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EXHIBIT 10.1
LEASE
1. PARTIES: THIS LEASE, is entered into on this 1st day of March, 1988, between
University Research Center, a California General Partnership, and Zycon, a
California Corporation, hereinafter called respectively Landlord and Tenant.
2. PREMISES: Landlord hereby leases to Tenant, and Tenant hires from Landlord
those certain Premises described on the preliminary site plan proposed by ▇▇▇▇▇▇
▇▇▇▇▇ and Associates dated February 26, 1986 attached hereto, situated in the
City of Santa ▇▇▇▇▇, County of Santa ▇▇▇▇▇ State of California, including a
building of:
Approximately 126,816 square foot on ground level industrial
building, with parking for approximately four hundred (400)
automobiles, described on plans prepared by ▇▇▇▇▇▇ ▇▇▇▇▇ and
Associates, attached hereto as Exhibit "A." To be constructed at
Landlord's expense. The Premises are part of the project known as
University Research Center, consisting of two buildings totaling
approximately 222,000 square feet to be constructed on approximately
13.5 acres as shown on the Site Plan prepared by ▇▇▇▇▇▇ ▇▇▇▇▇ and
Associates (The Project).
3. USE: Tenant shall use the Premises only for the following purposes and shall
not change the use of the Premises without the prior written consent of
Landlord: Research, Office, and Light Manufacturing purposes including but not
limited to the manufacturing of printed circuit boards.
4. TERM: The term shall be for one hundred forty-four (144) months, commencing
on the 1st day of February, 1989, and ending on the 31st day of January, 2001,
at the total rent or sum of FOURTEEN MILLION SEVEN HUNDRED NINETY ONE THOUSAND
EIGHT HUNDRED TWENTY FOUR AND 00/100 ($14,791,824.00) DOLLARS, payable, without
deduction or offset, in monthly installments of ONE HUNDRED TWO THOUSAND SEVEN
HUNDRED TWENTY ONE AND 00/100 DOLLARS:
$102,721.00 Subject to increases for Consumer Price
Index adjustments every forty-eight (48)
months as provided in Article 41 herein.
due on or before the first day of each calendar month during the term hereof.
Said rental shall be paid in lawful money of the United States of America,
without offset or deduction, and shall be paid to Landlord at such place or
places as may be designated in writing from time to time by Landlord. Rent for
any period less than a calendar month shall be a pro rata portion of the monthly
installment.
Concurrently with Tenants, execution of this Lease, Tenant shall pay to Landlord
the sum of ONE HUNDRED TWO THOUSAND SEVEN HUNDRED TWENTY ONE AND 00/100
($102,721.00) DOLLARS as prepared rent for first month's rent. Tenant to receive
a credit on its second month's rental for interest earned on such pre-paid rent
in the amount of five percent (5%) per year.
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5. SECURITY DEPOSIT: Concurrently with Tenant's execution of this Lease, Tenant
has deposited with Landlord the sum of ONE HUNDRED THOUSAND AND 00/100
($100,000.00) DOLLARS as a security deposit. If Tenant defaults, as defined in
Paragraph 24, with respect to any provisions of this lease, including but not
limited to the provisions relating to payment of rent or other charges, Landlord
may, to the extent reasonably necessary to remedy Tenant's default, use all or
any part of said deposit for the payment of rent or other charges in default or
the payment of any other payment of any other amount which Landlord may spend or
become obligated to spend by reason of Tenant's default or to compensate
Landlord for any other loss or damage which Landlord may suffer by reason of
Tenant's default. If any portion of said deposit is so used or applied, Tenant
shall, within ten (10) days after written demand therefore, deposit cash with
Landlord in an amount sufficient to restore said deposit to the full amount
hereinabove stated and shall pay to Landlord such other sums as shall be
necessary to reimburse Landlord for any sums paid by landlord. Said deposit
shall be returned to Tenant within fifteen (15) days after the expiration of the
term hereof less any amount deducted in accordance with this paragraph, together
with Landlord's written notice itemizing the amounts and purposes for such
retention. In the event of termination of Landlord's interest in this Lease,
Landlord shall transfer said deposit to Landlord's successor in interest. Tenant
shall receive an annual rental credit equal to five percent (5%) interest on
such security deposit applied to the first month's rent of each year of this
lease.
6. LATE CHARGES: Tenant hereby acknowledges that late payment by Tenant to
Landlord of rent and other sums due hereunder will cause landlord to incur costs
not contemplated by this Lease, the exact amount of which will be extremely
difficult to ascertain. Such costs include, but are not limited to,
administrative, processing, accounting charges, and late charges, which may be
imposed on Landlord by the terms of any contract, revolving credit, mortgage or
trust deed covering the Premises. Accordingly, if any installment of rent or any
other sum due from Tenant shall not be received by Landlord or Landlord's
designee within ten (10) days after such amount shall be due, Tenant shall pay
to Landlord a late charge equal to three (3%) percent of such overdue amount
which shall be due and payable with the payment then delinquent. The parties
hereby agree that such late charge represents a fair and reasonable estimate of
the costs Landlord will incur by reason of late payment by Tenant. Acceptance of
such late charge by Landlord shall in no event constitute a waiver of Tenant's
default with respect to such overdue amount, nor prevent Landlord from
exercising any of the other rights and remedies granted hereunder. In the event
that a late charge is payable hereunder, whether or not collected, for three (3)
consecutive installments of rent, then rent shall automatically become due and
payable quarterly in advance, rather than monthly, notwithstanding any provision
of this Lease to the contrary.
7. CONSTRUCTION AND POSSESSION: The Tenant Interior Improvements and Building
Shell shall be constructed by independent contractors to be employed by and
under the supervision of Landlord, as general contractor. The final plans for
such Interior Improvements and Building Shell shall be prepared as expeditiously
as possible and shall be subject to the reasonable approval by the parties,
which approval shall not be unreasonably withheld or delayed. Landlord shall
construct the Tenant Interior Improvements and Building Shell in
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accordance with all existing applicable municipal, local, state and federal
laws, statutes, rules, regulations and ordinances.
The Building Shell and Tenant Interior Improvements are generally described in
Exhibit E. The final plans shall be consistent with Exhibit E and shall be based
upon and consistent with the plan for the Building Shell attached as Exhibit A,
and with the Tenant Floor Plans to be submitted as provided in Exhibit E.
"Cost" of the Tenant Interior Improvements is defined in Exhibit E.
Landlord shall be responsible for and shall pay the entire cost of the Building
Shell and the cost of the Tenant Interior Improvements up to the amount of THREE
MILLION EIGHT HUNDRED FOUR THOUSAND FOUR HUNDRED EIGHTY AND 00/100
($3,804,480.00) DOLLARS ("Tenant Interior Improvement Allowance"). In the event
the cost of Tenant Interior Improvements is less than THREE MILLION EIGHT
HUNDRED FOUR THOUSAND FOUR HUNDRED EIGHTY AND 00/100 ($3,804,480.00) DOLLARS,
the monthly rental under the Lease shall be reduced at the rate of FIFTEEN
DOLLARS ($15.00) per month for each ONE THOUSAND DOLLARS ($1,000.00) of the
Tenant Interior Improvement Allowance not used to a minimum of TWO MILLION FOUR
HUNDRED THOUSAND AND 00/100 ($2,400,000.00) DOLLARS. Costs, as defined in
Exhibit "E," in excess of said Tenant Interior Improvement Allowance, if any,
shall be paid for by Tenant in cash within ten (10) days after Landlord has
provided Tenant with written evidence that Landlord's progress payments to
sub-contractors has exceeded said Tenant Interior Improvement budget. All costs
for Tenant Interior Improvements shall be fully documented to and verified by
Tenant. Tenant reserves the right to require Landlord to secure three
competitive bids from sub-contractors on any item costing in excess of TWENTY
FIVE THOUSAND AND 00/100 ($25,000.00) DOLLARS.
Landlord and Tenant to execute a standard construction contract containing
provisions customarily contained in such contracts providing reasonable
protection to the interests of the parties. The final selection of the
successful sub-contractors for the interior improvements shall be subject to
Tenant's approval. Upon receipt of all competitive bids, Tenant shall retain the
right to negotiate with any sub-contractor subject to the reasonable approval of
Lessor. Tenant to have the right to record a chattel mortgage, personal property
lease, or other security interest on that portion of leasehold improvements that
it has paid for, and that have not become an integral part of the real estate,
and that are of a specific nature unique to Tenant's business, that are not
needed for the normal operation of the building or heating and cooling for
personnel within the building.
If Landlord, for any reason whatsoever, cannot deliver possession of the said
Premises to Tenant at the commencement of the said term, as hereinbefore
specified, this Lease shall not be void or voidable, nor shall Landlord be
liable to Tenant for any loss or damage resulting therefrom; but in that event
the commencement and termination dates of the Lease and all other dates affected
thereby shall be revised to conform to the date of Landlord's delivery of
possession. The term of the Lease shall not commence until the Premises are
Substantially Complete as defined herein. "Substantially Complete" shall mean
that: (i) all necessary governmental approvals, permits,
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consents, and certificates have been obtained by or for Landlord for the lawful
construction by Landlord, and occupancy by Tenant, (ii) all of the Premises
interior fully meet all of the Tenant Floor Plans, (iii) all of the Premises
exterior substantially meets the applicable Tenant Floor Plans, including paved
parking areas, and (iv) said interior is in a "broom clean" finished condition.
If necessary, Landlord reserves the right to post a bond for the uncompleted
portion of the landscaping.
Notwithstanding the above, if Landlord has not commenced construction of the
Building Shell by September 1, 1988, Tenant may terminate this lease by giving
Landlord written notice. Commencement of construction shall mean that Landlord
has obtained all permits necessary to construct the Building Shell given the use
contemplated hereby, has executed Ground Lease (see Paragraph 47) and has
commenced substantial excavation. The September 1, 1988 date contemplates that
Tenant shall have provided Landlord with one-line drawings of Tenant wall layout
and Basement Details by march 15, 1988 and if it fails to do so the above date
shall be extended by one day for each day after March 31, 1988 until Tenant
delivers such drawings.
Provided further that Landlord shall complete the shell and interior
improvements by March 1, 1989 unless it has been delayed for causes beyond its
reasonable control such as, but not limited to, strikes, unavailable equipment
or materials, changes made by Tenant, or delays caused securing approval of
governmental agencies. In the event of a delayed commencement date beyond March
1st plus additional time for the unavoidable delays described above, Tenant is
to receive one day of free rent for every day beyond March 1, 1989 that the
Premises are not ready for Tenant's occupancy.
Tenant's obligations under this Lease are conditioned upon Tenant's reasonable
satisfaction before May 1, 1988, that the Building Shell and Tenant's Interior
Improvements will be approved by all applicable public authorities so as to
permit Tenant to conduct the business contemplated without having to incur
additional engineering or construction costs not customarily incurred by
companies in the printed circuit business as a result of the Premises' proximity
to residential property or from the property's proximity to the San ▇▇▇▇ City
Limit.
8. ACCEPTANCE OF PREMISES AND COVENANTS TO SURRENDER: When Tenant enters
hereunder, Tenant shall accept the Premises as being in good and sanitary order,
condition and repair, except for latent defects except for the "punch list" to
be provided Landlord within thirty (30) days after Tenant's occupancy. The
Tenant agrees on the last day of the term hereof, or on the sooner termination
of this Lease, to surrender the Premises unto Landlord in good condition and
repair, reasonable wear and tear excepted. "Good condition" shall mean that the
interior walls of all office and warehouse areas, the floors of all office and
warehouse areas, all suspended ceilings and any carpeting will be cleaned.
Tenant shall ascertain from Landlord at least thirty (30) days before the end of
the term of this Lease whether Landlord desires to have the Premises or any part
or parts thereof restored to their condition as of the Lease commencement date
or to cause Tenant to surrender all alterations, additions, and improvements in
place to landlord. Tenant may request Landlord's decision at any time within six
(6) months before the end of the Lease term and Landlord shall respond within
thirty (30) days of Tenant's inquiry. Landlord's failure to respond within such
period shall be deemed an election that
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Tenant surrender the Premises in their then current condition. If Landlord shall
so desire, then Tenant shall remove such alterations, addition, and improvements
as Landlord may require and shall repair and restore said Premises or such part
or parts thereof before the termination of this Lease at Tenant's sole cost and
expense. Tenant on or before the end of the term or sooner termination of this
Lease, shall remove all his or its personal property and trade fixtures from the
Premises, and all property not so removed shall be deemed to be abandoned by
Tenant. If the Premises are not surrendered at the end of the term or sooner
termination of this Lease, Tenant shall indemnify Landlord against loss or
liability resulting from delay by Tenant in so surrendering the Premises
including, without limitation, reasonable claims made by any succeeding tenant
founded on such delay.
Provided further that Landlord hereby warrants that all work will be performed
in a good workmanlike manner free of all defects in construction and/or
materials for a period of one year after Tenant accepts possession plus a period
of two years from acceptance for the roof membrane or any other waterproof
conditions. Landlord to further assign all subcontractor and material supplier's
warranties to Tenant.
9. USES PROHIBITED: Tenant shall not commit, or suffer to be committed, any
waste upon the said Premises, or any nuisance, or other act or thing which may
disturb the quiet enjoyment of any other tenant in the project or allow any sale
by auction upon the Premises, or allow the Premises to be used for any unlawful
purposes, or place any loads upon the floor, walls, or ceiling which endanger
the structure, or place any harmful liquids, waste materials, or hazardous
materials in the domestic drainage system of or soils surrounding the Building.
No materials, supplies, equipment, finished products or semi-finished products,
raw materials or articles of any nature or any waste materials, refuse, scrap or
debris shall be stored upon or permitted to remain on any portion of the
Premises outside the Building proper or appropriately screened area. See
Paragraph 20.
10. ALTERATIONS AND ADDITIONS: Tenant shall not make, or suffer to be made, any
alteration or addition to the said Premises, or any part thereof, without the
written consent of Landlord first had and obtained based upon Tenant's
delivering to Landlord the proposed architectural and structural plans for all
such alterations; any addition or alteration to the said Premises, except
movable furniture and trade fixtures, shall become at once a part of the realty
and belong to Landlord. Alterations and additions which are not to be deemed as
trade fixtures shall include heating, lighting, electrical systems, air
conditioning, partitioning, carpeting, or any other installation which has
become an integral part of the Premises. After having obtained Landlord's
consent, Tenant agrees that it will not proceed to make such alterations or
additions, until three (3) days from the receipt of such consent, or ten (10)
working days after request for such consent, whichever is sooner, in order that
Landlord may post appropriate notices to avoid any liability to contractors or
material suppliers for payment for Tenant's improvements. Tenant will at all
times permit such notices to be posted and to remain posted until the completion
of work. Tenant acknowledges Landlord's right to and hereby consents to
construction of additional building(s) in the Project, excepting the premises
demised by this lease, and on adjacent land owned by Landlord subject, always,
to recalculation of Tenant's Allocable share of Costs as set forth below.
Provided further that Tenant may make non-structural modifications to
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the premises costing less than TWENTY FIVE THOUSAND AND 00/100 ($25,000.00)
DOLLARS per modification with a total of four (4) such modifications per year as
long as Tenant provides Landlord an "As Built" drawing within ten (10) days
following completion of the work.
11. LANDLORD'S AND TENANT'S OBLIGATIONS REGARDING COMMON AREA COSTS: Tenant
acknowledges that this lease is a net lease and the rental shall be paid to
Landlord net of all taxes (as and to the extent provided in Article 14),
utilities (as and to the extent provided in Article 15), insurance expenses (as
and to the extent provided in Article 13), maintenance, service, janitorial,
security and repair expenses (as and to the extent provided in Article 12) and
other operating expenses commonly borne by tenants of like commercial buildings.
Tenant shall pay all such expenses accruing after the lease commencement date
and during the term of this lease. Lease costs and costs of management,
financing and construction shall be Landlord's responsibility, except as
otherwise provided in this lease.
Landlord will use its best efforts to obtain separate tax assessments and
insurance ▇▇▇▇▇▇▇▇ and separate utility meters for Tenant's building leasehold
improvements therein.
Tenant will have the right to approve all vendors selected by Landlord that
provide common area maintenance.
It is contemplated that certain expenses such as gardening, outside lighting and
parking lot maintenance will be shared by Tenant and other Tenants in the
Project. Such expenses shall be prorated on a mutually acceptable basis
reflecting the services provided and in the absence of such agreement, on the
basis of the rentable square footage of the Premises compared to the rentable
square footage of the Project.
It is understood and agreed that Tenant's obligation to share in Common Area
Costs shall be adjusted to reflect the commencement and termination dates of the
Lease Term and are subject to recalculation in the event of expansion of the
Building or Project.
12. MAINTENANCE OF PREMISES: Except as provided in paragraph 11 or below, Tenant
shall, at its sole cost, keep and maintain, repair and replace, said Premises
and appurtenances and every part hereof, including but not limited to, exterior
walls, roof, glazing, sidewalks, parking areas, plumbing, electrical and HVAC
systems, and all the Tenant Interior Improvements in good and sanitary order,
condition, and repair. Tenant shall provide Landlord with a copy of a service
contract between Tenant and a licensed air-conditioning and heating contractor
which contract shall provide for bi-monthly maintenance of all air conditioning
and heating equipment at the Premises. Tenant shall pay the cost of all
air-conditioning and heating equipment repairs or replacements which are either
excluded from such service contract or any existing equipment warranties. Tenant
shall be responsible for the preventive maintenance of the membrane of the roof,
which responsibility shall be deemed properly discharged if (i) Tenant contracts
with a licensed roof contractor who is reasonably satisfactory to both Tenant
and Landlord, at Tenant's sole cost, to inspect the roof membrane at least
annually, with the first inspection due the sixth (6th) month after the
Commencement Date, and (ii) Tenant performs, at Tenant's sole cost, all
preventive maintenance recommendations made by such contractor within
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a reasonable time after such recommendations are made. Such preventive
maintenance might include acts such as clearing storm gutters and drains,
removing debris from the roof membrane, trimming trees overhanging the roof
membrane, applying coating materials to seal roof penetrations, repairing
blisters, and other routine measures. Tenant shall provide to Landlord a copy of
such preventive maintenance contract and paid invoices for the recommended work.
Landlord to be responsible for repairs or replacements of foundation, exterior
walls (except painting), the structural portions of the roof, any problems
caused by subsidence, and any defects in construction, workmanship or materials
unless caused by Tenant's fault. All vinyl wall surfaces and floor tile are to
be maintained in an as good a condition as when Tenant took possession free of
holes, gouges, or defacements, reasonable wear and tear excepted. Tenant agrees
to limit attachments to vinyl wall surfaces exclusively to V-joints. The Tenant
agrees to water, maintain and replace, when necessary, any shrubbery and
landscaping. Landlord to be responsible for landscape material replacement
required for the first twelve (12) months of this lease.
13. INSURANCE: Tenant shall not use, or permit said Premises, or any part
thereof, to be used, for any purposes other than that for which the said
Premises are hereby leased; and no use shall be made or permitted to be made of
the said Premises, nor acts done, which will cause a cancellation of any
insurance policy covering said Building, or any part thereof. Tenant shall, at
its sole cost and expense, comply with any and all requirements, pertaining to
said Premises, of any insurance organization or company, necessary for the
maintenance of reasonable fire and public liability insurance, covering said
Building and appurtenances. The Landlord agrees to purchase and keep in force
fire, earthquake (if commercially available and if required by Institutional
Lenders from time to time on the majority of similar industrial buildings in the
City of Santa ▇▇▇▇▇), and extended coverage insurance covering the Premises in
amounts not to exceed the actual insurable value of the Building, including the
Premises, as determined by Landlord's insurance company's appraisers.
Tenant's obligation to pay for Earthquake coverage shall be limited to a maximum
additional cost over a normal fire and extended coverage policy of $50,000.00
per year subject to adjustment for Consumer Price Index increases utilizing
February 1988 as the base period.
In addition, Tenant agrees to insure its additions, alterations, and for those
leasehold improvements paid for by Tenant which have become an integral part of
the building or real estate for their full replacement value (without
depreciation) and to obtain worker's compensation and public liability and
property damage insurance for occurrences within the Premises of $10,000,000.00
combined single limit for bodily injury and property damage. Tenant shall name
Landlord and Santa ▇▇▇▇▇ University, or any future owner of the fee interest,
and the Institutional Lender on the building as loss payees as their interests
may appear on the property insurance and as an additional insured on the
liability insurance, shall deliver a Certificate of Insurance and renewal
certificates to Landlord, fee owner, and Lender. All such policies shall provide
for thirty (30) days' prior written notice to Landlord of any cancellation or
termination.
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Landlord and Tenant hereby waive any rights each may have against the other on
account of any loss or damage occasioned to the Landlord or the Tenants as the
case may be, or to the Premises or its contents, and which arise from any risk
covered by their respective insurance policies, as set forth above. The parties
shall obtain from their respective insurance companies a waiver of any right of
subrogation which said insurance company may have against the Landlord or the
Tenant, as the case may be.
14. TAXES: Tenant shall be liable for all taxes levied against personal property
and trade or business fixtures, and agrees to pay, as additional rental, all
real estate taxes and special assessment installments levied on the Premises,
upon the occupancy of the Premises and including any substitute or additional
charges which may be imposed during the Lease term including real estate tax
increases due to a sale or other transfer of the Premises, as they appear on the
City and County tax bills during the Lease term, and as they become due. It is
understood and agreed that Tenant's obligation under this paragraph will be
prorated to reflect the commencement and termination dates of this Lease.
Tenant's obligation for taxes shall not apply to taxes accruing before the
Commencement Date of this lease. In any time during the term of this Lease a
tax, excise on rents, business license tax, or any other tax, however described,
is levied or assessed against Landlord, as a substitute or addition in whole or
in part for taxes assessed or imposed on land or Buildings, Tenant shall pay and
discharge his prorata share of such tax or excise on rents or other tax before
it becomes delinquent, except that this provision is not intended to cover net
income taxes, inheritance, gift or estate tax imposed upon the Landlord. In the
event that a tax is placed, levied, or assessed against Landlord and the taxing
authority takes the position that the Tenant cannot pay and discharge his
prorata share of such tax on behalf of the Landlord, then at the sole election
of the Landlord, the Landlord may increase the rental charged hereunder by the
exact amount of such tax.
15. UTILITIES: Except as provided in paragraph 11, Tenant shall pay directly to
the providing utility all water, gas, heat, light, power, telephone and other
utilities supplied to the Premises. Tenant to pay for all sewer discharge fees
charged by the City of Santa ▇▇▇▇▇ above the cost for an industrial shell as
defined by the City of Santa ▇▇▇▇▇ net of any credit due from the prior use of
the property equitably prorated between Tenant's parcel and adjacent parcel
leased by Landlord.
16. WAIVER OF LIABILITY: Failure by Landlord to perform any defined services, or
any cessation thereof, when such failure is caused by accident, breakage,
repairs, strikes, lockout or other labor disturbances or labor disputes of any
character, or by any other cause, similar or dissimilar, beyond the reasonable
control of Landlord, shall not render Landlord liable in any respect for damages
to either person or property, nor be construed as an eviction of Tenant, nor
cause an abatement of rent nor relieve Tenant from fulfillment of any covenant
or agreement hereof. Should any of the equipment or machinery utilized in
supplying the services listed herein break down, or for any cause cease to
function properly, upon receipt of written notice from Tenant of any deficiency
or failure of any defined Services, Landlord shall use reasonable diligence to
repair the same promptly, but Tenant shall have no right to terminate this
Lease, and shall have no claim for rebate of rent or damages, on account of any
interruptions in service occasioned thereby or resulting therefrom. Tenant
waives the provisions of California Civil
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Code Sections 1941 and 1942 concerning the Landlord's obligation of
tenantability and Tenant's right to make repairs and deduct the cost of such
repairs from the rent. Landlord shall not be liable for a loss of or injury to
property, however occurring, through or in connection with or incidental to
furnishing or its failure to furnish any of the foregoing.
17. ABANDONMENT: Tenant shall not vacate or abandon the Premises at any time
during the term; and if Tenant shall abandon, vacate or surrender said Premises,
or be dispossessed by process of law, or otherwise, any personal property
belonging to Tenant and left on the Premises shall be deemed to be abandoned, at
the option of Landlord, except such property as may be mortgaged to Landlord.
18. FREE FROM LIENS: Tenant shall keep the Premises and the Building in which
the Premises are situated, free form any liens arising out of any work
performed, materials furnished, or obligations incurred by Tenant.
Provide further that Tenant shall have the right to contest such lien provided
it posts a bond indemnifying Landlord in an equivalent amount at Tenant's sole
cost and expense.
19. COMPLIANCE WITH GOVERNMENTAL REGULATIONS: Tenant shall, at its sole cost and
expense, comply with all of the requirements of all Municipal, State and Federal
authorities now in force, or which may hereafter be in force, pertaining to the
said Premises, and shall faithfully observe in the use of the Premises all
Municipal ordinances and State and Federal statues now in force or which may
hereafter be in force provided further that Tenant reserves the right to contest
such requirement and as a condition of such contest Landlord may require a bond
be posted in a sufficient sum as Landlord reasonably determines is necessary to
protect and indemnify Landlord's interest. All costs for such bond will be at
Tenant's expense during the period of protest. The judgment of any court of
competent jurisdiction, or the admission of Tenant in any action or proceeding
against Tenant, whether Landlord be a party thereto or not, that Tenant has
violated any such ordinance or statute in the use of the Premises, shall be
conclusive of that fact as between Landlord and Tenant.
20. TOXIC WASTE AND ENVIRONMENTAL DAMAGE: Except as permitted by governmental
laws, regulations, and ordinances, Tenant shall not bring, allow, use or permit
upon the Premises, or generate or create at or emit or dispose from the Premises
any chemicals, toxic or hazardous gaseous, liquid or solid materials or waste,
including without limitation, material or substance having characteristics of
ignitability, corrosively, reactivity, or extraction procedure toxicity or
substances or materials which are listed on any of the Environmental Protection
Agency's lists of hazardous wastes or which are identified in Sections 66680
through 66685 of Title 22 of the California Administrative code as the same may
be amended from time to time. Tenant shall comply, at its sole cost, with all
laws pertaining to, and shall indemnify and hold Landlord harmless from any
claims, liabilities, costs or expenses incurred or suffered by Landlord arising
from such bringing, allowing, using, permitting, generating, crating, or
emitting or disposing of any such materials. Tenant's indemnification and hold
harmless obligations include, without limitation, (i) claims, liability, costs
or expenses resulting from or based upon administrative, judicial (civil or
criminal) or other action, legal or equitable, brought by any
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private or public person under common law or under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"), the
Resource Conservation and Recovery Act of 1980 ("RCRA") or any other Federal,
State, County or Municipal law, ordinance or regulation, (ii) claims,
liabilities, costs or expenses pertaining to the cleanup or containment of
wastes, the identification of scope of any environmental contamination, the
removal of pollutants from soils, riverbeds or aquifers, the provision of an
alternative public drinking water source, or the long term monitoring of ground
water and surface waters, and (iii) all costs of defending such claims. Tenant
will provide Landlord with copies of all applications and supporting
documentation supplied to any governmental agency for the permission to use
toxic material upon the premises. Notwithstanding the above, Tenants shall not
be liable nor responsible for any toxic condition that it can prove existed
prior to its initial occupancy of the Premises.
21. INDEMNITY: As a material part of the consideration to be rendered to
Landlord, Tenant hereby waives all claims against Landlord for damages to goods,
wares and merchandise, and all other personal property in, upon or about said
Premises and for injuries to persons in or about said Premises, from any cause
arising at any time, and Tenant will hold Landlord exempt and harmless from any
damage or injury to any person, or to the goods, wares and merchandise and all
other personal property of any person, arising from the use of the Premises by
Tenant, or from the failure of Tenant to keep the Premises in good condition and
repair, as herein provided, except for Landlord's proven negligence. Further, in
the event Landlord is made party to any litigation due to the acts or omission
of Tenant, Tenant will indemnify and hold Landlord harmless from any such claim
or liability including Landlord's costs and expenses and reasonable attorney's
fees incurred in defending such claims. This paragraph shall not apply to an
injury or damage to person or property arising out of any construction defect.
22. ADVERTISEMENTS AND SIGNS: Tenant will not place or permit to be placed, in,
upon or about the said Premises any unusual or extraordinary signs, or any signs
not approved by the city or other governing authority. The Tenant will not
place, or permit to be placed, upon the Premises, any signs, advertisements or
notices without the written consent of the Landlord as to type, size, design,
lettering, coloring and location, and such consent will not be unreasonably
withheld. Any sign so placed on the Premises shall be so placed upon the
understanding and agreement that Tenant will remove same at the termination of
the tenancy herein created and repair any damage or injury to the Premises
caused thereby, and if not so removed by Tenant then Landlord may have same so
removed at Tenant's expense.
23. ATTORNEY'S FEES: In case suit should be brought for the possession of the
Premises, for the recovery of any sum due hereunder, or because of the breach of
any other covenant herein, the losing party shall pay to the prevailing party a
reasonable attorney's fee as part of its costs which shall be deemed to have
accrued on the commencement of such action.
24. TENANT'S DEFAULT: The occurrence of any of the following shall constitute a
default and breach of this Lease by Tenant: a) Any failure by Tenant to pay the
rental or to make any other payment required to be made by Tenant hereunder,
where such failure continues for ten (10) days after written notice thereof by
Landlord to Tenant; b) The abandonment or vacation
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of the Premises by Tenant; c) A failure by Tenant to observe and perform any
other provision of this Lease to be observed or performed by Tenant, where such
failure continues for thirty (30) days after written notice thereof by Landlord
to Tenant; provided, however, that if the nature of such default is such that
the same cannot reasonably be cured within such thirty (30) day period Tenant
shall not be deemed to be in default if Tenant shall within such period commence
such cure and thereafter diligently prosecute the same to completion; d) The
making by Tenant of any general assignment for the benefit of creditors; the
filing by or against Tenant of a petition to have Tenant adjudged a bankrupt or
of a petition for reorganization or arrangement under any law relating to
bankruptcy (unless, in the case of a petition filed against Tenant, the same is
dismissed after the filing); 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 thirty (30) days; or the attachment, execution or other judicial seizure
of substantially all of Tenant's assets located at the Premises or of Tenant's
interest in this Lease, where such seizure is not discharged within thirty (30)
days. The notice requirements set forth herein are in lieu of and not in
addition to the notices required by California Code of Civil Procedure Section
1161.
24.(a) REMEDIES: In the event of any such default by Tenant, then in
addition to any other remedies available to Landlord at law or in
equity, Landlord shall have the immediate option to terminate this
Lease and all rights of Tenant hereunder by giving written notice of
such intention to terminate. In the event that Landlord shall elect to
so terminate this Lease then Landlord may recover from Tenant: a) the
worth at the time of award of any unpaid rent which had been earned at
the time of such termination; plus b) the worth at the time of award of
the amount by which the unpaid rent would have been earned after
termination until the time of award exceeds the amount of such rental
loss Tenant proves could have been reasonably avoided; plus c) 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; plus
d) any other amount necessary to compensate Landlord for all the
detriment proximately caused by Tenant's failure to perform his
obligations under this Lease or which in the ordinary course of things
would be likely to result therefrom, and e) at Landlord's election,
such other amounts in addition to or in lieu of the foregoing as may be
permitted from time to time by applicable California law. The term
"rent", as used herein, shall be deemed to be and to mean the minimum
monthly installments of rent and all other sums required to be paid by
Tenant pursuant to the terms of this Lease, all other such sums being
deemed to be an additional rental due hereunder. As used in (a) and (b)
above, the "worth at the time of award" is computed by allowing
interest at the rate of the discount rate of the Federal Reserve Bank
of San Francisco plus five (5%) percent per annum. As used in (c)
above, the "worth at the time of award" is computed by discounting such
amount at the discount rate of the Federal Reserve Bank of San
Francisco at the time of award plus one (1%) percent.
24.(b) RIGHT TO RE-ENTER: In the event of any uncured monetary default
as defined above or a default involving a breach of Article 20 herein
by Tenant, Landlord shall also have the right, with or without
terminating this Lease, to re-enter the Premises and
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remove all persons and property from the Premises; such property can be
removed and stored in a public warehouse or elsewhere at the cost of
and for the account of Tenant.
24.(c) ABANDONMENT: In the event of the vacation or abandonment of the
Premises by Tenant or in the event that Landlord shall elect to
re-enter as provided in paragraph 24.(b) above or shall take possession
of the Premises pursuant to legal proceeding or pursuant to any notice
provided by law, then if Landlord does not elect to terminate this
Lease as provided in paragraph 24.(a) above, then the provisions of
California Civil Code Section 1951.4, as amended from time to time,
shall apply and Landlord may from time to time, without terminating
this Lease, either recover all rental as it becomes due or relet the
Premises or any part thereof for such term or terms and at such rental
or rentals and upon such other terms and conditions as Landlord in its
sole discretion may deem advisable with the right to make alterations
and repairs to the Premises. In the event that Landlord shall elect to
so relet, then rentals received by Landlord from such reletting shall
be applied: first, to the payment of any indebtedness other than rent
due hereunder from Tenant to Landlord; second, to the payment of any
prorated cost of such reletting; third, to the payment of the cost of
any prorated alterations and repairs to the Premises; fourth, to the
payment of rent due and unpaid hereunder, and the residue, if any,
shall be held by Landlord and applied in payment of future rent as the
same may become due and payable hereunder. Should that portion of such
rentals received from such reletting during any month, which is applied
by the payment of rent hereunder, be less that the rent payable during
that month by Tenant hereunder, then Tenant shall pay such deficiency
to Landlord immediately upon demand therefore by Landlord. Such
deficiency shall be calculated and paid monthly. Tenant shall also pay
to Landlord, as soon as ascertained, any costs and expenses incurred by
Landlord in such reletting or in making such alterations and repairs
not covered by the rentals received from such reletting.
24.(d) NO TERMINATION: No re-entry or taking possession of the Premises
by Landlord pursuant to 24. (b) or 24. (c) of this Article 24 shall be
construed as an election to terminate this Lease unless a written
notice of such intention be given to Tenant or unless the termination
thereof be decreed by a court of competent jurisdiction.
Notwithstanding any reletting without termination by Landlord because
of any default by Tenant, Landlord may at any time after such reletting
elect to terminate this Lease for any such default.
25. SURRENDER OF LEASE: The voluntary or other surrender of this Lease by
Tenant, or a mutual cancellation thereof, shall not automatically effect a
merger of the Lease with Landlord's ownership of the Building and Premises.
Instead, at the option of Landlord, Tenant's surrender may terminate all or any
existing sublease or subtenancies, or may operate as an assignment to Landlord
of any or all such subleases or subtenancies, thereby creating a direct
Landlord-Tenant relationship between Landlord and any subtenants.
26. HABITUAL DEFAULT: Notwithstanding anything to the contrary contained in
paragraph 24, 24 (a) (b) (c) and (d), the parties hereto agree that if the
Tenant shall have defaulted in the performance of any monetary default or a
default involving a breach of Article 20 herein of this Lease for three or more
times during any twelve month period during the term
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hereof, then such conduct shall, at the election of the Landlord, represent a
separate event of default which cannot be cured by the Tenant. Tenant
acknowledges that the purpose of this provision is to prevent repetitive
defaults by the Tenant under the Lease, which work a hardship upon the Landlord,
and deprive the Landlord of the timely performance by the Tenant hereunder.
27. LANDLORD'S DEFAULT: In the event of Landlord's failure to perform any of its
covenants or agreements under this Lease, Tenant shall give Landlord written
notice of such failure and shall give Landlord the reasonable opportunity to
cure such failure prior to any claim for breach or for damages resulting from
such failure.
28. NOTICES: All notices given to Tenant may be given in writing personally or
by depositing the same in the United States mail, postage prepaid, and addressed
to Tenant at the said Premises, or such other address advised by Tenant in
writing, whether or not the Tenant has departed from, abandoned or vacated the
Premises. All notices shall be deemed received three (3) days after posting.
29. ENTER BY LANDLORD: Tenant shall permit Landlord and his agents to enter into
and upon said Premises at all reasonable times subject to any security
regulations of Tenant for the purpose of inspecting the same or for the purpose
of maintaining the Premises or the Building in which said Premises are situated
or for the purposes of making repairs, alterations to the Premises, or building
on adjacent land leased by Landlord, including the erection and maintenance of
such scaffolding, canopies, fences and props as may be required without any
rebate of rent or without any liability to Tenant for any loss of occupation or
quiet enjoyment of the Premises thereby occasioned. In the event of a
substantial disruption to Tenant during such entry, Tenant will be entitled to
reasonable reduction in rent determined by the percentage of the floor area of
the building that cannot be utilized by the Tenant; and Tenant shall permit
Landlord and his agents, at any time within ninety (90) days prior to the
expiration of this Lease, to place upon said Premises any "For Sale" or "to
lease" signs and exhibit the Premises to prospective tenants at reasonable
hours.
30. DESTRUCTION OF PREMISES: If the Premises are damaged or destroyed from any
cause during the term of this lease (including option periods) Landlord will
within thirty (30) days of the destruction, notify Tenant in writing: 1) whether
or not the repairs can be made within one hundred fifty (150) days; 2) whether
the destruction is a partial destruction as defined below; 3) if the destruction
is an uninsured loss as defined below which Landlord declines to repair. Within
thirty (30) days of such notice, either party may be written notice to the other
terminate this lease if the repairs cannot be made within one hundred fifty
(150) days, or if the loss is an uninsured loss unless the Landlord elects to
repair the same or if destruction exceeds more than one-half (1/2) of the
replacement cost of the premises. If Landlord fails to timely give the notice,
Tenant shall have ninety (90) days after destruction to give notice of
termination.
In the event of a partial destruction of the Premises from any cause then,
unless the Lease is terminated as provided above, Landlord shall forthwith
repair the same, provided such repairs can be made within one hundred fifty
(150) days under the laws and regulations of State, Federal, County or Municipal
authorities, but such partial destruction shall in no way annul or void this
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Lease, except that Tenant shall be entitled to a proportionate reduction of rent
while such repairs are being made, such proportionate reduction to be based upon
the extent to which the making of such repairs shall interfere with the business
carried on by Tenant in the said Premises in the reasonable judgment of
Landlord. In the event that Landlord does not elect to make such repairs, or
such repairs cannot be made under such laws and regulations, this Lease may be
terminated at the option of Tenant. For purposes of this paragraph "partial
destruction" shall mean destruction to the extent of one-half (1/2) of the
Replacement Cost of the Premises or less. In the event the Premises are more
than partially destroyed, Landlord, or Tenant, may elect to terminate this
Lease. If not so terminated, Landlord shall proceed with repairs, this Lease
continuing in full force and the rent to be proportionately reduced as
aforesaid. In respect to any partial destruction which Landlord is obligated to
repair or may elect to repair under the terms of this paragraph, the provision
of Section 1932, Subdivision 2, and of Section 1933, Subdivision 4, of the Civil
Code of the State of California are waived by Tenant. In all events a total or
partial destruction of the Premises by an uninsured casualty with damage costing
in excess of $500,000.00 to repair, such event shall terminate this Lease at the
option of Landlord. In the event of any dispute between Landlord and Tenant
relative to the provision s of this paragraph, they shall each select an
arbitrator, the two arbitrators so selected shall select a third arbitrator and
the three arbitrators so selected shall hear and determine the controversy and
their decision thereon shall be final and binding upon both the Landlord and
Tenant, who shall bear the cost of such arbitration equally between them. In all
events Landlord shall not be required to restore additions, alterations or
improvements made by Tenant after commencement of this lease or replace Tenant's
fixtures or personal property.
If the Landlord does not rebuild the Premises, then Tenants shall be entitled to
the prorated portion of insurance proceeds under the policy it carries under
Paragraph 13. The prorated portion shall be determined on a straight line basis
over the original term of the Lease.
31. ASSIGNMENT OR SUBLEASE: In the event Tenant should desire to assign this
Lease or any interest therein including, without limitation, a pledge, mortgage
or other hypothecation, except as provided in Paragraph 7, or sublet the
Premises or any part thereof, Tenant shall give Landlord written notice of such
desire at least thirty (30) days in advance of the date on which Tenant desires
to make such assignment or sublet. After Tenant has located a sub-tenant
satisfactory to Tenant, it shall provide further notice to Landlord. This
further notice shall give the name and current address of the proposed
assignee/subtenant, proposed use of the Premises, rental rate and current
financial statement, and upon request to Tenant, Landlord shall be given
additional information as reasonably required to determine whether it will
consent to the proposed assignment or sublease. Landlord shall then have a
period of five (5) working days following receipt of such notice within which to
notify Tenant in writing that Landlord elects (i) to terminate this Lease as to
the space so affected as of the date so specified by Tenant in which event
Tenant will be relieved of all further obligations hereunder as to such space,
(ii) to permit Tenant to assign or sublet such space to the named
assignee/subtenant on the terms and conditions set forth in the notice, or (iii)
refuse consent. If Landlord should fail to notify Tenant in writing of such
election within said five (5) working day period, Landlord shall be deemed to
have elected option (ii) above. Except as provided below, any rent or other
consideration realized by Tenant under any such sublease and assignment in
excess of the monthly rental
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installments payable hereunder, and all expenses payable under Paragraph 11 less
reasonable subletting and assignment costs, AND COSTS PAYABLE BY TENANT TO
MODIFY THE PREMISES TO SUIT THE SUB-TENANT, SHALL BE DIVIDED AND PAID FIFTY
PERCENT (50%) to Landlord and fifty percent (50%) to Tenant. Tenant's obligation
to pay over Landlord's portion of the consideration shall constitute an
obligation for additional rent hereunder. TENANT SHALL FIRST RECEIVE ITS
SUBLETTING AND MODIFICATION COSTS WITHOUT INTEREST BEFORE DIVIDING ANY EXCESS
PROFITS WITH LANDLORD. No assignment or subletting by Tenant shall relieve
Tenant of any obligation under this Lease. Any assignment or subletting which
conflicts with the provisions hereof shall be void.
If Landlord exercises its option to terminate this Lease in part in the event
Tenant desires to sublet or assign part of the Premises, then (a) this Lease
shall end and expire, with respect to such part of the Premises, on the date
upon which the proposed sublease was to commence, and (b) from and after such
date, the rent and Tenant's allocable share of all other costs and charges shall
be adjusted, based upon the proportion that the rentable area of the Premises
remaining bears to the total rentable return of the Premises.
If Landlord does not exercise its option to terminate this Lease, Landlord's
consent to the proposed assignment or sublease shall not unreasonably withheld
provided and upon condition that:
(a) In Landlord's reasonable judgment the proposed assignee or
subtenant is engaged in such a business, and the Premises, or the
relevant part thereof, will be used in such a manner, that: (ii) is
limited to the use expressly permitted under this Lease;
(b) The proposed assignee or subtenant is a company with
sufficient financial worth and management ability to undertake the
responsibility involved, and Landlord has been furnished with
reasonable proof thereof;
(c) THIS PARAGRAPH INTENTIONALLY LEFT BLANK
(d) The proposed sublease shall be in form reasonably satisfactory
to Landlord;
(e) There shall not be more than two (2) subtenants of the
Premises at any one time;
(f) THIS PARAGRAPH INTENTIONALLY LEFT BLANK
(g) Tenant shall reimburse Landlord on demand for any reasonable
costs that may be incurred by Landlord in connection with said
assignment or sublease, including the costs of making investigations as
to the acceptability of the proposed assignee or subtenant and
reasonable legal costs incurred in connection with the granting of any
requested consent; and
Any sublease or assignment executed with the consent of Landlord shall be
subject to all of the covenants, agreements, terms, provisions and conditions
contained in this Lease. Notwithstanding any such sublease or assignment and the
acceptancy of rent or additional rent by
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Landlord from any subtenant or assignee, Tenant shall and will remain fully
liable for the payment of the rent and additional rent due, and to become due
hereunder, for the performance of all of the covenants, agreements, terms,
provisions and conditions contained in this Lease on the part of Tenant to be
performed and for all acts and omissions of any licensee, subtenant, assignee or
any other person claiming under or through any subtenant that shall be in
violation of any of the obligations of this Lease, and any such violation shall
be deemed to be a violation by Tenant. Tenant shall further indemnify, defend
and hold Landlord harmless from and against any and all losses, liabilities,
damages, costs and expenses (including reasonable attorney fees) resulting from
any claims that may be made against Landlord by the proposed assignee or
subtenant or by any real estate brokers or other persons claiming a commission
or similar compensation in connection with the proposed assignment or sublease.
In the event of Tenant's default, Tenant hereby assigns all rents due from any
assignment or subletting to Landlord as security for performance of its
obligations under this Lease and Landlord may collect such rents as Tenant's
Attorney-in-Fact, except that Tenant may collect such rents unless a default
occurs, as described in paragraph 24 above.
Any assignment or transfer shall be made only if and shall not be effective
until the assignee shall execute, acknowledge and deliver to Landlord an
agreement, in form and substance satisfactory to Landlord, whereby the assignee
shall assume all of the obligations of this Lease on the part of Tenant to be
performed or observed.
If Tenant is a corporation or partnership, all the above provisions shall apply
to a transfer (by one or more transfers) of a majority of the stock of the
corporation or the majority of ownership or control of the partnership, as if
such transfer were an assignment of this Lease; but said provisions shall not
apply to transactions with a corporation or partnership that controls, is
controlled by, or is under common control with Tenant, provided that, in any of
such events: (i) the successor to Tenant has a net worth, computed in accordance
with generally accepted accounting principles, at least equal to the net worth
of Tenant immediately prior to such transfer; and (ii) proof satisfactory to
Landlord of such net worth shall have been delivered to Landlord at least ten
(10) days prior to the effective date of any such transaction.
Notwithstanding the above, the sale or transfer of a majority of the Tenant's
shares shall not constitute an assignment so long as immediately after such sale
or transfer the corporation meets the new worth criteria set forth above.
Notwithstanding the above, Tenant may assign this lease without Landlord's
consent to any corporation resulting from the merger or consolidation with
Tenant or to any person or entity which acquires all or substantially all the
assets of Tenant as a going concern of the business that is being conducted on
the premises provided that the assignee meets the net worth criteria set forth
above and provided such assignee agrees in writing to abide by all of the terms
of this lease. Only the amount allocated to the lease in the agreement between
Tenant and the purchaser of the business shall be considered rent for purposes
of the 50150 sharing provided in the first paragraph of this Section 31.
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The termination of this Lease due to Tenant's default shall not automatically
terminate any assignment or sublease then in existence. At the sole election of
Landlord, the assignee or subtenant shall attorn to Landlord and Landlord shall
undertake the obligations of the Tenant under the sublease or assignment;
provided the Landlord shall not be liable for prepaid rent, security deposits or
other defaults of the Tenant to the subtenant or assignee.
32. CONDEMNATION: If any part of the Premises shall be taken for any public or
quasi-public use, under any statute or by right of eminent domain or private
purchase in lieu thereof, and a part thereof remains which is susceptible of
occupation hereunder, this Lease shall as to the part so taken, terminate as of
the date title shall vest in the condemnor or purchaser and the rent payable
hereunder shall be adjusted so that the Tenant shall be required to pay for the
remainder of the term only such portion of such rent as the value of the part
remaining after such taking bears to the value of the entire Premises prior to
such taking; but in such event Landlord shall have the option to terminate this
Lease as of the date when title to the part so taken vests in the condemnor or
purchaser. Tenant to be notified in writing by Landlord of any pending or
threatened condemnation proceedings within a reasonable period of time after
Landlord's knowledge of same and whether Landlord intends to terminate the lease
so as to give Tenant a reasonable opportunity to locate new facilities. If all
of the Premises, or such part thereof be taken so that there does not remain a
portion susceptible for occupation hereunder, this Lease shall there upon
terminate. If a part of all of the Premises be taken, then Landlord and Tenant
shall share in the balance of the compensation remaining after the application
of the condemnation provisions of the Ground Lease and of the Lease Mortgage and
that is payable to Landlord. The compensation shall be divided between Landlord
and Tenant in proportion to the relative amounts spent by Landlord and Tenant
for Tenant improvements as provided in this lease. Tenant's share of the
compensation shall not exceed the depreciated value of the improvements as
provided in this lease installed and paid for by Tenant less any amounts
received or to be received by Tenant outside of the award as compensation for
Tenant's interest in those improvements. If Tenant elects to remove some or all
of the improvements pursuant to California Code of Civil Procedure Section
1263.260, then the value of such improvements removed shall be excluded from the
calculation. Landlord shall have the exclusive right to negotiate or litigate
the award with the authority exercising the power of eminent domain. Landlord
shall cooperate with Tenant in Tenant's efforts to recover compensation for
relocation costs, loss of personal property not treated as improvements
pertaining to realty and loss of goodwill. Tenant waives the provisions of
California Code of Civil Procedure Section 1265.130.
33. EFFECTS OF CONVEYANCE: The term "Landlord" as used in this Lease, means only
the Ground Lessee for the time being of the land and Building, containing the
Premises, so that, in the event of any sale of the Ground Lease, the Landlord
shall be and hereby is entirely freed and relieved of all covenants and
obligations of the Landlord hereunder, and it shall be deemed and construed,
without further agreement between the parties and the purchaser at any such
sale, if the purchaser of the Ground Lease has agreed in writing to carry out
any and all covenants and obligations of the Landlord hereunder. Landlord shall
transfer and deliver Tenant's security deposit, to the purchaser at any such
sale or the master tenant of the Building, and thereupon the Landlord shall be
discharged from any further liability in reference thereto.
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34. SUBORDINATION: In the event Landlord notifies Tenant in writing, this Lease
shall be subordinate to any ground Lease, deed of trust, or other hypothecation
for security now or hereafter placed upon the real property of which the
Premises are a part and to any and all advances made on the security thereof and
to renewals, modifications, replacements and extensions thereof. Tenant agrees
to promptly execute any documents which may be required to effectuate such
subordination. Notwithstanding such subordination, Tenant's right to quiet
possession of the premises shall not be disturbed if Tenant is not in default
and so long as Tenant shall pay the rent and observe and perform all of the
provisions of this Lease. At the request of any lender, Tenant agrees to execute
and deliver any reasonable modifications of this Lease which do not adversely
affect the leasehold or Tenant's rights hereunder.
35. WAIVER: The waiver by Landlord of any breach of any term, covenant or
condition, herein contained shall not be deemed to be a waiver of such term,
covenant or condition or any subsequent breach of the same or any other term,
covenant or condition herein contained. The subsequent acceptance of rent
hereunder by Landlord shall not be deemed to be a waiver of any preceding breach
by Tenant of any term, covenant or condition of this Lease, other than the
failure of Tenant to pay the particular rental so accepted, regardless of
Landlord's knowledge of such preceding breach at the time of acceptance of such
rent.
36. HOLDING OVER: Any holding over after the termination or expiration of the
said term, shall be construed to be a hold over tenancy and Tenant shall pay
rent to Landlord at a rate equal to ONE AND ONE-HALF (1 1/2) times the monthly
rental installment due in the month preceding the termination or expiration of
the Lease and shall otherwise be on the terms and conditions herein specified,
except those provisions relating to the term and any options to extend or renew,
which terms are expressly waived during any hold over. Furthermore, no holding
over shall be deemed or construed to exercise any option to extend or renew this
Lease in lieu of full and timely exercise of any such option as required
hereunder.
37. SUCCESSORS AND ASSIGNS: The covenants and conditions herein contained shall,
subject to the provisions as to assignment, apply to and bind the heirs,
successors, executors, administrators and assigns of all the parties hereto; and
all of the parties hereto shall be jointly and severally liable hereunder.
38. ESTOPPEL CERTIFICATES: Tenant shall at any time during the term of this
Lease, upon not less than five (5) business days prior written notice from
Landlord, execute and deliver to Landlord a statement in writing certifying that
this Lease is unmodified and in full force and effect (or, if modified, stating
the nature of such modification) and the date to which the rent and other
charges are paid in advance, if any, and acknowledging that there are not, to
Tenant's knowledge, any uncured defaults on the part of Landlord hereunder or
specifying such defaults if they are claimed. Any such statement may be
conclusively relied upon by any prospective purchaser or encumbrances of the
Premises. Tenant's failure to deliver such statement within such time shall be
conclusive upon the Tenant that: (a) this Lease is in full force and effect,
without modification except as may be represented by Landlord; (b) there are not
uncured defaults in Landlord's performance.
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39. OPTION TO EXTEND: Tenant shall have the option and right to extend the term
of this Lease for two (2) separate additional and successive option periods of
five (5) years each, (each such period being referred to as the "Renewal Term")
commencing with rent at "Fair Market Value," as defined in paragraph 40 below,
and subject to adjustment in accordance with paragraph 41 only under the
following conditions precedent: (i) Tenant alone is in occupation of and is
conducting the business in at least sixty six and two-thirds percent (66 2/3%)
of the Premises and Tenant, for itself and its successors and assigns, hereby
expressly acknowledges and agrees that this Option to Extend is personal to
Tenant; and (ii) and Tenant has delivered written notice by certified mail to
Landlord not less than one hundred and twenty (120) days prior and not more than
one hundred and eighty (180) days prior to the expiration of the then existing
term of the Lease of Tenant's intention to extend the term of the Lease.
40. FAIR MARKET VALUE: For purposes of this Lease the term "Fair Market Value"
shall mean the going market rental as of the date of commencement of each
Renewal Term, for equivalent space of similar age and construction, with
improvements and equipment in similar condition and for a lessee proposing to
sign five (5) year lease and having financial qualifications similar to Tenant,
it being understood that in determining "Fair Market Value" the parties shall
negotiate in good faith in order to reach agreement; and in the event the
parties are unable to reach agreement, the matter shall be referred to
arbitration by three (3) M.A.I. appraisers, experienced in the evaluation of
similar rental properties in the County of Santa ▇▇▇▇▇, State of California.
Landlord and Tenant shall each appoint one such arbitrator within thirty (30)
days of a written request for arbitration from the other, and the two
arbitrators so selected shall select a third arbitrator within fifteen (15) days
after the selection of the second arbitrator. Should either party fail to
appoint an arbitrator as provided above, the decision of the remaining
arbitrators shall be final. The arbitrators shall be instructed to disregard any
Fair Market Value directly attributable to leasehold improvements paid for
by Tenant that can be documented and supported by generally accepted accounting
methods. All specialized leasehold improvements paid for by Landlord shall be
included in Fair Market value. The determination of the three arbitrators shall
be made by the vote of two (2) or more of the three arbitrators within thirty
(30) days from the date of the appointment of the third arbitrator and shall be
final for all purposes. The cost of arbitration shall be shared equally. In no
event shall such "Fair Market value" be less than the rental paid during the
year immediately preceding the commencement of the current extension.
If, after the determination of fair rental value by appraisal, Tenant rejects
such value in a writing delivered to Landlord within five (5) days after the
date of such determination. Tenant's notice of exercise of the option shall be
deemed null and void, and the lease shall terminate effective as of the date six
(6) months after Landlord's receipt of Tenant's rejection notice. During this
six (6) month period, Tenant shall continue to pay rental at the fair rental
value determined by the arbitrators. In addition, Tenant shall bear and pay,
upon Landlord's request, all fees, costs and "out-of-pocket" expenses incurred
by Landlord in connection with the determination of fair rental value by
appraisal.
41. RENTAL ADJUSTMENTS DURING ORIGINAL TERM: The rent during the Original Term
shall be subject to adjustments beginning the FORTY-NINTH (49TH) MONTH AND
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EVERY FORTY EIGHTH MONTH THEREAFTER THROUGHOUT THE BALANCE OF THE ORIGINAL TERM
BASED on the Consumer Price Index Adjustment ("Adjustment Date"). The basis for
computing the Adjustment shall be the U.S. Department of Labor, Bureau of Labor
Statistics' Consumer Price Index for All urban Consumers, All items,
1982-84=100, for the San Francisco-Oakland area, ("Index"). The Index most
recently published preceding the Lease commencement date and the commencement of
each Renewal Term shall be considered the "Beginning Index." If the Index most
recently published preceding the Adjustment Date ("Comparison Index") is greater
than the Beginning Index, the monthly rent shall be increased by multiplying the
monthly rent by a fraction, the numerator of which is the Comparison Index and
the denominator of which is the Beginning Index. Notwithstanding any subsequent
decrease in the Index, the new monthly rent shall never be less than the rent
for the month immediately preceding the Adjustment Date. On adjustment of the
monthly rent Landlord shall notify Tenant by letter stating the new monthly
rent. If the Index base year is changed so that it differs from 1982-84=100, the
Index shall be converted in accordance with the conversion factor published by
the United States Department of Labor, Bureau of Labor Statistics. If the Index
is discontinued or revised during the Renewal Term, such other government index
or computation with which it is replaced shall be used in order to obtain
substantially the same result as would be obtained if the index had not been
discontinued or revised. Provided further that for each forty-eight (48) month
adjustment period, in no event shall the rent determined in this manner be less
than on a compound annual increase of three percent (3%) per year nor more than
on a compounded annual increase of six percent (6%) per year.
Furthermore, should Tenant believe that this increase does not reflect actual
market conditions, the Tenant reserves the rights to hire three (3) M.A.I.
appraisers at its expense as described in Article 40 to determine the market
rent for similar industrial buildings in the City of Santa ▇▇▇▇▇. If the
determination of market rental value by the appraisers results in a lower
increase then that increase arrived at based on the Consumer Price Index
adjustment, including the floor and ceiling figures set forth above, the opinion
of the three appraisers shall be utilized to arrive at the adjusted rent for the
period. In no event shall the rental for the adjustment period be less than the
rental paid during the year immediately preceding the commencement of the
adjustments period.
42. OPTIONS: Except as provided in Paragraph 39, all Options provided Tenant in
this Lease are personal and granted to original Tenant and are not exercisable
by any third party should Tenant assign or sublet all or a portion of its rights
under this Lease, unless Landlord consents to permit exercise of any option by
any assignee or subtenant, in Landlord's sole discretion. In the event that
Tenant hereunder has any multiple options to extend this Lease, a later option
to extend the Lease cannot be exercised unless the prior option has been so
exercised.
Notwithstanding the above, if the assignment is a result of the transfer of
Tenant's stock as permitted by Paragraph 31, the options to extend will survive
the assignment.
43. QUIET ENJOYMENT: Upon Tenant's faithful and timely performance of all the
terms and covenants of the Lease, Tenant shall quietly have and hold the
Premises for the term and any extensions thereof.
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44. BROKERS. Tenant represents it has not utilized or contracted a real estate
broker or finder with respect to this Lease, EXCEPT FOR ▇▇▇ ▇▇▇▇ REAL ESTATE,
INC. AND ▇▇▇▇▇▇ HAWK, and Tenant agrees to indemnify and hold Landlord harmless
against any claim, cost, liability or cause of action asserted by any broker or
finder claiming through Tenant except for $300,000.00 in commission which
Landlord shall pay and which shall be divided equally between such Brokers. One
half of such commission will be payable upon commencement of construction and
one half upon Tenant's occupancy.
45. LANDLORD'S LIABILITY. If Tenant should recover a money judgment against
Landlord arising in connection with this Lease, the judgment shall be satisfied
only out of Landlord's interest in the Premises including the improvements and
real property and neither Landlord or any of its partners shall be liable
personally for any deficiency.
46. AUTHORITY OF PARTIES: If Tenant is a corporation, each individual executing
this Lease on behalf of said corporation represents and warrants that he is duly
authorized to execute and deliver this Lease on behalf of said corporation, in
accordance with a duly adopted resolution of the Board of Directors of said
corporation or in accordance with the by-laws of said corporation, and that this
Lease is binding upon said corporation in accordance with its terms.
47. GROUND LEASE. Landlord is the Tenant under a Ground Lease affecting the
Premises. This Lease is subordinate to the Ground Lease and is subject to all of
the terms and conditions of the Ground Lease. A true and correct copy of the
Ground Lease has been attached as Exhibit "B," and the terms of the Ground Lease
are incorporated into this Lease. Tenant shall not commit or permit to be
committed on the Premises any act or omission which shall violate any term or
condition of the Ground Lease. Tenant shall perform all actions required to be
performed by it under the terms of the Ground Lease. Tenant shall indemnify and
hold Landlord harmless from any claim, loss or damage (including any
expenditures for attorneys fees reasonably incurred by Landlord) sustained by
Landlord as the result of any act or omission by Tenant, its agents, employees,
invitees or contractors in violation of the provisions of the Ground Lease. The
provisions of this paragraph shall survive the expiration or termination of this
Lease.
48. MISCELLANEOUS PROVISIONS: All rights and remedies hereunder are cumulative
and not alternative to the extent permitted by law and are in addition to all
other rights and remedies in law and in equity.
If any term or provision of this Lease is held unenforceable or invalid by a
court of competent jurisdiction, the remainder of the Lease shall not be
invalidated hereby but shall be enforceable in accordance with its terms,
omitting the invalid or unenforceable term.
This Lease shall be governed by and construed in accordance with California law.
Tenant shall not permit or condone any nuisance or disturbance of any kind on
the Premises which annoys or disturbs other occupants of the Project.
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All sums due hereunder, including rent and additional rent, if not paid when
due, shall bear interest at the maximum rate permitted under California law
accruing from the date due until the date paid to Landlord.
Time is of the essence hereunder.
The headings or titles to the paragraphs of this Lease are not a part of this
Lease and shall have no effect upon the construction or interpretation of any
part thereof nor shall any phrases in capital letters have any increased
emphasis. This instrument contains all of the agreements and conditions made
between the parties hereto and may not be modified orally or in any other manner
than by an agreement in writing signed by all of the parties hereto or their
respective successors in interest.
If Tenant fails to perform any obligation required under this Lease or by law or
governmental regulation, Landlord in its sole discretion may without notice
perform such obligation, in which event Tenant shall pay landlord as additional
rent all sums paid by Landlord in connection with such substitute performance
within ten (10) days following Landlord's written notice for such payment. Any
delinquent sum shall bear interest at the maximum lawful contract rate permitted
to be charged under California law.
If Landlord becomes a party to any litigation concerning this Lease, the
Premises, the Building or the Project by reason of any act or omission of Tenant
or Tenant's authorize representatives, Tenant shall be liable to Landlord for
reasonable attorneys' fees, court costs and litigation expenses incurred by
Landlord in the litigation, whether such litigation leads to actual court
action.
All monetary sums due from Tenant to landlord under this Lease shall be deemed
to be rent.
Whenever a consent of a party to this lease is required, such consent will not
be arbitrarily or unreasonably withheld or delayed.
IN WITNESS WHEREOF, Landlord and Tenant have executed these presents, the day
and year first above written.
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LANDLORD: UNIVERSITY RESEARCH CENTER TENANT: Zyca Corporation
A California General Partnership a California Corporation
BY:
BY: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ITS: President
ITS: General Partner
BY: /s/
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ITS: General Partner