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LEASE
BY AND BETWEEN
CORPORATE TECHNOLOGY CENTRE ASSOCIATES II LLC,
A CALIFORNIA LIMITED LIABILITY COMPANY
AS LANDLORD
AND
DIGITAL MICROWAVE CORPORATION,
A DELAWARE CORPORATION
AS TENANT
FEBRUARY 16, 2000
170 ROSE ORCHARD WAY
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TABLE OF CONTENTS
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ARTICLE 1 REFERENCE.............................................................1
1.1 References ..............................................................1
ARTICLE 2 LEASED PREMISES, TERM AND POSSESSION ...............................2
2.1 Demise Of Leased Premises ...............................................2
2.2 Right To Use Outside Areas ..............................................2
2.3 Lease Commencement Date And Lease Term ..................................2
2.4 Delivery Of Possession ..................................................2
2.5 Performance Of Tenant Improvements; Acceptance Of Possession ............3
2.6 Surrender Of Possession..................................................3
ARTICLE 3 RENT, LATE CHARGES AND SECURITY DEPOSITS ...........................3
3.1 Base Monthly Rent .......................................................3
3.2 Additional Rent .........................................................3
3.3 Year-End Adjustments ....................................................4
3.4 Late Charge, And Interest On Rent In Default ............................4
3.5 Payment Of Rent..........................................................4
3.6 Prepaid Rent.............................................................4
3.7 Security Deposit .......... .............................................4
ARTICLE 4 USE OF LEASED PREMISES AND OUTSIDE AREA ..............................5
4.1 Permitted Use ...........................................................5
4.2 General Limitations On Use ..............................................5
4.3 Noise And Emissions......................................................5
4.4 Trash Disposal ..........................................................5
4.5 Parking..................................................................5
4.6 Signs....................................................................6
4.7 Compliance With Laws And Private Restrictions ..........................6
4.8 Compliance With Insurance Requirements ..................................6
4.9 Landlord's Right To Enter ...............................................6
4.10 Use Of Outside Areas ....................................................6
4.11 Environmental Protection ................................................6
4.12 Rules And Regulations ...................................................8
4.13 Reservations.............................................................8
ARTICLE 5 REPAIRS, MAINTENANCE, SERVICES AND UTILITIES .........................8
5.1 Repair And Maintenance ..................................................8
(a) Tenant's Obligations...............................................8
(b) Landlord's Obligation .............................................8
5.2 Utilities................................................................8
5.3 Security.................................................................8
5.4 Energy And Resource Consumption..........................................9
5.5 Limitation Of Landlord's Liability.......................................9
ARTICLE 6 ALTERATIONS AND IMPROVEMENTS .........................................9
6.1 By Tenant................................................................9
6.2 Ownership Of Improvements................................................9
6.3 Alterations Required By Law..............................................9
6.4 Liens...................................................................10
ARTICLE 7 ASSIGNMENT AND SUBLETTING BY TENANT .................................10
7.1 By Tenant...............................................................10
7.2 Merger, Reorganization, or Sale of Assets...............................10
i.
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7.3 Landlord's Election ....................................................11
7.4 Conditions To Landlord's Consent........................................11
7.5 Assignment Consideration And Excess Rentals Defined ....................11
7.6 Payments................................................................12
7.7 Good Faith..............................................................12
7.8 Effect Of Landlord's Consent............................................12
ARTICLE 8 LIMITATION ON LANDLORD'S LIABILITY AND INDEMNITY.....................12
8.1 Limitation On Landlord's Liability And Release..........................12
8.2 Tenant's Indemnification Of Landlord....................................12
ARTICLE 9 INSURANCE............................................................13
9.1 Tenant's Insurance......................................................13
9.2 Landlord's Insurance....................................................13
9.3 Mutual Waiver Of Subrogation............................................14
ARTICLE 10 DAMAGE TO LEASED PREMISES............................................14
10.1 Landlord's Duty To Restore................................... ..........14
10.2 Insurance Proceeds......................................................14
10.3 Landlord's Right To Terminate ..........................................14
10.4 Tenant's Right To Terminate.............................................15
10.5 Tenant's Waiver.........................................................15
10.6 Abatement Of Rent.......................................................15
ARTICLE 11 CONDEMNATION ........................................................15
11.1 Tenant's Right To Terminate.............................................15
11.2 Landlord's Right To Terminate ..........................................15
11.3 Restoration.............................................................15
11.4 Temporary Taking........................................................15
11.5 Division Of Condemnation Award..........................................15
11.6 Abatement Of Rent.......................................................15
11.7 Taking Defined..........................................................16
ARTICLE 12 DEFAULT AND REMEDIES ................................................16
12.1 Events Of Tenant's Default..............................................16
12.2 Landlord's Remedies.....................................................16
12.3 Landlord's Default And Tenant's Remedies................................17
12.4 Limitation Of Tenant's Recourse.........................................17
12.5 Tenant's Waiver.........................................................18
ARTICLE 13 GENERAL PROVISIONS...................................................18
13.1 Taxes On Tenant's Property..............................................18
13.2 Holding Over............................................................18
13.3 Subordination To Mortgages..............................................18
13.4 Tenant's Attornment Upon Foreclosure....................................19
13.5 Mortgagee Protection....................................................19
13.6 Estoppel Certificate....................................................19
13.7 Tenant's Financial Information..........................................19
13.8 Transfer By Landlord....................................................19
13.9 Force Majeure...........................................................19
13.10 Notices.................................................................19
13.11 Attorneys' Fees.........................................................20
13.12 Definitions.............................................................20
ii.
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(a) Real Property Taxes...............................................20
(b) Landlord's Insurance Costs........................................20
(c) Property Maintenance Costs........................................20
(d) Property Operating Expenses.......................................21
(e) Law...............................................................21
(f) Lender............................................................21
(g) Private Restrictions .............................................21
(h) Rent..............................................................21
13.13 General Waivers.........................................................21
13.14 Miscellaneous...........................................................21
ARTICLE 14 CORPORATE AUTHORITY BROKERS AND ENTIRE AGREEMENT.....................21
14.1 Corporate Authority ....................................................21
14.2 Brokerage Commissions ..................................................21
14.3 Entire Agreement .......................................................22
14.4 Landlord's Representations..............................................22
ARTICLE 15 OPTIONS TO EXTEND....................................................22
ARTICLE 16 TELEPHONE SERVICE....................................................23
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iii.
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LEASE
THIS LEASE, dated February 16, 2000 for reference purposes only, is
made by and between CORPORATE TECHNOLOGY CENTRE ASSOCIATES II LLC, a California
limited liability company ("Landlord") and DIGITAL MICROWAVE CORPORATION, a
Delaware corporation ("Tenant"), to be effective and binding upon the parties as
of the date the last of the designated signatories to this Lease shall have
executed this Lease (the "Effective Date of this Lease").
RECITALS
A. Metropolitan Life Insurance Company ("MetLife") and Tenant
entered into a lease dated May 6, 1991 (the "Original Lease"), for the leased
Premises (as defined below);
B. On or about August 14, 1998, Landlord acquired the fee simple
interest in certain real property, including the Leased Premises, and succeeded
to the interest of MetLife as landlord under the Original Lease;
C. Tenant is now occupying the Leased Premises pursuant to the
Original Lease; and
D. Landlord and Tenant have agreed to enter into this new Lease
instead of extending the Original Lease, and Tenant has agreed to assume the
obligations under the Original Lease as if the term of the Original Lease had
been extended.
AGREEMENT
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Landlord and Tenant hereby agree as follows:
ARTICLE 1
REFERENCE
1.1 REFERENCES. All references in this Lease (subject to any further
clarifications contained in this Lease) to the following terms shall have the
following meaning or refer to the respective address, person, date, time period,
amount, percentage, calendar year or fiscal year as below set forth:
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Tenant's Address for Notice: Digital Microwave Corporation
170 Rose Orchard Way
San Jose, California 95134
Tenant's Representative: Sandy Johnson, Facility Manager
Ed Rockwell, Director of Finance
Landlord's Address for Notices: c/o Menlo Equities LLC
525 University Avenue
Suite 100
Palo Alto, California 94301
Landlord's Representative: Henry Bullock/Richard Holmstrom
Phone Number: (650) 326-9300
Intended Commencement Date: January 1, 2001
Intended Term: Ten (10) years
Lease Expiration Date: Ten (10) years from the Actual Lease Commencement Date, unless
earlier terminated by Landlord in accordance with the terms of
this Lease, or extended by Tenant pursuant to Article 15.
Options to Renew: 2 option(s) to renew, each for a term of five (5) years etc.
First Month's Prepaid Rent: $99,792.00
Tenant's Security Deposit: $130,032.00
Late Charge Amount: Five Percent (5%) of the Delinquent Amount
Tenant's Required Liability Coverage: $10,000,000 Combined Single Limit
Tenant's Broker(s): Martin Morici of Colliers International
1.
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Project: That certain real property situated in the City of San
Jose, County of Santa Clara, State of California, as
presently improved with 5 building(s), which real property
is shown on the Site Plan attached hereto as Exhibit "A."
Property: That certain real property situated in the City of San
Jose, County of Santa Clara, State of California, as
presently improved with 1 building, which real property is
shown on the Site Plan attached hereto as Exhibit "A."
Building: That certain building on the Property in which the Leased
Premises are located commonly known as or otherwise described
as 170 Rose Orchard Way, California. (the "Building")
located on Assessor's Parcel No. 97-03-077, which Building is
shown outlined on Exhibit "A" hereto.
Outside Areas: The "Outside Areas" shall mean all areas within Assessor's
Parcel No. 97-03-077 which are located outside the Building,
such as pedestrian walkways, parking areas, landscaped areas,
open areas and enclosed trash disposal areas.
Leased Premises: All the interior space within the Building, including
stairwells, connecting walkways, and atriums, consisting of
approximately 60,480 square feet and, for purposes of
this Lease, agreed to contain said number of square feet.
Tenant's Expense Share: The term "Tenant's Expense Share" shall mean the percentage
obtained by dividing the rentable square footage of the
Leased Premises at the time of calculation by the rentable
square footage of the Building. Such percentage is currently
100%.
Tenant's Project Share: The term "Tenant's Project Share" shall mean the percentage
obtained by dividing the rentable square footage of the Leased
Premises at the time of calculation by the rentable square
footage of all buildings located on the Property at the time
of calculation. Such percentage is currently 19.42%. In the
event that any portion of the Property is sold by Landlord, or
the rentable square footage of the Leased Premises or the
Property is otherwise changed, Tenant's Expense Share shall be
recalculated to equal the percentage described in the first
sentence of this paragraph, so that the aggregate Tenant's
Expense Share of all tenants of the Property shall equal 100%.
Tenant's Expense Share is subject to adjustment as set forth in
Paragraphs 13.12(b) and 13.12 (c).
Base Monthly Rent: The term "Base Monthly Rent" shall mean the following:
Period Base Monthly Rent
------ -----------------
1/1/01-12/31/01 $99,792.00
1/1/02-12/31/02 $102,816.00
1/1/03-12/31/03 $105,840.00
1/1/04-12/31/04 $108,864.00
1/1/05-12/11/05 $111,888.00
1/1/06-12/31/06 $115,516.80
1/1/07-12/31/07 $119,145.60
1/1/08-12/31/08 $122,774.40
1/1/09-12/31/09 $126,403.20
1/1/10-12/31/10 $130,032.00
Permitted Use: Office, research and development light manufacturing and
assembly.
Exhibits: The term "Exhibits" shall mean the Exhibits of this Lease
which are described as follows:
Exhibit "A" - Site Plan showing the Property and delineating
the Building in which the Leased Premises are located.
Exhibit "B" - Work Letter
Exhibit "C" - Form of Tenant Estoppel Certificate
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2.
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ARTICLE 2
LEASED PREMISES, TERM AND POSSESSION
2.1 DEMISE OF LEASED PREMISES. Landlord hereby leases to Tenant and Tenant
hereby leases from Landlord for Tenant's own use in the conduct of Tenant's
business and not for purposes of speculating in real estate, for the Lease Term
and upon the terms and subject to the conditions of this Lease, that certain
interior space described in Article 1 as the Leased Premises, reserving and
excepting to Landlord the right to fifty percent (50%) of all assignment
consideration and excess rentals as provided in Article 7 below. Tenant's lease
of the Leased Premises, together with the appurtenant right to use the Outside
Areas as described in Paragraph 2.2 below, shall be conditioned upon and be
subject to the continuing compliance by Tenant with (i) all the terms and
conditions of this Lease, (ii) all Laws governing the use of the Leased Premises
and the Property, (iii) all Private Restrictions, easements and other matters
now of public record respecting the use of the Leased Premises and Property, and
(iv) all reasonable rules and regulations from time to time established by
Landlord. Notwithstanding any provision of this Lease to the contrary, Landlord
hereby reserves to itself and its designees all rights of access, use and
occupancy of the Building roof, provided that Tenant may retain the antennae
existing on the Building roof as of the Effective Date of this Lease and shall
have a right to access the Building roof for maintenance of such antennae and
Tenant's other maintenance and repair obligations pursuant to this Lease.
2.2 RIGHT TO USE OUTSIDE AREAS. As an appurtenant right to Tenant's right to the
use and occupancy of the Leased Premises, Tenant shall have the right to use the
Outside Areas in conjunction with its use of the Leased Premises solely for the
purposes for which they were designated and intended and for no other purposes
whatsoever. Tenant's right to so use the Outside Areas shall be subject to the
limitations on such use as set forth in Article 1 and shall terminate
concurrently with any termination of this Lease.
2.3 LEASE COMMENCEMENT DATE AND LEASE TERM. The term of this Lease shall begin,
and the Lease Commencement Date shall be deemed to have occurred, on the Lease
Commencement Date, as set forth in Article 1 (the "Lease Commencement Date").
The term of this Lease shall in all events end on the Lease Expiration Date (as
set forth in Article 1). The Lease Term shall be that period of time commencing
on the Lease Commencement Date and ending on the Lease Expiration Date (the
"Lease Term").
2.4 DELIVERY OF POSSESSION. Landlord and Tenant acknowledge that Tenant is
currently in possession of the Leased Premises. Tenant agrees to accept the
Leased Premises "as-is" WITH ALL FAULTS on the Lease Commencement Date.
Landlord hereby represents that Landlord has not received notice from any
governmental agencies that the Leased Premises or Building do not comply with
the Americans With Disabilities Act of 1990.
2.5 PERFORMANCE OF TENANT IMPROVEMENTS. Tenant shall, pursuant to the Work
Letter attached hereto as Exhibit B, construct the Tenant Improvements, as more
particularly described therein.
2.6 SURRENDER OF POSSESSION. Immediately prior to the expiration or upon the
sooner termination of this Lease, Tenant shall remove all of Tenant's signs from
the exterior of the Building and shall remove all of Tenant's equipment, trade
fixtures, furniture, supplies, wall decorations and other personal property from
within the Leased Premises, the Building and the Outside Areas, and shall vacate
and surrender the Leased Premises, the Building, the Outside Areas and the
Property to Landlord in the same condition, broom clean, when Tenant first took
occupancy of the Leased Premises, reasonable wear and tear excepted. Tenant
shall repair all damage to the Leased Premises, the exterior of the Building and
the Outside Areas caused by Tenant's removal of Tenant's property. Tenant shall
patch and refinish, to Landlord's reasonable satisfaction, all penetrations made
by Tenant or its employees to the floor, walls or ceiling of the Leased
Premises, whether such penetrations were made with Landlord's approval or not.
Tenant shall repair or replace all stained or damaged ceiling tiles, wall
coverings and floor coverings to the reasonable satisfaction of Landlord. Tenant
shall repair all damage caused by Tenant to the exterior surface of the Building
and the paved surfaces of the Outside Areas and, where necessary, replace or
resurface same. Tenant shall remove all Specialized Improvements (as defined in
Paragraph 6 hereof) identified by Landlord pursuant to the terms of this Lease
and shall repair all damage to the Leased Premises, the Building and the
Property caused by such removal. Additionally, to the extent that Landlord shall
have notified or is deemed to have notified Tenant in writing at the time the
improvements were completed that it desired to have certain improvements made by
Tenant or at the request of Tenant removed at the expiration or sooner
termination of the Lease, Tenant shall, upon the expiration or sooner
termination of the Lease, remove any such improvements constructed or installed
by Landlord or Tenant and repair all damage caused by such removal. If the
Leased Premises, the Building, the Outside Areas and the Property are not
surrendered to Landlord in the condition required by this paragraph at the
expiration or sooner termination of this Lease, Landlord may, at Tenant's
expense, so remove Tenant's signs, property and/or improvements not so removed
and make such repairs and replacements not so made or hire, at Tenant's expense,
independent contractors to perform such work. Tenant shall be liable to Landlord
for all costs incurred by Landlord in returning the Leased Premises, the
Building and the Outside Areas to the required condition, together with interest
on all costs so incurred from the date paid by Landlord at the then maximum rate
of interest not prohibited or made usurious by law until paid. Tenant shall pay
to Landlord the amount of all costs so incurred plus such interest thereon,
within ten (10) days of Landlord's billing Tenant for same. Tenant shall
indemnify Landlord against loss or liability resulting from delay by Tenant in
surrendering the Leased Premises, including, without limitation, any claims made
by any succeeding Tenant or any losses to Landlord with respect to lost
opportunities to lease to succeeding tenants.
3.
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ARTICLE 3
RENT, LATE CHARGES AND SECURITY DEPOSITS
3.1 BASE MONTHLY RENT. Commencing on the Lease Commencement Date (as determined
pursuant to Paragraph 2.3 above) and continuing throughout the Lease Term,
Tenant shall pay to Landlord, without prior demand therefor, in advance on the
first day of each calendar month, the amount set forth as "Base Monthly Rent" in
Article 1 (the "Base Monthly Rent").
3.2 ADDITIONAL RENT. Commencing on the Lease Commencement Date (as determined
pursuant to Paragraph 2.3 above) and continuing throughout the Lease Term, in
addition to the Base Monthly Rent and to the extent not required by Landlord to
be contracted for and paid directly by Tenant, Tenant shall pay to Landlord as
additional rent (the "Additional Rent") the following amounts:
(a) An amount equal to all Property Operating Expenses (as defined in
Article 13) incurred by Landlord. Payment shall be made by whichever of the
following methods (or combination of methods) is (are) from time to time
designated by Landlord:
(i) Landlord may forward invoices or bills for such expenses
to Tenant, and Tenant shall, no later than ten (10) days prior to the due date,
pay such invoices or bills and deliver satisfactory evidence of such payment to
Landlord, and/or
(ii) Landlord may bill to Tenant, on a periodic basis not more
frequently than monthly, the amount of such expenses (or group of expenses) as
paid or incurred by Landlord, and Tenant shall pay to Landlord the amount of
such expenses within thirty (30) days after receipt of a written bill therefor
from Landlord, and/or
(iii) Landlord may deliver to Tenant Landlord's reasonable
estimate of any given expense (such as Landlord's Insurance Costs or Real
Property Taxes), or group of expenses, which it anticipates will be paid or
incurred for the ensuing calendar or fiscal year, as Landlord may determine, and
Tenant shall pay to Landlord an amount equal to the estimated amount of such
expenses for such year in equal monthly installments during such year with the
installments of Base Monthly Rent.
Landlord reserves the right to change from time to time the methods of billing
Tenant for any given expense or group of expenses or the periodic basis on which
such expenses are billed.
(b) Landlord's share of the consideration received by Tenant upon
certain assignments and sublettings as required by Article 7.
(c) Any legal fees and costs that Tenant is obligated to pay or
reimburse to Landlord pursuant to Article 13; and
(d) Any other charges or reimbursements due Landlord from Tenant
pursuant to the terms of this Lease.
Notwithstanding the foregoing, Landlord may elect by written notice to Tenant
to have Tenant pay Real Property Taxes or any Portion thereof directly to the
applicable taxing authority, in which case Tenant shall make such payments
and deliver satisfactory evidence of payment to Landlord no later than ten
(10) days before such Real Property Taxes become delinquent.
3.3 YEAR-END ADJUSTMENTS. If Landlord shall have elected to bill Tenant for
the Property Operating Expenses (or any group of such expenses) on an
estimated basis in accordance with the provisions of Paragraph 3.2(a)(iii)
above, Landlord shall furnish to Tenant within three months following the end
of the applicable calendar or fiscal year, as the case may be, a statement
setting forth (i) the amount of such expenses paid or incurred during the
just ended calendar or fiscal year, as appropriate, and (ii) the amount that
Tenant has paid to Landlord for credit against such expenses for such period.
If Tenant shall have paid more than its obligation for such expenses for the
stated period, Landlord shall, at its election, either (i) credit the amount
of such overpayment toward the next ensuing payment or payments of Additional
Rent that would otherwise be due or (ii) refund in cash to Tenant the amount
of such overpayment. If such year-end statement shall show that Tenant did
not pay its obligation for such expenses in full, then Tenant shall pay to
Landlord the amount of such underpayment within ten days from Landlord's
billing of same to Tenant. The provisions of this Paragraph shall survive the
expiration or sooner termination of this Lease.
3.4 LATE CHARGE, AND INTEREST ON RENT IN DEFAULT. Tenant acknowledges that
the late payment by Tenant of any monthly installment of Base Monthly Rent or
any Additional Rent will cause Landlord to incur certain costs and expenses
not contemplated under this Lease, the exact amounts of which are extremely
difficult or impractical to fix Such costs and expenses will include without
limitation, administration and collection costs and processing and accounting
expenses. Therefor, if any installment of Base Monthly Rent is not received
by Landlord from Tenant within five (5) calendar days after the same becomes
due, Tenant shall immediately pay to Landlord a late charge in an amount
equal to the amount set forth in Article 1 as the "Late Charge Amount," and
if any Additional Rent is not received by Landlord when the same becomes due,
Tenant shall immediately pay to Landlord a late charge in an amount equal to
5% of the Additional Rent not so paid. Landlord and Tenant agree that this
late charge represents a reasonable estimate of such costs and expenses and
is fair compensation to Landlord for the anticipated loss Landlord would
suffer by reason of Tenant's failure to make timely payment. In no event
shall this provision for a late charge be deemed to grant to Tenant a grace
period or extension of time within which to pay any rental installment or
prevent Landlord from exercising any right or remedy available to Landlord
upon Tenant's failure to
4.
<PAGE>
pay each rental installment due under this Lease when due, including the right
to terminate this Lease. If any rent remains delinquent for a period in excess
of five (5) calendar days, then, in addition to such late charge, Tenant shall
pay to Landlord interest on any rent that is not so paid from said tenth day at
the then maximum rate of interest not prohibited or made usurious by Law until
paid.
3.5 PAYMENT OF RENT. Except as specifically provided otherwise in this Lease,
all rent shall be paid in lawful money of the United States, without any
abatement, reduction or offset for any reason whatsoever, to Landlord at such
address as Landlord may designate from time to time. Tenant's obligation to
pay Base Monthly Rent and all Additional Rent shall be appropriately prorated
at the commencement and expiration of the Lease Term. The failure by Tenant
to pay any Additional Rent as required pursuant to this Lease when due shall
be treated the same as a failure by Tenant to pay Base Monthly Rent when due,
and Landlord shall have the same rights and remedies against Tenant as
Landlord would have had Tenant failed to pay the Base Monthly Rent when due.
3.6 PREPAID RENT. Tenant shall, upon execution of this Lease, pay to Landlord
the amount set forth in Article 1 as "First Month's Prepaid Rent" as
prepayment of rent for credit against the first payment of Base Monthly Rent
due hereunder.
3.7 SECURITY DEPOSIT. Tenant has deposited or shall deposit concurrently with
Tenant's execution of this Lease, with Landlord the amount set forth in
Article I as the "Security Deposit" (LESS any unapplied security deposit held
by Landlord under the Original Lease, which shall be applied to the amount of
the Security Deposit) as security for the performance by Tenant of the terms
of this Lease to be performed by Tenant, and not as prepayment of rent.
Tenant hereby grants to Landlord a security interest in the Security Deposit,
including but not limited to replenishments thereof. Landlord may apply such
portion or portions of the Security Deposit as are reasonably necessary for
the following purposes: (i) to remedy any default by Tenant in the payment of
Base Monthly Rent or Additional Rent or a late charge or interest on
defaulted rent, or any other monetary payment obligation of Tenant under this
Lease; (ii) to repair damage to the Leased Premises, the Building or the
Outside Areas caused or permitted to occur by Tenant; (iii) to clean and
restore and repair the Leased Premises, the Building or the Outside Areas
following their surrender to Landlord if not surrendered in the condition
required pursuant to the provisions of Article 2, and (iv) to remedy any
other default of Tenant to the extent permitted by Law including, without
limitation, paying in full on Tenant's behalf any sums claimed by materialmen
or contractors of Tenant to be owing to them by Tenant for work done or
improvements made at Tenant's request to the Leased Premises. In this regard,
Tenant hereby waives any restriction on the uses to which the Security
Deposit may be applied as contained in Section 1950.7(c) of the California
Civil Code and/or any successor statute. In the event the Security Deposit or
any portion thereof is so used, Tenant shall pay to Landlord, promptly upon
demand, an amount in cash sufficient to restore the Security Deposit to the
full original sum. If Tenant fails to promptly restore the Security Deposit
and if Tenant shall have paid to Landlord any sums as "Last Month's Prepaid
Rent," Landlord may, in addition to any other remedy Landlord may have under
this Lease, reduce the amount of Tenant's Last Month's Prepaid Rent by
transferring all or portions of such Last Month's Prepaid Rent to Tenant's
Security Deposit until such Security Deposit is restored to the amount set
forth in Article 1. Landlord shall not be deemed a trustee of the Security
Deposit. Landlord may use the Security Deposit in Landlord's ordinary
business and shall not be required to segregate it from Landlord's general
accounts. Tenant shall not b e entitled to any interest on the Security
Deposit. If Landlord transfers the Building or the Property during the Lease
Term, Landlord may pay the Security Deposit to any subsequent owner in
conformity with the provisions of Section 1950.7 of the California Civil Code
and/or any successor statute, in which event the transferring landlord shall
be released from all liability for the return of the Security Deposit. Tenant
specifically grants to Landlord (and Tenant hereby waives the provisions of
California Civil Code Section 1950.7 to the contrary) a period of ninety days
following a surrender of the Leased Premises by Tenant to Landlord within
which to inspect the Leased Premises, make required restorations and repairs,
receive and verify workmen's billings therefor, and prepare a final
accounting with respect to the Security Deposit. In no event shall the
Security Deposit or any portion thereof, be considered prepaid rent.
ARTICLE
USE OF LEASED PREMISES AND OUTSIDE AREA
4.1 PERMITTED USE. Tenant shall be entitled to use the Leased Promises solely
for the "Permitted Use" as set forth in Article 1 and for no other purpose
whatsoever. Tenant shall continuously and without interruption use the Leased
Premises for such purpose for the entire Lease Term. Any discontinuance of
such use for a period of sixty consecutive calendar days shall be, at
Landlord's election, a default by Tenant under the terms of this Lease.
Tenant shall have the right to use the Outside Areas in conjunction with its
Permitted Use of the Leased Premises solely for the purposes for which they
were designed and intended and for no other purposes whatsoever.
4.2 GENERAL LIMITATIONS ON USE. Tenant shall not do or permit anything to be
done in or about the Leased Premises, the Building, the Outside Areas or the
Property which does or could (i) jeopardize the structural integrity of the
Building or (ii) cause damage to any part of the Leased Premises, the
Building, the Outside Areas or the Property. Tenant shall not operate any
equipment within the Leased Premises which does or could (i) injure, vibrate
or shake the Leased Premises or the Building, (ii) damage, overload or impair
the efficient operation of any electrical, plumbing, heating, ventilating or
air conditioning systems within or servicing the Leased Premises or the
Building, or (iii) damage or impair the efficient operation of the sprinkler
system (if any) within or servicing the Leased Premises or the Building.
Except as set forth in Paragraph 2.1 hereof, Tenant shall not install any
equipment or antennas on or make any penetrations of the exterior walls or
roof of the Building. Tenant shall not affix any equipment to or make any
penetrations or cuts in the floor, ceiling, walls or roof of the Leased
Premises. Tenant shall not place any loads upon the floors, walls, ceiling or
roof systems which could endanger the structural integrity of the Building or
damage its floors, foundations or supporting structural components. Tenant
shall not place any explosive, flammable or harmful fluids or other waste
materials in the drainage systems of the Leased Premises, the
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Building, the Outside Areas or the Property. Tenant shall not drain or
discharge any fluids in the landscaped areas or across the paved areas of the
Property. Tenant shall not use any of the Outside Areas for the storage of
its materials, supplies, inventory or equipment and all such materials,
supplies, inventory or equipment shall at all times be stored within the
Leased Premises. Tenant shall not commit nor permit to be committed any waste
in or about the Leased Premises, the Building, the Outside Areas or the
Property.
4.3 NOISE AND EMISSIONS. All noise generated by Tenant in its use of the
Leased Premises shall be confined or muffled so that it does not interfere
with the businesses of or annoy the occupants and/or users of adjacent
properties. All dust, fumes, odors and other emissions generated by Tenant's
use of the Leased Premises shall be sufficiently dissipated in accordance
with sound environmental practice and exhausted from the Leased Premises in
such a manner so as not to interfere with the businesses of or annoy the
occupants and/or users of adjacent properties, or cause any damage to the
Leased Premises, the Building, the Outside Areas or the Property or any
component part thereof or the property of adjacent property owners.
4.4 TRASH DISPOSAL. Tenant shall provide trash bins or other adequate garbage
disposal facilities within the trash enclosure areas provided or permitted by
Landlord outside the Leased Premises sufficient for the interim disposal of
all of its trash, garbage and waste. All such trash, garbage and waste
temporarily stored in such areas shall be stored in such a manner so that it
is not visible from outside of such areas, and Tenant shall cause such trash,
garbage and waste to be regularly removed from the Property. Tenant shall
keep the Leased Premises and the Outside Areas in a clean, safe and neat
condition free and clear of all of Tenant's trash, garbage, waste and/or
boxes, pallets and containers containing same at all times.
4.5 PARKING. Tenant shall have the non-exclusive use of approximately 157
parking spaces on the Property, as shown on the Site Plan attached as Exhibit
A. Tenant shall not, at any time, park or permit to be parked any
recreational vehicles, inoperative vehicles or equipment in the Outside Areas
or on any portion of the Property. Tenant agrees to assume responsibility for
compliance by its employees and invitees with the parking provisions within
contained herein. If Tenant or its employees park any vehicle within the
Property in violation of these provisions, then Landlord may, upon prior
written notice to Tenant giving Tenant one (1) day (or any applicable
statutory notice period, if longer than one (1) day) to remove such
vehicle(s), in addition to any other remedies Landlord may have under this
Lease, charge Tenant, as Additional Rent, and Tenant agrees to pay, as
Additional Rent, One Hundred Dollars ($100) per day for each day or partial
day that each such vehicle is so parked within the Property. Landlord
reserves the right to grant easements and access rights to others for use of
the parking areas on the Property, provided that such grants do not
materially interfere with Tenant's use of the parking areas.
4.6 SIGNS. Tenant shall not place or install on or within any portion of the
Leased Premises, the exterior of the Building, the Outside Areas or the
Property any sign, advertisement, banner, placard, or picture which is
visible from the exterior of the Leased Premises. Tenant shall not place or
install on or within any portion of the Leased Premises, the exterior of the
Building, the Outside Areas or the Property any business identification sign
which is visible from the exterior of the Leased Promises until Landlord
shall have approved in writing and in its sole discretion the location, size,
content, design, method of attachment and material to be used in the making
of such sign. Any signs installed by Tenant shall not adversely impact the
signage rights of other tenants of the Project. Landlord may remove any signs
(which have not been approved in writing by Landlord), advertisements,
banners, placards or pictures so placed by Tenant on or within the Leased
Premises, the exterior of the Building, the Outside Areas or the Property and
charge to Tenant the cost of such removal, together with any costs incurred
by Landlord to repair any damage caused thereby, including any cost incurred
to restore the surface (upon which such sign was so affixed) to its original
condition. Tenant shall remove all of Tenant's signs, repair any damage
caused thereby, and restore the surface upon which the sign was affixed to
its original condition, all to Landlord's reasonable satisfaction, upon the
termination of this Lease.
4.7 COMPLIANCE WITH LAWS AND PRIVATE RESTRICTIONS. Tenant shall abide by and
shall promptly observe and comply with, at its sole cost and expense, all
Laws and Private Restrictions respecting the use and occupancy of the Leased
Premises, the Building, the Outside Areas or the Property including, without
limitation, all Laws governing the use and/or disposal of hazardous
materials, and shall defend with competent counsel, indemnify and hold
Landlord harmless from any claims, damages or liability resulting from
Tenant's failure to so abide, observe, or comply. Tenant's obligations
hereunder shall survive the expiration or sooner termination of this Lease.
4.8 COMPLIANCE WITH INSURANCE REQUIREMENTS. With respect to any insurance
policies required or permitted to be carried by Landlord in accordance with
the provisions of this Lease, Tenant shall not conduct nor permit any other
person to conduct any activities nor keep, store or use (or allow any other
person to keep, store or use) any item or thing within the Leased Premises,
the Building, the Outside Areas or the Property which (i) is prohibited under
the terms of any such policies, (ii) could result in the termination of the
coverage afforded under any of such policies, (iii) could give to the
insurance carrier the right to cancel any of such policies, or (iv) could
cause an increase in the rates (over standard rates) charged for the coverage
afforded under any of such policies. Tenant shall comply with all
requirements of any insurance company, insurance underwriter, or Board of
Fire Underwriters which are necessary to maintain, at standard rates, the
insurance coverages carried by either Landlord or Tenant pursuant to this
Lease.
4.9 LANDLORD'S RIGHT TO ENTER. Landlord and its agents shall have the right
to enter the Leased Premises during normal business hours after giving Tenant
reasonable notice and subject to Tenant's reasonable security measures for
the purpose of (i) inspecting the same; (ii) showing the Leased Premises to
prospective purchasers, mortgagees or tenants; (iii) making necessary
alterations, additions or repairs; and (iv) performing any of Tenant's
obligations when Tenant has failed to do so. Landlord shall have the right to
enter the Leased Premises during normal business hours (or as otherwise
agreed), subject to Tenant's reasonable security measures, for purposes of
supplying any maintenance or services agreed to be supplied by Landlord.
Landlord shall have the right to enter the Outside Areas
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during normal business hours for purposes of (i) inspecting the exterior of
the Building and the Outside Areas; (ii) posting notices of nonresponsibility
(and for such purposes Tenant shall provide Landlord at least thirty days'
prior written notice of any work to be performed on the Leased Premises); and
(iii) supplying any services to be provided by Landlord. Any entry into the
Leased Premises or the Outside Areas obtained by Landlord in accordance with
this paragraph shall not under any circumstances be construed or deemed to be
a forcible or unlawful entry into, or a detainer of, the Leased Premises, or
an eviction, actual or constructive of Tenant from the Leased Premises or any
portion thereof.
4.10 USE OF OUTSIDE AREAS. Tenant, in its use of the Outside Areas, shall at
all times keep the Outside Areas in a safe condition free and clear of all
materials, equipment, debris, trash (except within existing enclosed trash
areas), inoperable vehicles, and other items which are not specifically
permitted by Landlord to be stored or located thereon by Tenant. If, in the
opinion of Landlord, unauthorized persons are using any of the Outside Areas
by reason of, or under claim of, the express or implied authority or consent
of Tenant, then Tenant, upon demand of Landlord, shall restrain, to the
fullest extent then allowed by Law, such unauthorized use, and shall initiate
such appropriate proceedings as may be required to so restrain such use.
Landlord reserves the right to grant easements and access rights to others
for use of the Outside Areas and shall not be liable to Tenant for any
diminution in Tenant's right to use the Outside Areas as a result.
4.11 ENVIRONMENTAL PROTECTION. Tenant's obligations under this Paragraph 4.11
shall survive the expiration or termination of this Lease.
(a) As used herein, the term "Hazardous Materials" shall mean any
toxic or hazardous substance, material or waste or any pollutant or
infectious or radioactive material, including but not limited to those
substances, materials or wastes regulated now or in the future under any of
the following statutes or regulations and any and all of those substances
included within the definitions of "hazardous substances," "hazardous
materials," "hazardous waste," "hazardous chemical substance or mixture,"
"imminently hazardous chemical substance or mixture," "toxic substances,"
"hazardous air pollutant," "toxic pollutant," or "solid waste" in the (a)
Comprehensive Environmental Response, Compensation and Liability Act of 1990
("CERCLA" or "Superfund"), as amended by the Superfund Amendments and
Reauthorization Act of 1986 ("SARA"), 42 U.S.C. Section 9601 ET SEQ., (b)
Resource Conservation and Recovery Act of 1976 ("RCRA"), 42 U.S.C. Section
6901 ET SEQ., (c) Federal Water Pollution Control Act ("FSPCA"), 33 U.S.C.
Section 1251 ET SEQ., (d) Clean Air Act ("CAA"), 42 U.S.C. Section 7401 ET
SEQ., (e) Toxic Substances Control Act ("TSCA"), 14 U.S.C. Section 2601 ET
SEQ., (f) Hazardous Materials Transporation Act, 49 U.S.C. Section 1801, ET
SEQ., (g) Carpenter-Presley-Tanner Hazardous Substance Account Act
("California Superfund"), Cal. Health & Safety Code Section 25300 ET SEQ.,
(h) California Hazardous Waste Control Act, Cal. Health & Safety code Section
25100 ET SEQ., (i) Porter Cologne Water Quality Control Act ("Porter-Cologne
Act"), Cal. Water Code Section 13000 ET SEQ., (j) Hazardous Waste Disposal
Land Use Law, Cal. Health & Safety codes Section 25220 ET SEQ., (k) Safe
Drinking Water and Toxic Enforcement Act of 1986 ("Proposition 65"), Cal.
Health & Safety code Section 25249.5 ET SEQ., (l) Hazardous Substances
Underground Storage Tank Law, Cal. Health & Safety code Section 25280 ET
SEQ., (m) Air Resources Law, Cal. Health & Safety Code Section 39000 ET SEQ.,
and (n) regulations promulgated pursuant to said laws or any replacement
thereof, or as similar terms are defined in the federal, state and local
laws, statutes, regulations, orders or rules. Hazardous Materials shall also
mean any and all other biohazardous wastes and substances, materials and
wastes which are, or in the future become, regulated under applicable Laws
for the protection of health or the environment, or which are classified as
hazardous or toxic substances, materials or wastes, pollutants or
contaminants, as defined, listed or regulated by any federal, state or local
law, regulation or order or by common law decision, including, without
limitation, (i) trichloroethylene, tetrachloroethylene, perchloroethylene and
other chlorinated solvents, (ii) any petroleum products or fractions thereof,
(iii) asbestos, (iv) polychlorinted biphenyls, (v) flammable explosives, (vi)
urea formaldehyde, (vii) radioactive materials and waste, and (viii)
materials and wastes that are harmful to or may threaten human health,
ecology or the environment.
(b) Notwithstanding anything to the contrary in this Lease, Tenant,
at its sole cost, shall comply with all Laws relating to the storage, use and
disposal of Hazardous Materials; PROVIDED, HOWEVER, that Tenant shall not be
responsible for contamination of the Leased Premises by Hazardous Materials
existing as of the date the Leased Premises were originally occupied by
Tenant (whether before or after the Lease Commencement Date) unless caused by
Tenant. Tenant shall not store, use or dispose of any Hazardous Materials
except for those Hazardous Materials listed in a Hazardous Materials
management plan ("HMMP")which Tenant shall deliver to Landlord upon execution
of this Lease and update at least annually with Landlord ("Permitted
Materials") which may be used, stored and disposed of provided (i) such
Permitted Materials are used, stored, transported, and disposed of in strict
compliance with applicable laws, (ii) such Permitted Materials shall be
limited to the materials listed on and may be used only in the quantities
specified in the HMMP, and (iii) Tenant shall provide Landlord with copies of
all material safety data sheets and other documentation required under
applicable Laws in connection with Tenant's use of Permitted Materials as and
when such documentation is provided to any regulatory authority having
jurisdiction, in no event shall Tenant cause or permit to be discharged into
the plumbing or sewage system of the Building or onto the land underlying or
adjacent to the Building any Hazardous Materials. Tenant shall be solely
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 Tenant's
storage, use and/or disposal of Hazardous Materials. If the presence of
Hazardous Materials on the Leased Premises caused or Permitted by Tenant
results in contamination or deterioration of water or soil, then Tenant shall
promptly take any and all action necessary to clean up such contamination,
but the foregoing shall in no event be deemed to constitute permission by
Landlord to allow the presence of such Hazardous Materials. At any time prior
to the expiration of the Lease Term if Tenant has a reasonable basis to
suspect that there has been any release or the presence of Hazardous
Materials in the ground or ground water on the Leased Premises which did not
exist upon commencement of the Lease Term, Tenant shall have the right to
conduct appropriate tests of water and soil and to deliver to Landlord the
results of such tests to demonstrate that no contamination in excess of
permitted levels has occurred as a result of Tenant's use of the Leased
Premises. Tenant shall further be solely responsible for, and shall
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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 removal, cleanup and restoration work and
materials required hereunder to return the Leased Premises and any other
property of whatever nature to their condition existing prior to the appearance
of the Hazardous Materials.
(c) Upon termination or expiration of the lease, Tenant at its sole
expense shall cause all Hazardous Materials placed in or about the Leased
Premises, the Building and/or the Property by Tenant, its agents, contractors,
or invitees, and all installations (whether interior or exterior) made by or on
behalf of Tenant relating to the storage, use, disposal or transportation of
Hazardous Materials to be removed from the property and transported for use,
storage or disposal in accordance and compliance with all Laws and other
requirements respecting Hazardous Materials used or permitted to be used by
Tenant. Tenant shall apply for and shall obtain from all appropriate regulatory
authorities (including any applicable fire department or regional water quality
control board) all permits, approvals and clearances necessary for the closure
of the Property and shall take all other actions as may be required to complete
the closure of the Building and the Property. In addition, prior to vacating the
Leased Premises, Tenant shall undertake and submit to Landlord an environmental
site assessment from an environmental consulting company reasonably acceptable
to Landlord which site assessment shall evidence Tenant's compliance with this
Paragraph 4.11.
(d) At any time prior to expiration of the Lease term, subject to
reasonable prior notice (not less than forty-eight (48) hours) and Tenant's
reasonable security requirements and provided such activities do not
unreasonably interfere with the conduct of Tenant's business at the Leased
Premises, Landlord shall have the right to enter in and upon the Property,
Building and Leased Premises in order to conduct appropriate tests of water
and soil to determine whether levels of any Hazardous Materials in excess of
legally permissible levels has occurred as a result of Tenant's use thereof.
Landlord shall furnish copies of all such test results and reports to Tenant
and, at Tenant's option and cost, shall permit split sampling for testing and
analysis by Tenant. Such testing shall be at Tenant's expense if Landlord has
a reasonable basis for suspecting and confirms the presence of Hazardous
Materials in the soil or surface or ground water in, on, under, or about the
Property, the Building or the Leased Premises, which has been caused by or
resulted from the activities of Tenant, its agents, contractors, or invitees.
(e) Landlord may voluntarily cooperate in a reasonable manner with the
efforts of all governmental agencies in reducing actual or potential
environmental damage. Tenant shall not be entitled to terminate this Lease or to
any reduction in or abatement of rent by reason of such compliance or
cooperation. Tenant agrees at all times to cooperate fully with the requirements
and recommendations of governmental agencies regulating, or otherwise involved
in, the protection of the environment.
4.12 RULES AND REGULATIONS. In the event Digital Microwave Corporation is no
longer the sole tenant of the Leased Premises, Landlord shall have the right
from time to time to establish reasonable rules and regulations and/or
amendments or additions thereto respecting the use of the Leased Premises and
the Outside Areas for the care and orderly management of the Property. Upon
delivery to Tenant of a copy of such rules and regulations or any amendments
or additions thereto, Tenant shall comply with such rules and regulations. A
violation by Tenant of any of such rules and regulations shall constitute a
default by Tenant under this Lease. If there is a conflict between the rules
and regulations and any of the provisions of this Lease, the provisions of
this Lease shall prevail. Landlord shall not be responsible or liable to
Tenant for the violation of such rules and regulations by any other tenant of
the Property.
4.13 RESERVATIONS. Landlord reserves the right from time to time to grant,
without the consent or joinder of Tenant, such easements, rights of way and
dedications that Landlord deems necessary, and to cause the recordation of
parcel maps and restrictions, so long as such easements, rights of way and
dedications do not unreasonably interfere with the use of the Leased Premises
by Tenant. Tenant agrees to execute any documents reasonably requested by
Landlord to effectuate any such easement rights, dedications, maps or
restrictions.
ARTICLE 5
REPAIRS, MAINTENANCE, SERVICES AND UTILITIES
5.1 REPAIR AND MAINTENANCE. Except in the case of damage to or destruction of
the Leased Premises, the Building, the Outside Areas or the Property caused by
an act of God or other peril, in which case the provisions of Article 10 shall
control, the parties shall have the following obligations and responsibilities
with respect to the repair and maintenance of the Leased Premises, the Building,
the Outside Areas, and the Property.
(a) TENANT'S OBLIGATIONS. Tenant shall, at all times during the
Lease Term and at its sole cost and expense, regularly clean and continuously
keep and maintain in good order, condition and repair the Leased Premises and
every part thereof including, without limiting the generality of the
foregoing, (i) all interior walls, floors and ceilings, (ii) all windows,
doors and skylights, (iii) all electrical wiring, conduits, connectors and
fixtures, (iv) all plumbing, pipes, sinks, toilets, faucets and drains, (v)
all lighting fixtures, bulbs and lamps and all heating ventilating and air
conditioning equipment, and (vi) all entranceways to the Leased Premises.
Tenant, if requested to do so by Landlord, shall hire, at Tenant's sole cost
and expense, a licensed heating, ventilating and air conditioning contractor
to regularly and periodically (not less frequently than every three months)
inspect and perform required maintenance on the heating, ventilating and air
conditioning equipment and systems serving the Leased Premises, or
alternatively, Landlord may, at its election, contract in its own name for
such regular periodic inspections of and maintenance on such heating,
ventilating and air conditioning equipment and systems and charge to Tenant,
as Additional Rent, the cost thereof. Tenant shall, at all times during the
Lease Term, keep in a clean and safe condition the Outside Areas. Tenant
shall regularly and periodically sweep and clean the driveways and parking
areas. Tenant shall, at its sole cost and expense, repair all damage to the
Leased Premises, the Building,
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the Outside Areas or the Property caused by the activities of Tenant, its
employees, invitees or contractors promptly following written notice from
Landlord to so repair such damages. If Tenant shall fail to perform the
required maintenance or fail to make repairs required of it pursuant to this
paragraph within a reasonable period of time following notice from Landlord
to do so, then Landlord may, at its election and without waiving any other
remedy it may otherwise have under this Lease or at law, perform such
maintenance or make such repairs and charge to Tenant, as Additional Rent,
the costs so incurred by Landlord for same. All glass within or a part of the
Leased Premises, both interior and exterior, is at the sole risk of Tenant
and any broken glass shall promptly be replaced by Tenant at Tenant's expense
with glass of the same kind, size and quality.
(b) LANDLORD'S OBLIGATION. Landlord shall, at Landlord's sole cost
and expense, maintain in good condition and repair the foundation, roof
structure, load-bearing and exterior walls of the Building (other than
exterior painting) (except to the extent any of the foregoing are caused by
the actions or inactions of Tenant, or result from the failure of Tenant to
comply with the terms of the Lease, in which case such maintenance and
repairs shall be made at Tenant's sole cost and expense). Subject
reimbursement pursuant to Article 3 hereof, Landlord shall maintain the
Outside Areas and the following base building systems and elements: roof
membrane, standard HVAC, non-distributed plumbing, non-distributed electrical
and sprinkler/ fire suppression systems unless such systems or elements were
installed by Tenant or are specific to Tenant's activities or the Improvement
Works. Except as set forth in the first sentence of this Paragraph 5.1(b),
Landlord shall charge to Tenant, as Additional Rent pursuant to Article 3,
all costs incurred by Landlord for all repairs, replacements and maintenance
(including exterior painting) for the Building, the Property and the Outside
Areas.
5.2 UTILITIES. Tenant shall arrange at its sole cost and expense and in its
own name, for the supply of gas and electricity to the Leased Premises. In
the event that such services are not separately metered, Tenant shall, at its
sole expense, cause such meters to be installed. Landlord shall maintain the
water meter(s) in its own name; provided, however, that if at any time during
the Lease Term Landlord shall require Tenant to put the water service in
Tenant's name, Tenant shall do so at Tenant's sole cost. Tenant shall be
responsible for determining if the local supplier of water, gas and
electricity can supply the needs of Tenant and whether or not the existing
water, gas and electrical distribution systems within the Building and the
Leased Premises are adequate for Tenant's needs. Tenant shall be responsible
for determining if the existing sanitary and storm sewer systems now
servicing the Leased Premises and the Property are adequate for Tenant's
needs. Tenant shall pay all charges for water, gas, electricity and storm and
sanitary sewer services as so supplied to the Leased Premises, irrespective
of whether or not the services are maintained in Landlord's or Tenant's name.
5.3 SECURITY. Tenant acknowledges that Landlord has not undertaken any duty
whatsoever to provide security for the Leased Premises, the Building, the
Outside Areas or the Property and, accordingly, Landlord is not responsible
for the security of same or the protection of Tenant's property or Tenant's
employees, invitees or contractors. To the extent Tenant determines that such
security or protection services are advisable or necessary, Tenant shall
arrange for and pay the costs of providing same.
5.4 ENERGY AND RESOURCE CONSUMPTION. Landlord may voluntarily cooperate in a
reasonable manner with the efforts of governmental agencies and/or utility
suppliers in reducing energy or other resource consumption within the Property.
Tenant shall not be entitled to terminate this Lease or to any reduction in or
abatement of rent by reason of such compliance or cooperation. Tenant agrees at
all times to cooperate fully with Landlord and to abide by all reasonable rules
established by Landlord (i) in order to maximize the efficient operation of the
electrical, heating, ventilating and air conditioning systems and all other
energy or other resource consumption systems with the Property and/or (ii) in
order to comply with the requirements and recommendations of utility suppliers
and governmental agencies regulating the consumption of energy and/or other
resources.
5.5 LIMITATION OF LANDLORD'S LIABILITY. Landlord shall not be liable to Tenant
for injury to Tenant, its employees, agents, invitees or contractors, damage to
Tenant's property or loss of Tenant's business or profits, nor shall Tenant be
entitled to terminate this Lease or to any reduction in or abatement of rent by
reason of (i) Landlord's failure to provide security services or systems within
the Property for the protection of the Leased Premises, the Building or the
Outside Areas, or the protection of Tenant's property or Tenant's employees,
invitees, agents or contractors, or (ii) Landlord's failure to perform any
maintenance or repairs to the Leased Premises, the Building, the Outside Areas
or the Property until Tenant shall have first notified Landlord, in writing, of
the need for such maintenance or repairs, and then only after Landlord shall
have had a reasonable period of time following its receipt of such notice within
which to perform such maintenance or repairs, or (iii) any failure,
interruption, rationing or other curtailment in the supply of water, electric
current, gas or other utility service to the Leased Premises, the Building, the
Outside Areas or the Property from whatever cause (other than Landlord's sole
active negligence or willful misconduct), or (iv) the unauthorized intrusion or
entry into the Leased Premises by third parties (other than Landlord).
ARTICLE 6
ALTERATIONS AND IMPROVEMENTS
6.1 BY TENANT. Tenant shall not make any alterations to or modifications of the
Leased Premises or construct any improvements within the Leased Premises until
Landlord shall have first approved, in writing, the plans and specifications
therefor, which approval may be withheld in Landlord's sole discretion.
Landlord's approval shall be deemed given if not denied by Landlord in a written
notice to Tenant delivered within fifteen (15) days following receipt of
Tenant's written request. Tenant's written request shall also contain a request
for Landlord to elect whether or not it will require Tenant to remove the
subject alterations, modifications or improvements at the expiration or earlier
termination of this Lease. If such additional request is not included, Landlord
may make such election at the expiration or earlier termination of this Lease
(and for purposes of Tenant's removal obligations set forth in Paragraph 2.6
above, Landlord shall be deemed to have made the election at the time the
alterations,
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modifications or improvements were completed). Landlord shall have the right to
require Tenant to remove all nonstandard Tenant Improvements and other
alterations, modifications and improvements to the Leased Premises, including
without limitation, raised floors, additional interior offices, cabling (all
such non-standard modifications, alterations and improvements are referred to
herein as "Specialized Improvements"). All such modifications, alterations or
improvements, once so approved, shall be made, constructed or installed by
Tenant at Tenant's expense (including all permit fees and governmental charges
related thereto), using a licensed contractor first approved by Landlord, in
substantial compliance with the Landlord-approved plans and specifications
therefor. All work undertaken by Tenant shall be done in accordance with all
Laws and in a good and workmanlike manner using new materials of good quality.
Tenant shall not commence the making of any such modifications or alterations or
the construction of any such improvements until (i) all required governmental
approvals and permits shall have been obtained, (ii) all requirements regarding
insurance imposed by this Lease have been satisfied, (iii) Tenant shall have
given Landlord at least five (5) business days prior written notice of its
intention to commence such work so that Landlord may post and file notices of
non-responsibility, and (iv) if requested by Landlord, Tenant shall have
obtained contingent liability and broad form builder's risk insurance in an
amount satisfactory to Landlord in its reasonable discretion to cover any perils
relating to the proposed work not covered by insurance carried by Tenant
pursuant to Article 9. In no event shall Tenant make any modification,
alterations or improvements whatsoever to the Outside Areas or the exterior or
structural components of the Building including, without limitation, any cuts or
penetrations in the floor, roof or exterior walls of the Leased Premises. As
used in this Article, the term "modifications, alterations and/or improvements"
shall include, without limitation, the installation of additional electrical
outlets, overhead lighting fixtures, drains, sinks, partitions, doorways, or the
like. Notwithstanding the foregoing, Tenant, without Landlord's prior written
consent, shall be permitted to make non-structural alterations to the Building,
provided that: (a) such alterations do not exceed $25,000 individually, (b)
Tenant shall timely provide Landlord the notice required pursuant to Paragraph
4.9 above, (c) Tenant shall notify Landlord in writing within thirty (30) days
of completion of the alteration and deliver to Landlord a set of the plans and
specifications therefor, either "as built" or marked to show construction
changes made, (d) Tenant shall, upon Landlord's request, remove the alteration
at the termination of the Lease and restore the Leased Premises to their
condition prior to such alteration, and (e) Tenant shall otherwise comply with
the terms of this Article 6 regarding alterations and improvements.
6.2 OWNERSHIP OF IMPROVEMENTS. All modifications, alterations and improvements
made or added to the Leased Premises by Tenant (other than Tenant's inventory,
equipment, movable furniture, wall decorations and trade fixtures) shall be
deemed real property and a part of the Leased Premises, but shall remain the
property of Tenant during the Lease, and Tenant hereby covenants and agrees not
to grant a security interest in any such items to any party other than
Landlord. Any such modifications, alterations or improvements, once completed,
shall not be altered or removed from the Leased Premises during the Lease Term
without Landlord's written approval first obtained in accordance with the
provisions of Paragraph 6.1 above. At the expiration or sooner termination of
this Lease, all such modifications, alterations and improvements other than
Tenant's inventory, equipment, movable furniture, wall decorations and trade
fixtures, shall automatically become the property of Landlord and shall be
surrendered to Landlord as part of the Leased Premises as required pursuant to
Article 2, unless Landlord shall require Tenant to remove any of such
modifications, alterations or improvements in accordance with the provisions of
Article 2, in which case Tenant shall so remove same. Landlord shall have no
obligations to reimburse Tenant for all or any portion of the cost or value of
any such modifications, alterations or improvements so surrendered to Landlord.
All modifications, alterations or improvements which are installed or
constructed on or attached to the Leased Premises by Landlord and/or at
Landlord's expense shall be deemed real property and a part of the Leased
Premises and shall be property of Landlord. All lighting, plumbing,
electrical, heating, ventilating and air conditioning fixtures, partitioning,
window coverings, wall coverings and floor coverings installed by Tenant shall
be deemed improvements to the Leased Premises and not trade fixtures of Tenant.
6.3 ALTERATIONS REQUIRED BY LAW. Tenant shall make all modifications,
alterations and improvements to the Leased Premises, at its sole cost, that are
required by any Law because of (i) Tenant's use or occupancy of the Leased
Premises, the Building, the Outside Areas or the Property, (ii) Tenant's
application for any permit or governmental approval, or (iii) Tenant's making of
any modifications, alterations or improvements to or within the Leased Premises.
If Landlord shall, at any time during the Lease Term, be required by any
governmental authority to make any modifications, alterations or improvements to
the Building or the Property, the cost incurred by Landlord in making such
modifications, alterations or improvements, including interest at a rate equal
to the greater of (a) 12%, or (b) the sum of that rate quoted by Wells Fargo
Bank, N.T. & S.A. from time to time as its prime rate, plus two percent (2%)
("Wells Prime Plus Two") (but in no event more than the maximum rate of interest
not prohibited or made usurious), shall be amortized by Landlord over the
useful life of such modifications, alterations or improvements, as determined in
accordance with generally accepted accounting principles, and the monthly
amortized cost of such modifications, alterations and improvements as so
amortized shall be considered a Property Maintenance Cost.
6.4 LIENS. Tenant shall keep the Property and every part thereof free from any
lien, and shall pay when due all bills arising out of any work performed,
materials furnished, or obligations incurred by Tenant, its agents, employees or
contractors relating to the Property. If any such claim of lien is recorded
against Tenant's interest in this Lease, the Property or any part thereof,
Tenant shall bond against, discharge or otherwise cause such lien to be entirely
released within ten days after the same has been recorded. Tenant's failure to
do so shall be conclusively deemed a material default under the terms of this
Lease.
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ARTICLE 7
ASSIGNMENT AND SUBLETTING BY TENANT
7.1 BY TENANT. Tenant shall not sublet the Leased Premises or any portion
thereof or assign its interest in this Lease, whether voluntarily or by
operation of Law, without Landlord's prior written consent which shall not be
unreasonably withheld. Any attempted subletting or assignment without Landlord's
prior written consent, at Landlord's election, shall constitute a default by
Tenant under the terms of this Lease. The acceptance of rent by Landlord from
any person or entity other than Tenant, or the acceptance of rent by Landlord
from Tenant with knowledge of a violation of the provisions of this paragraph,
shall not be deemed to be a waiver by Landlord of any provision of this Article
or this Lease or to be a consent to any subletting by Tenant or any assignment
of Tenant's interest in this Lease. Without limiting the circumstances in which
it may be reasonable for Landlord to withhold its consent to an assignment or
subletting, Landlord and Tenant acknowledge that it shall be reasonable for
Landlord to withhold its consent in the following instances:
(a) the proposed assignee or sublessee is a governmental agency;
(b) in Landlord's reasonable judgment, the use of the Leased Premises
by the proposed assignee or sublessee would involve occupancy by other than for
a Permitted Use, would entail any alterations which would lessen the value of
the leasehold improvements in the Leased Premises, or would require increased
services by Landlord;
(c) in Landlord's reasonable judgment, the financial worth of the
proposed assignee does not meet the credit standards applied by Landlord;
(d) the proposed assignee or sublessee (or any of its affiliates) has
been in material default under a lease, has been in litigation with a
previous landlord, or in the ten years prior to the assignment or sublease
has filed for bankruptcy protection, has been the subject of an involuntary
bankruptcy, or has been adjudged insolvent;
(e) Landlord has experienced a previous default by or is in litigation
with the proposed assignee or sublessee;
(f) in Landlord's reasonable judgment, the Leased Premises, or the
relevant part thereof, will be used in a manner that will violate any negative
covenant as to use contained in this Lease;
(g) the use of the Leased Premises by the proposed assignee or
sublessee will violate any applicable law, ordinance or regulation;
(h) the proposed assignee or sublessee is, as of the date of this
Lease, a tenant in the Building;
(i) the proposed assignment or sublease fails to include all of the
terms and provisions required to be included therein pursuant to this Article 7;
(j) Tenant is in default of any obligation of Tenant under this Lease,
or Tenant has defaulted under this Lease on three or more occasions during the
12 months preceding the date that Tenant shall request consent; or
(k) in the case of a subletting of less than the entire Leased
Premises, if the subletting would result in the division of the Leased Premises
into more than three subparcels or would require improvements to be made outside
of the Leased Premises.
7.2 MERGER, REORGANIZATION, OR SALE OF ASSETS. Any dissolution, merger,
consolidation or other reorganization of Tenant, or the sale or other transfer
in the aggregate over the Lease Term of a controlling percentage of the capital
stock of Tenant, or the sale or transfer of all or a substantial portion of the
assets of Tenant, shall be deemed a voluntary assignment of Tenant's interest in
this Lease. The phrase "controlling percentage" means the ownership of and the
right to vote stock possessing more than fifty percent of the total combined
voting power of all classes of Tenant's capital stock issued, outstanding and
entitled to vote for the election of directors. If Tenant is a partnership, a
withdrawal or change, voluntary, involuntary or by operation of Law, of any
general partner, or the dissolution of the partnership, shall be deemed a
voluntary assignment of Tenant's interest in this Lease. Upon Landlord's request
from time to time, Tenant shall promptly provide Landlord with a statement
certified by the Tenant's chief operating officer, which shall provide the
following information: (a) the names of all of Tenant's shareholders and their
ownership interests at the time thereof, provided Tenant's shares are not
publicly traded; (b) the state in which Tenant is incorporated; (c) the location
of Tenant's principal place of business; (d) information regarding a material
change in the corporate structure of Tenant, including, without limitation, a
merger or consolidation; and (e) any other information regarding Tenant's
ownership that Landlord reasonably requests. Notwithstanding the foregoing,
Tenant may, without Landlord's prior written consent, sublet the Leased
Premises or assign this Lease to a subsidiary, affiliate, division, corporation
or joint venture controlling, controlled by or under common control with Tenant,
provided that Tenant shall remain primarily liable under the Lease
7.3 LANDLORD'S ELECTION. If Tenant shall desire to assign its interest under the
Lease or to sublet the Leased Premises, Tenant must first notify Landlord, in
writing, of its intent to so assign or sublet, at least thirty (30) days in
advance of the date it intends to so assign its interest in this Lease or sublet
the Leased Premises but not sooner than one hundred eighty days in advance of
such date, specifying in detail the terms of such proposed assignment or
subletting, including the name of the proposed assignee or sublessee, the
property assignee's or sublessee's intended
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use of the Leased Premises, current financial statements (including a balance
sheet, income statement and statement of cash flow, all prepared in accordance
with generally accepted accounting principles) of such proposed assignee or
sublessee, the form of documents to be used in effectuating such assignment or
subletting and such other information as Landlord may reasonably request.
Landlord shall have a period of ten (10) business days following receipt of such
notice and the required information within which to do one of the following: (i)
consent to such requested assignment or subletting subject to Tenant's
compliance with the conditions set forth in Paragraph 7.4 below, or (ii) refuse
to so consent to such requested assignment or subletting, provided that such
consent shall not be unreasonably refused, or (iii) terminate this Lease as to
the portion of the Leased Premises that is the subject of the proposed
assignment or subletting. During such ten (10) business day period, Tenant
covenants and agrees to supply to Landlord, upon request, all necessary or
relevant information which Landlord may reasonably request respecting such
proposed assignment or subletting and/or the proposed assignee or sublessee.
7.4 CONDITIONS TO LANDLORD'S CONSENT. If Landlord elects to consent, or shall
have been ordered to so consent by a court of competent jurisdiction, to such
requested assignment or subletting, such consent shall be expressly conditioned
upon the occurrence of each of the conditions below set forth, and any purported
assignment or subletting made or ordered prior to the full and complete
satisfaction of each of the following conditions shall be void and, at the
election of Landlord, which election may be exercised at any time following such
a purported assignment or subletting but prior to the satisfaction of each of
the stated conditions, shall constitute a material default by Tenant under this
Lease until cured by satisfying in full each such condition by the assignee or
sublessee. The conditions are as follows:
(a) Landlord having approved in form and substance the assignment or
sublease agreement and any ancillary documents, which approval shall not be
unreasonably withheld by Landlord if the requirements of this Article 7 are
otherwise complied with.
(b) Each such sublessee or assignee having agreed, in writing
satisfactory to Landlord and its counsel and for the benefit of Landlord, to
assume, to be bound by, and to perform the obligations of this Lease to be
performed by Tenant which relate to space being subleased.
(c) Tenant having fully and completely performed all of its obligations
under the terms of this Lease through and including the date of such assignment
or subletting.
(d) Tenant having reimbursed to Landlord all reasonable costs and
reasonable attorneys' fees incurred by Landlord in conjunction with the
processing and documentation of any such requested subletting or assignment.
(e) Tenant having delivered to Landlord a complete and fully-executed
duplicate original of such sublease agreement or assignment agreement (as
applicable) and all related agreements.
(f) Tenant having paid, or having agreed in writing to pay as to future
payments, to Landlord fifty percent (50%) of all assignment consideration or
excess rentals to be paid to Tenant or to any other on Tenant's behalf or for
Tenant's benefit for such assignment or subletting as follows:
(i) If Tenant assigns its interest under this Lease and if all
or a portion of the consideration for such assignment is to be paid by the
assignee at the time of the assignment, that Tenant shall have paid to Landlord
and Landlord shall have received an amount equal to fifty percent (50%) of the
assignment consideration so paid or to be paid (whichever is the greater) at the
time of the assignment by the assignee; or
(ii) If Tenant assigns its interest under this Lease and if
Tenant is to receive all or a portion of the consideration for such assignment
in future installments, that Tenant and Tenant's assignee shall have entered
into a written agreement with and for the benefit of Landlord satisfactory to
Landlord and its counsel whereby Tenant and Tenant's assignee jointly agree to
pay to Landlord an amount equal to fifty percent (50%) of all such future
assignment consideration installments to be paid by such assignee as and when
such assignment consideration is so paid.
(iii) If Tenant subleases the Leased Premises, that Tenant and
Tenant's sublessee shall have entered into a written agreement with and for the
benefit of Landlord satisfactory to Landlord and its counsel whereby Tenant and
Tenant's sublessee jointly agree to pay to Landlord fifty percent (50%) of all
excess rentals to be paid by such sublessee as and when such excess rentals are
so paid.
7.5 ASSIGNMENT CONSIDERATION AND EXCESS RENTALS DEFINED. For purposes of this
Article, including any amendment to this Article by way of addendum or other
writing, the term "assignment consideration" shall mean all consideration to be
paid by the assignee to Tenant or to any other party on Tenant's behalf or for
Tenant's benefit as consideration for such assignment, after deduction for
reasonable leasing commissions actually paid by Tenant but without deduction for
any other costs or expenses (including, without limitation, tenant improvements,
capital improvements, building upgrades, permit fees, attorneys' fees, and
other consultants' fees) incurred by Tenant in connection with such assignment,
and the term "excess rentals" shall mean all consideration to be paid by the
sublessee to Tenant or to any other party on Tenant's behalf or for Tenant's
benefit for the sublease of all or any portion of the Leased Premises in excess
of the rent due to Landlord under the terms of this Lease for the portion so
subleased for the same period, after deduction for reasonable leasing
commissions actually paid by Tenant but without deduction for any other costs or
expenses (including, without limitation, tenant improvements, capital
improvements, building upgrades, permit fees, attorneys' fees, and other
consultants' fees) incurred by Tenant in connection with such sublease. Tenant
agrees that the portion of any assignment consideration and/or excess rentals
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arising from any assignment or subletting by Tenant which is to be paid to
Landlord pursuant to this Article now is and shall then be the property of
Landlord and not the property of Tenant.
7.6 PAYMENTS. All payments required by this Article to be made to Landlord shall
be made in cash in full as and when they become due. At the time Tenant,
Tenant's assignee or sublessee makes each such payment to Landlord, Tenant or
Tenant's assignee or sublessee, as the case may be, shall deliver to Landlord an
itemized statement in reasonable detail showing the method by which the amount
due Landlord was calculated and certified by the party making such payment as
true and correct.
7.7 GOOD FAITH. The rights granted to Tenant by this Article are granted in
consideration of Tenant's express covenant that all pertinent allocations which
are made by Tenant between the rental value of the Leased Premises and the value
of any of Tenant's personal property which may be conveyed or leased generally
concurrently with and which may reasonably be considered a part of the same
transaction as the permitted assignment or subletting shall be made fairly,
honestly and in good faith. If Tenant shall breach this covenant, Landlord may
immediately declare Tenant to be in default under the terms of this Lease and
terminate this Lease and/or exercise any other rights and remedies Landlord
would have under the terms of this Lease in the case of a material default by
Tenant under this Lease.
7.8 EFFECT OF LANDLORD'S CONSENT. No subletting or assignment, even with the
consent of Landlord, shall relieve Tenant of its personal and primary obligation
to pay rent and to perform all of the other obligations to be performed by
Tenant hereunder. Consent by Landlord to one or more assignments of Tenant's
interest in this Lease or to one or more sublettings of the Leased Premises
shall not be deemed to be a consent to any subsequent assignment or subletting.
If Landlord shall have been ordered by a court of competent jurisdiction to
consent to a requested assignment or subletting, or such an assignment or
subletting shall have been ordered by a court of competent jurisdiction over the
objection of Landlord, such assignment or subletting shall not be binding
between the assignee (or sublessee) and Landlord until such time as all
conditions set forth in Paragraph 7.4 above have been fully satisfied (to the
extent not then satisfied) by the assignee or sublessee, including, without
limitation, the payment to Landlord of all agreed assignment considerations
and/or excess rentals then due Landlord.
ARTICLE 8
LIMITATION ON LANDLORD'S LIABILITY AND INDEMNITY
8.1 LIMITATION ON LANDLORD'S LIABILITY AND RELEASE. Landlord shall not be liable
to Tenant for, and Tenant hereby releases Landlord and its partners, principals,
members, officers, agents, employees, lenders, attorneys, and consultants from,
any and all liability, whether in contract, tort or on any other basis, for any
injury to or any damage sustained by Tenant, Tenant's agents, employees,
contractors or invitees, any damage to Tenant's property, or any loss to
Tenant's business, loss of Tenant's profits or other financial loss of Tenant
resulting from or attributable to the condition of, the management of, the
repair or maintenance of, the protection of, the supply of services or utilities
to, the damage in or destruction of the Leased Premises, the Building, the
Property or the Outside Areas, including without limitation (i) the failure,
interruption, rationing or other curtailment or cessation in the supply of
electricity, water, gas or other utility service to the Property, the Building
or the Leased Premises; (ii) the vandalism or forcible entry into the Building
or the Leased Premises; (iii) the penetration of water into or onto any portion
of the Leased Premises; (iv) the failure to provide security and/or adequate
lighting in or about the Property, the Building or the Leased Premises, (v) the
existence of any design or construction defects within the Property, the
Building or the Leased Premises; (vi) the failure of any mechanical systems to
function properly (such as the HVAC systems); (vii) the blockage of access to
any portion of the Property, the Building or the Leased Premises, except that
Tenant does not so release Landlord from such liability to the extent such
damage was proximately caused by Landlord's active negligence, willful
misconduct, or Landlord's failure to perform an obligation expressly undertaken
pursuant to this Lease after a reasonable period of time shall have lapsed
following receipt of written notice from Tenant to so perform such obligation.
In this regard, Tenant acknowledges that it is fully apprised of the provisions
of Law relating to releases, and particularly to those provisions contained in
Section 1542 of the California Civil Code which reads as follows:
"A general release does not extend to claims which the creditor does
not know or suspect to exist in his favor at the time of executing the
release, which if known by him must have materially affected his
settlement with the debtor."
Notwithstanding such statutory provision, and for the purpose of implementing a
full and complete release and discharge, Tenant hereby (i) waives the benefit of
such statutory provision and (ii) acknowledges that, subject to the exceptions
specifically set forth herein, the release and discharge set forth in this
paragraph is a full and complete settlement and release and discharge of all
claims and is intended to include in its effect, without limitation, all claims
which Tenant, as of the date hereof, does not know of or suspect to exist in its
favor.
8.2 TENANT'S INDEMNIFICATION OF LANDLORD. Tenant shall defend with competent
counsel satisfactory to Landlord any claims made or legal actions filed or
threatened against Landlord with respect to the violation of any Law, or the
death, bodily injury, personal injury, property damage, or interference with
contractual or property rights suffered by any third party occurring within the
Leased Premises or resulting from Tenant's use or occupancy of the Leased
Premises, the Building or the Outside Areas, or resulting from Tenant's
activities in or about the Leased Premises, the Building, the Outside Areas or
the Property, and Tenant shall indemnify and hold Landlord, Landlord's partners,
principals, members, employees, agents and contractors harmless from any loss
liability, penalties, or expense whatsoever (including any loss attributable to
vacant space which otherwise would have been leased, but for such activities)
resulting therefrom, except to the extent proximately caused by the active
negligence or willful misconduct of Landlord. This indemnity agreement shall
survive the expiration or sooner termination of this Lease.
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ARTICLE 9
INSURANCE
9.1 TENANT'S INSURANCE. Tenant shall maintain insurance complying with all of
the following:
(a) Tenant shall procure, pay for and keep in full force and effect, at
all times during the Lease Term, the following:
(i) Commercial general liability insurance insuring Tenant
against liability for personal injury, bodily injury, death and damage to
property occurring within the Leased Premises, or resulting from Tenant's use or
occupancy of the Leased Premises, the Building, the Outside Areas or the
Property, or resulting from Tenant's activities in or about the Leased Premises
or the Property, with coverage in an amount equal to Tenant's Required Liability
Coverage (as set forth in Article 1), which insurance shall contain "blanket
contractual liability" and "broad form property damage" endorsements insuring
Tenant's performance of Tenant's obligations to indemnify Landlord as contained
in this Lease.
(ii) Fire and property damage insurance in "special form"
coverage insuring Tenant against loss from physical damage to Tenant's personal
property, inventory, trade fixtures and improvements within the Leased Premises
with coverage for the full actual replacement cost thereof;
(iii) Business income/extra expense insurance sufficient to
pay Base Monthly Rent and Additional Rent for a period of not less than twelve
(12) months;
(iv) Plate glass insurance, at actual replacement cost;
(v) Boiler and machinery insurance, to limits sufficient to
restore the Building;
(vi) Product liability insurance (including, without
limitation, if food and/or beverages are distributed, sold and/or consumed
within the Leased Premises, to the extent obtainable, coverage for liability
arising out of the distribution, sale, use or consumption of food and/or
beverages (including alcoholic beverages, if applicable) at the Leased Premises
for not less than Tenant's Required Liability Coverage (as set forth in Article
1);
(vii) Workers' compensation insurance (statutory coverage)
with employer's liability in amounts not less than $1,000,000 insurance
sufficient to comply with all laws; and
(viii) With respect to making of any alterations or
modifications or the construction of improvements or the like undertaken by
Tenant, course of construction, commercial general liability, automobile
liability and workers' compensation (to be carried by Tenant's contractor), in
an amount and with coverage reasonably satisfactory to Landlord.
(b) Each policy of liability insurance required to be carried by Tenant
pursuant to this paragraph or actually carried by Tenant with respect to the
Leased Premises or the Property: (i) shall, except with respect to insurance
required by subparagraph (a)(vii) above, name Landlord, and such others as are
designated by Landlord, as additional insureds; (ii) shall be primary insurance
providing that the insurer shall be liable for the full amount of the loss, up
to and including the total amount of liability set forth in the declaration of
coverage, without the right of contribution from or prior payment by any other
insurance coverage of Landlord (iii) shall be in a form satisfactory to
Landlord; (iv) shall be carried with companies reasonably acceptable to Landlord
with Best's ratings of at least A and XI; (v) shall provide that such policy
shall not be subject to cancellation, lapse or change except after at least
thirty (30) days prior written notice to Landlord, and (vi) shall contain a
so-called "severability" or "cross liability" endorsement. Each policy of
property insurance maintained by Tenant with respect to the Leased Premises or
the Property or any property therein (i) shall provide that such policy shall
not be subject to cancellation, lapse or change except after at least thirty
(30) days prior written notice to Landlord and (ii) shall contain a waiver
and/or a permission to waive by the insurer of any right of subrogation against
Landlord, its partners, principals, members, officers, employees, agents and
contractors, which might arise by reason of any payment under such policy or by
reason of any act or omission of Landlord, its partners, principals, members,
officers, employees, agents and contractors.
(c) Prior to the time Tenant or any of its contractors enters the
Leased Premises, Tenant shall deliver to Landlord, with respect to each
policy of insurance required to be carried by Tenant pursuant to this
Article, a copy of such policy (appropriately authenticated by the insurer as
having been issued, premium paid) or a certificate of the insurer certifying
in form satisfactory to Landlord that a policy has been issued, premium paid,
providing the coverage required by this Paragraph and containing the
provisions specified herein. With respect to each renewal or replacement of
any such insurance, the requirements of this Paragraph must be complied with
not less than thirty days prior to the expiration or cancellation of the
policies being renewed or replaced. Landlord may, at any time and from time
to time, inspect and/or copy any and all insurance certificates required to
be carried by Tenant pursuant to this Article. If Landlord's Lender,
insurance broker, advisor or counsel reasonably determines at any time that
the amount of coverage set forth in Paragraph 9.1(a) for any policy of
insurance Tenant is required to carry pursuant to this Article is not
adequate, then Tenant shall increase the amount of coverage for such
insurance to such greater amount as Landlord's Lender, insurance broker,
advisor or counsel reasonably deems adequate.
9.2 LANDLORD'S INSURANCE. With respect to insurance maintained by Landlord:
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(a) Landlord shall maintain, as the minimum coverage required of it by
this Lease, fire and property damage insurance in so-called special form
coverage insuring Landlord (and such others as Landlord may designate) against
loss from physical damage to the Building with coverage of not less than one
hundred percent (100%) of the full actual replacement cost thereof and against
loss of rents for a period of not less than six months. Such fire and property
damage insurance, at Landlord's election but without any requirements on
Landlord's behalf to do so, (i) may be written in so-called "all risk" form,
excluding only those perils commonly excluded from such coverage by Landlord's
then property damage insurer; (ii) may provide coverage for physical damage to
the improvements so insured for up to the entire full actual replacement cost
thereof; (iii) may be endorsed to cover loss or damage caused by any additional
perils against which Landlord may elect to insure, including earthquake and/or
flood; and/or (iv) may provide coverage for loss of rents for a period of up to
twelve months. Landlord shall not be required to cause such insurance to cover
any of Tenant's personal property, inventory, and trade fixtures, or any
modifications, alterations or improvements made or constructed by Tenant to or
within the Leased Premises. Landlord shall use commercially reasonable efforts
to obtain such insurance at competitive rates.
(b) Landlord shall maintain commercial general liability insurance
insuring Landlord (and such others as are designated by Landlord) against
liability for personal injury, bodily injury, death, and damage to property
occurring in, on or about, or resulting from the use or occupancy of the
Property, or any portion thereof, with combined single limit coverage of at
least Ten Million Dollars ($10,000,000). Landlord may carry such greater
coverage as Landlord or Landlord's Lender, insurance broker, advisor or counsel
may from time to time determine is reasonably necessary for the adequate
protection of Landlord and the Property.
(c) Landlord may maintain any other insurance which in the opinion of
its insurance broker, advisor or legal counsel is prudent in carry under the
given circumstances, provided such insurance is commonly carried by owners of
property similarly situated and operating under similar circumstances.
9.3 MUTUAL WAIVER OF SUBROGATION. Landlord hereby releases Tenant, and Tenant
hereby releases Landlord and its respective partners, principals, members,
officers, agents, employees and servants, from any and all liability for
loss, damage or injury to the property of the other in or about the Leased
Premises or the Property which is caused by or results from a peril or event
or happening which is covered by insurance actually carried and in force at
the time of the loss by the party sustaining such loss; PROVIDED, HOWEVER,
that such waiver shall be effective only to the extent permitted by the
insurance covering such loss and to the extent such insurance is not
prejudiced thereby.
ARTICLE 10
DAMAGE TO LEASED PREMISES
10.1 LANDLORD'S DUTY TO RESTORE. If the Leased Premises, the Building or the
Outside Area are damaged by any peril after the Effective Date of this Lease,
Landlord shall restore the same, as and when required by this paragraph, unless
this Lease is terminated by Landlord pursuant to Paragraph 10.3 or by Tenant
pursuant to Paragraph 10.4. If this Lease is not so terminated, then upon the
issuance of all necessary governmental permits, Landlord shall commence and
diligently prosecute to completion the restoration of the Leased Premises, the
Building or the Outside Area, as the case may be, to the extent then allowed by
law, to substantially the same condition in which it existed as of the date the
Leased Premises were originally occupied by Tenant. Landlord's obligation to
restore shall be limited to the improvements constructed by Landlord. Landlord
shall have no obligation to restore any alterations, modifications or
improvements made by Tenant to the Leased Premises or any of Tenant's personal
property, inventory or trade fixtures. Upon completion of the restoration by
Landlord, Tenant shall forthwith replace or fully repair all of Tenant's
personal property, inventory, trade fixtures and other improvements constructed
by Tenant to like or similar conditions as existed at the time immediately prior
to such damage or destruction.
10.2 INSURANCE PROCEEDS. All insurance proceeds available from the fire and
property damage insurance carried by Landlord shall be paid to and become the
property of Landlord. If this Lease is terminated pursuant to either
Paragraph 10.3 or 10.4, all insurance proceeds available from insurance
carried by Tenant which cover loss of property that is Landlord's property or
would become Landlord's property on termination of this Lease shall be paid
to and become the property of Landlord, and the remainder of such proceeds
shall be paid to and become the property of Tenant. If this Lease is not
terminated pursuant to either Paragraph 10.3 or 10.4, all insurance proceeds
available from insurance carried by Tenant which cover loss to property that
is Landlord's property shall be paid to and become the property of Landlord,
and all proceeds available from such insurance which cover loss to property
which would only become the property of Landlord upon the termination of this
Lease shall be paid to and remain the property of Tenant. The determination
of Landlord's property and Tenant's property shall be made pursuant to
Paragraph 6.2.
10.3 LANDLORD'S RIGHT TO TERMINATE. Landlord shall have the option to terminate
this Lease in the event any of the following occurs, which option may be
exercised only by delivery to Tenant of a written notice of election to
terminate within thirty days after the date of such damage or destruction:
(a) The Building is damaged by any peril covered by valid and
collectible insurance actually carried by Landlord and in force at the time of
such damage or destruction (an "insured peril") to such an extent that the
estimated cost to restore the Building exceeds the lesser of (i) the insurance
proceeds available from insurance actually carried by Landlord, or (ii) fifty
percent of the then actual replacement cost thereof;
(b) The Building is damaged by an uninsured peril, which peril Landlord
was not required to insure against pursuant to the provisions of Article 9 of
this Lease.
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(c) The Building is damaged by any peril and, because of the laws then
in force, the Building (i) cannot be restored at reasonable cost or (ii) if
restored, cannot be used for the same use being made thereof before such damage.
10.4 TENANT'S RIGHT TO TERMINATE. If the Leased Premises, the Building or the
Outside Area are damaged by any peril and Landlord does not elect to terminate
this Lease or is not entitled to terminate this Lease pursuant to this Article,
then as soon as reasonably practicable, Landlord shall furnish Tenant with the
written opinion of Landlord's architect or construction consultant as to when
the restoration, work required of Landlord may be complete. Tenant shall have
the option to terminate this Lease in the event any of the following occurs,
which option may be exercised only by delivery to Landlord of a written notice
of election to terminate within seven days after Tenant receives from Landlord
the estimate of the time needed to complete such restoration:
(a) If the time estimated to substantially complete the restoration
exceeds nine (9) months from and after the date the architect's or construction
consultant's written opinion is delivered; or
(b) If the damage occurred within twelve months of the last day of the
Lease Term and the time estimated to substantially complete the restoration
exceeds one hundred eighty days from and after the date such restoration is
commenced.
10.5 TENANT'S WAIVER. Landlord and Tenant agree that the provisions of Paragraph
10.4 above, captioned "Tenant's Right To Terminate", are intended to supersede
and replace the provisions contained in California Civil Code, Section 1932,
Subdivision 2, and California Civil Code, Section 1934, and accordingly, Tenant
hereby waives the provisions of such Civil Code Sections and the provisions of
any successor Civil Code Sections or similar laws hereinafter enacted.
10.6 ABATEMENT OF RENT. In the event of damage to the Leased Premises which does
not result in the termination of this Lease, the Base Monthly Rent (and any
Additional Rent) shall be temporarily abated during the period of restoration in
proportion in the degree to which Tenant's use of the Leased Premises is
impaired by such damage.
ARTICLE 11
CONDEMNATION
11.1 TENANT'S RIGHT TO TERMINATE. Except as otherwise provided in Paragraph 11.4
below regarding temporary takings, Tenant shall have the option to terminate
this Lease if as a result of any taking, (i) all of the Leased Premises is
taken, or (ii) twenty-five percent (25%) or more of the Leased Premises is taken
and the part of the Leased Premises that remains cannot, within a reasonable
period of time, be made reasonably suitable for the continued operation of
Tenant's business. Tenant must exercise such option within a reasonable period
of time, to be effective on the later to occur of (i) the date that possession
of that portion of the Leased Premises that is condemned is taken by the
condemnor or (ii) the date Tenant vacated the Leased Premises.
11.2 LANDLORD'S RIGHT TO TERMINATE. Except as otherwise provided in Paragraph
11.4 below regarding temporary takings, Landlord shall have the option to
terminate this Lease if, as a result of any taking, (i) all of the Leased
Premises is taken, (ii) twenty-five percent (25%) or more of the Leased
Premises is taken and the part of the Leased Premises that remains cannot,
within a reasonable period of time be made reasonably suitable for the
continued operation of Tenant's business, or (iii) because of the laws then
in force, the Leased Premises may not be used for the same use being made
before such taking, whether or not restored as required by Paragraph 11.3
below. Any such option to terminate by Landlord must be exercised within a
reasonable period of time, to be effective as of the date possession is taken
by the condemnor.
11.3 RESTORATION. If any part of the Leased Premises or the Building is taken
and this Lease is not terminated, then Landlord shall, to the extent not
prohibited by laws then in force, repair any damage occasioned thereby to the
remainder thereof to a condition reasonably suitable for Tenant's continued
operations and otherwise, to the extent practicable, in the manner and to the
extent provided in Paragraph 10.1.
11.4 TEMPORARY TAKING. If a portion of the Leased Premises is temporarily taken
for a period of one year or less and such period does not extend beyond the
Lease Expiration Date, this Lease shall remain in effect. If any portion of the
Leased Premises is temporarily taken for a period which exceeds one year or
which extends beyond the Lease Expiration Date, then the rights of Landlord and
Tenant shall be determined in accordance with Paragraphs 11.1 and 11.2 above.
11.5 DIVISION OF CONDEMNATION AWARD. Any award made for any taking of the
Property, the Building, or the Leased Premises, or any portion thereof, shall
belong to and be paid to Landlord, and Tenant hereby assigns to Landlord all of
its right, title and interest in any such award; PROVIDED, HOWEVER, that Tenant
shall be entitled to receive any portion of the award that is made specifically
(i) for the taking of personal property, inventory or trade fixtures belonging
to Tenant, (ii) for the interruption of Tenant's business or its moving costs,
or (iii) for the value of any leasehold improvements installed and paid for by
Tenant. The rights of Landlord and Tenant regarding any condemnation shall be
determined as provided in this Article, and each party hereby waives the
provisions of Section 1265.130 of the California Code of Civil Procedure, and
the provisions of any similar law hereinafter enacted, allowing either party to
petition the Supreme Court to terminate this Lease and/or otherwise allocate
condemnation awards between Landlord and Tenant in the event of a taking of the
Leased Premises.
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11.6 ABATEMENT OF RENT. In the event of a taking of the Leased Premises which
does not result in a termination of this Lease (other than a temporary taking),
then, as of the date possession is taken by the condemning authority, the
Base Monthly Rent shall be reduced in the same proportion that the area of
that part of the Leased Premises so taken (less any addition to the area of
the Leased Premises by reason of any reconstruction) bears to the area of the
Leased Premises immediately prior to such taking.
11.7 TAKING DEFINED. The term "taking" or "taken" as used in this Article 11
shall mean any transfer or conveyance of all or any portion of the Property to a
public or quasi-public agency or other entity having the power of eminent domain
pursuant to or as a result of the exercise of such power by such an agency,
including any inverse condemnation and/or any sale or transfer by Landlord of
all or any portion of the Property to such an agency under threat of
condemnation or the exercise of such power.
ARTICLE 12
DEFAULT AND REMEDIES
12.1 EVENTS OF TENANT'S DEFAULT. Tenant shall be in default of its obligations
under this Lease if any of the following events occur:
(a) Tenant shall have failed to pay Base Monthly Rent or any Additional
Rent when due; or
(b) Tenant shall have done or permitted to be done any act, use or
thing in its use, occupancy or possession of the Leased Premises or the Building
or the Outside Areas which is prohibited by the terms of this Lease; or
(c) Tenant shall have failed to perform any term, covenant or condition
of this Lease (except those requiring the payment of Base Monthly Rent or
Additional Rent, which failures shall be governed by subparagraph (a) above)
within thirty (30) days after written notice from Landlord to Tenant specifying
the nature of such failure and requesting Tenant to perform same; or
(d) Tenant shall have sublet the Leased Premises or assigned or
encumbered its interest in this Lease in violation of the provisions contained
in Article 7, whether voluntarily or by operation of law; or
(e) Tenant shall have abandoned the Leased Premises; or
(f) Tenant or any Guarantor of this Lease shall have permitted or
suffered the sequestration or attachment of, or execution on, or the appointment
of a custodian or receiver with respect to, all or any substantial part of the
property or assets of Tenant (or such Guarantor) or any property or asset
essential to the conduct of Tenant's (or such Guarantor's) business, and Tenant
(or such Guarantor) shall have failed to obtain a return or release of the same
within thirty days thereafter, or prior to sale pursuant to such sequestration,
attachment or levy, whichever is earlier; or
(g) Tenant or any Guarantor of this Lease shall have made a general
assignment of all or a substantial part of its assets for the benefit of its
creditors; or
(h) Tenant or any Guarantor of this Lease shall have allowed (or
sought) to have entered against it a decree or order which: (i) grants or
constitutes an order for relief, appointment of a trustee, or condemnation or
a reorganization plan under the bankruptcy laws of the United States; (ii)
approves as properly filed a petition seeking liquidation or reorganization
under said bankruptcy laws or any other debtor's relief law or similar
statute of the United States or any state thereof, or (iii) otherwise directs
the winding up or liquidation of Tenant; provided, however, if any decree or
order was entered without Tenant's consent or over Tenant's objection,
Landlord may not terminate this Lease pursuant to this Subparagraph if such
decree or order is rescinded or reversed within thirty days after its
original entry; or
(i) Tenant or any Guarantor of this Lease shall have availed itself of
the protection of any debtor's relief law, moratorium law or other similar law
which does not require the prior entry of a decree or order.
(j) Tenant shall be in default of its obligations under any other Lease
between Landlord and Tenant.
12.2 LANDLORD'S REMEDIES. In the event of any default by Tenant, and without
limiting Landlord's right to indemnification as provided in Article 8.2,
Landlord shall have the following remedies, in addition to all other rights and
remedies provided by law or otherwise provided in this Lease to which Landlord
may resort cumulatively, or in the alternative:
(a) Landlord may, at Landlord's election, keep this Lease in effect
and enforce, by an action at law or in equity, all of its rights and remedies
under this Lease including, without limitation, (i) the right to recover the
rent and other sums as they become due by appropriate legal action, (ii) the
right to make payments required by Tenant, or perform Tenant's obligations
and be reimbursed by Tenant for the cost thereof with interest at the then
maximum rate of interest not prohibited by law from the date the sum is paid
by Landlord until Landlord is reimbursed by Tenant, and (iii) the remedies of
injunctive relief and specific performance to prevent Tenant from violating
the terms of this Lease and/or to compel Tenant to perform its obligations
under this Lease, as the case may be.
(b) Landlord may, at Landlord's election, terminate this Lease by
giving Tenant written notice of termination, in which