INDUSTRIAL LEASE AGREEMENT
(Multi-Tenant)
between
LATHROP INDUSTRIAL DEVELOPMENT, LLC
a California limited liability company,
as Landlord
and
Aladdin Manufacturing Corporation, a Delaware Corporation
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as Tenant
For the Premises
Located At:
2733 Yosemite Avenue, Building 4
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Lathrop, California
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TABLE OF CONTENTS
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Page
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1. PREMISES......................................................................................... 1
1.1 Lease of Premises....................................................................... 1
1.2 Construction of Tenant Improvements. ................................................... 1
2. TERM............................................................................................. 1
2.1 Term.................................................................................... 1
2.1.1 Commencement Date................................................................. 1
Option to Extend (Exhibit E)......................................................
2.2 Delay in Possession..................................................................... 1
3. RENT AND SECURITY DEPOSIT........................................................................ 1
3.1 Base Rent............................................................................... 1
3.2 Late Charges............................................................................ 1
3.3 Security Deposit........................................................................ 1
4. UTILITIES........................................................................................ 2
5. TAXES 2
5.1 Increase in Real Property Taxes......................................................... 2
5.2 Definition of Real Property Taxes....................................................... 2
5.3 Personal Property Taxes................................................................. 2
6. OPERATING EXPENSES............................................................................... 2
6.1 Payment of Operating Expenses........................................................... 2
6.2 Definition of Operating Expenses........................................................ 2
7. ESTIMATED EXPENSES............................................................................... 3
7.1 Payment................................................................................. 3
7.2 Adjustment.............................................................................. 3
8. USE.............................................................................................. 3
8.1 Use of Premises......................................................................... 3
8.2 Compliance with Laws.................................................................... 3
8.3 Outside Areas........................................................................... 3
8.4 Signs................................................................................... 3
8.5 Waste Disposal.......................................................................... 4
8.6 Hazardous Material...................................................................... 4
8.6.1 Definition of Hazardous Materials............................................... 4
8.6.2 Prohibition on Use.............................................................. 4
8.6.3 Environmental Questionnaire; Reports............................................ 4
8.6.4 Landlord's Investigation Rights................................................. 4
8.6.5 Tenant's Remediation Obligations................................................ 4
8.6.6 Indemnification................................................................. 5
8.6.7 Survival........................................................................ 5
8.7 Common Areas............................................................................ 5
8.8 Parking................................................................................. 5
8.9 Changes and Additions by Landlord....................................................... 5
8.10 Building Name and Address............................................................... 5
8.11 Rules and Regulations................................................................... 5
8.12 Railroad Area Assessments............................................................... 5
9. LANDLORD'S MAINTENANCE AND REPAIR................................................................ 6
9.1 Landlord's Maintenance.................................................................. 6
9.2 Common Areas............................................................................ 6
9.3 Procedure and Liability................................................................. 6
9.4 Waiver.................................................................................. 6
9.5 Landlord's Right to Perform Tenant's Covenants.......................................... 6
10. TENANTS MAINTENANCE AND REPAIR................................................................... 6
10.1 Tenant's Obligation to Maintain......................................................... 6
10.1.1 General......................................................................... 6
10.1.2 Maintenance Contracts........................................................... 6
10.1.3 Maintenance Contracts........................................................... 7
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11. ALTERATIONS.................................................................................. 7
11.1 Trade Fixtures..................................................................... 7
11.2 Consent Requirement for Alterations................................................ 7
11.3 Possession......................................................................... 7
11.4 Alterations Required by Law........................................................ 7
11.5 Mechanic's Liens................................................................... 7
12. FIRE AND CASUALTY DAMAGE..................................................................... 7
12.1 Notice of Destruction.............................................................. 7
12.2 Loss Covered by Insurance ......................................................... 8
12.3 Loss Not Covered by Insurance...................................................... 8
12.4 Loss Covered by Tenant or Tenant's Parties......................................... 8
12.5 Destruction Near End of Term....................................................... 8
12.6 Destruction of Improvements and Personal Property.................................. 8
12.7 Exclusive Remedy................................................................... 8
12.8 Lender Discretion.................................................................. 8
13. CONDEMNATION................................................................................. 8
14. LIABILITY OF LANDLORD; INDEMNITY BY TENANT................................................... 9
14.1 Limitation on Landlord's Liability................................................. 9
14.2 Limitation on Tenant's Recourse.................................................... 9
14.3 Indemnification of Landlord........................................................ 9
14.4 Notice of Claim or Suit............................................................ 9
14.5 Waiver of Jury Trial............................................................... 9
14.6 Sale of Premises................................................................... 9
15. INSURANCE.................................................................................... 9
15.1 Tenant's Insurance Obligations..................................................... 9
15.1.1 Public Liability Insurance.................................................. 10
15.1.2 Property Insurance.......................................................... 10
15.1.3 Other Insurance............................................................. 10
15.2 Requirements of Tenant's Insurance Coverage........................................ 10
15.3 Evidence of Tenant's Insurance Coverage............................................ 10
15.4 Landlord's Insurance............................................................... 10
15.5 Release and Waiver of Subrogation.................................................. 10
16. LANDLORDS RIGHT OF ACCESS.................................................................... 11
17. ASSIGNMENT AND SUBLETTING.................................................................... 11
17.1 Consent Requirement................................................................ 11
17.2 Procedure.......................................................................... 11
17.3 Landlord's Election................................................................ 11
17.4 Terms of Transfer.................................................................. 11
17.5 Corporate Reorganization........................................................... 12
18. DEFAULT AND REMEDIES......................................................................... 12
18.1 Events of Tenant's Default......................................................... 12
18.2 Landlord's Remedies................................................................ 12
18.3 Waiver............................................................................. 13
18.4 Limitation on Exercise of.......................................................... 13
18.5 Waiver by Tenant of Certain Remedies............................................... 13
18.6 Remedies Cumulative................................................................ 13
19. TENANTS...................................................................................... 13
19.1 Landlord's Default................................................................. 13
19.2 Tenant's Remedies.................................................................. 13
20. SURRENDER AND HOLDING OVER................................................................... 14
20.1 Surrender of the Premises.......................................................... 14
20.2 Holding Over....................................................................... 14
21. MORTGAGES.................................................................................... 14
21.1 Subordination...................................................................... 14
21.2 Estoppel Certificates and Financial Statements..................................... 14
22. GENERAL PROVISIONS............................................................................ 15
22.1 Construction of Meaning............................................................ 15
22.2 Interest on Past-Due Obligations................................................... 15
22.3 Time of Essence.................................................................... 15
22.4 Binding Effect..................................................................... 15
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22.5 Choice of Law................................................................. 15
22.6 Captions...................................................................... 15
22.7 Amendments.................................................................... 15
22.8 Fees and Expenses............................................................. 15
22.9 Severability.................................................................. 15
22.10 Security Measures ........................................................... 15
22.11 Easements..................................................................... 15
22.12 Performance Under Protest..................................................... 15
22.13 Effective Date/Nonbinding Offer............................................... 16
22.14 Notices....................................................................... 16
22.15 Corporate Authority........................................................... 16
22.16 Brokerage Commissions......................................................... 16
22.17 Entire Agreement.............................................................. 16
22.18 Joint and Several Liability................................................... 16
22.19 Quiet Enjoyment............................................................... 16
22.20 Survival...................................................................... 16
22.21 Recording..................................................................... 16
22.22 Counterparts.................................................................. 16
22.23 Merger........................................................................ 16
22.24 No Third Party Beneficiaries.................................................. 16
22.25 Force Majeure................................................................. 16
22.26 Confidentiality............................................................... 17
22.27 Additional Provisions......................................................... 17
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iii.
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INDUSTRIAL LEASE AGREEMENT
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(Multi-Tenant)
BASIC LEASE PROVISIONS
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1. Effective Date: Date Lease has been executed by both parties
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2. Landlord: Lathrop Industrial Development, LLC
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3. Landlords Address
For Notice: 129 Edelen Avenue
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Los Gatos, CA 95030
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Attention: Mr. Timothy J. Murphy
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Telephone: 408-395-4084
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Fax: 408-354-0150
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4. Tenant: Aladdin Manufacturing Corporation,
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a Delaware Corporation.
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5. Tenant's Address
For Notice: 160 South Industrial Boulevard
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Calhoun, Georgia 30701
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Attention: Salvatore J. Perillo, Esq.
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Telephone: (800) 24l-4494
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Fax: (706) 624-2483
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6. Project: Lathrop Industrial Park, Building 4, consisting of
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the land ("Land") and all of the improvements,
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including the Building, located thereon and more
particularly shown on Exhibit A attached hereto.
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7. Building: An approximately 231,840 sq. ft. building located
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on approximately 12.94 acres of land
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8. Premises: Approximately 101,112 rentable square feet in the
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Building, as shown in Exhibit B, attached hereto.
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9. Premises Address: 2733 Yosemite Avenue, Building #4
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City and State: Lathrop, California
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10. Term & Option to Extend:Original Lease Term shall be for Seventy-Three (73)
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Months Tenant has one (1) option to extend Lease
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for additional sixty (60) months at fair market
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rate as provided in Exhibit E.
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11. Estimated Commencement
Date: Sixty (60) Days from Full Execution of Lease
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12. Base Rent Per Month: Thirty Four Thousand Three Hundred Seventy Eight
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Dollars ($34,378.00)
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Rent Schedule: Months Base Monthly Rent
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1 -0-
2 - 38 $ 34,378
39 - 73 $ 37,411
13. Tenant's Share: Forty-three and sixty one hundreds percent (43.61%)
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14. Security Deposit: N/A Dollars ($ N/A )
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15. Broker: Lee & Associates - Central Valley, Inc.,
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represents Landlord, and both Lee & Associates
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Realty Group, Inc. -Newport Beach and Lee &
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Associates - Central Valley, Inc., represents
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Lessee
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16. Base Year: 2001
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17. Parking Spaces: 50 unassigned spaces
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18. Permitted Uses: warehousing and distributing hard surface flooring,
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carpeting and related products and for no other
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use.
iv.
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19. Tenant's Minimum Liability
Insurance Amount: Five Million Dollars ($5,000,000.00
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20. Guarantor: Mohawk Industries Inc., a Delaware Corporation
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21. Exhibits:
"A" Project
"B" Site Plan of Premises
"C" Work Letter
"D" Commencement Date Memorandum
"E" Option to Extend
"F" Guaranty of Lease
"G" Tenant Sign Criteria
"H" Environmental Questionnaire and Disclosure Statement
"I" Rules and Regulations
The Basic Lease Provisions set forth above and the Exhibits and Addendum if
any, attached hereto are hereby incorporated into and made a part of this Lease.
Each reference in this Lease to any of the Basic Lease Provisions shall mean the
respective information hereinabove set forth and shall be construed to
incorporate all of the terms provided under the particular paragraph pertaining
to such information. In the event of any conflict between any of the Basic Lease
Provisions and the Lease, the latter shall control.
Landlord (____________________) and Tenant (_____________) Agree.
v.
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1. PREMISES.
1.1 Lease of Premises. Landlord hereby leases to Tenant, and Tenant
hereby leases from Landlord, the Premises, together with (i) the non-exclusive
right to use Tenant's Parking Spaces within the Common Areas (subject to the
limitations set forth in Section 8.8), and (ii) the non-exclusive right to use
the grounds, sidewalks, parking areas, driveways, alleys and other areas of the
Building designated by Landlord as Common Areas (the "Common Areas"), which
Common Areas are depicted on Exhibit "B" attached hereto. Landlord and Tenant
agree that all measurements of area contained in this Lease are conclusively
agreed to be correct and binding upon the parties, and subsequent determination
that the area is more or less than shown in this Lease shall not result in a
change in any matter described in this Lease where area is a factor.
1.2 Construction of Tenant Improvements. Prior to the Commencement
Date, Landlord shall construct certain improvements (the "Tenant Improvements")
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to the Premises in accordance with the terms of the Work Letter attached hereto
as Exhibit C.
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1.3 Landlord's Improvements. Landlord warrants and represents that
upon Commencement Date the Building shall be in good condition and repair and
structurally sound [which condition includes, without limitation, that the roof
shall be leak-free and not in need, or in imminent need, of repair and that the
plumbing, electrical, heating, ventilation and air-conditioning ("HVAC")
systems shall be in good operating condition and repair and not in need, or
imminent need, of repair. Notwithstanding anything to the contrary contained in
this Lease, in the event any portion of the Building, whether structural or non-
structural and including, without limitation, the roof, the HVAC and any
operating systems therein, require repair or replacement for the first year of
this Lease and such repair or replacement is not caused by the acts or
omissions of Tenant (normal wear and tear excepted), Landlord shall make such
repairs or replacements without cost to Tenant.
1.4 Premises Specifications/Access. Landlord warrants and represents
that (i) the Premises shall have a height clearance of no less than 28 feet,
(ii) the Premises shall have truck loading facilities as shown on the Approved
Plans and including 15 dock high doors and one (1) grade level doors, (iii)
there is access to the Premises over the Common Areas (hereinafter defined) to
publicly dedicated (and accepted) right-of-way, (iv) the office shown on the
approved floor plan shall be adequately heated and air conditioned, (v) the
Premises shall include men's and women's restrooms, (vi) the warehouse lighting
shall be as heretofore agreed to by Landlord and Tenant and shall be in good
working order and repair, and (vii) as of the Commencement Date, the Project
shall comply with all applicable Laws, including, without limitation, the
Americans With Disabilities Act.
2. TERM
2.1 Term. The Term of this Lease shall commence on the Commencement
Date and shall continue in full force and effect for the Term hereof, unless
terminated earlier pursuant to the terms hereof.
2.1.1 Commencement Date. The Commencement Date of the Lease
shall be the earlier of the date on which: (i) Tenant takes possession of any
portion of the Premises in order to conduct business thereon; (ii) the Premises
would have been Ready for Occupancy but for Tenant Delays (as defined in the
Work Letter attached hereto as Exhibit C); or (iii) the Premises are Ready for
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Occupancy. The Premises shall be deemed "Ready for Occupancy" on the date of
substantial completion of all Tenant Improvements to be constructed by
Landlord, except for punchlist items which do not prevent Tenant from using the
Premises for the Permitted Uses and such work as Landlord is required to
perform but cannot complete until Tenant performs necessary portions of the
construction work it has elected or is required to do. Tenant shall, upon
demand, execute and deliver to Landlord a Commencement Date Memorandum in the
form attached hereto as Exhibit D acknowledging the actual Commencement Date of
this Lease.
2.2 Delay in Possession. If Landlord, for any reason whatsoever,
cannot deliver possession of the Premises to Tenant on or before the Estimated
Commencement Date, this Lease shall not be void or voidable nor shall Landlord
be liable to Tenant for any resulting loss or damage. However, Tenant shall not
be liable for any Rent (as defined in Section 3.1 below) and the Commencement
Date shall not occur until the Premises are Ready for Occupancy, except that if
Landlord's failure to make the Premises Ready for Occupancy by the Estimated
Commencement Date is attributable to any Tenant Delays, then the Commencement
Date shall not be advanced to the date on which possession of the Premises is
tendered to Tenant, and Landlord shall be entitled to full performance by
Tenant (including the payment of Rent) from the date the Premises would have
been Ready for Occupancy but for such Tenant Delays. Notwithstanding anything
to the contrary contained herein, in the event Landlord fails to deliver
possession of the Premises to Tenant within thirty (30) days of the Estimated
Commencement Date and such delay is not caused by a Tenant Delay, Tenant, at
its sole and exclusive remedy, shall have the right to terminate this Lease by
notice delivered to Landlord prior to the date Landlord delivers the Premises
to Tenant.
3. RENT AND SECURITY DEPOSIT.
3.1 Base Rent. From and after the Commencement Date, Tenant shall pay
the Base Rent to Landlord on the first day of each calendar month in lawful
money of the United States, at Landlord's Address or such other address as
Landlord shall from time to time designate in writing to Tenant for the payment
of Rent, without notice, and, except as may otherwise be set forth herein,
without demand, abatement, offset or deduction. Upon the
1.
<PAGE>
execution of this Lease, Tenant shall pay to Landlord the first month's Base
Rent. If the Term commences (or ends) on a date other than the first (or last)
day of a month, Tenant shall pay on the Commencement Date or first day of the
last month a pro rata portion of Base Rent, prorated on a per diem basis with
respect to the portion of the month within the Term. Any sums other than Base
Rent which Tenant is obligated to pay under this Lease shall be deemed to be
Additional Rent due hereunder, whether or not such sums are designated
"Additional Rent." The term "Rent" means the Base Rent and all Additional Rent
payable hereunder.
(a) Increases in Base Rent. Notwithstanding anything to the
contrary herein, the Base Rent due hereunder shall be increased at the times
and in the amounts more particularly described in Item 12 of the Basic Lease
Provisions.
3.2 Late Charges. Tenant acknowledges that late payment by Tenant of
any amount owed to Landlord under this Lease will cause Landlord to incur costs
not contemplated by this Lease, the exact amount of such costs being extremely
difficult and impracticable to fix. Therefore, if any installment of Base Rent
is not received by Landlord, within five (5) days of the date same is due, or
if any other installment of Rent is not received by Landlord within five (5)
days of Tenant's receipt of written notice that same is overdue and payable,
Tenant shall pay to Landlord, as liquidated damages for Tenant's failure to
make such timely payment, an additional sum of eight percent (8%) of the
overdue Rent per month as a late charge. The parties agree that this late
charge represents a fair and reasonable estimate of the administrative costs
that Landlord will incur by reason of a late payment by Tenant.
4. UTILITIES. Tenant shall pay, as the same become due, all charges for
domestic and irrigation water, gas, electricity (including parking lot
lighting), telephone, storm and sanitary sewer service, waste pick-up and any
other utilities, materials or services furnished directly to or used by Tenant
on or about the Premises during the Term, including, without limitation, meter,
use and/or connection fees, hook-up fees, penalties and surcharges. If any
utility or other service is not separately metered to the Premises, or is billed
directly to Landlord, or included as part of a tax bill, then Tenant shall
reimburse Landlord or pay its pro rata share of the cost of such utility service
with all others served by the service not separately metered, as appropriate.
Such proration shall be based upon the respective gross leaseable areas of the
parties using such utility services. If Landlord is responsible for paying such
utility costs directly to the provider of such services, Landlord shall make
such payments in a timely manner, and Tenant shall not be responsible for any
late payment penalties or charges assessed against Landlord as a result of
Landlord's failure to pay such costs on or before the date same are due and
payable. Landlord and Tenant shall comply with all rules, regulations and
requirements promulgated by national, state or local governmental agencies or
utility suppliers concerning the use of utility services, including any
rationing, limitation or other control. Tenant shall not be entitled to
terminate this Lease nor to any abatement in Rent by reason of such compliance.
Landlord shall not be liable for damages or otherwise for any failure or
interruption of any utility or other service furnished to the Premises, and no
such failure or interruption shall be deemed an eviction or entitle Tenant to
terminate this Lease or withhold or abate any rent due hereunder, unless such
failure is directly attributable to the intentional acts or omissions of
Landlord. Landlord shall at all reasonable times have free access to all
electrical and mechanical installations of Landlord.
5. TAXES.
5.1 Increase in Real Property Taxes. Tenant shall pay to Landlord
Tenant's Share of the Increase in Real Property Taxes for each fiscal
tax year of the Lease. The "Increase in Real Property Taxes" is the
increase in Real Property Taxes in any fiscal tax year over Real
Property Taxes for the Base Year. If the Base Year valuation of the
improvements as shown on the tax bill do not reflect the cost of initial
construction of the Building and Common Areas, such value shall be
adjusted to reflect the increase in the valuation by the San Joaquin
County Assessor on account of the initial construction of the Building
and Common Areas. Under no circumstances shall Tenant have any
obligation to pay Landlord any amount or contribution toward the payment
of Real Property Taxes for any fiscal tax year in which the amount of
Real Property Taxes for the Land and the Building is less than or equal
to the Real Property Taxes for the Base Year. If the term of this Lease
shall terminate on any date other than the last day of a tax fiscal
period, the amount payable by Tenant (if any) during the tax fiscal
period in which such termination occurs shall be prorated on the basis
which the number of days from the commencement of said tax fiscal period
to and including said termination date bears to the number of days in
the fiscal period.
(a) Payment of Real Property Taxes. Landlord agrees to pay all
Real Property Taxes prior to the last date that the same may be paid without
penalty or interest, or if a discount shall be available for early payment,
prior to the last day that such discount is available. Without cost to Tenant,
Landlord shall bear all interest, penalties, late charges and lost discount
amounts incurred as a result of Landlord's failure to timely pay any installment
of Real Property Taxes. Landlord shall take the maximum benefit of any law
allowing Real Property Taxes to be paid in installments, and in such event only
the amount actually paid by Landlord during the applicable tax year shall be
included in Real Property Taxes for purposes of this Article. Landlord shall use
diligent and good faith efforts to obtain any available tax abatements, refunds,
rebates or credits that may reduce Real Property Taxes for the Premises, and the
Real Property Taxes for any tax year shall mean such amounts as shall be finally
determined to be the Real Property Taxes payable during such tax year less any
abatements, refunds, rebates or credits made thereof. The parties shall make
appropriate adjustments to previous reimbursements from Tenant to Landlord on
account of any abatements, refunds, rebates or credits immediately following the
determination of the amount of such abatements, refunds, rebates or credits.
Prior to the Commencement Date, Landlord shall pay all Real Property Taxes
before they become overdue.
2.
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5.2 Definition of Real Property Taxes. "Real Property Taxes" shall
include any form of real estate tax or assessment, general and special,
ordinary and extraordinary, (including fees "in-lieu" of any such tax
or assessment) which are assessed, levied, charged, confirmed or
imposed by any public authority upon the Premises (or any real property
comprising any portion thereof and any license fee, commercial rental
tax, improvement bond or bonds, levy or tax), together with any tax
imposed in substitution, partially or totally, of any tax previously
included within the aforesaid definition or any additional tax the
nature of which was previously included within the aforesaid
definition, together with the costs and expenses (including reasonable
attorneys fees) of challenging any of the foregoing, but only to the
extent of any resulting reduction, abatement, redemption or return.
Sanitary, landscape, lighting and storm sewer assessments shall not be
included as Real Property Taxes, but shall instead be payable by Tenant
as provided in Section 4 of this Lease. Notwithstanding anything to the
contrary contained herein, Real Property Taxes to be shared by Tenant
shall not include the following: (i) income, intangible, franchise,
capital stock, estate or inheritance taxes or taxes substituted for or
in lieu of the foregoing exclusions; (ii) any roll-back taxes; (iii)
any assessment for special improvements to the Land or the Building,
including, but not limited to, the widening of exterior roads, the
installation of or hook up to sewer lines, sanitary and storm drainage
systems and other utility lines and installations, if such assessment
was made prior to the date hereof; (iv) taxes on rents, gross receipts
or revenues of Landlord from the Premises or other portions of the
Building, unless same pertain only to rents paid by Tenant hereunder and
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are made specifically in lieu of existing Real Property Taxes; or (v)
impact fees.
5.3 Personal Property Taxes. Prior to delinquency, Tenant shall pay
all taxes and assessments levied upon trade fixtures, alterations, additions,
improvements, inventories and other personal property located and/or installed
on the Premises by Tenant; and Tenant shall provide Landlord copies of receipts
for payment of all such taxes and assessments. To the extent any such taxes are
not separately assessed or billed to Tenant, Tenant shall pay the amount thereof
as invoiced by Landlord.
5.4 Tenant's Contest of Taxes. Landlord shall furnish Tenant with
copies of all Real Property Tax bills applicable to the Premises promptly upon
receipt thereof and in sufficient time to allow Tenant to determine whether or
not to contest any increase in Real Property Taxes. If Tenant desires to contest
any increase in assessment, Tenant shall promptly notify Landlord of same, and
Tenant shall have the right to do so at its own expense and Landlord shall fully
cooperate with Tenant in any such proceeding; provided, however, Landlord shall
have the right to elect to contest such assessment increase in lieu of Tenant's
contest, in which event Landlord shall do so in a diligent and commercially
reasonable manner. In the event Tenant does contest such assessment increase and
a savings results, Tenant shall have the right to offset its reasonable costs
(including reasonable attorneys' fees) against the next ensuing payment(s) of
Tenant's Share of an Increase in Real Property Taxes due under this Lease.
6. OPERATING EXPENSES.
6.1 Payment of Operating Expenses. Tenant shall pay to Landlord
Tenant's Share of Operating Expenses.
6.2 Definition of Operating Expenses. "Operating Expenses" shall mean
the total amounts paid or payable by Landlord in connection with the ownership,
maintenance, repair, replacement and operation of the Building and Common
Areas, including but not limited to:
(a) Cost (including a replacement reserve as established by
Landlord) of (i) non-structural maintenance and repair of the foundations, and
(ii) maintenance and repair of the roof and exposed parts of the Building as
provided in Section 9.1. Notwithstanding the foregoing, in no event shall
Landlord's replacement reserve exceed for any lease year exceed Forty Five
Thousand Dollars ($45,000).
(b) Cost of maintaining (including utilities) Common Areas,
including without limitation, paved areas and landscaping.
(c) All insurance cost increase or other charges as provided in
Section 15.
(d) Management fees (whether for services rendered by Landlord,
an affiliate of Landlord, Landlords employees, or a third party property manager
hired by Landlord), provided in all events such services are provided pursuant
to a commercially reasonable, arms-length management agreement) equal to eight
percent (8%) of Operating Expenses.
(e) Cost of modifications to the Building occasioned by any
rules, laws or regulations effective subsequent to the commencement of the
Lease not otherwise payable by Tenant hereunder.
Notwithstanding anything to the contrary contained herein, Operating
Expenses shall not include: (i) administrative and overhead costs, including
but not limited to office space, equipment and utilities, legal, accounting or
administrative services and Landlord's personnel who are not permanently
located at the Building; (ii) any Capital Expenditure, except for the amortized
portion of any Capital Expenditure reasonably made for the general benefit of
all tenants of the Building, which amortization shall be made over the
estimated actual useful life
3.
<PAGE>
of the improvement in question (as used herein, the term "Capital Expenditure"
shall mean those expenditures which in accordance with generally accepted
accounting principles are capitalized as opposed to expensed); (iii) expenses
incurred in leasing space, such as legal expenses, brokerage commissions or
advertising or promotional expenses; (iv) interest and amortization under
mortgages or any other secured or unsecured loan payable by Landlord; (v)
expenses separately reimbursed by any other tenants of the Building (excluding
reimbursements to Landlord for such tenants' prorata share of Operating
Expenses); (vi) financing and refinancing costs, including fees paid by Landlord
to obtain financing or refinancing such as origination fees and brokerage
commissions; (vii) non-cash depreciation, (viii) costs incurred in connection
with the enforcement of leases, including attorneys' fees or other costs and
expenses incurred in connection with summary proceedings to dispossess any other
tenant in the Building; and (ix) any expenses associated with any special
requirements of a particular tenant.
Landlord estimates that Tenant's Share of Operating Expenses will
total Thirty Thousand Dollars ($30,000) for the entire first lease year.
Landlord warrants and represents that said estimate is reasonable and made in
good faith.
7. ESTIMATED EXPENSES.
7.1 Payment. "Estimated Expenses" for any particular year shall mean
Landlord's estimate of Tenant's Share of Operating Expenses and the Increase in
Real Property Taxes and/or Insurance for a calendar year. On or about the last
month of each calendar year, Landlord shall give Tenant notice of the Estimated
Expenses for the ensuing calendar year. Tenant shall pay Tenant's share of the
Estimated Expenses with installments of Base Rent in monthly installments on
the first day of each calendar month during such year.
7.2 Adjustment. "Operating Expenses and Real Property Taxes
Adjustment" (or "Adjustment") shall mean the difference between Estimated
Expenses and Tenant's share of the Operating Expenses and increase in Real
Property Taxes for any calendar year. Within ninety (90) days after the end of
each calendar year, Landlord shall deliver to Tenant a statement of Tenant's
share of the Operating Expenses and the Increase in Real Property Taxes and
Insurance for such calendar year together with copies of invoices and other
supporting documentation, accompanied by a computation of the Adjustment. If
Tenant's payments are less than Tenant's share thereof, then Tenant shall pay
the difference within twenty (20) days after receipt of such statement. If
Tenant's payments exceed Tenant's share thereof, then (provided that Tenant is
not in default), Landlord shall credit such amount to the installments thereof
next coming due.
7.3 Audits. Landlord shall retain its records relating to the
Operating Expenses at Landlord's principal office, and upon reasonable prior
notice to Landlord, Tenant shall have the right to inspect all of Landlord's
records relating to such costs. Appropriate adjustments shall be made for
errors in the computation of such costs revealed by such audit or inspection.
If any audit by Tenant indicates an overcharge in the amount of Tenant's Share
of Operating Expenses by more than five percent (5%), the reasonable cost of
such audit shall be paid on demand by Landlord to Tenant; otherwise the
expenses of Tenant's audit shall be borne by Tenant. Landlord shall retain its
Operating Expense records for at least forty (40) months after the expiration
of each calendar year.
8. USE.
8.1 Use of Premises. Tenant shall use the Premises solely for the
Permitted Uses specified in Item 18 of the Basic Lease Provisions. Tenant shall
not do anything in or about the Premises or the Common Areas which will (i)
cause structural or other damage to or overload the Building or Common Areas;
(ii) overload or impair the efficient operation of existing electrical systems
or other mechanical equipment or systems servicing the Building; (iii) damage,
overload or corrode the sanitary sewer system; (iv) operate forklifts with
drive wheels no less than 18 inches in diameter and four (4) inches in width
and a steering wheel with a diameter of 16 inches and six (6) inches in width;
or (v) materially interfere with other tenants of the Building. Tenant shall
not change the exterior of the Building or install any equipment or antennas on
or make any penetrations of the exterior or roof of the Building. Tenant shall
not commit any waste in or about the Premises, and Tenant shall keep the
Premises in a neat, clean, attractive and orderly condition (normal wear and
tear excepted), free of any nuisances. Tenant shall not conduct on any portion
of the Premises or the Project any sale of any kind, including any public or
private auction, fire sale, going-out-of-business sale, distress sale or other
liquidation sale.
8.2 Compliance with Laws. Tenant shall be responsible for and shall
at Tenant's own cost and expense obtain any and all licenses and permits
necessary for any Permitted Use. Tenant shall not use the Premises in any manner
which violates, and shall comply with, any law, ordinance, rule, ruling, statue
or restriction affecting the Building or Project (collectively "Laws") which
affect the Building or Project. Notwithstanding the foregoing, Tenant shall have
the right to contest the applicability of any Laws to Tenant's operations in the
Premises providing same does not materially adversely affect Landlord's fee
simple interest in the Premises, the Building and the Land. Tenant shall not use
the Premises in any manner which will cause a cancellation of any insurance
policy with respect to the Premises, the Building or the Project. Tenant shall
comply with all reasonable requirements of any insurance company, insurance
underwriter, or Board of Fire Underwriters which are necessary to maintain the
insurance coverage carried by either Landlord or Tenant pursuant to this Lease.
8.3 Outside Areas. No property of any nature shall he stored upon or
permitted to remain outside of the Premises except in fully fenced and screened
areas outside the Building which have been designed for such purpose and have
been approved in writing by Landlord for such use by Tenant.
4.
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8.4 Signs. Tenant shall not place on any portion of the Premises,
Building or Project any sign, placard, lettering in or on windows, banner,
displays or other advertising or communicative material which is visible from
the exterior to the Building without the prior written approval of Landlord,
which approval shall not be unreasonably withheld, conditioned or delayed. All
such approved signs shall strictly conform to all Laws, Private Restrictions,
and Landlord's sign criteria attached hereto as Exhibit E, and shall be
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installed at the expense of Tenant. Tenant shall maintain such signs in good
condition and repair. If Tenant fails to maintain Tenant's signs, or if Tenant
fails to remove such sign(s) upon the termination of this Lease and repair any
damage caused by such removal, Landlord may do so at Tenant's expense.
8.5 Waste Disposal. Tenant shall store its waste either inside the
Building or within outside trash enclosures on the Premises that are fully
fenced and screened in compliance with all Private Restrictions, and designed
for such purpose. All entrances to such outside trash enclosures shall be kept
closed, and waste shall be stored in such manner as not to be visible from the
exterior of such outside enclosures. Tenant shall cause all of its waste to be
regularly removed from the Premises at Tenant's sole cost. Tenant shall keep all
fire corridors and mechanical equipment rooms in the Building free and clear of
all obstructions at all times.
8.6 Hazardous Material.
8.6.1 Definition of Hazardous Materials. For purposes of this
Lease, the term "Hazardous Materials" shall mean the substances included within
the definitions of the terms "Hazardous Substance" under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, 42
U.S.C. Section 9601 et. seq., and the California Carpenter-Presley-Tanner
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Hazardous Substances Account Act, California Health & Safety Code Section 25300
et. seq., and regulations promulgated thereunder, as amended. "Hazardous Waste"
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shall mean (a) any waste listed as or meeting the identified characteristics of
a "Hazardous Waste" under the Resource Conservation and Recovery Act of 1976,42
U.S.C. Section 6901 et. seq. and regulations promulgated pursuant thereto, or
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(b) any waste meeting the identified characteristics of "Hazardous Waste" under
California Hazardous Waste Control Law, California Health and Safety Code
Section 25100 et. seq., and regulations promulgated pursuant thereto.
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8.6.2 Landlord's Delivery of Premises. Landlord shall deliver the
Premises to Tenant on the Commencement Date free of all Hazardous Substances to
the extent necessary to be in compliance with all environmental and other laws
related to health and safety and so as to allow Tenant to operate in the
Premises for its intended use hereunder without impairment, interruption,
interference, liability or additional cost or expense with respect to any
Hazardous Substance.
8.6.3 Prohibition on Use. Tenant shall not cause or permit any
Hazardous Materials to be brought upon, stored, used, generated, released or
disposed of on, under, from or about the Premises, Building or Project
(including without limitation the soil and groundwater thereunder) without the
prior written consent of Landlord; provided, however, that nothing herein shall
prevent Hazardous Substances to be brought onto the Premises in the ordinary
course of Tenant's business, as long as such presence is in compliance with all
Laws. Landlord may, in its commercially reasonable discretion, place such
conditions as Landlord deems appropriate with respect to any such Hazardous
Materials, and may further require that Tenant demonstrate that any such
Hazardous Materials are necessary or useful to Tenant's business and will be
generated, stored, used and disposed of in a manner that complies with all
applicable Laws and Private Restrictions and with good business practices.
Tenant understands that Landlord may utilize an environmental consultant to
assist in determining conditions of approval in connection with the presence,
storage, generation or use of Hazardous Materials by Tenant on or about the
Premises, and Tenant agrees that any reasonable costs actually incurred by
Landlord in connection therewith shall be reimbursed by Tenant to Landlord as
Additional Rent hereunder upon demand.
8.6.4 Environmental Questionnaire; Reports. Prior to execution of
this Lease and thereafter on each anniversary of the Lease Commencement Date,
Tenant shall complete, execute, and deliver to Landlord an Environmental
Questionnaire and Disclosure Statement (the "Environmental Questionnaire") in
the form of Exhibit F attached hereto. Tenant shall immediately notify Landlord
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in writing of any complaints, investigations or other governmental action with
respect to the use, storage, generation, release and/or clean-up of Hazardous
Materials in or about the Premises. In addition, to the extent Tenant brings
Hazardous Materials upon the Premises in the ordinary course of its business
pursuant to the terms and conditions of this Lease, Tenant shall promptly
provide Landlord with complete and legible copies of all the following
environmental documents relating thereto: reports filed pursuant to any self-
reporting requirements; permit applications, permits, monitoring reports,
workplace exposure and community exposure warnings or notices and all other
reports, disclosures, plans or documents relating to water discharges, air
pollution, waste generation or disposal, and underground storage tanks for
Hazardous Materials; orders, reports, notices listings and correspondence of or
concerning the release, investigation of, compliance, cleanup, remedial and
corrective actions, and abatement of Hazardous Materials; and all complaints,
pleadings and other legal documents filed by or against Tenant related to
Tenant's use, handling, storage or disposal of Hazardous Materials.
8.6.5 Landlord's Investigation Rights. Landlord and Landlord's
agents, employees, contractors and assigns (collectively, "Landlord's Parties")
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shall have the right, but not the obligation, to inspect, sample and/or monitor
the Premises Building or Project and/or the soil or groundwater thereunder at
any time to determine whether Tenant is complying with the terms of this Section
8.6, and in connection therewith Tenant shall
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provide Landlord with full access to all relevant facilities, records and
personnel. If Tenant is not in compliance with any of the provisions of this
Section 8.6, or in the event of a release of any Hazardous Material on, under or
about the Premises, Landlord and Landlord's Parties shall have the right, but
not the obligation, without limitation upon any of Landlord's other rights and
remedies under this Lease, to immediately enter upon the Premises without notice
and acting on behalf of Tenant to discharge Tenant's obligations under this
Section 8.6 at Tenant's expense, including without limitation the taking of
emergency or long-term remedial action. Landlord and Landlord's Parties shall
endeavor to minimize interference with Tenant's business in connection
therewith, but shall not be liable for any such interference. In addition,
Landlord, at Tenant's expense, shall have the right, but not the obligation, to
join and participate in any legal proceedings or actions initiated in connection
with any claims arising out of the storage, generation, use or disposal by
Tenant or Tenant's agents, employees, contractors, assigns, subtenants or
invitees (collectively, "Tenant's Parties") of Hazardous Materials on, under,
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from or about the Premises, Building or Project.
8.6.6 Tenant's Remediation Obligations. If the presence of any
Hazardous Materials on, under, from or about the Premises or the Project caused
or permitted by Tenant results in (i) injury to any person; (ii) injury to or
any contamination of the Premises or the Project; or (iii) injury to or
contamination of any real or personal property wherever situated, Tenant, at
Tenant's expense, shall promptly take all actions necessary to return the
Premises and the Project to the condition existing prior to the introduction of
such Hazardous Materials and to remedy or repair any such injury or
contamination, including without limitation, any cleanup, remediation, removal,
disposal, neutralization or other treatment of any such Hazardous Materials.
Notwithstanding the foregoing, Tenant shall not, without Landlord's prior
written consent, take any remedial action in response to the presence of any
Hazardous Materials on, under or about the Premises or enter into any similar
agreement, consent, decree or other compromise with any governmental agency with
respect to any Hazardous Materials claims; provided however, Landlord's prior
written consent shall not be necessary in the event that the presence of
Hazardous Materials on, under or about the Premises (a) imposes an immediate
threat to the health, safety or welfare of any individual or (b) is of such a
nature that an immediate remedial response is necessary and it is not possible
to obtain Landlord's consent before taking such action. If Landlord at any time
discovers that Tenant may have caused or permitted the release of Hazardous
Materials on, under, from or about the Premises, Tenant shall, at Landlord's
request, immediately prepare and submit to Landlord a comprehensive plan,
subject to Landlord's approval, specifying the actions to be taken by Tenant to
return the Premises to the condition existing prior to the introduction of
Hazardous Materials. Upon Landlord's approval of such cleanup plan, Tenant
shall, at its expense, and without limitation of any rights and remedies of
Landlord under this Lease or at law or in equity, immediately implement such
plan and proceed to cleanup such Hazardous Materials in accordance with all
applicable Laws and as required by such plan and this Lease.
8.6.7 Indemnification by Tenant. To the fullest extent permitted by
law, Tenant shall indemnify, hold harmless, protect and defend (with attorneys
acceptable to Landlord) Landlord and any successors to all or any portion of
Landlord's interest in the Premises and the Project from and against any and ail
liabilities, losses, damages, diminution in value, judgments, fines, demands,
claims, recoveries, deficiencies, costs and expenses (including without
limitation attorneys' fees, court costs and other professional expenses),
whether foreseeable or unforeseeable, arising directly or indirectly out of the
presence, use, generation, storage, treatment, on- or off-site disposal or
transportation of Hazardous Materials on, into, from, under or about the
Premises, the Building and the Project by Tenant or Tenant's Parties,
specifically including without limitation the cost of any required or necessary
repair, restoration, cleanup or detoxification of the Premises or the Project,
and the preparation of any closure or other required plans, whether or not such
action is required or necessary during the Term or after the expiration of this
Lease.
8.6.8. Indemnification by Landlord. Landlord shall not cause or
permit the storage, use, escape, disposal or release of Hazardous Substances in,
on or with respect to the Building or the Project in any manner not in
compliance with Laws, provided, however, that nothing herein shall prevent
Hazardous Substances to be brought onto the Land or the Project in the ordinary
course of Landlord's business or the businesses of Landlord's other tenants, as
long as such presence is in compliance with all applicable Laws. Landlord shall
indemnify and hold Tenant harmless against and from any liability, claim of
liability, claims, suits, costs, expenses, causes of action, personal liability
and property damage (including without limitation reasonable attorney's fees)
arising out of a breach by Landlord of its covenant in the preceding sentence.
Further, Landlord shall indemnify and hold Tenant harmless against and from any
liability, claim of liability, claims, suits, costs, expenses, causes of action,
personal liability and property damage (including without limitation reasonable
attorney's fees) arising out of a breach by Landlord of its representations,
warranties and covenants in this Section 8.6. Landlord shall not be liable to
Tenant under this Section 8.6 with respect to the acts of other tenants of
Landlord, unless same results from Landlord's gross negligence or willful
misconduct; provided, however, that if any Hazardous Substances brought onto the
Land by such other tenants materially adversely affects Tenant's ability to use
the Premises for the use contemplated hereunder, then Tenant may terminate this
Lease by written notice to Landlord, unless Landlord agrees to promptly abate
such interference.
8.6.9 Survival. The provisions of this Section 8.6 shall expressly
survive the expiration or sooner termination of this Lease.
8.7 Common Areas. Landlord shall at all times have exclusive control of
and operate and maintain the Common Areas in the manner Landlord may determine
to be appropriate. "Common Areas" (or "Common Area") shall mean all
exterior/outdoor areas, space, installations and equipment on the Land and the
Building for the common use and benefit of the tenants of the Project, their
employees, agents, licensees, customers and other
6.
<PAGE>
invitees, including without limitation parking areas, exits, entrances, access
roads, driveways, sidewalks, retaining walls, landscaped areas. Landlord hereby
grants to Tenant, its licensees, subtenants, concessionaires, successors and
assigns, and its and their employees, agents, licensees, customers, and invitees
the non-exclusive right and easement to use the Common Areas during the term
hereof and any extensions of same, continuously and without interruption, in
common with other tenants of the Building and the Project. Except as otherwise
expressly set forth in this Lease, all reasonable costs actually incurred by
Landlord for the maintenance and operation of the Common Areas shall be included
in Operating Expenses unless any particular cost incurred can be charged to a
specific tenant of the Project. Tenant shall keep the Common Areas clear of any
obstruction or unauthorized use related to Tenant's operations. Landlord may
temporarily close any portion of the Common Areas as reasonably required for
repairs or to prevent a public dedication or the accrual of prescriptive rights.
Notwithstanding the foregoing, Landlord shall make no change or alteration to
the Common Areas that would have a material adverse impact on Tenant's
operations in the Premises and, except for de minimis changes, shall provide
Tenant with at least ten (10) business days advance written notice before
implementing any such change. No change shall be made to any curb cut or major
access drive within the Common Areas without Tenant's prior written consent,
which consent shall not be unreasonably withheld.
8.8 Parking. Tenant is allocated and shall have the non-exclusive right to
use not more than the number of Parking Spaces described in Item 17 of the Basic
Lease Provisions, the location of which may be designated from time to time by
Landlord. Tenant shall not at any time use more parking spaces than the number
so allocated to Tenant or park its vehicles or the vehicles of others in any
portion of the Project not designated by Landlord as a non-exclusive parking
area. Neither Tenant nor Tenant's Parties shall have the exclusive right to use
any specific parking space. Landlord shall have the right and obligation to
construct, maintain and operate lighting facilities within the parking areas in
good condition and repair, and Tenant shall have no right to install any
fixtures, equipment or personal property in parking areas.
8.9 Building Name and Address. Tenant shall not utilize any name selected
by Landlord from time to time for the Building and/or Project as any part of
Tenant's corporate or trade name. Landlord shall have the right to change the
name, number or designation of the Building or Project without liability to
Tenant.
8.10 Rules and Regulations. Tenant agrees to observe faithfully and comply
strictly with the Rules and Regulations attached hereto as Exhibit I, and any
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reasonable and nondiscriminatory amendments, modifications and/or additions as
may be adopted and published by written notice to tenants by Landlord; provided,
however, that such amendments, modifications and/or additions do not materially
interfere with Tenant's operations in the Premises. Landlord shall not be liable
to Tenant for any violation of the Rules and Regulations or the breach of any
covenant or condition in any lease by any other tenant. Tenant's failure to keep
and observe the Rules and Regulations shall constitute a default under this
Lease. In the case of any conflict between the Rules and Regulations and this
Lease, this Lease shall be controlling.
9. LANDLORD'S MAINTENANCE AND REPAIR
9.1 Landlord's Maintenance. Landlord shall, with such right of
reimbursement from Tenant as is specified in Section 6: (i) maintain in good
condition and repair the roof, foundation (subject to Section 10.1.2 below), and
the exterior walls of the Building and utility facilities stubbed to the
Building in good condition, reasonable wear and tear excepted; and (ii) maintain
in good condition and repair and repaint the exterior walls, canopies, entries,
handrails, gutters and other exposed parts of the Building as necessary to
maintain safety and aesthetic standards. The term "walls" as used herein shall
not include windows, glass or plate glass, doors, overhead doors, dock bumpers,
dock plates and levelers, special store fronts or office entries, unless
otherwise specified by Landlord in writing.
9.2 Common Areas. Landlord shall repair, maintain, operate and replace
when necessary the Common Areas, if any, in order to keep them in good, clean
and safe condition, with such right of reimbursement from Tenant as is specified
in Section 6. Landlord shall not be responsible for repairs required by either
(i) an accident, fire or other peril, except as required by Section 12 hereof;
or (ii) for damage caused to any part of the Project by any act, negligence or
omission of Tenant or Tenant's Parties, the uninsured cost, including any
deductible, of which shall be paid to Landlord by Tenant. Landlord may engage
contractors of Landlord's choice to perform the obligations required of Landlord
by this Section 9.2, and the necessity of any expenditure to perform such
obligations shall be at the commercially reasonable discretion of Landlord.
9.3 Procedure and Liability. Tenant shall immediately give Landlord
written notice of defect or need for repair of the items described above, after
which Landlord shall have reasonable opportunity to repair same or cure such
defect with contractors of Landlord's choice. Landlord's liability shall be
limited by the terms of Sections 14 and 19 of this Lease. If Tenant or Tenant's
Parties caused any damage necessitating such repair, then Tenant shall pay the
cost thereof, upon demand.
9.4 Waiver. Except as expressly set forth herein, Tenant hereby waives the
benefit of California Civil Code Section 1941 and 1942, and any other statute
providing a right to make repairs and deduct the cost thereof from the Rent.
Notwithstanding the foregoing, if Landlord defaults in the performance of any
obligation imposed on it by this lease and does not cure such default within
thirty (30) days after written notice from Tenant specifying the default (or
does not within said period commence and diligently proceed to cure such
default), Tenant without waiver of or prejudice to any other right or
remedy it may have, shall have the right, at any time thereafter,
7.
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to cure such default for the account of the Landlord, and Landlord shall
reimburse Tenant upon an invoice for any amount paid and any expense or
contractual liability so incurred. If Landlord fails to reimburse Tenant within
fifteen (15) days after invoice, then Tenant shall have the right to offset the
amount due thereunder, together with interest at the Interest Rate from the date
of disbursement against all rent and other charges due from Tenant to Landlord
under this Lease until Tenant has been completely reimbursed for its expenses.
In the event of emergencies, or where necessary to prevent injury to persons or
damage to property or to mitigate damages, Tenant may cure a default by Landlord
before the expiration of the waiting period, but after giving such written or
oral notice to Landlord as is practical under all of the circumstances.
9.5 Landlord's Right to Perform Tenant's Covenants. Tenant agrees that, if
Tenant shall at any time fail to pay within the grace or notice and cure period
herein provided any mechanic's lien, taxes or other fees and charges the
nonpayment of which may place in jeopardy Landlord's interest in the Project or
any portion thereof, or if Tenant shall at any time fail to provide the
insurance required pursuant to Section 15, or perform any other act to be made
or performed by it under this Lease within the grace or notice and cure period
provided therefor, Landlord may, but shall not be obligated to, make such
payment or perform such other act to the extent Landlord may reasonably deem
such action necessary for the protection of the Premises or the Project, and
without waiving or releasing Tenant from any obligation under this Lease. All
sums so paid by Landlord and all reasonable expenses paid in connection
therewith, including without limitation reasonable attorneys' fees, together
with interest thereon at the Interest Rate from the date of such payment until
repaid by Tenant, shall be paid by Tenant to Landlord within fifteen (15) days
of demand.
10. TENANT'S MAINTENANCE AND REPAIR.
10.1 Tenant's Obligation to Maintain. Tenant shall be responsible for the
following during the Term:
10.1.1 General. Except as otherwise expressly set forth herein, Tenant
shall clean and maintain in good order, condition, and repair and replace when
necessary the Premises and every part thereof through regular inspections and
servicing, including but not limited to: (i) those portions of the plumbing and
sewage facilities and the HVAC system to the extent they service the Premises;
(ii) all fixtures, interior walls, floors, carpets and ceilings; (iii) all
windows, doors, entrances, plate glass, showcases and skylights (including
cleaning both interior and exterior surfaces); (iv) all electrical facilities
and all equipment; and (v) any automatic fire extinguisher equipment in the
Premises. Notwithstanding the foregoing, Tenant shall not be responsible for any
of the foregoing repairs or replacements if such repairs or replacements are
necessitated by Landlord's failure to promptly perform its obligations
hereunder, by damage caused by the wrongful acts or negligence of Landlord, its
employees, agents and contractors, or by damage by fire or other casualty for
which Landlord is responsible for repairing pursuant to this Lease. In light of
the substantial costs of replacing any portions of the Premises' HVAC system,
the parties hereby agree that in the event such system requires any replacement
during the last two (2) years of the initial term of this Lease or any extension
term hereof, Landlord shall reimburse Tenant on the expiration or earlier
termination of this Lease for the unamortized portion of such expense based on
the date of installation of such equipment and the useful life of such
equipment.
10.1.2 Maintenance Contracts. Except as otherwise expressly set forth
herein, Tenant shall (i) maintain, repair and replace when necessary all HVAC
equipment which services only the Premises, and shall keep the same in good
condition through regular inspection and servicing; (normal wear and tear
excepted) and (ii) maintain continuously throughout the Term a service contract
for the maintenance of all such HVAC equipment with a licensed HVAC repair and
maintenance contractor approved by Landlord, which contract provides for the
periodic inspection and servicing of the HVAC equipment at least once every
thirty (30) days during the Term. Notwithstanding the foregoing, Landlord may
elect at any time to assume responsibility for the maintenance, repair and
replacement of such HVAC equipment which serves only the Premises, the
reasonable and actual cost of which shall be paid by Tenant. Tenant shall
maintain continuously throughout the Term a service contract for the washing of
all windows (both interior and exterior surfaces) in the Premises with a
contractor approved by Landlord, which contract provides for the periodic
washing of all such windows at least once every sixty (60) days during the Term.
Tenant shall furnish Landlord with copies of all such service contracts, which
shall provide that they may not be cancelled or changed without at least thirty
(30) days' prior written notice to Landlord.
10.1.3 Standards. All repairs and replacements required of Tenant
shall be promptly made with new materials of like kind and quality and shall be
performed in accordance with all applicable Laws and the terms of Section 11 of
this Lease. If Tenant fails to properly maintain the Premises or provide the
maintenance contracts provided above, Landlord, upon providing Tenant with
notice and reasonable opportunity to cure, may undertake to do so, the cost of
which shall be deemed Rent which shall be due within fifteen (15) days of demand
by Landlord.
11. ALTERATIONS.
11.1 Trade Fixtures. During the Term of this Lease, Tenant may install
Tenant's Trade Fixtures which may be removed without material injury to the
Premises on the Premises without the prior consent of Landlord. All Trade
Fixtures shall remain Tenant's property. "Trade Fixtures" shall not include the
initial Tenant Improvements paid for with the funds of Landlord nor any
improvements thereafter made to the Premises by Landlord at any time with
Landlord's Funds.
8.
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11.2 Consent Requirement for Alterations. Tenant shall make no material
alterations, additions or improvements (collectively, "Alterations") to the
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Premises or any part thereof without obtaining the prior written consent of
Landlord, which consent shall not be unreasonably withheld. Landlord may impose
as a condition to such consent such requirements as Landlord may reasonably deem
necessary, in its sole and absolute discretion including, without limitation:
(i) that Landlord be furnished with working drawings before work commences;
(ii) that performance and labor and material payment bonds be furnished; (iii)
that Landlord approve the contractor by whom the work is to be performed, such
approval not to be unreasonably withheld; (iv) that adequate course of
construction insurance be in place and the Landlord is named as an additional
insured under the contractor's liability and property damage policies; and (v)
that Landlord may require the removal of the alterations and restoration of the
Premises to the condition which existed prior to the installation of such
Tenant's Alterations, at Tenant's sole expense upon expiration of the Term. All
such alterations, additions or improvements must be done in compliance with all
applicable Laws, in a good and workmanlike manner and diligently prosecuted to
completion. Tenant shall deliver to Landlord upon commencement of such work, a
copy of the building permit with respect thereto. All such work shall be
performed so as not to obstruct the access to the Premises of any other tenant
in the Building or Project. Should Tenant make any material alterations without
Landlord's prior written consent, Landlord shall have the right, in addition to
and without limitation of any right or remedy Landlord may have under this
Lease, at law or in equity, to require the Tenant to remove all or some of the
alterations at Tenant's sole cost and restore the Premises to the same condition
as existed prior to undertaking the alterations. Tenant shall notify Landlord in
writing at least ten (10) days prior to the commencement of any such work in or
about the Premises and Landlord shall have the right at any time and from time
to time to post and maintain notices of nonresponsibility in or about the
Premises.
11.3 Possession. All Tenant's Alterations shall remain the property of
Tenant during the Term but shall not be altered or removed from the Premises. At
the expiration or sooner termination of the Term, all Tenant's Alterations shall
be surrendered to Landlord and shall then become Landlord's property, and
Landlord shall have no obligation to reimburse Tenant for all or any portion of
the value or cost thereof.
11.4 Alterations Required by Law. Tenant shall make any Alteration or
change of any sort to the Premises that is required by any Law because of (i)
Tenant's particular use or change of use of the Premises, (ii) Tenant's
application for any permit or governmental approval, or (iii) Tenant's
construction or installation of any Tenant's Alterations or Trade Fixtures. Any
other alteration, addition, or change required by Law which is not the
responsibility of Tenant pursuant to the foregoing shall be made by Landlord
(subject to Landlord's right to reimbursement from Tenant specified in Section
6), provided that Tenant shall have no obligation to reimburse Landlord for any
alteration, addition or change to the Premises or the Project required by Law
which relates to the original construction of the Premises or the Project.
11.5 Mechanic's Liens. If any claim of lien is recorded with respect to
work performed by or on behalf of Tenant or Tenant's Parties, Tenant shall bond
against or discharge the same within thirty (30) days after receipt of notice
thereof. Thereafter, Landlord shall have the right, at Landlord's option, of
paying and discharging the same or any portion thereof without inquiry as to the
validity thereof, and any amounts so paid, including expenses, together with
interest thereon at the Interest Rate, shall be Additional Rent due and payable
within fifteen (15) days of Tenant's receipt of a bill therefor. Tenant shall
indemnify, defend (by counsel satisfactory to Landlord), protect and hold
Landlord harmless from any and all loss, cost or expense based on or arising out
of asserted claims or liens against the leasehold estate or against the right,
title and interest of Landlord in the Premises or Project or this Lease arising
from the act or agreement of Tenant. Tenant agrees to give Landlord immediate
written notice of the placing of any lien or encumbrance against the Premises or
Project.
12. FIRE AND CASUALTY DAMAGE.
12.1 Notice of Destruction. If the Building should be damaged or destroyed
by fire, earthquake or other casualty, to the extent that the Premises are
totally or partially inaccessible or unusable by Tenant in the ordinary course
of Tenant's business, Tenant shall give immediate written notice thereof to
Landlord. Landlord shall thereafter, within thirty (30) days after receipt of
written notice of such damage, notify Tenant of the amount of time Landlord
estimates in its reasonable discretion that it will take to repair such damage
("Landlord's Estimate").
12.2 Loss Covered by Insurance. If the loss to Landlord from which is fully
(exclusive of any deductible) covered by insurance maintained by Landlord or for
Landlord's benefit, which risk renders the Building totally, or partially
inaccessible or unusable by Tenant in the ordinary conduct of Tenant's business,
then:
(a) If(i) Landlord's Estimate is equal to or less than ninety (90)
days; and (ii) Landlord is not prevented by applicable Laws from rebuilding the
Building to its preexisting condition, Landlord shall, at Landlord's expense,
repair the same and this Lease shall remain in full force and effect and a
proportionate reduction of Rent shall be allowed Tenant for such portion of the
Building as shall be rendered inaccessible or unusable to Tenant during the
period of time that such portion is unusable or inaccessible. In such event,
Tenant shall pay to Landlord the amount of the deductible under Landlord's
insurance policy, which in no event shall exceed Five Thousand Dollars ($5000).
If the damage involves portions of the Building other than the Premises leased
by Tenant, Tenant shall pay only a portion of the deductible based on the ratio
of the cost of repairing the damages in the Premises to the total cost of
repairing all of the damage on the Building.
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(b) If Landlord's Estimate exceeds ninety (90) days, then either
party may by written notice to the other, given within thirty (30) days after
Landlord gives Tenant notice of Landlord's Estimate, terminate this Lease as of
the date of the occurrence of such damage or destruction.
12.3 Loss Not Covered by Insurance. If, at any time prior to the expiration
or termination of this Lease, the Building is totally or partially damaged or
destroyed from a risk, the loss to Landlord from which is not fully (exclusive
of any deductible) covered by insurance maintained by Landlord or for Landlord's
benefit, Landlord may, at its option, upon written notice to Tenant within
thirty (30) days after notice to Landlord of the occurrence of such damage or
destruction, elect to repair or restore such damage or destruction, or Landlord
may elect to terminate this Lease. If Landlord elects to repair or restore such
damage or destruction and such repair and restoration can be completed within
ninety (90) days, this Lease shall continue in full force and effect, but the
Rent shall be proportionately reduced as provided in Section 12.2(a).
12.4 Loss Covered by Tenant or Tenant's Parties. If the Building is wholly
or partially damaged or destroyed as a result of the negligence or willful
misconduct or omission of Tenant or Tenant's Parties, Tenant shall forthwith
diligently undertake to repair or restore all such damage or destruction at
Tenant's sole cost and expense; provided, however, that Tenant shall be relieved
of its repair and payment obligations pursuant to this Section 12.4 to the
extent that insurance proceeds are collectible by Landlord to repair such
damage. This Lease shall continue in full force and effect without any abatement
or reduction in Rent or other payments owed by Tenant.
12.5 Destruction Near End of Term. Notwithstanding the foregoing, if the
Building is wholly or partially damaged or destroyed within the final twelve
(12) months of the Term, either Tenant or Landlord may, at its option, elect to
terminate this Lease; provided, however, that Landlord may not terminate this
Lease pursuant to this subparagraph if Tenant at the time of such damage has a
then valid express written option to extend the Term and Tenant exercises such
option to extend the Term within thirty (30) days following the date of such
damage.
12.6 Destruction of Improvements and Personal Property. In the event of any
damage to or destruction of the Building, under no circumstances shall Landlord
be required to repair, replace or compensate anyone for the personal property,
Trade Fixtures, Alterations, machinery, equipment or furniture of Tenant or any
of Tenant's Parties, and Tenant shall repair and replace all such personal
property, Alterations and Trade Fixtures at Tenant's sole cost and expense.
12.7 Exclusive Remedy. This Section 12 shall be Tenant's sole and exclusive
remedy in the event of damage or destruction to the Premises or the Project, and
Tenant waives and releases Tenant's rights under California Civil Code Sections
1932 and 1933(4). No damages, compensation or claim shall be payable by Landlord
for any inconvenience, any interruption or cessation of Tenant's business, or
any annoyance, arising from any damage or destruction of all or any portion of
the Premises or the Project.
12.8 Lender Discretion. Notwithstanding anything herein to the contrary, in
the event the holder of any indebtedness secured by a mortgage or deed of trust
covering the Premises requires that the insurance proceeds from insurance held
by Landlord be applied to such indebtedness, then Landlord shall have the right
to deliver written notice to Tenant terminating this Lease within sixty (60)
days of the date of damage or destruction of the Premises.
13. CONDEMNATION. If any part of the Premises, the Building or the Land should
be taken for any public or quasi-public use under governmental law, ordinance,
or regulation, or by right of eminent domain, or by private purchase in lieu
thereof (a "Taking" or "Taken"), and the Taking would prevent or materially
interfere with Tenant's use of the Premises or in Landlord's judgment would
materially interfere with or impair its ownership or operation of the Building,
then upon written notice by Landlord or Tenant to the other party, this Lease
shall terminate and Rent shall be apportioned as of said date. If part of the
premises shall be Taken, and this Lease is not terminated as provided above, the
Rent payable hereunder during the unexpired Lease Term shall be reduced to such
extent as may be fair and reasonable under the circumstances. In the event of
any such Taking, Landlord shall be entitled to receive the entire price or award
from any such Taking without any payment to Tenant, and Tenant hereby assigns to
Landlord Tenant's interest, if any, in such award. Tenant shall have the right,
to the extent that same shall not diminish Landlord's award, to make a separate
claim against the condemning authority (but not Landlord) for such compensation
as may be separately awarded or recoverable by Tenant for moving expenses, loss
of its leasehold estate and damage to Tenant's Trade Fixtures, if a separate
award for such items is made to Tenant.
14. LIABILITY OF LANDLORD; MUTUAL INDEMNITY BY TENANT.
14.1 Limitation on Landlord's Liability. Landlord shall not be liable to
Tenant for any injury to Tenant or Tenant's Parties, damage to the property of
Tenant or Tenant's Parties, or loss to Tenant's business resulting from: (i)
failure, interruption or installation of any HVAC or other utility system or
service (except as expressly set forth in Section 1.3 herein); (ii) failure to
furnish or delay in furnishing any utilities or services when such failure or
delay is caused by fire or other peril, the elements, labor disturbances of any
character, or any other accidents or other conditions beyond the reasonable
control of Landlord; (iii) limitation, curtailment, rationing or restriction on
the use of water or electricity, gas or any other form of energy or any services
or utility serving the Project; or (iv) vandalism or forcible entry by
unauthorized persons or the criminal acts of any person. Notwithstanding the
foregoing but subject to Sections 14.2 and 15.5, Landlord shall be liable for
any such injury,
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damage or loss which is proximately caused by Landlord's willful misconduct,
or negligence of which Landlord has actual notice and a reasonable opportunity
to cure but which it fails to so cure.
14.2 Limitation on Tenant's Recourse. If Landlord is a corporation,
trust, partnership, joint venture, unincorporated association or other form of
business entity: (i) the obligations of Landlord shall not constitute personal
obligations of the officers, directors, trustees, partners, joint venturers,
members, owners, stockholders, or other principals or representatives of such
business entity; and (ii) Tenant shall not have recourse to the assets of such
officers, directors, trustees, partners, joint venturers, members, owners,
stockholders, principals or representatives except to the extent of their
interest in the Project. Notwithstanding anything to the contrary in this
Lease, Tenant shall have recourse only to the interest of Landlord in the
Project for the satisfaction of each and every remedy of Tenant in the event of
default by Landlord hereunder; such exculpation of personal liability is
absolute and without exception whatever.
14.3 Mutual Indemnification. Tenant and Landlord agree to indemnify
and hold each other harmless horn and against any and all claims, damages or
causes of action for damages brought on account of injury to any person or
persons or property, or loss of life, arising out of (i) the failure to comply
with its obligations hereunder by Landlord or Tenant, respectively, or (ii) the
use, operation or maintenance of the Premises by Tenant or by the use,
operation or maintenance of the remainder of the Building and other
improvements on the Land by Landlord, except for matters arising from the gross
negligence or willful misconduct of the party seeking indemnification.
Notwithstanding any other provisions set forth herein, the parties hereby agree
that in the event of any damage to a party, including all personal and property
damages and losses to a party's employees or invitees, each party shall resort
to any and all insurance coverage available prior to asserting any claim or
demand against the other party or its assets. No insurer is meant to be a third
party or other beneficiary of any provision contained in this Lease.
14.4 Notice of Claim or Suit. Landlord and Tenant shall promptly
notify the other of any claim, action, proceeding or suit instituted or
threatened against Landlord or Tenant of which they received notice or of which
they acquire knowledge and which names the other party as a defendant thereto.
14.5 Waiver of Jury Trial. Landlord and Tenant each acknowledges that
it is aware of and has had the advice of counsel of its choice with respect to
its rights to trial by jury, and each party does hereby expressly and knowingly
waive and release all such rights to trial by jury in any action, proceeding or
counterclaim brought by either party hereto against the other (and/or against
its officers, directors, employees, agents, or subsidiary or affiliated
entities) on any matters whatsoever arising out of or in any way connected with
this Lease, Tenant's use of occupancy of the Premises, and/or any claim of
injury or damage.
14.6 Sale of Premises. In the event of any sale or transfer of the
Premises, the seller, transferor or assignor shall be and hereby is entirely
freed and relieved of all agreements, covenants and obligations of Landlord
thereafter to be performed provided such purchaser, transferee or assignee has
assumed and agreed in writing to carry out any and all agreements, covenants
and obligations of Landlord hereunder.
15. INSURANCE.
15.1 Tenant's Insurance Obligations. Tenant agrees that at all times
from and after the date Tenant is given access to the Premises for any reason,
Tenant shall carry and maintain, at its sole cost and expense, the following
types, amounts and forms of insurance:
15.1.1 Public Liability Insurance. A broad form comprehensive
general liability or commercial general liability policy including contractual
liability coverage for obligations under this Lease, covering the Project in
an amount of not less than the amount per occurrence specified in Item 19 of
the Basic Lease Provisions. Such policy shall be in the occurrence form with a
per location general aggregate. The amounts of such insurance required
hereunder shall be subject to adjustment from time to time as requested by
Landlord based upon Landlord's commercially reasonable determination as to the
amounts of such insurance generally required at such time for comparable
tenants, premises and buildings in the general geographical location of the
Building or as requested by any lender with an interest in the Premises or
Project.
15.1.2 Property Insurance. A policy or policies, including the
basic form, broad form and special form of coverage ("All Risks"), including
vandalism and malicious mischief, theft, sprinkler leakage and water damage
coverage in an amount equal to the full replacement value, new without
deduction for depreciation, of all Trade Fixtures, furniture and equipment in
the Premises, and all Alterations to the Premises installed by or for Tenant
or provided to Tenant. Such coverage shall name the Landlord as an additional
insured as its interest may appear.
15.1.3 Other Insurance. Such other insurance that is
either (i) required by any Lender, or (ii) reasonably required by Landlord and
customarily carried by tenants of similar property in similar businesses.
15.2 Requirements of Tenant's Insurance Coverage. Each policy of
insurance required to be carried by Tenant pursuant to Section 15.1: (i) shall
name Landlord and such other parties in interest as Landlord reasonably
designates as additional insureds; (ii) shall be primary insurance; (iii)
shall be in a form reasonably satisfactory to Landlord; (iv) shall be carried
with companies licensed to do business in California and which have a general
policy holders' rating of at least "A" and a Financial rating of at least
"VIII" as set forth in the most current issue of Best's
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Insurance Guide; (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 so long as such provision of thirty (30) days notice
is reasonably obtainable, but in any event not less than ten (10) days prior
written notice; (vi) shall not have a "deductible" in excess of such amount as
is approved by Landlord; (vii) shall contain a cross liability endorsement;
(viii) shall contain a severability clause and (ix) shall be written on an
"occurrence" basis only, with a per location aggregate, unless such forms are no
longer available, in which case the policy form obtained by Tenant shall be
subject to Landlord's prior written approval, such approval not to be
unreasonably withheld, conditioned or delayed. If Tenant has in full force and
effect a blanket policy of liability insurance with the same coverage for the
Premises as described above, as well as other coverage of other premises and
properties of Tenant, or in which Tenant has some interest, such blanket
insurance shall satisfy the requirements of this Section 15, provide that
Landlord is named as an additional insured thereunder and provide that the
coverage afforded with respect to the Premises shall not be reduced or
diminished by reason of the use of such blanket policy of insurance.
15.3 Evidence of Tenant's Insurance Coverage. A copy of each paid-up
policy evidencing the insurance required to be carried by Tenant pursuant to
Section 15.1 (appropriately authenticated by the insurer) shall be delivered to
Landlord prior to the time Tenant or any of Tenant's Parties enters the Premises
and upon renewal of such policies, but not less than ten (10) days prior to the
expiration of the term of such coverage. If Tenant fails to obtain the insurance
required hereby or provide evidence thereof to Landlord, Landlord may, but shall
not be obligated to, and Tenant hereby appoints Landlord as its agent to procure
such insurance and bill the cost of the insurance to Tenant.
15.4 Landlord's Insurance. Landlord shall maintain all risk property
insurance covering the full replacement cost of the Project. Landlord shall at
all times maintain general commercial liability insurance covering the Land,
including, but not limited to, the Common Areas, against claims for personal
injury and damage to property naming Tenant as an additional insured under the
policy. Landlord may, but is not obligated to, maintain such other insurance and
additional coverages as it may deem necessary, including, but not limited to,
workers' compensation and rent loss insurance. The amount of any increase in
premiums for the insurance carried by Landlord as allowed by this paragraph in
excess of the premiums paid by Landlord for the Base Year shall be included as
part of the Operating Expenses charged to Tenant hereunder. The Building may be
included in a blanket policy (in which case the cost of such insurance allocable
to the Project will be determined by Landlord based upon the insurer's cost
calculations). Tenant shall also reimburse Landlord for any increased premiums
or additional insurance which Landlord deems reasonably necessary as a result of
Tenant's use of the Premises. In the event that Landlord is required to obtain
additional insurance due the Tenant's operations on the Premises, Tenant shall
be required to pay all costs of such insurance. Landlord shall deliver to Tenant
the foregoing insurance policies or certificates thereof at or prior to the date
that same are required to be in effect and evidence of all renewals or
replacements of same.
15.5 Release and Waiver of Subrogation. Notwithstanding anything to the
contrary contained in this Lease, the parties hereto release each other, and
their respective agents and employees, from any liability for injury to any
person or damage to property to the extent that is covered under any valid and
collectible insurance policy carried by either of the parties which is in force
at the time of such injury or damage. Each party shall cause each insurance
policy obtained by it to provide that the insurer waives all right of recovery
by way of subrogation against the other party and its agents and employees in
connection with any injury or damage covered by the policy. Each party shall
provide the other party with a certificate of insurance evidencing the
requirements of this section.
16. Landlord's Right of Access. Tenant shall permit Landlord and Landlord's
Parties, at all reasonable times and at any time in case of emergency: (a) to
enter into and upon the Premises to inspect them, to protect the Landlord's
interest therein, to post notices of non-responsibility; (b) to take all
necessary materials and equipment into the Premises and perform necessary work
therein; and (c) to perform environmental testing. No such work shall cause or
permit any rebate of Rent to Tenant. Landlord may at any time place on or about
the Building any ordinary "for sale" and "for lease" signs. Tenant shall also
permit Landlord and Landlord's Parties, upon request and reasonable advance
notice, to enter the Premises or any part thereof, at reasonable times during
normal business hours, to show the Premises to prospective purchasers,
mortgagees or lessees.
17. Assignment and Subletting. Tenant shall have the right to assign this
Lease, or to sublet all or any portion of the Premises to any party without the
prior written consent provided that subsequent to such subletting or assignment
Tenant remains liable for the payment and performance of Tenant's obligations
under this Lease and, in the case of any assignment, the assignee assumes
Tenant's obligations under this Lease. No transfer or any interest under this
lease shall relieve Tenant and any guarantor of this lease of its/his personal
and primary obligation to pay the Rent and to perform all of the other
obligations to be performed by Tenant hereunder.
17.1 Terms of Transfer. If Tenant sublets or assigns any portion of the
Premises, the following shall apply:
(a) Tenant shall pay to Landlord an amount equal to one-half (l/2) of
the difference, if any, between the rent and other charges due and payable by a
sublessee or assignee (or the combination of the rent and other charges due and
payable under such sublease or assignment plus any other consideration therefor
or incidental thereto) exceeds the Rent payable under this Lease with respect to
the Premises or portion thereof which is assigned or subleased. Such amount owed
to Landlord shall be paid to Landlord on the same basis, whether periodic or in
lump sum, that such Subrent is paid to Tenant by the assignee.
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(b) Upon a default by Tenant hereunder, Landlord may collect rent from
the assignee or sublessee and, except to the extent set forth in Section
17.1(a), apply the amount collected to the next Rent payable hereunder; and all
such Rent collected by Tenant shall be held in trust for Landlord and
immediately forwarded to Landlord. No such transaction or collection of rent or
application thereof by Landlord, however, shall be deemed a waiver of these
provisions or a release of Tenant from the further performance by Tenant of its
covenants, duties or obligations herewith.
18. Default and Remedies.
18.1 Events of Tenant's Default. Tenant shall be in default of its
obligations under this Lease if any of the following events occurs (an "Event
of Tenant's Default"):
(a) Tenant shall have failed to pay Base Rent or Additional
Rent when due, and such failure is not cured within five (5) days after
delivery of written notice from Landlord specifying such failure to pay; or
(b) Tenant shall have failed to perform any term, covenant, or
condition of this Lease except those requiring the payment of Base Rent or
Additional Rent, and Tenant shall have failed to cure such breach within thirty
(30) days after written notice from Landlord specifying the nature of such
breach where such breach could reasonably be cured within said thirty (30) day
period, or if such breach could not be reasonably cured within said thirty (30)
day period, Tenant shall have failed to commence such cure within said thirty
(30) day period and thereafter continue with due diligence to prosecute such
cure to completion within such time period as is reasonably needed; or
(c) Tenant shall have sublet the Premises or assigned its
interest in the Lease in violation of the provisions contained in Section 17;
or
(d) The occurrence of the following: (i) the making by Tenant
of any general arrangements or assignments for the benefit of creditors; (ii)
Tenant becomes a "debtor" as defined in 11 U.S.C. Section 101 or any successor
statute thereto (unless, in the case of a petition filed against Tenant, the
same is dismissed within 60 days); (iii) the appointment of a trustee or
receiver to take possession of substantially all of Tenant's assets located at
the Premises or of Tenant's interest in this Lease, where possession is not
restored to Tenant within sixty (60) days; or (iv) the attachment, execution or
other judicial seizure of substantially all of Tenant's assets located at the
Premises or of Tenant's interest in this Lease, where such seizure is not
discharged within sixty (60) days; provided, however, in the event that any
provision of this Section 18.1 is contrary to any applicable Law, such
provision shall be of no force or effect.
The notice periods provided for in this Section 18.1 are intended to satisfy
any and all notice requirements imposed on Landlord by law and are not in
addition to any such requirements.
18.2 Landlord's Remedies. If an Event of Tenant's Default occurs,
Landlord shall have the following remedies, in addition to all other rights and
remedies provided by any Law or otherwise provided in this Lease, to which
Landlord may resort cumulatively or in the alternative:
(a) Landlord may keep this Lease in effect and enforce its
rights and remedies under this Lease. Landlord may enter the Premises and
release them to third parties for Tenant's account for any period, whether
shorter or longer than the remaining Term. Tenant shall be liable immediately
to Landlord for all reasonable costs Landlord incurs in releasing the Premises,
including brokers' commissions, expenses of altering and preparing the Premises
required by the releasing. No act by Landlord allowed by this subparagraph or
intended to mitigate the adverse effects of a breach of this Lease by Tenant
shall terminate this Lease unless Landlord notifies Tenant in writing that
Landlord elects to terminate this Lease. Notwithstanding any releasing without
termination, Landlord may later elect to terminate this Lease because of the
default by Tenant. Landlord may enforce all its rights and remedies under this
Lease, including the right to recover the Rent as it becomes due under the
Lease as provided in California Civil Code Section 1951.4.
(b) Landlord may terminate this Lease by giving Tenant
written notice of termination in which event this Lease shall terminate on the
date set for termination in such notice. In the event Landlord terminates this
Lease, Landlord shall be entitled, at Landlord's election, to damages in an
amount as set forth in California Civil Code Section 1951.2 as in effect on
the Effective Date. For purposes of computing damages pursuant to California
Civil Code Section 1951.2, an interest rate equal to the Interest Rate shall
be used where permitted. Such damages shall include:
(1) The worth at the time of award of the amount by
which the unpaid Rent for the balance of the term after the time of award
exceeds the amount of such rental loss that Tenant proves could be reasonably
avoided, computed by discounting such amount at the discount rate of the
Federal Reserve Bank of San Francisco at the time of award plus one percent
(1%); and
(2) Any other amount reasonably necessary to compensate
Landlord for all detriment proximately caused by Tenant's failure to perform
Tenant's obligations under this Lease, or which in the ordinary course of
things would be likely to result therefrom, including the following: (i)
reasonable expenses for
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cleaning, repairing or restoring the Premises; (ii) reasonable expenses for
altering, remodeling or otherwise improving the Premises for the purpose of
reletting, including installation of leasehold improvements (whether such
installation be funded by a reduction of rent, direct payment or allowance to a
new tenant, or otherwise); (iii) broker's fees, advertising costs and other
expenses of reletting the Premises; (iv) costs of carrying the Premises, such
as taxes, insurance premiums, utilities and security precautions; (v) expenses
in retaking possession of the Premises; and (vi) reasonable attorneys' fees and
court costs incurred by Landlord in retaking possession of the Premises and in
releasing the Premises or otherwise incurred as a result of Tenant's default.
(c) Nothing in this Section 18.2 shall limit Landlord's right
to indemnification from Tenant as provided in Sections 8.6.6, 11.5, 14.3, 20.1
and 22.16. Any notice given by Landlord in order to satisfy the requirements of
this Section 18.2 shall also satisfy the notice requirements of California Code
of Civil Procedure Section 1161 regarding unlawful detainer proceedings.
18.3 Waiver. One party's consent to or approval of any act by the
other party requiring the first party's consent or approval shall not be deemed
to waive or render unnecessary the fast party's consent to or approval of any
subsequent similar act by the other party. The receipt by Landlord of any Rent,
payment, interest or late charge with or without knowledge of the breach of any
other provision hereof shall not be deemed a waiver of any such breach unless
such waiver is in writing and signed by Landlord. No delay or omission in the
exercise of any right or remedy accruing to either party upon any breach by the
other party under this Lease shall impair such right or remedy or be construed
as a waiver of any such breach theretofore or thereafter occurring. The waiver
by either party of any breach of any provision of this Lease shall not be
deemed to be a waiver of any subsequent breach of the same or of any other
provisions herein contained.
18.4 Limitation on Exercise of Rights. At any time that an Event of
Tenant's Default has occurred and remains uncured, (i) Landlord may deny or
withhold any consent or approval requested of it by Tenant which Landlord would
otherwise be obligated to give; and (ii) Tenant may not exercise any option to
extend, right to terminate this Lease, or other right granted to it by this
Lease which would otherwise be available to it.
18.5 Remedies Cumulative. All rights, privileges and remedies of the
parties are cumulative and not alternative or exclusive to the extent permitted
by law except as otherwise provided herein.
19. TENANT'S REMEDIES.
19.1 Landlord's Default. Landlord shall not be in default under this
Lease unless Landlord fails to perform obligations required of Landlord within
thirty (30) days after written notice is delivered by Tenant to Landlord,
specifying the obligation which Landlord has failed to perform; provided,
however, that if the nature of Landlord's obligation is such that more than
thirty (30) days are required for performance, then Landlord shall not be in
default if Landlord commences performance within such thirty (30) day period
and thereafter diligently prosecutes the same to completion.
19.2 Tenant's Remedies. In the event of any default by Landlord,
Tenant shall be entitled at its election to bring suit for the collection or
any amounts for which Landlord may be in default, or for the performance of any
other covenant or agreement devolving upon Landlord in addition to all remedies
otherwise provided in this Lease or otherwise available in law or equity.
20. SURRENDER AND HOLDING OVER.
20.1 Surrender of the Premises. Upon the expiration or sooner
termination of this Lease, Tenant shall vacate and surrender the Premises to
Landlord in the same condition as existed at the Commencement Date, except for
(i) reasonable wear and tear, and (ii) damage caused by any peril or
condemnation. In any event, Tenant shall cause the following to be done prior
to the expiration or the sooner termination of this Lease: (a) all interior
walls shall be painted or cleaned so that they appear freshly painted; (b) all
tiled floors shall be cleaned and waxed; (c) all carpets shall be cleaned and
shampooed; (d) all broken, marred, stained or nonconforming acoustical ceiling
tiles shall be replaced; (e) all windows shall be washed; (f) the HVAC system
shall be serviced by a reputable and licensed service firm and left in good
operating condition and repair (normal wear and tear excepted) as so certified
by such firm; and (g) the plumbing and electrical systems and lighting shall be
placed in good order and repair (including replacement of any burned out,
discolored or broken light bulbs, ballasts, or lenses). If Landlord so
requests, Tenant shall, prior to the expiration or sooner termination of this
Lease, (1) remove any Tenant's Alterations which Tenant is required to remove
pursuant to Section 11 and repair all damage caused by such removal; and (2)
return the Premises or any part thereof to its original configuration existing
as of the time the Premises were delivered to Tenant. If the Premises are not
so surrendered at the termination of this Lease, Tenant shall be liable to
Landlord for all reasonable costs incurred by Landlord in returning the
Premises to the required condition, plus interest on all costs incurred at the
Interest Rate. Tenant shall indemnify, defend by counsel satisfactory to
Landlord, protect and hold Landlord harmless against loss or liability
resulting from delay by Tenant in so surrendering the Premises, including,
without limitation, any claims made by any succeeding tenant or losses to
Landlord due to lost opportunities to lease to succeeding tenants.
20.2 Holding Over. This Lease shall terminate without further notice
at the expiration of the Term. Any holding over by Tenant after expiration of
the Term shall not constitute a renewal or extension of the Lease or leave
Tenant any rights in or to the Premises except as expressly provided in this
Lease. Any holding over after
14.
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such expiration with the written consent of Landlord shall be construed to be a
tenancy from month to month on the same terms and conditions herein specified
insofar as applicable except that Base Rent shall be increased to an amount
equal to 125% of the Base Rent payable during the last full calendar month of
the Term.
21. MORTGAGES.
21.1 Subordination. The following provisions shall govern the
relationship of this Lease to any underlying lease, mortgage or deed of trust
which now or hereafter affects the Project, and any renewal, modification,
consolidation, replacement or extension thereof (collectively, a "Security
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instrument").
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(a) The Lease is subject and subordinate to all Security
Instruments existing as of the Effective Date; on the condition, however, that
prior to the Commencement Date the holder of any present Security Interest shall
enter into a subordination, non-disturbance and attornment agreement ("SNDA")
with Tenant providing that so long as there is not an Event of Tenant's Default
under the Lease, in the event of foreclosure or other action or exercise of
rights taken under such Security Instrument, this Lease and all of the rights of
Tenant hereunder shall not be disturbed, but shall continue in full force and
effect. However, if any Lender so requires, this Lease shall become prior and
superior to any such Security Instrument.
(b) At Landlord's election, this Lease shall become subject
and subordinate to any Security Instrument created after the Effective Date.
Notwithstanding such subordination, this Lease and all of the rights of Tenant
hereunder shall not be disturbed but shall continue in full force and effect so
long and Event of Tenant's Default has not occurred. Subject to the foregoing
sentence, Tenant shall upon request execute any document or instrument
reasonably required by any Lender to make this Lease either prior or subordinate
to a Security Instrument, which may include such other matters as the Lender
customarily and reasonably requires in connection with such agreements,
including provisions that the Lender not be liable for (i) the return of any
security deposit unless the Lender receives it from Landlord, and (ii) any
defaults on the part of Landlord occurring prior to the time the Lender takes
possession of the Project in connection with the enforcement of its Security
Instrument, provided, however, that in any SNDA such Lender shall agree not to
disturb Tenant's rights under this Lease so long as an Event of Tenant's Default
has not occurred hereunder.-
21.2 Mortgagee Protection and Attornment. In the event of any default
on the part of the Landlord, Tenant will use reasonable efforts to give notice
by registered mail to any Lender whose name has been provided to Tenant and
provide such Lender with a reasonable opportunity to cure such default;
provided, however, any cure period afforded Lender pursuant to this paragraph
shall in no way operate to the benefit of Landlord. Tenant shall a