by
Tenant, or kept or suffered by Tenant to be kept in, upon or about the Premises
that shall cause the rate of fire or other insurance on the Premises, the
Building or the Project in companies acceptable to Landlord to be increased,
Tenant shall pay the entire amount of such increase promptly upon Landlord's
demand therefor as Additional Rent. Notwithstanding the foregoing, Tenant's
prudent use of the Premises in the usual and regular course of Tenant's business
for the purposes set forth in Section 8.1 shall not be deemed a basis for
imposing any obligation or charge upon Tenant for any increase in the rate of
fire or other insurance. In determining whether increased premiums are a result
of something done, omitted or suffered to be done or kept or suffered to be kept
in, upon or about the Premises by Tenant, a schedule issued by the organization
computing the insurance rate of the Building or the Project, as the case may be,
showing the various components of such rate, shall be conclusive evidence of the
several items and charges which make up such rate.
8.6 Tenant shall not place a load upon any floor that exceeds
either the floor load per square foot that such floor was designed to carry or
which is allowed by any Legal Requirement. Business machines and mechanical
equipment in the Premises shall be placed and maintained by Tenant at the
Tenant's sole expense, in such manner as shall be sufficient, in Landlord's
reasonable judgment, to prevent vibration, noise, annoyance or inconvenience to
Landlord and the other tenants.
ARTICLE IX
BUILDING NAME
9.1 The Building is presently designated and known as "Inner Harbor
Center". Such name and the address of the building may be changed from time to
time in Landlord's sole discretion.
ARTICLE X
ASSIGNMENT AND SUBLETTING
10.1 Neither this Lease nor any part hereof, nor the interest of
Tenant in any sublease or the rentals thereunder shall, by operation of law or
otherwise, be assigned, mortgaged, pledged, encumbered or otherwise transferred
by Tenant, Tenant's legal representatives or
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successors in interest, and neither the Premises, nor any part thereof, nor any
of Tenant's Property shall be encumbered in any manner by reason of any act or
omission on the part of Tenant or anyone claiming under or through Tenant, or
shall be sublet or be used, occupied or utilized by anyone other than Tenant,
without the prior consent of Landlord. A transfer of more than 50% in interest
of Tenant (whether stock, partnership interest or otherwise), whether in a
single transaction or a series of related or unrelated transactions, shall be
deemed an assignment of this Lease. Any assignment, sublease, mortgage, pledge,
encumbrance or transfer by Tenant in contravention of this Article X shall be
void. If this Lease be assigned, or if the Premises or any part thereof be
sublet or occupied by anybody other than Tenant, Landlord may, after the
occurrence of an Event of Default, collect rent from the assignee, subtenant or
occupant, and apply the net amount collected to the Rent, but no such
assignment, subletting, occupancy or collection shall be deemed a waiver of this
covenant, or an acceptance of the assignee, subtenant or occupant as tenant
under this Lease, or a release of Tenant from the further performance by Tenant
of covenants on the part of Tenant herein contained. The consent by Landlord to
an assignment or subletting shall not in any way be construed to relieve Tenant
from obtaining the express consent of Landlord to any further assignment or
subletting.
10.2 No assignment or subletting consented to by Landlord shall be
valid unless within 10 days after the execution thereof, Tenant shall deliver to
Landlord (a) a duplicate original sublease, duly executed by Tenant and the
subtenant, or instrument of assignment duly executed by Tenant, as the case may
be, in form and substance satisfactory to Landlord and (b) in the case of an
assignment, an instrument in form and substance satisfactory to Landlord, duly
executed by the assignee, in which such assignee shall assume observance and
performance of, and agree to be personally bound by, all of the terms, covenants
and conditions of this Lease on Tenant's part to be observed and performed.
10.3 Notwithstanding anything contained in Section 10.1, in the
event that, at any time or from time to time prior to or during the Term, Tenant
desires to sublet all or any part of the Premises or assign its interest in this
Lease, Tenant shall submit to Landlord:
(a) in writing, the name and address of the proposed subtenant
or assignee, a reasonably detailed statement of the proposed subtenant's or
assignee's business, reasonably detailed character references for the proposed
subtenant or assignee, reasonably detailed financial references for the proposed
subtenant or assignee (including
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certified balance sheet and income statements for the proposed subtenant or
assignee; in the case of the balance sheet, dated not more than 60 days prior to
the date of its submission), and such other information with respect to the
character, business and financial condition of the proposed subtenant or
assignee as Landlord or any Superior Lessor or Superior Mortgagee, whose consent
to such subletting or assignment is required, may request; and
(b) (i) a fully executed copy of the proposed sublease or
assignment, the effective date of which shall be at least 30 days after the date
on which Tenant shall have furnished Landlord with all of the information
required pursuant to Subdivision (a) above and which shall be conditioned on
Landlord's consent thereto and (ii) an agreement by Tenant to indemnify Landlord
against liability resulting from any claims that may be made against Landlord by
the proposed assignee or subtenant or by any brokers or other persons claiming a
commission or similar compensation in connection with the proposed assignment or
sublease.
10.4 Tenant agrees to pay Landlord all reasonable costs incurred by
Landlord in connection with any subletting or assignment, including, without
limitation, the costs of making investigations as to the acceptability of a
proposed subtenant or assignee, and legal costs incurred in connection with any
requested consent.
ARTICLE XI
REPAIRS
11.1 Tenant, at its sole cost and expense, shall take good care of
the Premises and the Fixtures and Building Equipment therein and Tenant's
Property consistent with the operation of a first-class office building. Tenant
shall pay to Landlord, promptly upon demand, all costs and expenses incurred by
Landlord in connection with all repairs, replacements and alterations to the
Premises and the Fixtures or the Building Equipment therein, whether such
repairs, replacements and alterations are interior or exterior, structural or
otherwise, ordinary or extraordinary, the need for which arises out of (i) the
installation, use, operation or existence of Improvements or Tenant's Property,
(ii) the moving of Tenant's Property or Improvements in or out of the Building
or the Premises, (iii) the acts, omissions, negligence or misuse of Tenant or
any of its subtenants or any of its or their employees, agents, contractors,
licensees or invitees or their use or occupancy or manner of use or occupancy of
the Premises (except fire or other casualty caused by Tenant's negligence, if
the fire or other casualty
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insurance policies insuring Landlord are not invalidated and the rights of
Landlord are not adversely affected by this provision) or (iv) the performance
by Tenant of its obligations pursuant to the provisions of Section 8.2. Tenant,
at its sole cost and expense, except where the necessity therefor has been
occasioned by the gross negligence or willful acts of Landlord, it agents,
employees or contractors, shall promptly replace scratched, damaged or broken
doors and glass in and about the Premises and shall be responsible for all
repairs and maintenance of wall and floor coverings in the Premises. Tenant
shall promptly and diligently make all repairs in or to the Premises for which
it is responsible and in any event within 30 days of receipt of written notice
of the necessity therefor from Landlord, except that if any such repair cannot
be completed within 30 days, Tenant shall commence such repair within said
period and thereafter diligently proceed with such repair to completion. All
repairs made by or on behalf of Tenant or any person claiming through or under
Tenant shall be made and performed in conformity with the provisions of Article
XV.
11.2 Landlord shall keep the Building and Building Equipment in
good order and repair and shall operate the Building as a first-class office
building. Landlord, at its sole cost and expense, shall make all repairs and
replacements, structural or non-structural, exterior or interior, ordinary or
extraordinary, necessary to comply with the covenant contained in this Section
11.2, including, but not limited to, repairs to all utility. sprinkler,
electrical and plumbing lines and HVAC systems outside the Premises which serve
the Premises, and all such lines and systems within the Premises but serving
other occupants of the Building, except for (a) repairs required to be made by
Tenant pursuant to Section 11.1 and any other terms of this Lease, and (b)
repairs of Tenant's Property or Improvements not occasioned by Landlord's
negligence. Notwithstanding anything contained herein to the contrary, Landlord
shall have no liability to Tenant under this Section unless and until 30 days
after receipt of written notice from Tenant of the specific repair required to
be made (which, in the case of an emergency, may be telephone notice confirmed
in writing) or, in the event such repair cannot be effected within such 30 days
period, within a reasonable time, under the circumstances, thereafter.
11.3 All repairs and replacements made by either party shall be at
least equal in quality of workmanship and material to the quality of workmanship
and material found in the original construction of the Building or the Premises,
as the case may be, and shall be consistent with the operation of a first-class
office building.
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ARTICLE XII
ACCESS
12.1 Landlord or its representative, or designees, may enter the
Premises at reasonable times under the circumstances, whether or not during
business hours, to inspect the Premises, to enforce any provisions of this
Lease, to make or cause to be made such repairs and Improvements, or to perform
such maintenance, including the maintenance of the Building Equipment, as may be
required of Landlord hereunder or as Landlord may deem necessary or desirable,
to cure defaults of Tenant pursuant to the rights granted Landlord under Article
XXIII hereof, to repair any utility lines or system or systems servicing other
parts of the Building or the Project, to rectify any condition in the Premises
adversely affecting other occupants of the Building or the Project, to alter,
renovate and decorate the Premises at any time during the Term if Tenant shall
have removed all or substantially all of Tenant's Property from the Premises,
or, upon prior reasonable notice to Tenant, to exhibit the Premises to others.
Landlord or its representative may bring upon the Premises all things
necessary to perform any work any work to be done in the Premises pursuant to
this Section 12.1. Landlord agrees, however, that all such repairs,
Improvements and maintenance shall be made with a minimum of inconvenience to
Tenant and that Landlord will diligently proceed therewith to completion but
without obligation to employ overtime labor and subject to Unavoidable Delays.
If Tenant, its agents or employees shall not be present or shall not permit an
entry into the Premises at any time when such entry shall be permissible,
Landlord may use a master key (or master code, card or switch if Tenant's
security system is other than conventional locks and keys), or, in the case of
an emergency, forcibly enter the Premises. The Superior Lessor and the Superior
Mortgagee shall have the right to enter the Premises at any time to examine the
Premises or for the purpose of exercising any right reserved to Landlord under
this Section.
ARTICLE XIII
COMMON FACILITIES
13.1 Tenant, and its permitted subtenants and its and their
employees, invitees and licensees shall have the non-exclusive right to make use
of the Common Area, such use to be in common with Landlord and other tenants and
persons entitled to use the same, subject to such reasonable rules and
regulations governing use as Landlord may from time to time prescribe and
subject to such easements therein as Landlord may from time to time grant to
others. Tenant shall not
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obstruct in any way any portion of the Common Area or in any way interfere with
the rights of other person entitled thereto to use or enjoy the benefit of the
Common Facilities and, shall not, without the prior written consent of Landlord,
use the Common Area in any manner, directly or indirectly, for the location or
display of any merchandise or for the location or display of any property
belonging to Tenant or appertaining, directly or indirectly, to Tenant's
operations in the Premises.
13.2 Subject to the provisions of Sections 13.3 and 13.4, the
Common Facilities shall at all times be subject to the exclusive control and
management of Landlord.
13.3 Landlord shall not, without Tenant's prior consent, which
shall not be unreasonably withheld or delayed, make any change to the location,
layout, nature or arrangement of the Common Facilities or any alteration to any
portion of the Common Area, which would (a) unreasonably deprive Tenant of
access to the Premises, (b) interfere with the use of the Premises or the
services furnished to the Premises for an unreasonable length of time, or (c)
reduce the Premises Area in excess of 2% (without any reduction in Rent), except
if such reduction results from compliance with Legal Requirements or Insurance
Requirements and in such event only if there is an appropriate reduction in
Rent. Landlord shall redecorate and repaint the Common Area, from time to time,
as Landlord may deem necessary or desirable to maintain the Common Area in an
attractive manner consistent with a first-class office building. Landlord shall
have the right to close temporarily all or any portion of the Common Area to
such extent as may in the reasonable opinion of Landlord be necessary to prevent
a dedication thereof to public use or the accrual of any rights to the public
therein and/or for repairs, replacements or maintenance, provided said repairs,
replacements or maintenance are performed expeditiously and provided (both as to
closing and repairs) that Tenant and its invitees shall not be denied access to
the Premises.
13.4 Landlord covenants to keep, maintain, manage and operate the
Common Facilities in good order, condition and repair consistent with the
operation of a first class office building-retail-parking complex and to keep
the sidewalks and driveways, if any, constituting a portion of the Common Area
clean and reasonably clear of snow and ice. Landlord reserves the right of
access to the Common Facilities through the Premises for the purposes of
operation, decoration, cleaning, maintenance, safety, security, alteration and
repair.
ARTICLE XIV
UTILITIES AND SERVICES
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14.1 HEATING, VENTILATING AND AIR-CONDITIONING.
A. Except as otherwise provided in Section 14.7, Landlord shall
maintain and operate the heating, ventilating and air-conditioning systems and
shall furnish heat, outside air and air-conditioning to the Premises through the
Building Equipment from 8:00 a.m. to 6:00 p.m. on business days and from 8:00 am
to 1:00 p.m. on Saturdays (such hours being herein referred to as "business
hours"). "Business days" shall mean all days except Saturdays, Sundays and days
observed by the federal or the Maryland State or Baltimore City governments as
legal holidays and such other days as shall be designated as holidays by the
applicable operating engineers union or building service employees union
contract. Landlord and Tenant agree to operate the heating, ventilating and
air-conditioning equipment in accordance with their design criteria unless a
recognized energy conversation law, program, guideline, regulation or
recommendation (which, with respect to any recommendation, is being observed by
other owners or landlords of first class office building in Baltimore)
promulgated by any federal, state, city or other governmental or
quasi-governmental bureau, board, department, agency, office, commission or
other subdivision thereof shall provide for any reduction in operations below
said design criteria in which case such equipment shall be operated so as to
provide reduced service in accordance with such law, program, guideline,
regulation or recommendation.
B. If Tenant requests heating, ventilating or air-conditioning
services during other than business hours, which request shall be made between
the hours of 9:00 a.m. and 1:00 p.m. on any business day, Landlord shall make
the same available to Tenant in accordance with such request, provided that,
Tenant shall pay to Landlord, as Additional Rent, Landlord's then established
charges therefor. As of the date of this Lease, such established charge is
$75.00 per hour, and no increase in such charge shall average more than 3% per
year calculated from the last such established charge.
C. Notwithstanding the foregoing provisions of this Section 14.1,
Landlord shall not be responsible if the normal operation of the Building
heating, ventilating and air-conditioning system shall fail to provide
conditioned air at reasonable temperatures, pressures or degrees of humidity or
in reasonable volumes or velocities in any portion of the Premises (i) which
shall have an electrical load in excess of 3 watts per square foot of usable
area of the Premises for all purposes (including lighting and power), or which
shall have a human occupancy factor in excess of one person per 100 square feet
of usable area of the Premises (the average electrical load and human occupancy
factors for which such system is designed), or (ii) because of any rearrangement
of
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partitioning or other Improvements. Tenant shall cooperate fully with Landlord
at all times and abide by all regulations and requirements which Landlord may
reasonably prescribe for the proper functioning and protection of the heating,
ventilating and air-conditioning system.
14.2 ELEVATORS. Landlord shall provide elevator service by
elevators servicing the floors on which the Premises are situated during
business hours on business days and shall have at least one passenger elevator
subject to call at all other times. In the event that Tenant shall require the
use of a service elevator or of the Building's passenger elevators for purposes
not otherwise supplied by Landlord or other than during business hours on
business days, Landlord shall provide a service elevator or passenger elevators,
as the case may be, for the use of Tenant, provided Tenant gives Landlord
reasonable advance notice of the time and use of such elevators to be made by
Tenant and Tenant pays to Landlord, as Additional Rent, Landlord's then
established charges therefor.
14.3 CLEANING. A. Provided Tenant shall keep the Premises in
good order, Landlord, at Landlord's expense, shall cause the Premises, including
the exterior and the interior of the windows thereof (subject to Tenant
maintaining unrestricted access to such windows), but excluding any portions of
the Premises used for the storage, preparation, service or consumption of food
or beverages, to be cleaned. Notwithstanding the preceding sentence, Tenant
shall pay to Landlord on demand Landlord's charges for (a) cleaning work in the
Premises or the Building or other portions of the Project required because of
(i) misuse or neglect on the part of Tenant or its agents, employees,
contractors subtenants or visitors, (ii) use of portions of the Premises for
preparation, storage, service, or consumption of food or beverages,
reproduction, data processing or computer operations, private lavatories or
toilets, or other special purposes requiring greater or more difficult cleaning
work than typical office areas, (iii) interior glass surfaces in the Premises,
(iv) non-building standard materials or finishes installed by Tenant or at its
request, (v) increases in frequency or scope of cleaning beyond the
specifications contained in any contract, the cost of which is included in
Operating Expenses, and (b) removal from the Premises and the Building of (i) so
much of any refuse and rubbish of Tenant as shall exceed that normally
accumulated daily in the routine of ordinary business office occupancy and (ii)
all of the refuse and rubbish of Tenant's machines and of any eating facilities
requiring special handling. Landlord and its cleaning contractor and their
employees shall have access to the Premises after 6 P.M. and before 9 P.M. on
each business day and at all times of any other day and, in the case of an
emergency, at any time on any day. Landlord and its cleaning
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contractor and their employees shall also have the right to use Tenant's light,
power and water in the Premises, without charge therefor, as may be reasonably
required for the purpose of cleaning the Premises. If Tenant is permitted
hereunder to, and does, have a separate area for the storage, preparation,
service or consumption of food or beverages in the Premises, Tenant, at Tenant's
expense, shall cause all portions of the Premises so used to be cleaned daily in
a manner satisfactory to Landlord, and to be exterminated against infestation by
vermin, roaches or rodents regularly and, in addition, whenever there shall be
evidence of any infestation.
B. The cleaning services required to be furnished by Landlord
pursuant to this Section 14.3 may be furnished by a contractor or contractors
employed by Landlord and Tenant agrees that Landlord shall not be deemed in
default of any of its obligations under this Section 14.3 unless such default
shall continue for an unreasonable period of time after notice from Tenant to
Landlord setting forth the specific nature of such default.
14.4 WATER. Landlord shall cause to be furnished adequate
tempered water to each floor on which the Premises are located for normal
drinking, lavatory and cleaning purposes. If Tenant uses water for any purpose
other than as aforesaid, or in extraordinary quantities, Landlord, at Tenant's
expense, may install a meter or meters to measure Tenant's consumption of water.
Tenant shall pay to Landlord the cost of any such meter and its installation and
Tenant, at its sole cost and expense, shall keep any such meter(s) in good
working order and repair. Tenant shall reimburse Landlord on demand for the
cost of the quantities of water shown on such meter(s), or in an amount which
may otherwise be agreed upon by the parties, and for any related sewer charges.
14.5 DIRECTORY LISTINGS. Landlord, on Tenant's request, shall
maintain listings on the Building directory of the names of Tenant and permitted
subtenants, and the names of partners, officers and key employees of Tenant and
permitted subtenants, provided that the spaces so allocated to Tenant shall not
exceed Tenant's Proportionate Share of the total listing space on the Building
directory.
14.6 ELECTRICITY. A. Landlord, at Landlord's expense, subject
to the provisions of this Section and Article VII, shall furnish through the
Building Equipment electrical energy reasonably required (but subject to the
provisions of Subsections 14.6B and C) in connection with the use and occupancy
of the Premises for the operation of such lighting, electrical appliances and
equipment as Landlord may permit to
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be installed in the Premises. Except as otherwise specifically set forth in
this Article, there shall be no specific charge by way of measuring such
electrical energy on any meter or otherwise, as the furnishing of such
electrical energy will be included in Operating Expenses. If either the
quantity or character of electrical service is changed by the public utility
corporation supplying electrical service to the Building or is no longer
available or suitable for Tenant's requirements, no such change, unavailability
or unsuitability shall constitute an actual or constructive eviction, in whole
or in part, or entitle Tenant to any abatement or diminution of rent, or relieve
Tenant from any of its obligations under this Lease, or impose any liability
upon Landlord or Landlord's agents.
B. Tenant covenants that at no time shall the use of
electrical energy in the Premises exceed 3 watts per square foot of usable area
consisting of 2.5 watts per square foot for lighting and 0.5 watts per square
foot for power (electric outlets). In order to insure that such capacity
is not exceeded and to avert any possible adverse effect upon the Building
electrical system or the Building heating, ventilating or air-conditioning
systems, Tenant shall not, without the prior consent of Landlord in each
instance (which consent, subject to all of the other provisions of this section,
shall not be unreasonably withheld or delayed), make or perform, or permit the
making or performing of, any alteration to wiring installations or other
electrical facilities in or serving the Premises or any additions to the
electrical fixtures, business machines, office equipment, or other appliances in
the Premises which utilize electrical energy, other than small business
machines, including personal desktop computers, normally used in executive and
administrative offices. Should Landlord grant such consent, all additional
risers or other equipment required therefor, including, without limitation,
air-conditioning equipment, shall be provided by Landlord and the cost thereof
shall be paid by Tenant with 10 days after being billed therefor. As a
condition to granting such consent, Tenant shall be required to pay an amount
for each calendar month commencing with the month in which installation of such
alterations, wiring, other facilities or such fixtures, appliances or equipment
occurs (prorated for the month in which such installation occurs, if necessary)
which will reflect the value of the additional electrical service to be
furnished by Landlord--that is, the potential additional electrical energy to be
made available to Tenant based upon the estimated additional capacity of such
additional risers or other equipment or the connected load of such fixtures,
equipment or appliances as determined by an electrical consultant selected by
Landlord. Such determination shall be binding upon the parties. Each such
determination shall be made at the sole cost and expense of
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Tenant.
C. From time to time during the Term, Landlord may, at its option,
cause an electrical engineer or utility consultant selected by Landlord to make
a survey of the electrical lighting and power load to determine the average
monthly electrical energy consumption in the Premises. Such determinations
shall take into account, among other things, any special electrical requirements
of Tenant and use by Tenant of electrical energy at times other than business
hours on business days. If, based on the findings of such engineer or
consultant, Landlord reasonably determines that Tenant is consuming electricity
in the Premises in excess of that reasonably required for the operation of
normal office lighting fixtures, appliances and equipment, during business hours
on business days, Tenant shall pay to Landlord an amount for each month from and
after the date of such determination by the engineer or consultant (prorated for
the month during which such determination is made, if necessary) which will
reflect the value of the electrical energy being consumed by Tenant in excess of
that reasonably required for the operation of normal office lighting fixtures,
appliances and equipment during business hours on business days. Alternatively,
Landlord may cause to be installed a submeter to measure the electric
consumption of any special equipment operated by Tenant, and Tenant agrees to
pay the charges shown thereon.
D. Notwithstanding anything to the contrary contained herein,
Landlord reserves the right to discontinue, at any time, the furnishing of
electrical energy. In the event of any such discontinuance, (i) Landlord agrees
to give not less than 60 days advance notice of any such discontinuance to
Tenant unless such notice is not feasible under the circumstances in which event
Landlord will give Tenant such reasonable advance notice as is possible, (ii)
Landlord agrees to permit Tenant to receive electrical service directly from the
public utility corporation supplying electrical service to the Building and to
permit the existing feeders, risers, wiring and other electrical facilities
serving the Premises to be used by Tenant for such purpose to the extent they
are available, suitable and safely capable, (iii) Tenant agrees, at its sole
cost and expense, to install and maintain any necessary electrical meter
equipment, panel boards, feeders, risers, wiring and other equipment and to pay
for any necessary rewiring, (iv) any amounts payable to Tenant pursuant to
Subsections 14.6B and C shall be eliminated from and after the date of such
discontinuance and (v) this Lease shall remain in full force and effect and such
discontinuance shall not constitute an actual or constructive eviction, in whole
or in part, or entitle Tenant to any abatement or diminution of Rent except as
expressly provided in this Subsection D, or relieve Tenant from any of its other
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obligations under this Lease, or impose any liability upon Landlord or
Landlord's agents.
14.7 REDUCTION IN SERVICES. Landlord reserves the right, without
any liability to Tenant and without affecting Tenant's covenants and obligations
hereunder, to stop or reduce the level of service of any of the heating,
ventilation, air-conditioning, electric, sanitary, elevator or other Building
systems serving the Premises, or to stop or reduce the level of any other
services required of Landlord under this Lease, whenever and for so long as may
be necessary, by reason of accidents, emergencies, governmental or
quasi-governmental laws, regulations, controls or guidelines, strikes or the
making of repairs or changes which Landlord is required by this Lease or by law
to make or in good faith deems necessary, or by reason of inability to secure
proper supplies of fuel, steam, water, electricity, labor or supplies, or by
reason of any other cause beyond Landlord's reasonable control. In each
instance, Landlord shall exercise reasonable diligence to eliminate the cause of
stoppage and to effect restoration of service and shall give Tenant reasonable
notice, when practicable, of the commencement and anticipated duration of such
stoppage or reduction in service. Tenant shall not be entitled to any
diminution or abatement of Rent or other compensation by reason of any such
stoppage or reduction, unless such stoppage or reduction prevents all use of the
Premises for three (3) consecutive business days, in which event Basic Rent and
Additional Rent shall abate until Tenant is able to resume use of all or any
part of the Premises.
14.8 NO FURTHER SERVICE. Landlord shall have no obligation to
provide any services to Tenant beyond those specifically set forth in this
Article XIV.
14.9 UTILITY FACILITIES. Landlord agrees to cause to be provided
and maintained the necessary mains, conduits and other facilities necessary to
supply, if applicable, water, electricity, heating, ventilation and
air-conditioning, telephone service and sewerage service to the Premises, in
accordance with and subject to the provisions of this Article XIV.
14.10 TELEPHONE SERVICE. Telephone service within the Premises
shall not be deemed an Operating Expense and Tenant shall pay for the entire
cost of such service directly to the utility company providing the same.
14.11 REQUESTS FOR SERVICE. Any requests made by Tenant for
after hours or additional services may be made by telephone to the building
superintendent or such other person
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as may be designated by Landlord by written notice to Tenant.
14.12 ACCESS TO BUILDING. Anything herein to the contrary
notwithstanding, it is agreed that Tenant will have access to the Building 24
hours per day, 7 days per week.
ARTICLE XV
ALTERATIONS AND FIXTURES
15.1A. Any Improvements in or to the Premises shall be made only with
the prior consent of Landlord which shall not be unreasonably withheld provided
such Improvements are limited to the interior of the Premises, do not affect the
Building's structure or systems, and are in compliance with all Legal
Requirements and Insurance Requirements. Before proceeding with any such
Improvements, Tenant shall submit to Landlord detailed plans and specifications
therefor, for Landlord's consent. Tenant shall, commencing with the third such
request, reimburse Landlord for all reasonable expenses incurred by Landlord in
connection with (i) its decision and the decision of the Superior Lessor and the
Superior Mortgagee (if such consents are required) as to whether to approve the
proposed alterations, and (ii) inspecting the Improvements to determine whether
the same are being or have been performed in accordance with the approved plans
and specifications therefor and with all Legal Requirements and Insurance
Requirements, including, without limitation, the fees and expenses of any
architect or engineer employed for such purpose. If such Improvements require
consent by or notice to the Superior Lessor or the Superior Mortgagee, Tenant,
notwithstanding anything to the contrary contained in this Article, shall not
proceed with the Improvements until such consent has been received, or such
notice has been given, as the case may be, and all applicable conditions and
provisions of the Superior Lease and the Superior Mortgage with respect to the
proposed Improvements have been met or complied with at Tenant's expense; and
Landlord, if it consents to the Improvements, will request such consent or give
such notice, as the case may be.
B. With respect to all Improvements made in or to the Premises:
(i) all work in connection with such Improvements shall be
performed in such a way so as not to damage the Premises or any other portion of
the Building or the Project, or interfere with any Building services provided to
any other tenant of the Building or the Parking Garage, but if any damage is
caused by such work, such damage shall be
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promptly repaired by Tenant at its sole cost and expense;
(ii) Tenant shall obtain all necessary permits and licenses and
Landlord shall cooperate with Tenant to that end;
(iii) any such work shall be done in a good, and workmanlike
manner and in conformity with all applicable Legal Requirements and Insurance
Requirements, and shall be consistent with a first-class office
building-retail-parking complex;
(iv) except in connection with the initial installation by
performance of Tenant's work, no such work shall be commenced or performed by
any contractor, until Tenant shall have delivered to Landlord a waiver of right
to file a mechanic's lien signed by such contractor;
(v) all costs and expenses of such work shall be paid by
Tenant and shall be paid promptly so as to prevent the assertion of any liens or
encumbrances on Landlord's estate in the Project on account of labor and/or
materials used in or contributing to the work;
(vi) Tenant shall indemnify Landlord and hold it harmless
against any and all loss, claim, expense, liability or damage resulting from
such work, including any mechanic's or others liens or claims asserted against
Landlord's estate in the Premises, the Building or the Project, as a result of
said work, and Tenant shall, within 10 days of receipt of notice of the
occurrence of any such loss, claim, expense, liability or damage, or the filing
of such lien or claim, defend, pay off or satisfy the same or, if applicable,
cause same to be removed of record by furnishing a bond or other security
reasonably satisfactory to Landlord;
(vii) no such work shall weaken or impair the structural
integrity of any part of the Project or result in a concentration of structural
loads beyond the design capacity or overloading of any of the Building Equipment
beyond the design criteria and standards therefor;
(viii) the construction process shall not unreasonably interfere
with or cause annoyance to any other tenants of the Building or disrupt any
access to or use of the Common Facilities, or unreasonably delay or impose any
additional expense upon Landlord in the construction, maintenance, cleaning,
repair, safety, management, security or operation of the Building or the
Project, and if any such additional expense shall be incurred by Landlord as a
result of Tenant's construction work, Tenant shall pay such additional expense
as Additional Rent upon demand;
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(ix) Improvements will not result in violation of or require a
change in any certificate of occupancy applicable to the Premises, the Building
or the Project;
(x) the proper functioning of the Building Equipment shall
not, in the sole opinion of Landlord, be adversely affected;
(xi) Tenant shall not use the elevators during business hours
on business days for haulage or removal of materials or debris;
(xii) Tenant shall not be permitted to install and make part of
the Premises-any materials, fixtures or articles which are subject to liens,
conditional sales contracts, chattel mortgages or security interests (as such
term is defined in the Uniform Commercial Code as in effect in Maryland);
(xiii) no Improvements estimated to cost more than $10,000 (as
estimated by Landlord's contractor or engineer), shall be undertaken (a) except
under the supervision of a licensed architect or licensed professional engineer
satisfactory to Landlord, and (b) prior to Tenant delivering to Landlord either
(y) a performance bond and a labor and materials payment bond (issued by a
surety satisfactory to Landlord and licensed to do business in Maryland) each in
an amount equal to 150% of such estimated cost and otherwise in form
satisfactory to Landlord or (z) such other security as shall be satisfactory to
Landlord;
(xiv) throughout the making of such Improvements, Tenant at its
sole cost and expense, shall carry, or cause to be carried, worker's
compensation insurance covering all persons employed in connection with such
Improvements in statutory limits and general liability insurance for any
occurrence in or about the Building in which Landlord, Landlord's agents, the
Superior Lessor and the Superior Mortgagee shall be named as parties assured, in
limits which shall be subject to Landlord's approval, which approval Landlord
agrees shall not be unreasonably withheld, and with insurers reasonably
satisfactory to Landlord. Tenant shall furnish Landlord with satisfactory
evidence that such insurance is in effect at or before the commencement of any
work in connection with such Improvements and, on request, at reasonable
intervals thereafter;
(xv) no Improvements shall involve the removal of any Fixtures,
equipment or other property in the Premises which are not Tenant's Property
without Landlord's prior consent and unless they are promptly replaced, at
Tenant's expense and free of superior title, liens, security interest
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and claims, with fixtures, equipment or other property, as the case may be, of
like utility and at least equal value (which shall thereupon become the property
of Landlord), unless Landlord shall otherwise consent; and
(xvi) upon the termination of this Lease, Tenant shall, on
Landlord's request, restore the Premises to their condition prior to the making
of any Improvements by Tenant (except for Improvements made with Landlord's
consent and which consent did not require removal thereof, shall not be required
to be removed), reasonable wear and tear and damage by insured casualty
excepted.
15.2 Notwithstanding the provisions of Articles VIII and XI and
this Article XV, only Landlord or any one or more persons, firms or
corporations, authorized by Landlord shall be permitted to act as a construction
contractor or subcontractor for any work to be performed by Tenant pursuant to
such Articles. Landlord shall not unreasonably withhold its authorization for
any firm or corporation proposed by Tenant. Landlord expressly reserves the
right to act as or to designate, at any time and from time to time, an exclusive
construction contractor, and Landlord expressly reserves the right to exclude
from the Building any person, firm or corporation attempting to act as
construction contractor in violation hereof. In the event Tenant shall employ
any contractor permitted by this Section, such contractor and any subcontractor
shall agree to employ only such materials and such labor as will not result in
any difficulty, strike or jurisdictional dispute with other contractors,
mechanics or laborers engaged by Tenant, Landlord or others. Tenant, upon
demand of Landlord, shall cause all materials, contractors, mechanics or
laborers causing such difficulty, strike or dispute to leave or be removed from
the Building immediately. Tenant shall inform Landlord in writing of the names
of any permitted contractor or subcontractor Tenant proposes to use in the
Premises at least 10 days prior to the beginning of work by such contractor or
subcontractor.
15.3 All Improvements made in connection with Tenant's initial
occupancy of the Premises shall be subject to the provisions of Sections 15.lB,
15.2 and the provisions of the Work Letter.
15.4 All Improvements shall be and remain the property of Tenant
until the Expiration Date or date of earlier termination of this Lease at which
time all Improvements shall become the property of Landlord and shall be
surrendered with the Premises. All other Fixtures installed in Premises at the
commencement of or during the Term shall be and remain a part of the Premises
and shall be deemed the property of Landlord as of the date such Fixtures
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are completed, or as of the date such Fixtures are attached to or built into the
Premises, and shall not be removed by Tenant, except as otherwise expressly
provided in this Lease.
15.5 Notwithstanding the provisions of Section 15.4, provided no
Event of Default has occurred and is continuing, and provided that any such
removal is not incident to Tenant's abandoning the Premises or terminating the
operation of its business at the Premises in violation of any provision of this
Lease, Tenant shall have the right during the Term hereof to remove, at its sole
cost and expense, any and all of Tenant's Property. All Tenant's Property shall
remain the property of Tenant; provided, however, that any Tenant's Property not
removed by Tenant upon the expiration or sooner termination of this Lease,
shall, at Landlord's option, either become the property of the Landlord or shall
be disposed of or stored by Landlord, at Tenant's risk and expense, at such
place as Landlord selects within the metropolitan Baltimore area. Any removal
of Tenant's Property by Tenant in accordance with the foregoing provisions shall
be accomplished in a manner which will minimize any damage or injury to the
Premises, the Building or the Project, and any such damage or injury shall be
promptly repaired by Tenant at its sole cost and expense; and any damage to the
Premises caused by the installation of Tenant's Property in the Premises by
nailing, bolting or otherwise attaching the same to a floor, ceiling or wall,
shall be repaired at Tenant's sole cost and expense.
15.6 No approval of plans or specifications by Landlord or consent
by Landlord allowing Tenant to make Improvements in the Premises shall in any
way be deemed to be an agreement by Landlord that the contemplated Improvements
comply with any Legal Requirements or Insurance Requirements or the certificate
of occupancy for the Building. Nor shall it be deemed to be a waiver by
Landlord of the compliance by Tenant of any of the terms of this Lease.
Notice is hereby given that neither Landlord, Landlord's agent, the Superior
Lessor nor the Superior Mortgagee shall be liable for any labor or materials
furnished or to be furnished to Tenant upon credit, and that no mechanic's or
other liens for such labor or materials shall attach to or affect any estate
or interest of Landlord, the Superior Lessor or the Superior Mortgagee in and
to the Premises or the Real Property.
15.7 Tenant shall keep records of Improvements costing in excess
of $10,000 and the cost thereof. Tenant shall, within 45 days after demand by
Landlord, furnish to Landlord copies of such records.
ARTICLE XVI
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INSURANCE
16.1 A. Tenant shall during the entire Term and any extensions and
renewals thereof and during any period of Rent abatement or period of occupancy
prior to the Commencement Date, at its sole cost and expense, obtain, maintain
and keep in full force and effect, with Tenant, Landlord and all Superior
Lessors and Superior Mortgagees named as insureds therein as their respective
interests may appear, the following insurance:
(1) Fire insurance, including extended coverage, vandalism and
malicious mischief, upon property of every description and kind owned by
Tenant or anyone claiming through or under Tenant and located in the
Building or for which Tenant is legally liable or which was installed by
or on behalf of Tenant or anyone claiming through or under Tenant,
including, without limitation, Tenant's Property and all other
Improvements (other than Landlord's Work), in an amount not less than 90%
of the full replacement cost thereof. In the event that there shall be a
dispute as to the amount which comprises full replacement cost, the
decision of Landlord or any Superior Mortgagee shall be conclusive.
(2) Comprehensive General Liability Insurance, coverage to include
personal injury, bodily injury, broad form property damage, operations
hazard, owner's protective coverage, contractual liability and products
and completed operations liability in limits not less than $5,000,000
inclusive.
(3) Worker's Compensation and Employer's Liability insurance in
form and amount satisfactory to Landlord.
(4) Any other form or forms of insurance as Tenant or Landlord or
any Superior Lessor or Superior Mortgagee may reasonably require from time
to time in form, in amounts and for insurance risks against which a
prudent tenant in a building in Baltimore similar to the Building would
protect itself.
B. All policies shall be taken out with insurers acceptable to
Landlord and in form reasonably satisfactory from time to time to Landlord and
all Superior Lessors and Superior Mortgagees. Such policies may be blanket
policies provided that the coverage afforded Landlord and any Superior Lessor or
Mortgagee shall not be reduced or diminished by reason of the use thereof.
Tenant agrees that certificates of insurance on the Landlord's standard form,
or, if required by Landlord or any Superior Lessor or Superior Mortgagee,
certified copies of each such insurance policy will be
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delivered to Landlord as soon as practicable after the placing of the required
insurance, but in no event later than 10 days after Tenant takes possession of
all or any part of the Premises, including any possession taken prior to the
Commencement Date. All policies shall contain an undertaking by the insurers to
notify Landlord and all Superior Lessors and Superior Mortgagees in writing, by
registered mail, not less than 30 days prior to any material change, reduction
in coverage, cancellation, or other termination thereof.
C. In the event of damage to or destruction of the Premises and
the termination of this Lease by Landlord pursuant to Section 18.2 hereof,
Tenant pay to Landlord all of its insurance proceeds relating to the
Improvements in the Premises.
16.2 Landlord will not carry insurance of any kind on any
Improvements other than Landlord's Work or on any other of Tenant's Property,
and Landlord shall not be obligated to repair any damage thereto or replace the
same, except as otherwise set forth in Section 18.3 hereof.
16.3 If any insurance policy carried by Landlord on the Premises,
the Building, the Building Equipment or the Project shall be canceled or
cancellation shall be threatened or the coverage thereunder reduced or
threatened to be reduced, in any way by reason of the use or occupation of the
Premises to any part thereof by Tenant or by any one claiming through or under
Tenant or by anyone permitted by Tenant to be upon the Premises and, if Tenant
fails to remedy the condition giving rise to cancellation, threatened
cancellation or reduction of coverage within 48 hours after notice thereof,
then, in addition to any remedies Landlord may have pursuant to Articles XXI and
XXIII hereof, Landlord may, at its option, terminate this Lease.
16.4 Any policy or policies of fire, extended coverage or similar
casualty insurance, which either party obtains in connection with the Premises
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 prior to the occurrence of injury or loss. Landlord and Tenant waive
any rights of recovery against the other for injury or loss due to hazards
covered by insurance containing such a waiver of subrogation clause or
endorsement to the extent of the injury or loss covered thereby.
ARTICLE XVII
NON-LIABILITY AND INDEMNIFICATION
17.1 Neither Landlord nor Landlord's agents,
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officers, directors, shareholders, partners or principals (disclosed or
undisclosed) shall be liable to Tenant or Tenant's agents, employees,
contractors, invitees or licensees or any other occupant of the Premises, and
Tenant shall save Landlord, Landlord's agents, the Superior Lessor and the
Superior Mortgagee and their respective agents, employees, contractors,
officers, directors, shareholders, partners and principals (disclosed or
undisclosed) harmless from any loss, cost, liability, claim, damage, expense
(including reasonable attorneys' fees and disbursements), penalty or fine
incurred in connection with or arising from any injury to Tenant or to any other
person or for any damage to, or loss (by theft or otherwise) of, any of Tenant's
Property or of the property of any other person, irrespective of the cause of
such injury, damage or loss (including the acts or negligence of any tenant or
of any owners or occupants of adjacent or neighboring property or caused by
operations in construction of any private, public or quasi-public work) unless
due to the negligence or wilful misconduct of Landlord or Landlord's employees
or agents without contributory negligence on the part of Tenant, its employees,
agents, contractors, invitees such as might normally be brought upon or kept in
the Premises as incidental to the reasonable use of the Premises for the
purposes herein permitted will be brought upon or kept in the Premises;
provided, however, that even if due to any such negligence of Landlord or
Landlord's agents, Tenant waives, to the full extent permitted by law, any claim
for consequential damages in connection therewith. Landlord and Landlord's
agents shall not be liable, to the extent of Tenant's insurance coverage, for
any loss or damage to any person or property even if due to the negligence of
Landlord or Landlord's agents. Any Building employee to whom any property shall
be entrusted by or on behalf of Tenant shall be deemed to be acting as Tenant's
agent with respect to such property and neither Landlord nor Landlord's agents
shall be liable for any loss of or damage to any such property by theft or
otherwise.
17.2 No representation, guaranty or warranty is made or assurance
given that the communications or security systems, devices or procedures of the
Building, if any, will be effective to prevent injury to Tenant or any other
person or damage to, or loss (by theft or otherwise) of, any of Tenant's
Property or of the property of any other person, and Landlord reserves the right
to discontinue or modify at any time such communications or security systems or
procedures without liability to Tenant.
17.3 Tenant hereby indemnifies Landlord, Landlord's agents, each
Superior Lessor and each Superior Mortgagee against liability in connection with
or arising from (a) any default by Tenant in the performance of any of the terms
of
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this Lease on Tenant's part to be performed, or (b) the use or occupancy or
manner of use or occupancy of the Premises by Tenant or any person claiming
through or under Tenant, or (c) any acts, omissions or negligence of Tenant or
any such person, or the contractors, agents, employees, invitees or licensees of
Tenant or any such person, in or about the Premises, the Real Property or the
Project either prior to, during or after the expiration of, the Term. If any
action or proceeding shall be brought against Landlord or Landlord's agents, or
the Superior Lessor or the Superior Mortgagee, based upon any such claim and if
Tenant, upon notice from Landlord, shall cause such action or proceeding to be
defended at Tenant's expense by counsel reasonably satisfactory to Landlord,
without any disclaimer of liability by Tenant in connection with such claim,
Tenant shall not be required to indemnify Landlord, Landlord's agents, the
Superior Lessor or the Superior Mortgagee for attorneys' fees and disbursements
in connection with such action or proceeding.
17.4 Tenant shall pay to Landlord as Additional Rent, within 15
days following rendition by Landlord to Tenant of bills or statements therefor,
sums equal to all losses, costs, liabilities, claims, damages, fines, penalties
and expenses referred to in Section 17.3.
ARTICLE XVIII
CASUALTY DAMAGE
18.1 Tenant shall give immediate notice (by telephone, confirmed in
writing) to Landlord of any damage caused to the Premises by fire or other
casualty, and if Landlord does not elect to terminate this Lease as provided in
Section 18.2, Landlord shall proceed with reasonable diligence and at its sole
cost and expense to rebuild and repair the Building and/or the Premises, as the
case may be, but Landlord shall not be obligated to expend for such rebuilding
and repair any amount in excess of the amount of the insurance proceeds actually
recovered by Landlord and made available by any Superior Lessor or Superior
Mortgagee as a result of such loss.
18.2 If the Building or the Premises shall be destroyed or
substantially damaged by a casualty not covered by Landlord's insurance, or if
25% or more of the Premises is damaged or rendered untenantable by a casualty
covered by Landlord's insurance, or if the Premises are not affected but 25% of
the Building or such portion of the Common Facilities as shall render the
Premises or the Building untenantable is damaged or rendered untenantable, then
in any such event Landlord may elect either to terminate this Lease or to
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proceed to rebuild and repair the Premises or that portion of the Building so
damaged. Landlord shall give written notice to Tenant of such election within
90 days after the occurrence of such casualty, or within 30 days after the
adjustment of the insurance settlement, whichever is later. In the event that
such notice of termination shall be given, this Lease shall terminate as of the
date provided in such notice of termination (whether or not the Term shall have
commenced) with the same effect as if that date were the Expiration Date,
without prejudice, however, to Landlord's rights and remedies against Tenant
under the terms of this Lease. If at any time prior to Landlord giving the
aforesaid notice of termination or commencing the repair pursuant to Section
18.1, there shall be a Successor Landlord, such Successor Landlord shall have a
further period of 60 days from the date of so taking possession to terminate
this Lease by notice to Tenant and in the event that such a notice of
termination shall be given, this Lease shall terminate as of the date provided
in such notice of termination (whether or not the Term shall have been
commenced) if Tenant is not occupying any portion of the Premises or otherwise
as of the date provided in such notice, with the same effect as if that date
were the Expiration Date, without prejudice, however, to Landlord's rights
against Tenant under the terms of this Lease.
18.3 Subject to the provisions of Section 18.1, Landlord's
obligation to rebuild and repair under this Article XVIII shall in any event be
limited to restoring Landlord's work, as described in the Work Letter, to
substantially the condition in which the same existed prior to the casualty, and
to proceed, at the sole cost and expense of Tenant, to rebuild, repair and
restore Tenant's Work and any additional Improvements made by Tenant during the
Term, all to substantially the condition existing prior to such casualty.
18.4 During the period from the occurrence of the casualty until
Landlord's repairs are completed, the Basic Rent and Additional Rent payable
pursuant to Articles VI and VII shall be abated in that Proportion which the
Premises Area rendered untenantable bears to the entire Premises Area; provided,
however, there shall be no abatement of any other charges or items of Additional
Rent provided for herein to be paid by Tenant; and further provided, however,
that should Tenant or anyone claiming through or under Tenant occupy a portion
of the Premises during the period the repair work is taking place and prior to
the date the Premises are no longer untenantable, the Rent allocable to such
reoccupied portion, based upon the proportion which the reoccupied portion of
the Premises bears to the total area of the Premises, shall be payable by Tenant
from the date of such occupancy.
18.5 Landlord shall not be liable for any
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inconvenience or annoyance to Tenant or injury to the business of Tenant
resulting in any way from any such damage by fire or other casualty or the
repair thereof.
18.6 Notwithstanding any of the foregoing provisions of this
Article, if, by reason of some action or inaction on the part of Tenant or any
of its employees, agents, licensees, invitees or contractors, either (a)
Landlord or the Superior Lessor or the Superior Mortgagee shall be unable to
collect all of the insurance proceeds (including rent insurance proceeds)
applicable to damage or destruction of the Premises or the Building or the
Project by fire or other casualty or (b) the Premises or the Building or the
Project shall be damaged or destroyed or rendered completely or partially
untenantable on account of fire or other casualty then, without prejudice to any
other remedy which may be available against Tenant, the abatement of rent
provided for in Section 18.4 shall not be effective to the extent of the
uncollected insurance proceeds.
ARTICLE XIX
EMINENT DOMAIN
19.1 If the whole of the Real Property or the Building or the
Premises shall be acquired or condemned by eminent domain for any public or
quasi-public use or purpose, this Lease shall terminate as of the date of the
vesting or acquisition of title in the condemning authority with the same effect
as if said date were the Expiration Date.
19.2 If less than the whole but more than 50% of the premises or
more than 25% of the Building (even if the Premises are unaffected) or such
portion of the Common Facilities as shall render the Premises or the Building
untenantable should be so acquired or condemned, Landlord shall have the option
to terminate this Lease by notice to Tenant given within 90 days of such taking.
If more than 25% of the Premises is taken or if more than 50% of the Building
(even if the Premises are unaffected) or such portion of the Common Facilities
as shall render the Premises or the Building untenantable should be so acquired
or condemned, Tenant shall have the option to terminate this Lease by notice to
Landlord given within 90 days of such taking. In the event that a notice of
termination is given as hereinabove set forth, this Lease shall terminate as of
the date of vesting or acquisition of title in the condemning authority with the
same effect as if said date were the Expiration Date. If (i) neither Landlord
nor Tenant shall exercise their respective options to terminate this Lease as
hereinabove set forth, or (ii) some
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lesser portion of the Premises or the Building, which does not give rise to a
right to terminate pursuant to Section 19.2, should be so acquired or condemned,
this Lease shall continue in force and effect but, from and after the date of
the vesting of title, the Basic Rent payable hereunder during the unexpired
portion of this Lease shall be reduced in proportion to the reduction of the
Premises Area so taken and any Additional Rent payable pursuant to Article VI
and Article VII shall be adjusted to reflect the diminution of the Premises
and/or the Building, as the case may be.
19.3 Following a partial condemnation, and provided this Lease is not
terminated as provided in Section 19.2, Landlord shall make all necessary
repairs and alterations within the scope of Landlord's Work necessary to make
the Premises an architectural whole, but Landlord shall not be obligated to
expend for such repairs any amount in excess of the condemnation proceeds
received by Landlord and made available by any Superior Lessor or Superior
Mortgagee as a result of such taking or condemnation. Further, Landlord will
proceed at the sole cost and expense of Tenant (except to the extent Landlord
receives any portion of an award for the taking of Tenant's Improvements) to
make all necessary repairs and alterations to Tenant's Work, and any additional
Improvements made by Tenant during the Term necessary to restore the Premises
to its condition immediately prior to such taking, to the extent practicable.
19.4 The proceeds of any condemnation award whether for the whole
or a part of the Premises, shall be the property of Landlord, whether such award
is compensation for damages to Landlord's or Tenant's interest in the Premises,
and Tenant hereby assigns all of its interest in any such award to Landlord;
provided, however, that Landlord shall have no interest in any award made to
Tenant for loss of business, relocation expenses, or for the taking of Tenant's
Property if a separate award for such items is made to Tenant.
19.5 If the temporary use or occupancy of all or part of the Premises
shall be condemned or taken for any public or quasi-public use or purpose during
the Term, this Lease and the Term shall be and remain unaffected by such
condemnation or taking and Tenant shall continue responsible for all of its
obligations hereunder (except to the extent prevented from so doing by reason of
such condemnation or taking) and it shall continue to pay the Rent in full. In
the event of any temporary condemnation or taking, Tenant shall be entitled to
appear, claim, prove and receive the entire award unless the period of temporary
use or occupancy extends beyond the Expiration Date or date of earlier
termination of this Lease, in which event Landlord shall be entitled to appear,
claim, prove and receive the entire award as represents the
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cost of restoration of the Premises and the balance of any such award shall be
apportioned between Landlord and Tenant as of the Expiration Date or date of
earlier termination. At the termination of such occupancy prior to the
Expiration Date, Tenant, at its own expense, will restore the Premises as nearly
as possible to their condition prior to the condemnation or taking.
Notwithstanding the foregoing, any lump sum award received by Tenant as
compensation for temporary use and occupancy of the Premises shall be delivered
to and held by Landlord in trust for the making of rent payments. The rights
and interest of Landlord and Tenant to any award received or receivable with
respect to a condemnation or taking for temporary use or occupancy shall be in
all other respects governed by the applicable provisions of the Superior Lease
and the Superior Mortgage and in the event of any conflict between the terms of
this Section and of the Superior Lease and the Superior Mortgage, those of the
Superior Lease and the Superior Mortgage shall govern.
ARTICLE XX
EVENTS OF DEFAULT
20.1 The occurrence of any one or more of the following events and
the continuation thereof beyond the applicable grace period herein provided, if
any, shall constitute an "Event of Default":
(a) if Tenant shall default in the payment of (i) Basic Rent and
such default shall continue for a period of 5 days after notice thereof, or (ii)
any item of Additional Rent and such default shall continue for a period of 15
days after notice thereof; or
(b) if Tenant shall default in the performance of any of its covenants
or obligations under this Lease (other than the payment of Basic Rent and
Additional Rent), and shall not have cured such default within 30 days after
written notice from Landlord of such default, or, if such default is of such a
nature that it cannot be completely remedied within said 30 days, Tenant shall
not have (i) promptly upon the giving by Landlord of such notice, advised
Landlord of Tenant's intention to institute all steps necessary to remedy such
situation, (ii) promptly instituted and thereafter diligently prosecute to
completion all steps necessary to remedy the same, and (iii) completed such
remedy within a reasonable time after the date of the giving of said notice by
Landlord and in any event prior to such time as would either subject Landlord,
Landlord's agents, any Superior Lessor or Superior Mortgagee to prosecution for
a crime or cause a
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default under any Superior Lease or any Superior Mortgage; or
(c) if any event shall occur or any contingency shall arise
whereby this Lease or the estate hereby granted or the unexpired balance of the
Term would, by operation of law or otherwise, devolve upon or pass to any person
other than Tenant except as is expressly permitted under Article X; or
(d) if Tenant shall fail to take occupancy of the Premises within 30
days after the Commencement Date; or
(e) if Tenant shall file a voluntary petition in bankruptcy or
insolvency, or commence a case under the Federal Bankruptcy Code, or shall be
adjudicated a bankrupt or insolvent, or shall file any petition or answer
seeking any reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under the present or any future federal bankruptcy
act or any other present or future applicable federal, state or other statute or
law (foreign or domestic), or shall make an assignment for the benefit of
creditors or shall seek or consent or acquiesce in the appointment of any
trustee, receiver or liquidator of Tenant or of all or any part of Tenant's
Property; or
(f) if, within 60 days after the commencement of any proceeding
against Tenant, whether by the filing of a petition or otherwise, seeking any
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar relief under any present or future federal bankruptcy act or any
other present or future applicable federal, state or other statute or law
(foreign or domestic), such proceeding shall not have been dismissed, or if,
within 60 days after the appointment of any trustee, receiver or liquidator of
Tenant or of all or any part of Tenant's Property, without the consent or
acquiescence of Tenant, such appointment shall not have been vacated or
otherwise discharged, or if any execution or attachment shall be issued against
Tenant or any of Tenant's Property pursuant to which the Premises, or any part
thereof, shall be taken or occupied or attempted to be taken or occupied.
20.2 If Tenant shall default (i) in the timely payment of Basic
Rent or Additional Rent, and any such default shall continue or be repeated for
2 consecutive months or for a total of 4 months in any period of 12 months or
(ii) more than 3 times in any period of 6 months, in the performance of any
other term of this Lease to be performed by Tenant, then, notwithstanding that
such defaults shall have each been cured within the applicable period, if any,
as above provided, any further similar default shall be deemed to be deliberate
and Landlord thereafter may pursue any one or more of the remedies provided to
Landlord in Article XXI or otherwise available to
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Landlord at law or in equity.
20.3 If, at any time, (a) Tenant shall be comprised of two or more
persons, or (b) Tenant's obligations under this Lease shall have been guaranteed
by any person, or (c) Tenant's interest in this Lease shall have been assigned,
"Tenant", as used in subdivisions (b) and (c) of Section 20.1, shall mean any
one or more of the persons primarily or secondarily liable for Tenant's
obligations under this Lease. Any monies received by Landlord from or on behalf
of Tenant during the pendency of any proceeding of the types referred to in
subdivisions (b) and (c) of Section 20.1 shall be deemed
paid as compensation for the use and occupation of the Premises and the
acceptance of any such compensation by Landlord shall not be deemed an
acceptance of Rent or a waiver on the part of Landlord of any rights under this
Lease.
ARTICLE XXI
LANDLORD'S REMEDIES
21.1 Upon the occurrence of any of the Events of Default, Landlord
shall have the option to pursue any one or more of the following remedies, in
addition to any and all other rights and remedies Landlord may have under this
Lease or by law, without any notice or demand whatsoever:
(a) Landlord and Landlord's agents may at any time, re-enter the
Premises, or any part thereof, without notice, either by summary proceedings,
distress proceedings, or by any other applicable action or proceeding, or by
force or otherwise (without being liable to indictment, prosecution or damages
therefor), and may repossess the Premises and dispossess Tenant and any other
persons from the Premises and remove any and all of its or their property and
effects from the Premises, without liability or damage thereto to the end that
Landlord may have, hold and enjoy the Premises and in no event shall re-entry be
deemed an acceptance and surrender of this Lease;
(b) Landlord, at its option, may relet the whole or any part or
parts of the Premises from time to time, either in the name of Landlord or
otherwise, to such tenant or tenants, for such term or terms ending before, on
or after the Expiration Date, at such rental or rentals and upon such other
conditions, which may include concessions and free rent periods, as Landlord in
its sole discretion may determine. Landlord shall have no obligation, other
than as prescribed by the laws of the State of Maryland, to relet the Premises
or any part thereof and shall in no event be liable, other than
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as prescribed by the laws of the State of Maryland, for refusal to relet the
Premises or any part thereof, or, in the event of any such reletting, for
refusal or failure to collect any rent upon any such reletting, and no such
refusal or failure shall operate to relieve Tenant of any liability under this
Lease or otherwise to affect any such liability. Landlord, at Landlord's
option, may make such repairs, improvements, alterations, additions, decorations
and other physical changes in and to the Premises as Landlord, in its sole
discretion, considers advisable or necessary in connection with any such
reletting or proposed reletting, without relieving Tenant of any liability under
this Lease or otherwise affecting any such liability;
(c) Either before or after any re-entry or reletting under this
Article XXI, Landlord may, by notice to Tenant, declare the Term hereof ended
and this Lease terminated and, in the event such notice is given, this Lease and
the Term and estate hereby granted (whether or not the Term shall have
commenced) shall terminate on the date set forth in such notice with the same
effect as if that day were the Expiration Date, but Tenant shall remain liable
for damages as provided in Section 21.3; and
(d) Distrain for rent and other charges due as rent and/or
additional rent and be entitled to the benefit of all laws now or hereafter made
applicable to distrain or any action in the nature of distraint.
21.2 In the event of any breach or threatened breach by Tenant or
any person claiming through or under Tenant of any of the terms of this Lease,
Landlord shall be entitled to enjoin such breach or threatened breach and shall
have the right to invoke any right allowed at law or in equity, by statute or
otherwise, as if re-entry, summary proceedings or other specific remedies were
not provided for in this Lease.
21.3 If this Lease shall terminate as provided in Subdivision (c) of
Section 21.1, or by or under any summary proceeding or any other action or
proceeding, or if Landlord shall re-enter the Premises as provided in
Subdivision (a) of Section 21.1, or by or under any summary proceeding or any
other action or proceeding, then, in any of said events:
(a) Tenant shall pay to Landlord all Rent to the date upon which
this Lease shall have been terminated or to the date of re-entry upon the
Premises by Landlord, as the case may be;
(b) Landlord shall be entitled to retain all monies, if any, paid
by Tenant to Landlord, whether as advance
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rent, security or otherwise, but such monies shall be credited
by Landlord against any Rent due at the time of such termination or re-entry or,
at Landlord's option, against any damages payable by Tenant;
(c) Tenant shall be liable for and shall pay to Landlord, as
damages, any deficiency between the Rent payable hereunder for the period which
otherwise would have constituted the unexpired portion of the Term (conclusively
presuming the Additional Rent to be the same as was payable for the year
immediately preceding such termination or reentry) and the net amount, if any,
of rents ("Net Rent") collected under any reletting effected pursuant to the
provisions of Subdivision (b) of Section 21.1 for any part of such period (first
deducting from the rents collected under any such reletting all of Landlord's
expenses in connection with the termination of this Lease or Landlord's re-entry
upon the Premises and in connection with such reletting including all
repossession costs, brokerage commissions, legal expenses, alteration costs and
other expenses of preparing the Premises for such reletting);
(d) Any deficiency in accordance with Subdivision
(c) above shall be paid in monthly installments by Tenant on the days specified
in this Lease for the payment of installments of Basic Rent. Landlord shall be
entitled to recover from Tenant each monthly deficiency as the same shall arise
and no suit to collect the amount of the deficiency for any month shall
prejudice Landlord's right to collect the deficiency for any prior or subsequent
month by a similar proceeding. Alternatively, suit or suits for the recovery of
such deficiencies may be brought by Landlord from time to time at its election;
(e) Whether or not Landlord shall have collected any monthly
deficiencies as aforesaid, Landlord shall be entitled, to recover from Tenant,
and Tenant shall pay Landlord, on demand, as and for liquidated and agreed final
damages and not as a penalty, a sum equal to the amount by which the Basic Rent
and Additional Rent payable hereunder for the period to the Expiration Date from
the latest of the date of termination of this Lease, the date of re-entry or the
date through which monthly deficiencies shall have been paid in full
(conclusively presuming the Additional Rent to be the same as payable for the
year immediately preceding such termination or re-entry) exceeds the then fair
and reasonable rental value of the Premises for the same period, both discounted
at the rate of 8% per annum to present worth. If, before presentation of proof
of such liquidated damages to any court, commission or tribunal, the Premises,
or any part thereof, shall have been relet by Landlord for the period which
otherwise would have constituted the unexpired portion
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of the Term, or any part thereof, the amount of rent upon such reletting shall
be deemed, prima facie, to be the fair and reasonable rental value for the part
or the whole of the Premises (as the case may be) so relet during the term of
the reletting; and
(f) In no event shall Tenant be entitled (i) to receive any excess
of any Net Rent under subdivision (c) over the sums payable by Tenant to
Landlord hereunder or (ii) in any suit for the collection of damages pursuant to
this Section, to a credit in respect of any Net Rent from a reletting except to
the extent that such Net Rent is actually received by Landlord prior to the
commencement of such suit. If the Premises or any part thereof should be relet
in combination with other space, then proper apportionment on a square foot area
basis shall be made of the rent received from such reletting and the expenses of
reletting.
21.4 If, on account of any breach or default by Tenant in Tenant's
obligations hereunder, it shall become necessary for Landlord to employ an
attorney to enforce or defend any of Landlord's rights or remedies hereunder,
Tenant agrees to pay any reasonable attorney's fees incurred by Landlord in such
connection.
21.5 All of the foregoing remedies are cumulative and the decision by
Landlord to exercise one of the remedies shall not preclude Landlord from
exercising any other of the remedies at such time as Landlord deems fit, and
pursuit by Landlord of any remedy herein provided or any other remedies provided
by law shall not constitute a forfeiture or waiver of any Rent due to Landlord
hereunder or of any damages to which Landlord may lawfully be entitled by reason
of any default by Tenant.
21.6 Any re-entry or re-letting under this Article XXI shall not
be deemed to constitute a surrender or termination of this Lease or of any
rights reserved by Landlord hereunder, nor a release of Tenant from the
performance of any of its obligations hereunder, unless Landlord shall
specifically notify Tenant in writing to that effect. Any such re-entry or
re-letting shall not preclude Landlord from thereafter at any time terminating
this Lease as herein provided.
ARTICLE XXII
ARBITRATION
22.1 The parties hereto shall not be deemed to have agreed to
determination of any dispute arising out of the
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Lease by arbitration unless determination in such manner shall have been
specifically provided for in this Lease.
22.2 The party desiring arbitration shall give notice to that
effect to the other party and shall in such notice appoint a person as
arbitrator on its behalf. Within 10 days, the other party by notice to the
original party shall appoint a second person as arbitrator on its behalf. The
arbitrators thus appointed shall appoint a third person, and such three
arbitrators shall as promptly as possible determine such matter, provided,
however, that
(a) if the second arbitrator shall not have been appointed as
aforesaid, the first arbitrator shall proceed to determine such matter; and
(b) if the two arbitrators appointed by the parties shall be
unable to agree, within 10 days after the appointment of the second arbitrator,
upon the appointment of a third arbitrator, they shall give written notice to
the parties of such failure to agree, and, if the parties fail to agree upon the
selection of such third arbitrator within 10 days after the arbitrators
appointed by the parties give notice as aforesaid, then within 5 days thereafter
either of the parties upon notice to the other party may request such
appointment by the American Arbitration Association (or any organization
successor thereto), or in its absence, refusal, failure or inability to act, may
apply for a court appointment of such arbitrator.
22.3 Each arbitrator shall be a fit and impartial person who shall
have had at least 10 years' experience in the City of Baltimore in a calling
connected with the matter of the dispute.
22.4 The arbitration shall be conducted, to the extent consistent
with this Article, in accordance with the then prevailing rules of the American
Arbitration Association (or any organization successor thereto). The
arbitrators shall render their decision and award, upon the concurrence of at
least two of their number, within 30 days after the appointment of the third
arbitrator. Such decision and award shall be in writing and shall be final and
conclusive on the parties, and counterpart copies thereof shall be delivered to
each of the parties. In rendering such decision and award, the arbitrators
shall not add to, subtract from or otherwise modify the provisions of this
Lease. Judgment may be had on the decision and award of the arbitrator(s) so
rendered in any court of competent jurisdiction. Any monetary award made by the
arbitrators shall bear interest at the then prevailing rate for three month
Treasury Bills.
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22.5 Each party shall pay the fees and expenses of the one of the
two original arbitrators appointed by or for such party and the fees and
expenses of the third arbitrator and all other expenses of the arbitration
(other than the fees and disbursements of attorneys or witnesses for each party)
shall be borne by the parties equally.
22.6 Notwithstanding the provisions of this Article, if any delay
in complying with any requirement of this Lease by Tenant might subject Landlord
to any fine or penalty, or to prosecution for a crime, or if it would constitute
a default by Landlord under a Superior Mortgage or a Superior Lease, Landlord
may exercise its right under Article XXIII to remedy such default and in such
event the sole question to be determined by the arbitrators under this Article
shall be whether Tenant is liable under Article XXIII for Landlord's costs and
expenses of curing such default.
22.7 Notwithstanding anything to the contrary elsewhere provided
in this Lease, if (a) the subject matter of a dispute which is provided in this
Lease to be determined by arbitration is (i) one which would directly affect the
liability of an insurer under any of the policies of insurance covering the
Project or the Premises and the party which is the insured under such policy so
notifies the other party, or (ii) one which cannot be the subject of arbitration
under the Superior Lease or the Superior Mortgage, then unless such insurer or
the Superior Lessor or the Superior Mortgagee gives its written consent to the
determination of such matter by arbitration, or (b) a Superior Mortgagee shall
be a Successor Landlord, then, in any such event, the dispute shall not be
determined by arbitration and the parties shall be left to such other remedies
as they may have.
ARTICLE XXIII
CURING TENANT'S DEFAULTS; FEES AND EXPENSES
23.1 If Tenant shall default in the performance of any term of
this Lease on Tenant's part to be performed, Landlord, without thereby waiving
such default, may, but shall not be obligated to, perform the same for the
account and at the expense of Tenant, without notice in case of emergency and
upon 10 days' prior notice in all other cases. Landlord may enter the Premises
at any time to cure any default without thereby incurring any liability to
Tenant or anyone claiming through or under Tenant. Bills for any expenses
incurred by Landlord in connection with any such performance or involved in
collecting or endeavoring to collect rent or enforcing or endeavoring to enforce
any rights against Tenant under or in connection with this Lease or pursuant to
law, including any
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cost, expense and disbursement involved in instituting and
prosecuting summary proceedings, as well as bills for any property, material,
labor or services provided, furnished or rendered, including reasonable
attorney's fees and disbursements, shall be paid by Tenant as Additional Rent on
demand. In the event that Tenant is in arrears in payment of Rent, Tenant
waives Tenant's right, if any, to designate the items against which any payments
made by Tenant are to be credited and Landlord may apply any payments made by
Tenant to any items Landlord sees fit, irrespective of and notwithstanding any
designation or requests by Tenant as to the items against which any such
payments shall be credited. Landlord reserves the right, without liability to
Tenant, to suspend furnishing to Tenant electrical energy and all or any other
services (including heat, ventilating and air conditioning), whenever Landlord
is obligated to furnish the same, in the event that (but only for so long as)
Tenant is in arrears in paying Landlord therefor.
ARTICLE XXIV
SUBORDINATION AND ATTORNMENT
24.1 A. This Lease shall be subordinate to each Superior Lease and
each Superior Mortgage. The provisions of this Subsection 24.lA shall be
self-operative and no further instruments of subordination shall be required.
However, if Landlord requests confirmation of the subordination provided for in
this Subsection 24.lA, Tenant shall, without charge therefor, promptly execute
and deliver to Landlord any certificate or instrument which Landlord may at any
time request in connection therewith. Upon request and without charge therefor,
Tenant shall promptly execute and deliver to each Superior Mortgagee an
instrument acknowledging notice of any assignment by Landlord of Landlord's
rights under this Lease to such Superior Mortgagee. If Tenant fails to execute,
acknowledge or deliver any such instrument provided for herein within 10 days
after request therefor, Tenant hereby irrevocably constitutes and appoints
Landlord as Tenant's attorney-in-fact, coupled with an interest, to execute,
acknowledge and deliver any such instruments for and on behalf of Tenant.
B. If, in connection with obtaining financing for the Premises, a
Superior Mortgagee shall request reasonable modifications in this Lease as a
condition to such financing, Tenant will not unreasonably withhold, delay or
defer its consent thereto, provided that such modifications do not materially
adversely increase the obligations of Tenant hereunder nor materially adversely
affect the leasehold interest hereby created or Tenant's use and enjoyment of
the
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Premises.
C. Any Superior Mortgagee may elect that this Lease shall have
priority over such Superior Mortgage and upon notification by such Superior
Mortgagee to Tenant, this Lease shall be deemed to have priority over such
Superior Mortgage whether this Lease is dated prior to or subsequent to the date
of such Superior Mortgage.
24.2 Tenant shall not do or suffer or permit anything to be done
which would constitute a default under any Superior Mortgage or any Superior
Lease or cause any Superior Lease to be terminated or forfeited by virtue of any
rights of termination or forfeiture reserved or vested in any Superior Lessor.
24.3 Tenant agrees to give each Superior Mortgagee, by registered
mail, a copy of any notice of default served upon Landlord, provided that prior
to such notice Tenant has been notified in writing (by way of Notice of
Assignment of Rents and Leases, or otherwise) of the address of such Superior
Mortgagee. Tenant further agrees that if Landlord shall have failed to cure
such default within the time provided for in this Lease, then, each Superior
Mortgagee shall have an additional 30 days within which to cure such default or,
if such default cannot be cured within that time, then such additional time as
may be necessary if within such 30 days any Superior Mortgagee has commenced and
is diligently pursuing the remedies necessary to cure such default (including
but not limited to commencement of foreclosure proceedings if necessary to
effect such cure), in which event this Lease shall not be terminated while such
remedies are being so diligently pursued.
24.4 If, at any time prior to the termination of this Lease, a
Superior Lessor or Superior Mortgagee (or any person or such person's successors
or assigns, who acquires the interest of Landlord under this Lease through
foreclosure action or an assignment or deed in lieu of foreclosure) shall
succeed to the rights of Landlord under this Lease through possession or
foreclosure or delivery of a new lease or deed or otherwise, Tenant agrees at
the election and upon request of any such person (collectively, "Successor
Landlord"), to fully and completely attorn, from time to time, to and recognize
any such Successor Landlord, as Tenant's landlord under this Lease upon the then
executory terms of this Lease. Upon such attornment this Lease shall continue
in full force and effect as a direct lease between Tenant and such Successor
Landlord, except that such Successor Landlord shall not be:
(i) liable for any previous act or omission of any prior
landlord (including Landlord);
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(ii) subject to any offsets or defenses which may have
theretofore accrued to Tenant against any prior landlord (including
Landlord);
(iii) bound by any previous amendment or modification of this
Lease not expressly provided for herein unless such modification
shall have been expressly approved in writing by such Successor
Landlord prior to attornment;
(iv) bound by any previous prepayment of Basic Rent or
Additional Rent for a period greater than one month in advance;
(v) bound to or liable for any refund of all or any part of
any security deposited by Tenant;
(vi) obligated to repair the Premises or the Building or any
part thereof, in the event of total or substantial damage beyond
such repair as can reasonably be accomplished from the net proceeds
of insurance actually made available to Landlord; or
(vii) obligated to repair the Premises or the Building or any
part thereof, in the event of partial condemnation beyond such
repair as can reasonably be accomplished from the net proceeds of
any award actually made available to Landlord as consequential
damages allocable to the part of the Premises or the Building not
taken.
ARTICLE XXV
SURRENDER AND HOLDOVER
25.1 On the Expiration Date or upon the sooner termination of this
Lease or upon re-entry by Landlord upon the Premises, Tenant shall surrender,
vacate and deliver to Landlord the Premises, including all improvements,
additions, alterations and replacements thereon, trade fixtures, furnishings,
furniture, equipment, merchandise and other personal property installed or
placed in or on the Premises by Tenant unless removed by Tenant pursuant to
Section 15.3 hereof, "broom clean" and in good order, condition and repair
except for ordinary wear, tear and damage by fire or other insured casualty.
25.2 If the Premises are not surrendered upon the termination of
this Lease, Tenant hereby indemnifies Landlord against liability resulting from
delay by Tenant in so surrendering the Premises, including any claims made by
any succeeding Tenant or prospective Tenant founded upon such
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delay. In addition, in the event Tenant remains in possession of the Premises
after the termination of this Lease without the execution of a new lease,
Tenant, at the option of Landlord, shall be deemed to be occupying the Premises
as a tenant from month to month, at 2 times the Basic Rent and Additional Rent
payable during the last month of the Term, subject to all of the other terms of
this Lease insofar as the same are applicable to a month-to-month tenancy.
Notwithstanding the foregoing, if, at the termination of this Lease, the parties
are negotiating in good faith for a new lease, the Basic Rent and Additional
Rent payable during the last month of the Term shall remain in effect until the
earlier of 90 days or the execution of such new lease.
25.3 Tenant's obligations under this Article shall survive the
termination of this Lease.
ARTICLE XXVI
NONDISCRIMINATION
26.1 NONDISCRIMINATION.
Throughout the Term of this Lease, Tenant agrees, for itself, its
successors and assigns, that it will comply with all laws, statutes and
ordinances and all rules, orders, regulations, directives and requirements of
all federal, state, county and city departments, bureaus, boards, agencies,
offices, commissions and other subdivisions thereof, or of any official thereof,
or of any other governmental, public or quasi-public authority, whether now or
hereafter in force, applicable to it which prohibit it from discriminating
against any person on the grounds of race, color or national origin in providing
housing, accommodations, facilities, services, financial aid, employment, or any
other benefits. This covenant shall run with the Land and shall bind Tenant's
assigns and successors in interest as to any such laws applicable to such assign
or successor, to the same force and effect as if any said successor in interest
had executed this Lease. In the event Tenant defaults hereunder it shall be
subject to all remedies or enforcement procedures contained in any such Laws at
the insistence of such agencies or persons entitled to enforcement thereof, but
such default shall not be deemed an Event of Default hereunder.
ARTICLE XXVII
PEACEABLE AND QUIET POSSESSION
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27.1 Tenant, if and so long as it pays the Rent and performs and
observes the other terms and covenants to be performed and kept by it as
provided in this Lease, shall have the peaceable and quiet possession of the
Premises during the Term free of the claims of Landlord or anyone claiming by,
through or under Landlord, subject to the terms of this Lease and any Superior
Lease and any Superior Mortgage. This covenant shall be construed as a covenant
running with the Land and shall not be construed as a personal covenant or
obligation of Landlord, except to the extent of Landlord's interest in this
Lease and then subject to the terms of Section 31.9.
ARTICLE XXVIII
RULES AND REGULATIONS
28.1 Tenant and its employees, agents, invitees and licensees
shall faithfully observe and strictly comply with, and shall not permit
violation of, the Rules and Regulations annexed hereto as Exhibit E, and such
reasonable changes therein as Landlord hereafter may make and communicate to
Tenant ("Rules and Regulations"). In case of any conflict or inconsistency
between the provisions of this Lease and any Rules and Regulations, the
provisions of this Lease shall control. Landlord shall have no duty or
obligation to enforce any Rule or Regulation, or any term, covenant or condition
of any other lease, against any other tenant, and Landlord's failure or refusal
to enforce any Rule or Regulation or any term, covenant or condition of any
other lease against any other tenant shall be without liability of Landlord to
Tenant.
28.2 Notwithstanding anything to the contrary in any of the Rules
and Regulations, whenever Landlord shall claim by notice to Tenant that Tenant
is violating any of the provisions of the Rules and Regulations and Tenant shall
in good faith dispute such claim to Landlord within 10 days after service of
Landlord's notice of the violation, the dispute shall be determined by
arbitration pursuant to Article XXII.
ARTICLE XXIX
SECURITY DEPOSIT
29.1 Tenant has deposited with Landlord the sum of as security
for the full and punctual performance by Tenant of all of the terms of this
Lease. In the event
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Tenant defaults in the performance of any of the terms of this Lease, including
the payment of Rent, Landlord may use, apply or retain the whole or any part of
the security so deposited to the extent required for the payment of any Rent or
for any sum which Landlord may expend or may be required to expend by reason of
Tenant's default in respect of any of the terms of this Lease, including any
damages or deficiency in the reletting of the Premises, whether accruing before
or after summary proceedings or other re-entry by Landlord. In the case of
every such use, application or retention, Tenant shall, on demand, pay to
Landlord the sum so used, applied or retained which shall be added to the
security deposit so that the same shall be replenished to its former amount. If
Tenant shall fully and punctually comply with all of the terms of this Lease,
the security, without interest, shall be returned to Tenant after the
termination of this Lease and delivery of exclusive possession of the Premises
to Landlord. In the event of a sale or lease of the Building Landlord shall
have the right to transfer the security to the vendee or lessee and Landlord
shall IPSO FACTO be released by Tenant from all liability for the return of
such security; and Tenant agrees to look solely to the new landlord for the
return of said security; and it is agreed that the provisions hereof shall apply
to every transfer or assignment made of the security to
a new landlord. Tenant shall not assign or encumber or attempt to assign or
encumber the monies deposited herein as security and neither Landlord nor its
successors or assigns shall be bound by any such assignment, encumbrance,
attempted assignment or encumbrance.
ARTICLE XXX
Article XXX intentionally omitted.
ARTICLE XXXI
MISCELLANEOUS
31.1 NO WAIVER.
(a) No agreement to accept a surrender of this Lease shall be
valid unless in writing signed by Landlord and agreed to by the Superior Lessor
and Superior Mortgagee. No agent or employee of Landlord or of Landlord's agent
shall have any power to accept the keys to or possession of all or any part of
the Premises prior to the Expiration Date. The delivery of keys or possession
to any such agent or employee shall not operate as a termination of this Lease
or a surrender of the Premises.
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(b) No provision of this Lease shall be deemed to have been waived
by Landlord or Tenant unless such waiver be in writing signed by the party
making such waiver. The failure of Landlord or Tenant to seek redress for
violation of, or to insist upon the strict performance of, any covenant or
condition of this Lease, shall not be deemed a waiver thereof or prevent a
subsequent act, which would have originally constituted a violation, from having
all the force and effect of an original violation.
(c) The receipt by Landlord of Basic Rent, and/or any items of
Additional Rent with knowledge of the breach of any covenant of this Lease shall
not be deemed a waiver of such breach. No payment by Tenant or receipt by
Landlord of a lesser amount than the Basic Rent herein stipulated shall be
deemed to be other than on account of the earliest Basic Rent reserved hereby
which is due and owing at the time such payment is received by Landlord. No
payment by Tenant or receipt by Landlord of a lesser amount than the Additional
Rent herein stipulated shall be deemed to be other than on account of the
earliest Additional Rent reserved hereby which is due and owing at the time
such payment is received by Landlord. No endorsement or statement on any check
or any letter accompanying any check or payment of any such Rent shall be
deemed an accord and satisfaction, and Landlord may accept such check or payment
without prejudice to Landlord's right to remedy provided in this Lease.
31.2 CAPTIONS; GENDER. The captions used in this Lease are for
convenience only and do not in any way limit or amplify the terms and provisions
hereof. Whenever herein the singular number is used, the same shall include the
plural, and words of any gender shall include each other gender.
31.3 EXHIBITS. The Exhibits hereto and the Rider are hereby
incorporated into this Lease.
31.4 FINAL AGREEMENT. This Lease and all other agreements and
instruments signed contemporaneously herewith contain the entire agreement
between the parties, and no agreement, representation or inducement shall be
effective to change, modify or terminate this Lease in whole or in part unless
such agreement, representation or inducement is in writing and signed by both
parties hereto.
31.5 BROKERS. Tenant warrants that it has not employed nor had
any dealings or discussions with any broker or agent in connection with the
negotiation or execution of this Lease other than Colliers Pinkard & Co., Inc.,
Peter D. Leibowits Co., Inc. and Manekin Corporation. Landlord agrees to pay
the agreed brokerage commission to Colliers Pinkard &
56
<PAGE>
Co., which shall be responsible for distribution of same in accordance with
separate agreements. Tenant agrees to indemnify Landlord and hold it harmless
from and against any and all liability for commissions or other compensation or
charges and all costs and expenses incurred in defense of the claim if this
warranty is breached. In the event of a suit on any such claim, Landlord shall
notify and implead Tenant, or Tenant may intervene. Landlord shall have no
liability for brokerage commissions arising out of a sublease by Tenant and
Tenant shall and does hereby indemnify Landlord and hold it harmless from any
and all liability for brokerage commissions arising out of any such sublease.
31.6 ESTOPPEL CERTIFICATES. Tenant at any time or from time to
time at the request of Landlord or at the request of any Superior Lessor or any
Superior Mortgagee will execute, acknowledge and deliver to the party so
requesting, a certificate by Tenant, in the form annexed hereto as Exhibit F,
certifying:
(a) that this Lease has not been modified, changed, altered or
amended in any respect and is in full force and effect (or, if there have been
modifications, stating the modifications and that the Lease is in full force and
effect as modified);
(b) that this Lease is the only lease between Landlord and Tenant
affecting the Premises;
(c) that Tenant has accepted the Premises (or a part thereof), is
in occupancy of the Premises, or a part thereof, and is paying all Rent
hereunder, for which it is then liable on a current basis;
(d) that there are then existing no credits, offsets or defenses
against the enforcement of any provisions of-this Lease (and, if so, specifying
the same);
(e) the dates, if any, to which the Rent or other charges due
hereunder have been paid in advance and that there has been no prepayment of
Rent other than as provided for in this Lease;
(f) that there are no existing defaults by Landlord or Tenant
under this Lease (or, if so, specifying such default);
(g) whether or not Tenant has exercised any renewal options or
other options which may be provided in this Lease;
(h) that there are no actions, whether voluntary
57
<PAGE>
or otherwise, pending against Tenant under the bankruptcy laws of the United
States or any state thereof; and
(i) such further information with respect to the Lease or the
Premises as Landlord, any Superior Lessor or any Superior Mortgagee may request.
Any such certificate may be relied upon by any prospective purchaser of the Real
Property or the Project or of the interest of Landlord in any part thereof, by
any mortgagee or prospective mortgagee thereof, by any lessor or prospective
lessor thereof, by any lessee or prospective lessee thereof, or by any
prospective assignee of any mortgage thereof. The failure of Tenant to execute,
acknowledge and deliver to Landlord a statement in accordance with the
provisions of this Section 31.6 within 10 days after request therefor shall
constitute an acknowledgement by Tenant, which may be relied on by any person
who would be entitled to rely upon any such statement, that such statement as
submitted by Landlord is true and correct.
31.7 SEVERABILITY. If any provision of this Lease should be
held to be invalid or unenforceable, the validity and enforceability of the
remaining provisions of this Lease shall not be affected thereby.
31.8 BINDING EFFECT. The terms, provisions and covenants
contained in this Lease shall apply to, inure to the benefit of, and be binding
upon the parties hereto and their respective heirs, personal representatives,
successors and permitted assigns and shall be covenants running with the Land.
31.9 EXCULPATION.
A. In the event of any default or breach by Landlord with respect to
any of the terms, covenants and conditions of this Lease to be observed and
performed by Landlord, Tenant shall look solely to the estate and property of
Landlord in the Real Property (provided that any right of Tenant thereto shall
always be subject and subordinate to the right of any Superior Lessor or
Superior Mortgagee) for the collection of any sum of money on a judgment, or for
the payment or expenditure of any money under any decree of specific
performance, injunctive relief or other equitable relief (or other judicial
process) requiring performance by Landlord of any obligation under this Lease.
No other property or assets of the Landlord, Landlord's agents, incorporators,
shareholders, officers, directors, partners, principals (disclosed or
undisclosed) or affiliates shall be subject to levy, execution or other
enforcement procedure for the satisfaction of Tenant's remedies.
58
<PAGE>
B. The term "Landlord" shall mean only the owner at the time in
question of the present Landlord's interest in the Building and in the event of
a sale or transfer of the Building (by operation of law or otherwise), or in the
event of the making of a lease of all or substantially all of the Building, or
in the event of a sale or transfer (by operation of law or otherwise) of the
leasehold estate under any such lease, the grantor, transferor or lessor, as the
case may be, shall be and hereby is (to the extent of the interest or portion of
the Building or leasehold estate sold, transferred or leased) automatically and
entirely released and discharged, from and after the date of such sale, transfer
or leasing, of all liability in respect of the performance of any of the terms
of this Lease on the part of Landlord thereafter to be performed; provided that
the purchaser, transferee or lessee (collectively, "Transferee") shall be deemed
to have assumed and agreed to perform, subject to the limitations of this
Section (and without further agreement between the then parties hereto, or among
such parties and the Transferee) and only during and in respect of the
Transferee's period of ownership of the Landlord's interest under this Lease,
all of the terms of this Lease on the part of Landlord to be performed during
such period of ownership, which terms shall be deemed to run with the Land it
being intended that Landlord's obligations hereunder shall, as limited by this
Article, be binding on Landlord, its successors and assigns, only during and in
respect of their respective successive periods of ownership.
C. In the event of any default or breach by Tenant with respect to
any of the term, covenants and conditions of this Lease to be observed and
performed by Tenant, Landlord shall look solely to the assets of the Tenant
corporation for the collection of any sum of money on a judgment, or for the
payment or expenditure of any money under any decree of specific performance,
injunctive relief or other equitable relief (or other judicial process)
requiring performance by Tenant of any obligation under this Lease. No other
property or assets of the corporation's agents, incorporators, shareholders,
officers, directors, partners, principals (disclosed or undisclosed) or
affiliates shall be subject to levy, execution or other enforcement procedure
for the satisfaction of Landlord's remedies.
31.10 WAIVER OF CERTAIN RIGHTS. Tenant hereby expressly waives any
and all rights granted by or under any present or future laws to redeem
Landlord's reversionary interest in the Real Property. To the extent permitted
by applicable law, Landlord and Tenant waive trial by jury in any proceeding or
any matter in any way connected with this Lease and agree that they will not
interpose any counterclaim of whatsoever nature or description in any manner
whatsoever
59
<PAGE>
arising out of or in any way connected with this Lease, the relationship of
Landlord and Tenant, or Tenant's use or occupancy of the Premises, any claim of
injury or damage, or any emergency or other statutory remedy with respect
thereto. The preceding sentence notwithstanding, Tenant may assert a
counterclaim arising out of and related to the particular matter asserted by
Landlord. In addition, in the event of any lawful termination of the Term or
any repossession of the premises by reason of Tenant's default hereunder, Tenant
waives (a) any notice of re-entry or of the institution of legal proceedings to
that end, (b) any right of redemption, re-entry or repossession, and (c) the
benefit of any laws now or hereafter in force exempting property from liability
for rent or otherwise. The provisions of this Article shall survive the
termination of this Lease.
31.11 NO RECORDATION. Neither Landlord nor Tenant shall record
this Lease, any amendment to this Lease, the confirmatory agreement referred to
in Section 4.3 or any other memorandum of this Lease without the prior written
consent of the other party and in the event such consent is given the party
requesting such consent shall pay all transfer taxes, recording fees and other
charges in connection with such recording notwithstanding any provision of law
imposing liability therefor upon the other party.
31.12 NOTICES. Except as otherwise expressly set forth herein all
notices, requests, demands, approvals or consents required hereunder or by law
(collectively, "Notices") shall be in writing and shall be given by personal
delivery, delivery by overnight courier providing proof of such delivery,
telefax transmission with confirmation or by mailing the same, certified or
registered mail, return receipt requested, postage prepaid, addressed to
Landlord at c/o PDL Baltimore Associates, 32 Lafayette Place, Greenwich,
Connecticut 06830, Attention: Mr. Peter D. Leibowits, if to Tenant, at the
Premises with a copy to General Counsel, Scios Nova, Inc., 2450 Bayshore
Parkway, Mountain View, California 94043. Notices shall be deemed given upon
such personal delivery or upon receipt if by overnight courier or telefax, or,
if mailed, 2 business days after mailing. The persons designated for the
receipt of Notices, and the addresses to which Notices may be given or made by
either party, may be changed or supplemented by Notice given by such party to
the other and notwithstanding the preceding sentence such Notice shall be
effective 10 days after mailing or delivery.
31.13 GOVERNING LAW. This Lease shall be deemed to be made under
and shall be construed in accordance with and governed by the internal laws of
the State of Maryland, without regard to principles of conflicts of laws.
60
<PAGE>
31.14 NO REPRESENTATIONS. Tenant expressly acknowledges that
neither Landlord nor Landlord's agents has made or is making and Tenant, in
executing and delivering this Lease, is not relying upon, any warranties,
representations, promises, or statements, except to the extent that the same are
expressly set forth in this Lease and no rights, easements or licenses are or
shall be acquired by Tenant by implication or otherwise unless expressly set
forth in this Lease.
31.15 CONSENTS.
A. Wherever it is specifically provided in this Lease that a party's
consent is not to be unreasonably withheld, a response to a request for such
consent shall also not be unreasonably delayed. If either Landlord or Tenant
considers that the other has unreasonably withheld or delayed a consent, it
shall so notify the other party within 10 days after receipt of notice of denial
of the requested consent or, in case notice of denial is not received, within 20
days after making its request for the consent.
B. Tenant hereby waives any claim against Landlord which it may have
based upon any assertion that Landlord has unreasonably withheld or unreasonably
delayed any such consent, and Tenant agrees that its sole remedy shall be an
action or proceeding to enforce any such provision or for specific performance,
injunction or declaratory judgment. In the event of such a determination, the
requested consent shall be deemed to have been granted; however, Landlord shall
have no liability to Tenant for its refusal or failure to give such consent.
C. Notwithstanding anything to the contrary provided in this Lease,
in any instance where the consent of the Superior Lessor and/or the Superior
Mortgagee is required Landlord shall not be required to give its consent until
and unless such Superior Lessor and/or such Superior Mortgagee has given its
consent. Landlord agrees to seek such consent if Landlord would otherwise
consent in such instance.
31.16 PARTIES BOUND. The terms of this Lease shall bind and
benefit the successors and assigns of the parties with the same effect as if
mentioned in such instance where a party is named or referred to, except that no
violation of the provisions of Article X shall operate to vest any right in any
successors or assignee of Tenant and that the provisions of this Article shall
not be construed as modifying the conditions of limitation contained in Article
X. This Lease is submitted to Tenant for signature with the understanding that
it shall not bind Landlord or Tenant unless and until it is duly executed by
both Landlord and Tenant and an executed copy
61
<PAGE>
delivered to Tenant.
IN WITNESS WHEREOF, the parties hereto have executed this Lease on
the day and year first above written.
PDL-RTKL ASSOCIATES
By: PDL Baltimore Associates,
Partner
By: /S/PETER D. LEIBOWITS
-------------------------------------
Peter D. Leibowits,Partner
Attest: SCIOS NOVA, INC.
/S/JOHN H. NEWMAN By: /S/W. VIRIGINA WALKER
- --------------------------- ----------------------------
1
<PAGE>
RIDER TO LEASE BETWEEN PDL-RTKL ASSOCIATES AS "LANDLORD" AND SCIOS NOVA, INC.,
AS "TENANT" COVERING A PORTION OF THE THIRD (3RD) FLOOR OF THE BUILDING LOCATED
AT THE NORTHWEST CORNER OF PRATT AND GAY STREETS, BALTIMORE, MARYLAND
In case of any conflict or inconsistency between this Rider and the Lease, the
provisions of this Rider shall control.
A. Section 31.17 RENEWAL OPTION:
Provided that Tenant is not in default under any of the terms of
this Lease at the time of the exercise of this option and at the time of the
commencement of the Renewal Term (as hereinafter defined), Tenant shall have the
right, at its option, to extend the original Lease Term ("Original Term"), for a
renewal term ("Renewal Term") of five (5) years to commence immediately
following the expiration of the Original Term, by giving notice ("Tenant's
Notice") to Landlord not less than six (6) nor more than nine (9) months prior
to the stated Expiration Date of this Lease and, upon the giving of such notice,
this Lease, subject to the provisions hereof, shall be automatically extended
for the Renewal Term with the same force and effect as if the Renewal Term had
been originally included in the Lease Term. Time shall be of the essence with
respect to the exercise by Tenant of this option. All of the terms, covenants
and conditions of this Lease shall continue in full force and effect during the
Renewal Term except that (a) the Basic Rent shall be as hereinafter set forth,
(b) the terms of this Lease relating to the performance of Landlord's Work and
Tenant's Work shall not be applicable to the Renewal Term, and (c) any further
privilege of extension of this Lease shall be limited to the Second Renewal Term
(as hereinafter defined). The basic rent payable to Tenant during the Renewal
Term shall be the fair market basic rent then prevailing for rental of space in
privately owned Class A buildings opened for initial occupancy subsequent to
1982 in the City of Baltimore as determined by Landlord, based upon then current
leases for such space.
B. Section 31.18 TENANT'S TERMINATION RIGHTS:
Tenant shall have the right to terminate this Lease on each of the
first, second and third anniversaries of the Commencement Date upon no less than
three (3) months' prior written notice to Landlord of Tenant's intention to
cancel this Lease ("Tenant's Termination Notice"); provided that Tenant pays to
Landlord on the applicable termination date the unamortized cost of the
following leasing expenses: construction allowance; RENT CREDIT, IF ANY, TAKEN
FOR BALANCE OF CONSTRUCTION ALLOWANCE; moving allowance; design allowance;
space planning allowance and brokerage commissions. For purposes of calculation
of the payment, amortization shall be over the Original Term of the lease.
<PAGE>
Upon Tenant's compliance with the terms of this Section of the Lease and
Tenant's payment of all amounts owed to Landlord under the Lease, the Lease will
terminate as of the date set forth in Tenant's Notice and neither Landlord nor
Tenant shall have any further rights or obligations under the Lease except with
respect to those matters in the Lease which expressly survive the termination of
the Lease.
C. SUPPLEMENTING SECTION 1.1 PREMISES AREA
Landlord and Tenant acknowledge that the amount of square footage
set out on Page 3 of this Lease is an estimate. Within twenty (20) days of the
date of this Lease, Landlord's architect shall measure the Premises and Landlord
shall give Tenant notice of the Premises Area. If Tenant disagrees with the
Premises Area, it shall so notify Landlord within 10 days after the date of
Landlord's notice, failing which the Premises Area in Landlord's notice shall be
deemed conclusive. If Tenant does so disagree, it shall specify the square
footage it claims for the Premises Area. If the parties are unable to agree
within 10 days thereafter, they shall jointly designate a qualified third party
whose determination of the square footage of the Premises Area shall be final.
That square footage shall apply for all purposes under the Lease as though it
were the original Premises Area set out on Page 3. The cost of the qualified
third party shall be borne by Tenant.
D. SUPPLEMENTING ARTICLE III
Within thirty (30) days after the Commencement Date, the parties
shall confirm in writing the Commencement Date and Expiration Date of the Lease.
Such writing shall also confirm the Premises Area, determined in accordance with
Paragraph C of this Rider, and the amount of the leasing expenses subject to
amortization, as referred to in Paragraph B of this Rider.
E. SUPPLEMENTING SECTION 4.1
Landlord further warrants that as of the date of this Lease (i) the
Building has a valid Certificate of Occupancy; (ii) Landlord is aware of no
outstanding violations against the Building issued by any governmental authority
having jurisdiction; and (iii) Landlord has not been notified by any
governmental authority having jurisdiction, that there is any condition in the
Building or the Premises which is in violation of the Americans with
Disabilities Act, or that asbestos or any other hazardous material is present in
the Building or the Premises. In the event that any such violation has been
issued as of the date of this Lease, then, provided same affects the Premises,
Landlord will cause same to be corrected and removed of record at Landlord's
sole cost
<PAGE>
and expense.
F. SUPPLEMENTING SECTIONS 6.4
In the event that, pursuant to Section 7.4B, Tenant disputes the
correctness of Landlord's Statement of Tenant's Operating Payment, Tenant shall
have the right to audit the books and records of Landlord with respect to the
Statement so disputed, provided that there shall be no more than one audit with
respect to such Statement and such audit shall be conducted within six (6)
months of the rendering of such Statement. Any such audit shall be conducted at
the place where such books and records are regularly maintained and shall be at
Tenant's sole cost and expense. Landlord shall use reasonable efforts to make
the books and records available to Tenant in Baltimore, Maryland but shall not
be required to remove the books and records from the place where they are
regularly maintained or to make a copy thereof. If such audit reveals an
overpayment by Tenant, and Landlord accepts the results of such audit, or if the
dispute with respect to such Statement is determined in Tenant's favor, Landlord
shall credit the amount of such overpayment to Tenant pursuant to Section 7.2.
G. SUPPLEMENTING ARTICLE X
Subject to and conditioned upon compliance with all the terms and
conditions of this Article X, and provided Tenant shall not be in default of any
of its obligations under this Lease:
a. Tenant shall have the right, without Landlord's consent to
assign this Lease or sublet all but not less than all of the Premises to any
wholly-owned subsidiary corporation of Tenant, to any corporation succeeding to
substantially all of the assets of Tenant as a result of a consolidation or
merger or to a corporation to which all or substantially all of the assets of
Tenant have been sold, or to any Affiliate to Tenant (as defined below);
provided, that in each of the foregoing instances, such other corporation shall
assume in writing all of Tenant's obligations hereunder. The term "Affiliate"
as used herein, shall mean any corporation, directly or indirectly, through one
or more intermediaries, controlling, controlled by, or under common control with
Tenant; the term "control" as used in the immediately preceding sentence, shall
mean the right to the exercise, directly or indirectly, of more than fifty
percent (50%) of the voting rights attributable to the shares of the controlled
corporation. Notwithstanding any such Assignment or Sublease, Tenant shall not
be released from liability and shall perform all obligations imposed upon it
hereunder.
<PAGE>
b. Landlord shall not unreasonably withhold its consent to an
assignment of this Lease, or a subletting of all, but not less than all, of the
Premises, to an assignee or sublessee other than set forth in Subparagraph (a)
above, provided that: (i) the assignee or sublessee, as the case may be, shall
have assets, capitalization and net worth certified to Landlord by an
independent certified public account to be at least equal to the greater of the
assets, capitalization and net worth of Tenant, determined as of the date of
Lease or as of the time of such assignment or subletting; (ii) the assignee or
sublessee, as the case may be, shall be a private business (which term shall
include a company whose shares are publicly traded) engaged in a use consistent
with uses of businesses then located in the Building; (iii) if rents or other
charges required to be paid to Tenant by the assignee or sublessee exceed the
rents and other charges reserved hereunder, Tenant shall pay the entire amount
of such excess (after deducting reasonable architects' fees, reasonable
attorneys' fees and any reasonable construction costs in adapting the Premises
for use by the assignee or sublessee) to Landlord monthly, as Additional Rent;
and (iv) no such assignment or subletting shall relieve Tenant of any of its
obligations under this Lease.
Landlord shall, within thirty (30) days after receiving the
information required in Subsection 10.3 of the Lease, give notice to Tenant to
permit or deny the proposed sublease or assignment. If Landlord does not
respond within the thirty (30) day period, then Tenant shall be deemed to have
received Landlord's consent and may assign or sublease all of the Premises upon
the terms given by Tenant in the information under Subsection 10.3.
H. SUPPLEMENTING ARTICLE XII
Except for performance of its cleaning obligation or regularly
scheduled maintenance, and except in cases of an emergency, wherever in this
Article or elsewhere in this Lease it is provided that Landlord may have access
to the Premises, Landlord shall give reasonable notice to Tenant (not less than
48 hours if possible) of its requirement of such access. If the required access
prevents all use of the Premises for three (3) consecutive business days, Basic
Rent and Additional Rent shall abate proportionately thereafter until the use of
all, or any portion thereof, may be resumed.
I. SUPPLEMENTING ARTICLE XVII
Landlord hereby indemnifies Tenant against liability in connection
with or arising from any acts, omissions or negligence of Landlord, its
contractors, agents or employees in or about the common areas of the Building
during the term of the Lease, provided in each case Landlord is insured for such
peril and such insurance is in force and collectible and
<PAGE>
Landlord shall not be liable to the extent of any negligence on the part of
Tenant, or Tenant's agent's, employees, and contractors.
J. SUPPLEMENTING ARTICLE XVIII
Tenant shall have the right to terminate this Lease if the
rebuilding, repair and restoration required to be performed by Landlord under
this Article is not completed within eighteen (18) months after receipt by
Landlord of the insurance proceeds.
K. SUPPLEMENTING SECTION 24.1
The subordination herein provided shall be conditioned upon a written
agreement from any present Superior Lessor and any present Superior Mortgagee to
the effect that, in the event of the foreclosure of the Superior Mortgage or
exercise of rights under the Superior Lease, said Superior Mortgagee or Superior
Lessor shall not join Tenant as a party defendant nor extinguish nor interfere
with Tenant's rights under this Lease or Tenant's possession, provided that
Tenant shall not have defaulted in its obligations under this Lease. Landlord
agrees to use reasonable efforts to obtain a similar written agreement from any
future Superior Lessor and Superior Mortgagee.
<PAGE>
EXHIBIT C
WORK LETTER
LANDLORD'S WORK - Landlord will provide at its sole expense, corridor
partitioning where necessary for access to Tenant's Premises, a single door for
ingress and egress from the Premises, and demising walls for the Premises.
Landlord shall have no other construction obligation with respect to the
Premises. Within a reasonable time after Tenant has occupied the Premises for
the conduct of its business, taking into consideration the status of existing or
future occupants of the floor on which the Premises is located, Landlord shall
provide carpeting and wall covering or paint in the common areas of said floor.
Tenant acknowledges that neither Landlord nor Landlord's agent has made any
representations or promises in regard to the Premises for the term herein
demised. The taking possession of the Premises by Tenant for the term herein
demised shall be conclusive evidence as against Tenant that Tenant accepts the
same 'as is' and that said Premises were in good and satisfactory condition at
the time such possession was taken.
TENANT'S WORK - All other work required to prepare the premises for Tenant's
occupancy shall be performed by Tenant at its sole cost and expense pursuant to
plans and specifications to be submitted for Landlord's approval prior to
commencement of such work. Tenant shall renovate and modernize all bathrooms on
the Premises, other than those the use of which it shares with other tenants,
pursuant to plans and specifications approved in advance by Landlord.
TENANT'S ALLOWANCES
A. Landlord shall pay to Tenant, as Landlord's Contribution for Tenant's
Work, an amount which shall not exceed the PRODUCT of THE rentable square
feet in the Premises MULTIPLIED BY $20.00. Payment shall be made in
installments no more frequently than monthly, upon receipt of an application for
payment from Tenant. Each application for payment shall be accompanied by a
certification from Tenant's architect or construction manager that the portion
of Tenant's Work for which payment is being requested has been completed and by
a waiver of liens from each contractor and subcontractor performing such portion
of Tenant's Work.
Landlord shall withhold payment of the final ten (10%) percent of
the allowance, notwithstanding the submission by Tenant of any further
applications for payment. Upon
<PAGE>
completion of Tenant's Work Tenant shall furnish to Landlord all invoices
rendered in connection therewith sufficient in form and content to permit
Landlord to determine the cost thereof. Landlord shall pay to Tenant the amount
withheld, or if said cost is less than $20.00 per square foot, so much of the
amount withheld as will complete payment for Tenant's Work, when Tenant shall
have (i) completed Tenant's Work in all respects in accordance with the
provisions of this Lease, (ii) furnished evidence satisfactory to Landlord that
all of Tenant's Work has been completed and paid for in full (and such work has
been accepted by Landlord), that any and all liens therefor that have been filed
have been discharged of record (by payment, bond, order of a court of competent
jurisdiction or otherwise) or waived and that no security interests relating
thereto are outstanding, (iii) furnished to Landlord all certifications and
approvals with respect to Tenant's Work that may be required from any
governmental authority and any board of fire underwriters or similar body for
the use and occupancy of the Premises, (iv) furnished Landlord with one set of
sepia mylar transparent reproducible 'as built' drawings of the Premises, (v)
occupied the Premises for the conduct of its business, and (vi) caused all
'punch list' items to be completed.
THE AMOUNT, IF ANY, BY WHICH LANDLORD'S CONTRIBUTION FOR TENANT'S
WORK IS LESS THAN THE PRODUCT OF THE NUMBER OF RENTABLE SQUARE FEET IN THE
PREMISES MULTIPLIED BY $20.00 MAY, AT TENANT'S OPTION AND UPON WRITTEN NOTICE TO
LANDLORD GIVEN PRIOR TO MARCH 1, 1995, BE TAKEN AS A CREDIT AGAINST THE MONTHLY
INSTALLMENTS OF BASIC RENT FIRST BECOMING DUE UNDER THIS LEASE.
B. Tenant shall also receive:
(i) an allowance in the amount of $.10 per rentable square foot for
space planning services;
(ii) an allowance in the amount of $1.00 per rentable square foot
for space programming, design and construction documents; and
(iii) a moving allowance in the amount of $1.00 per rentable square
foot.
Payment shall in each case be made within five (5) business days after
Tenant has completed moving its offices into the Premises and has commenced full
occupancy.
8
<PAGE>
SCIOS NOVA INC.
Computation of Net Loss Per Share
(Calculated in accordance with the
guidelines of item 601 of
Regulation S-K. The effect of
stock options on loss per
share is anti-dilutive)
<TABLE>
<CAPTION>
Three months ended
March 31,
1995 1994
------------ ------------
(Unaudited)
<S> <C> <C>
PRIMARY:
Average common shares outstanding 35,349,500 35,140,454
Net effect of dilutive stock options -
based on treasury stock method 454,246 752,781
------------ ------------
Average common and common equivalent
shares outstanding 35,803,746 35,893,235
------------ ------------
------------ ------------
Net loss ($6,627,000) ($5,285,000)
------------ ------------
------------ ------------
Net loss per share ($0.19) ($0.15)
------------ ------------
------------ ------------
FULLY DILUTED:
Average common shares outstanding 35,349,500 35,140,454
Net effect of dilutive stock options -
based on treasury stock method 455,601 752,952
------------ ------------
Average common and common equivalent -
shares outstanding 35,805,101 35,893,406
------------ ------------
------------ ------------
Net loss ($6,627,000) ($5,285,000)
------------ ------------
------------ ------------
Net loss per share ($0.19) ($0.15)
------------ ------------
------------ ------------
</TABLE>
See notes to consolidated financial statements.
Exhibit 11.1
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS INCLUDED IN THE QUARTERLY REPORT ON FORM 10-Q FOR THE
QUARTER ENDED 3-31-95.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
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