EXHIBIT 10.3
INDUSTRIAL SPACE LEASE
(Multi Tenant Net)
THIS LEASE, dated March 16, 2000 for reference purposes only, is made by and
between ▇▇▇▇▇▇▇▇ CORPORATION, a California corporation ("LANDLORD"), And
EFFICIENT NETWORKS, INC., a Delaware corporation ("TENANT"),
to be effective and binding upon the parties as of the date the last of the
designated signatories to this Lease shall have executed this Lease (the
"Effective Date of this Lease").
ARTICLE 1
REFERENCES
1.1 REFERENCES: All references in this Lease (subject to any further
clarifications contained in this Lease) to the following terms shall have the
following meaning or refer to the respective address, person, date, time period,
amount, percentage, calendar year or fiscal year as below set forth:
A. Tenant's Address for Notices: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
B. Tenant's Representative: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Phone Number: (▇▇▇) ▇▇▇-▇▇▇▇
C. Landlord's Address for Notices: ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
D. Landlord's Representative: ▇▇▇▇▇ ▇. ▇▇▇▇
Phone Number: (▇▇▇) ▇▇▇-▇▇▇▇
E. Tenant's share 51.51%
F. . Intended Commencement Date: July 1, 2000
G. . Intended Term: Five (5) Years
H. . Lease Expiration Date: Five (5) years following the
Commencement Date
I. . Tenant's Punchlist Period: Ten (10) Days from date of Occupancy
J. . First Month's Prepaid Rent: $100,183.20
K. . Last Month's Prepaid Rent: -0-
L. . Tenant's Security Deposit: $117,200.17
M. . Late Charge Amount: 5% of delinquent amount
N. . Tenant's Required Liability Coverage: $2,000,000
O. . Brokers: N/A
P. . Property: That certain real property situated in County of Santa ▇▇▇▇▇,
State of California, the City of Los Gatos, as presently improved with four
buildings, which real property is shown on the Site Plan attached hereto as
Exhibit "A" and is commonly known as or otherwise described as follows:
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇ through D
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Such four buildings together with such real property are sometimes herein
referred to as "Project."
Q. Building: That certain Building or Buildings within the Property in which
the Leased Premises are located, which Building or Buildings are shown
outlined in red on Exhibit "A" hereto.
R. Outside Areas: The "Outside Areas" shall mean all areas within the Property
which are located outside the buildings, such as pedestrian walkways,
parking areas, landscaped areas, open areas and enclosed trash disposal
areas.
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S. Leased Premises: All the interior space within the Building or Buildings,
consisting of approximately 35,152 rentable square feet and, for purposes
of this Lease, agreed to contain said number of square feet. The Leased
Premises are commonly known as or otherwise described as follows:
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
T. Base Monthly Rent: The term "Base Monthly Rent" shall mean the following:
01 - 12 $100,183.20
13 - 24 $104,190.53
25 - 36 $108,358.15
37 - 48 $112,692.48
49 - 60 $117,200.17
U. Permitted Use: The term "Permitted Use" shall mean the following:
Professional Office Use, Light Manufacturing, Research & Development,
Storage and other legal related uses.
V. Tenants Parking: non-exclusive use of up to 140 Parking Spaces.
W. Exhibits: The term "Exhibits" shall mean the Exhibits to this Lease which
are described as follows:
Exhibit "A" - Site Plan showing the Property and delineating the Building
in which the Lease Premises are located.
Exhibit "B" - Floor Plan outlining the Lease Premises.
Exhibit "C" - Acceptance Agreement
Exhibit "D" - Rules & Regulations
Exhibit "E" - Tenant Improvement Agreement
X. Addenda: The term "Addenda" shall mean the Addendum (or Addenda) to this
Lease which is (or are) described as follows: None
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ARTICLE 2:
LEASED PREMISES, TERM AND POSSESSION
2.1 DEMISE OF LEASED PREMISES: Landlord hereby leases to Tenant and Tenant
hereby leases from Landlord for Tenant's own use in the conduct of Tenant's
business and not for purposes of speculating in real estate, for the Lease Term
and upon the terms and subject to the conditions of this Lease, that certain
interior space described in Article 1 as the Lease Premises, reserving and
excepting to Landlord the exclusive right to all profits to be derived from any
assignments or subletting by Tenant during the Lease Term by reason of the
appreciation in the fair market rental value of the Leased Premises except only
as expressly provided in Article 7.4F. Tenant's lease of the Leased Premises,
together with the appurtenant right to use the Outside Areas as described in
Paragraph 2.2 below, shall be conditioned upon and be subject to the continuing
compliance by Tenant with (i) all the terms and conditions of this Lease, (ii)
all Laws governing the use of the Leased Premises and the Property, (iii) all
Private Restrictions, easements and other matters now of public record
respecting the use of the Leased Premises and the Property, and (iv) all
reasonable rules and regulations from time to time established by Landlord.
2.2 RIGHT TO USE OUTSIDE AREAS: As an appurtenant right to Tenant's right to
the use and occupancy of the Leased Premises, Tenant shall have the right to use
the Outside Areas in conjunction with its use of the Leased Premises solely for
the purposes for which they were designed and intended and for no other purposes
whatsoever. Tenant's right to so use the Outside Areas shall be subject to the
limitations on such use as set forth in Article 4 and shall terminate
concurrently with any termination of this Lease.
2.3 LEASE COMMENCEMENT DATE AND LEASE TERM: The term of this Lease shall
begin, and the Lease Commencement Date shall be deemed to have occurred, on the
Intended Commencement Date (as set forth in Article 1) unless either (i)
Landlord is unable to deliver possession of the Leased Premises to Tenant on the
Intended Commencement Date, in which case the Lease Commencement Date shall be
as determined pursuant to Paragraph 2.4 below or (ii) Tenant enters into
possession of the Leased Premises prior to the Intended Commencement Date, in
which case the Lease Commencement Date shall be as determined pursuant to
Paragraph 2.7 below (the "Lease Commencement Date"). The term of this Lease
shall end on the Lease Expiration Date (as set forth in Article I), irrespective
of whatever date the Lease Commencement Date is determined to be pursuant to the
foregoing sentence. The Lease Term shall be that period of time commencing on
the Lease Commencement Date and ending on the Lease Expiration Date (the "Lease
Term").
2.4 DELIVERY OF POSSESSION: Landlord shall deliver to Tenant possession of the
Leased Premises on or before the Commencement Date in their presently existing
condition, broom clean, unless Landlord shall have agreed, as a condition to
Tenant's obligation to accept possession of the Leased Premises pursuant to a
written Addenda attached to and made a part of this Lease, to modify existing
interior improvements or to make, construct and/or install additional specified
improvements within the Leased Premises or to the Outside Areas, in which case
Landlord shall deliver to Tenant possession of the Leased Premises on or before
the Intended Commencement Date as so modified and/or improved. If Landlord is
unable to so deliver possession of the Leased premises to Tenant in the agreed
condition on or before the Intended Commencement Date, for whatever reason,
Landlord shall not be in default under this Lease, nor shall this Lease be void,
voidable or cancelable by Tenant until the lapse of one hundred twenty days
after the Intended Commencement date (the "delivery grace period"); however, the
Lease Commencement Date shall not be deemed to have occurred until such date as
Landlord notifies Tenant that the Leased Premises are in the agreed condition
and are Ready for Occupancy. Additionally, the delivery grace period above set
forth shall be extended for such number of days as Landlord may be delayed in
making the agreed improvements and/or delivering possession of the Leased
Premises to Tenant by reason of Force Majeure or the actions of Tenant. If
Landlord is unable to deliver possession of the Leased Premises in the agreed
condition to Tenant within the described delivery grace period (including any
extensions thereof by reason of Force Majeure or the actions of Tenant), then
Tenant's sole remedy shall be to cancel and terminate this Lease, and in no
event shall Landlord be liable in damages to Tenant for such delay. Tenant may
not cancel this Lease at any time after the date Landlord notifies Tenant that
the Leased Premises have been put into the agreed condition and are Ready for
Occupancy.
Notwithstanding the foregoing, if Landlord is unable to enter into a termination
agreement or early expiration agreement acceptable to Landlord with Jetstream
Communications, Inc. on or before March 15, 2000 pursuant to which Jetstream's
lease shall terminate or expire on or before July 1, 2000, and Jetstream agrees
to vacate their premises by such date, either Landlord or Tenant may terminate
this Lease.
2.5 ACCEPTANCE OF POSSESSION: Tenant acknowledges that it has inspected the
Leased Premises and is willing to accept them in their existing condition, broom
clean, unless Landlord shall have agreed, as a condition to Tenant's obligation
to accept possession of the Leased Premises pursuant to a written Addenda
attached to and made a part of this Lease, to modify existing interior
improvements or to make, construct and/or install specified improvements within
the Leased Premises, in which case Tenant agrees to accept possession of the
Leased Premises when Landlord has substantially completed such modifications or
improvements and the Leased Premises are Ready for Occupancy. If Landlord shall
have so modified existing improvements or constructed additional improvements
within the Leased Premises for Tenant, Tenant shall, within Tenant's Punchlist
Period (as set forth in Article 1) which shall commence on the date that
Landlord notifies Tenant that the agreed improvements have been completed and
the Lease Premises are Ready for Occupancy, submit to Landlord a punchlist of
all incomplete and/or improper work performed by Landlord. Upon the expiration
of Tenant's Punchlist Period, Tenant shall be conclusively deemed to have
accepted the Leased Premises in their then-existing condition as so delivered by
Landlord to Tenant, except as to those items reasonably set forth in the
punchlist submitted to Landlord prior to the expiration of said period. Landlord
agrees to correct all items reasonably set forth in Tenant's punchlist, provided
that such punchlist was submitted to Landlord within Tenant's Punchlist Period.
Additionally, Landlord agrees to place in good working order all existing
plumbing, lighting, heating, ventilating and air conditioning systems within the
Leased Premises and all man doors and roll-up truck doors serving the Leased
Premises to the extent that such systems and/or items are not in good operating
condition as of the date Tenant accepts possession of the Leased Premises;
provided that, and only if, Tenant notifies Landlord in writing of such failures
or deficiencies within five business days from the date Tenant so accepts
possession of the Leased Premises.
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2.6 SURRENDER OF POSSESSION: Immediately prior to the expiration or upon the
sooner termination of this Lease, Tenant shall remove all of Tenant's signs from
the exterior of the Building and shall remove all of Tenant's equipment, trade
fixtures, furniture, supplies, wall decorations and other personal property from
within the Leased Premises, the Building and the Outside Areas, and shall vacate
and surrender the Leased Premises, the Building, the Outside Areas and the
Property to Landlord in the same condition, broom clean, as existed at the Lease
Commencement Date, reasonable wear and tear excepted. Tenant shall repair all
damage to the Leased Premises, the exterior of the Building and the Outside
Areas caused by Tenant's removal of Tenant's property. Tenant shall patch and
refinish, to Landlord's reasonable satisfaction, all penetrations made by Tenant
or its employees to the floor, walls or ceiling of the Leased Premises, whether
such penetrations were made with Landlord's approval or not. Tenant shall repair
or replace all stained or damaged ceiling tiles, wall coverings and floor
coverings to the reasonable satisfaction of Landlord. Tenant shall repair all
damage caused by Tenant to the exterior surface of the Building and the paved
surfaces of the Outside Areas and, where necessary, replace or resurface same.
Additionally, Tenant shall, prior to the expiration or sooner termination of
this Lease, remove any improvements constructed or installed by Tenant which
Landlord requests be so removed by Tenant and repair all damage caused by such
removal. If the Leased Premises, the Building, the Outside Areas and the
Property are not surrendered to Landlord in the condition required by this
Paragraph at the expiration or sooner termination of this Lease, Landlord may at
Tenant's expense, so remove Tenant's signs, property and/or improvements not so
removed and make such repairs and replacements not so made or hire, at Tenant's
expense, independent contractors to perform such work. Tenant shall be liable to
Landlord for all costs incurred by Landlord in returning the Leased Premises,
the Building and the Outside Areas to the required condition, together with
interest on all costs so incurred from the date paid by Landlord at the then
maximum rate of interest not prohibited or made usurious by Law until paid.
Tenant shall pay to Landlord the amount of all costs so incurred plus interest
as above set forth within ten days of Landlord's billing Tenant for same. Tenant
shall indemnify Landlord against loss or liability resulting from delay by
Tenant in so surrendering the Leased Premises, including, without limitation,
any claims made by any succeeding tenant or any losses to Landlord due to lost
opportunities to lease to succeeding tenants.
2.7 EARLY OCCUPANCY: If Tenant enters into possession of the Leased Premises
prior to the Commencement Date (or permits its contractors to enter the Leased
Premises prior to the Intended Commencement Date), unless otherwise agreed in
writing by Landlord, the Lease Commencement Date shall be deemed to have
occurred on such sooner date, and Tenant shall be obligated to perform all its
obligations under this Lease, including the obligation to pay rent, from that
sooner date.
Tenant shall have the right to enter the Leased Premises prior to the
Commencement Date solely for the purpose of installing Tenant's equiment, data
and telecommunications systems, and trade fixtures under the following
conditions: (i) such entry or work does not interfere with or delay Landlord's
work; (ii) Tenant shall be subject to and shall comply with all of the terms of
the Lease (including insurance requirements) except the obligation to pay rent;
(iii) Tenant shall not conduct any business from the Premises.
ARTICLE 3:
RENT, LATE CHARGES AND SECURITY DEPOSITS
3.1 BASE MONTHLY RENT: Commencing on the Lease Commencement Date (as determined
pursuant to Paragraph 2.3 above) and continuing throughout the Lease Term,
Tenant shall pay to Landlord, without prior demand therefore, in advance on the
first day of each calendar month, as base monthly rent, the amount set forth as
"Base Monthly Rent" in Article 1 (the "Base Monthly Rent").
3.2 ADDITIONAL RENT: Commencing on the Lease Commencement Date (as determined
pursuant to Paragraph 2.3 above) and continuing throughout the Lease Term, in
addition to the Base Monthly Rent, Tenant shall pay to Landlord as additional
rent (the "Additional Rent") the following amounts:
A. An amount equal to Tenant's Share, as defined in Article 1, of all
Property Operating Expenses (as defined in Article 13) incurred by Landlord.
Payment shall be made by whichever of the following methods (or combination of
methods) is (are) from time to time designated by Landlord:
(1) Landlord may ▇▇▇▇ to Tenant, on a periodic basis not more
frequently than monthly, the amount of such expenses (or group of expenses) as
paid or incurred by Landlord, and Tenant shall pay to Landlord the amount of
such expenses within ten (10) days after receipt of a written ▇▇▇▇ therefore
from Landlord; and/or
(2) Landlord may deliver to Tenant Landlord's reasonable estimate of
any given expense (such as Landlord's Insurance Costs or Real Property Taxes),
or group of expenses, which it anticipates will be paid or incurred for the
ensuing calendar or fiscal year, as Landlord may determine, and Tenant shall pay
to Landlord an amount equal to the estimated amount of such expenses for such
year in equal monthly installments during such year with the installments of
Base Monthly Rent.
(3) Landlord reserves the right to change from time to time the
methods of billing Tenant for any given expense or group of expenses or the
periodic basis on which such expenses are billed.
B. Landlord's share of the consideration received by Tenant upon certain
assignments and sublettings as required by Article 7.
C. Any legal fees and costs that Tenant is obligated to pay or reimburse
to Landlord pursuant to Article 13: and
D. Any other charges or reimbursements due Landlord from Tenant pursuant
to the terms of this Lease other than late charges and interest on defaulted
rent.
3.3 YEAR-END ADJUSTMENTS: If Landlord shall have elected to ▇▇▇▇ Tenant for the
Property Operating Expenses (or any group of such expenses) on an estimated
basis in accordance with the provisions of Paragraph 3.2A(2) above, Landlord
shall furnish to
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Tenant within three months following the end of the applicable calendar or
fiscal year, as the case may be, a statement setting forth (i) the amount of
such expenses paid or incurred during the just ended calendar or fiscal year, as
appropriate, and (ii) the amount that Tenant has paid to Landlord for credit
against such expenses for such period. If Tenant shall have paid more than its
obligation for such expenses for the stated period, Landlord shall, at its
election, either (i) credit the amount of such overpayment toward the next
ensuing payment or payments of Additional Rent that would otherwise be due or
(ii) refund in cash to Tenant the amount of such overpayment. If such year end
statement shall show that Tenant did not pay its obligation for such expenses in
full, then Tenant shall pay to Landlord the amount of such underpayment within
ten days from Landlord's billing of same to Tenant. The provisions of this
Paragraph shall survive the expiration or sooner termination of this Lease.
3.4 LATE CHARGE AND INTEREST ON RENT IN DEFAULT: Tenant acknowledges that the
late payment by Tenant of any monthly installment of Base Monthly Rent or any
Additional Rent will cause Landlord to incur certain costs and expenses not
contemplated under this Lease, the exact amounts of which are extremely
difficult or impractical to fix. Such costs and expenses will include, without
limitation, administration and collection costs and processing and accounting
expenses. Therefore, if any installment of Base Monthly Rent is not received by
Landlord from Tenant within six calendar days after the same is due, Tenant
shall immediately pay to Landlord a late charge in an amount equal to the amount
set forth in Article I as the "Late Charge Amount", and if any Additional Rent
is not received by Landlord within six calendar days after same is due, Tenant
shall immediately pay to Landlord a late charge in an amount equal to five
percent of the Additional Rent not so paid. Landlord and Tenant agree that this
late charge represents a reasonable estimate of such costs and expenses and is
fair compensation to Landlord for the anticipated loss Landlord would suffer by
reason of Tenant's failure to make timely payment. In no event shall this
provision for a late charge be deemed to grant to Tenant a grace period or
extension of time within to pay any rental installment or prevent Landlord from
exercising any right or remedy available to Landlord upon Tenant's failure to
pay each rental installment due under this Lease when due, including the right
to terminate this Lease. If any rent remains delinquent for a period in excess
of six calendar days, than, in addition to such late charge, Tenant shall pay to
Landlord interest on any rent that is not so paid from said sixth day at the
then maximum rate of interest not prohibited or made usurious by Law until paid.
3.5 PAYMENT OF RENT: All rent shall be paid in lawful money of the United
States, without any abatement, reduction or offset for any reason whatsoever, to
Landlord at such address as Landlord may designate from time to time. Tenant's
obligation to pay Base Monthly Rent and all Additional Rent shall be
appropriately prorated at the commencement and expiration of the Lease Term.
The failure by Tenant to pay any Additional Rent as required pursuant to this
Lease when due shall be treated the same as a failure by Tenant to pay Base
Monthly Rent when due, and Landlord shall have the same rights and remedies
against Tenant as Landlord would have if Tenant failed to pay the Base Monthly
Rent when due.
3.6 PREPAID RENT: Tenant has paid to Landlord the amount set forth in Article
1 as "First Month's Prepaid Rent" as prepayment of rent for credit against the
first installment(s) of Base Monthly Rent due hereunder. Additionally, Tenant
has paid to Landlord the amount set forth in Article 1 as "Last Month's Prepaid
Rent" as prepayment of rent for credit against the last installment's of Base
Monthly Rent due hereunder, subject, however, to the provisions of Paragraph 3.7
below:
3.7 SECURITY DEPOSIT: Tenant has deposited with Landlord the amount set forth
in Article 1 as the "Security Deposit" as security for the performance by Tenant
of the terms of this Lease to be performed by Tenant, and not as prepayment of
rent. Landlord may apply such portion or portions of the Security Deposit as are
reasonably necessary for the following purposes: (i) to remedy any default by
Tenant in the payment of Base Monthly Rent or Additional Rent or a late charge
or interest on defaulted rent; (ii) to repair damage to the Leased Premises, the
Building or the Outside Areas caused by and required to be paid for hereunder by
Tenant; (iii) to clean and repair the Leased Premises, the Building or the
Outside Areas following their surrender to Landlord if not surrendered in the
condition required pursuant to the provisions of Article 2; and (iv) to remedy
any other default of Tenant to the extent permitted by Law including, without
limitation, paying in full on Tenant's behalf any sums claimed by materialmen or
contractors of Tenant to be owing to them by Tenant for work done or
improvements made at Tenant's request to the Leased Premises. In this regard,
Tenant hereby waives any restrictions on the uses to which the Security Deposit
may be applied as contained in Section 1950.7(c) of the California Civil Code
and/or any successor statute. In the event the Security Deposit or any portion
thereof is so used, Tenant shall pay to Landlord, promptly upon demand, an
amount in cash sufficient to restore the Security Deposit to the full original
sum. If Tenant fails to promptly restore the Security Deposit and if Tenant
shall have paid to Landlord any sums as "Last Month's Prepaid Rent", Landlord
may, in addition to any other remedy Landlord may have under this Lease, reduce
the amount of Tenant's Last Month's Prepaid Rent by transferring all or portions
of such Last Month's Prepaid Rent to Tenant's Security Deposit until such
Security Deposit is restored to the amount set forth in Article 1. Landlord
shall not be deemed a trustee of the Security Deposit. Landlord may use the
Security Deposit in Landlord's ordinary business and shall not be required to
segregate it from its general accounts. Tenant shall not be entitled to any
interest on the Security Deposit. If Landlord transfers the Building or the
Property during the Lease Term, Landlord may pay the Security Deposit to any
subsequent owner in conformity with the provisions of Section 1950.7 of the
California Civil Code and/or any successor statute, in which event the
transferring landlord shall be released from all liability for the return of the
Security Deposit. Tenant specifically grants to Landlord (and Tenant hereby
waives the provisions of California Civil Code Section 1950.7 to the contrary) a
period of sixty days following a surrender of the Leased Premises by Tenant to
Landlord within which to restore the Security Deposit (less permitted
deductions) to Tenant, it being agreed between Landlord and Tenant that sixty
days is a reasonable period of time within which to inspect the Leased Premises,
make required repairs, receive and verify workmen's ▇▇▇▇▇▇▇▇ therefore, and
prepare a final accounting with respect to such deposit. In no event shall the
Security Deposit, or any portion thereof, be considered prepaid rent.
ARTICLE 4:
USE OF LEASE PREMISES AND OUTSIDE AREA
4.1 PERMITTED USE: Tenant shall be entitled to use the Leased Premises solely
for the "Permitted Use" as set forth in Article I and for no other purpose
whatsoever. Tenant shall have the right to use the Outside Areas in
conjunction with
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its Permitted Use of the Leased Premises solely for the purposes for which they
were designed and intended and for no other purposes whatsoever.
4.2 GENERAL LIMITATIONS ON USE: Tenant shall not do or permit anything to be
done in or about the Leased Premises, the Building, the Outside Areas or the
Property which does or could (i) jeopardize the structural integrity of the
Building or (ii) cause damage to any part of the Leased Premises, the Building,
the Outside Areas or the Property. Tenant shall not operate any equipment within
the Leased Premises which does or could (i) injure, vibrate or shake the Leased
Premises or the Building, (ii) damage, overload or impair the efficient
operation of any electrical, plumbing, heating, ventilating or air conditioning
systems within or servicing the Leased Premises or the Building or (iii) damage
or impair the efficient operation of the sprinkler systems (if any) within or
servicing the Leased Premises or the Building. Tenant shall not install any
equipment or antennas on or make any penetrations of the exterior walls or roof
of the Building. Tenant shall not affix any equipment to or make any
penetrations or cuts in the floor, ceiling or walls of the Leased Premises.
Tenant shall not place any loads upon the floors, walls, ceiling or roof systems
which could endanger the structural integrity of the Building or damage its
floors, foundations or supporting structural components. Tenant shall not place
any explosive, flammable or harmful fluids or other waste materials in the
drainage systems of the Leased Premises, the Building, the Outside Areas or the
Property. Tenant shall not drain or discharge any fluids in the landscaped areas
or across the paved areas of the Property. Tenant shall not use any of the
Outside Areas for the storage of its materials, supplies, inventory or
equipment, and all such materials, supplies, inventory or equipment shall at all
times be stored within the Leased Premises. Tenant shall not commit nor permit
to be committed any waste in or about the Leased Premises, the Building, the
Outside Areas or the Property.
4.3 NOISE AND EMISSIONS: All noise generated by Tenant in its use of the
Leased Premises shall be confined or muffled so that it does not unreasonably
interfere with the businesses of or annoy the occupants and/or users of adjacent
properties. All dust, fumes, odors and other emissions generated by Tenant's
use of the Leased Premises shall be sufficiently dissipated in accordance with
sound environmental practices and exhausted from the Leased Premises in such a
manner so as not to unreasonably interfere with the businesses of or annoy the
occupants and/or users of adjacent properties, or cause any damage to the Leased
Premises, the Building, the Outside Areas or the Property or any component part
thereof or the property of adjacent property owners.
4.4 TRASH DISPOSAL: Landlord shall provide trash bins (or other adequate
garbage disposal facilities) within the trash enclosure areas provided or
permitted by Landlord outside the Leased Premises sufficient for the interim
disposal of all of its trash, garbage and waste. All such trash, garbage and
waste temporarily stored in such areas shall be stored in such a manner so that
it is not visible from outside of such areas, and Tenant shall cause such trash,
garbage and waste to be regularly removed from the Property at Tenant's sole
cost. Tenant shall at all times keep the Leased Premises, the Building, the
Outside Areas and the Property in a clean, safe and neat condition free and
clear of all trash, garbage, waste and/or boxes, pallets and containers
containing same at all times.
4.5 PARKING: Tenant shall have the right to use, on a non-exclusive basis the
amount of parking spaces set forth in Article 1 subject to the Rules and
Regulations. Tenant shall not, at any time, park or permit to be parked any
recreational vehicles, inoperative vehicles or equipment in the Outside Areas or
on any portion of the Property. Tenant agrees to assume responsibility for
compliance by its employees and invitees with the parking provisions contained
herein. If Tenant or its employees park any vehicle within the Property in
violation of these provisions, then Landlord may, in addition to any other
remedies Landlord may have under this Lease, charge Tenant (after providing
Tenant with notice of such a violation and a reasonable amount of time to cure
the violation), as Additional Rent, and Tenant agrees to pay, as Additional
Rent, Ten Dollars per day for each day or partial day that each such vehicle is
so parked within the Property.
4.6 SIGNS: Other than one business identification sign which is first approved
by Landlord in accordance with this Paragraph, Tenant shall not place or
install on or within any portion of the Leased Premises, the exterior of the
Building, the Outside Areas or the Property any sign, advertisement, banner,
placard, or picture which is visible from the exterior of the Leased Premises.
Tenant shall not place or install on or within any portion of the Leased
Premises, the exterior of the Building, the Outside Areas or the Property any
business identification sign which is visible from the exterior of the Leased
Premises until Landlord shall have first approved in writing the location, size,
content, design, method of attachment and material to be used in the making of
such sign. Any sign, once approved by Landlord, shall be installed only in
strict compliance with Landlord's approval, at Tenant's expense, using a person
first approved by Landlord to install same. Landlord may remove any signs
(which have not been first approved in writing by Landlord), advertisements,
banners placards or pictures so placed by Tenant on or within the Leased
Premises, the exterior of the Building, the Outside Areas or the Property and
charge to Tenant the cost of such removal, together with any costs incurred by
Landlord to repair any damage caused thereby, including any cost incurred to
restore the surface upon which such sign was so affixed to its original
condition. Tenant shall remove all of Tenant's signs, repair any damage caused
thereby, and restore the surface upon which the sign was affixed to its original
condition, all to Landlord's reasonable satisfaction, upon the termination of
this Lease.
4.7 COMPLIANCE WITH LAWS AND PRIVATE RESTRICTIONS: Tenant shall abide by and
shall promptly observe and comply with, at its sole cost and expense, all Laws
and Private Restrictions respecting the use and occupancy of the Leased
Premises, the Building, the Outside Areas or the Property including, without
limitation, all Laws governing the use and/or disposal of hazardous materials,
and shall defend with competent counsel, indemnify and hold Landlord harmless
from any claims, damages or liability resulting from Tenant's failure to do so.
The indemnity provision of this Paragraph shall survive the expiration or sooner
termination of this Lease, with respect to any activities of Tenant occurring on
or about the Property while Tenant was in possession of the Lease Premises.
4.8 COMPLIANCE WITH INSURANCE REQUIREMENTS: With respect to any insurance
policies required or permitted to be carried by Landlord in accordance with the
provisions of this Lease, Tenant shall not conduct (or permit any other person
to conduct) any activities nor keep, store or use (or allow any other person to
keep, store or use) any item or thing within the Leased Premises, the Building,
the Outside Areas or the Property which (i) is prohibited under the terms of any
of such policies, (ii) could result in the termination of the coverage afforded
under any of such policies, (iii) could give to the insurance carrier the right
to cancel any of such policies, or (iv) could cause an increase in the rates
(over standard rates) charges for the coverage afforded under any of such
policies. Tenant shall comply with all requirements of any insurance company,
insurance underwriter, or Board of Fire Underwriters which are necessary to
maintain, at standard rates, the insurance coverage's carried by either Landlord
or Tenant pursuant to this Lease.
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4.9 LANDLORD'S RIGHT TO ENTER: Landlord and its agents shall have the right to
enter the Leased Premises during normal business hours after giving Tenant
reasonable notice and subject to Tenant's reasonable security measures for the
purpose of (i) inspecting the same; (ii) showing the Leased Premises to
prospective purchasers, mortgages or, during the last six months of the Term,
tenants: (iii) making necessary alterations, additions or repairs; (iv)
performing any of Tenant's obligations when Tenant has failed to do so after the
expiration of applicable notice and cure periods. Landlord shall have the right
to enter the Leased Premises during normal business hours (or as otherwise
agreed), subject to Tenant's reasonable security measures, for purposes of
supplying any maintenance or services agreed to be supplied by Landlord.
Landlord shall have the right to enter the Outside Areas during normal business
hours for purposes of (i) inspecting the exterior of the Building and Outside
Areas, (ii) posting notices of non-responsibility, and (iii) supplying any
services to be provided by Landlord. Any entry into the Leased Premises or the
Outside Areas obtained by Landlord in accordance with this Paragraph shall not
under any circumstances be construed or deemed to be a forcible or unlawful
entry into, or a detainer of, the Leased Premises, or an eviction, actual or
constructive of Tenant from the Leased Premises or any portion thereof.
4.10 USE OF OUTSIDE AREAS: Tenant, in its use of the Outside Areas, shall at
all times keep the Outside Areas in a safe condition free and clear of all
materials, equipment, debris, trash (except within existing enclosed trash
areas), inoperable vehicles, and other items which are not specifically
permitted by Landlord to be stored or located thereon by Tenant. If, in the
opinion of Landlord, unauthorized persons are using any of the Outside Areas by
reason of, or under claim of, the express or implied authority or consent of
Tenant, then Tenant, upon demand of Landlord, shall restrain, to the fullest
extent then allowed by Law, such unauthorized use, and shall initiate such
appropriate proceedings as may be required to so restrain such use.
4.11 RULES AND REGULATIONS: Landlord shall have the right from time to time to
establish reasonable rules and regulations and/or amendments or additions
thereto respecting the use of the Leased Premises and the Outside Areas for the
care and orderly management of the Property. Upon delivery to Tenant of a copy
of such rules and regulations or any amendments or additions thereto, Tenant
shall comply with such rules and regulations. A violation by Tenant of any of
such rules and regulations after the expiration of applicable notice and cure
periods shall constitute a default by Tenant under this Lease. If there is a
conflict between the rules and regulations and any of the provisions of this
Lease, the provisions of this Lease shall prevail. Landlord shall not be
responsible or liable to Tenant for the violation of such rules and regulations
by any other tenant of the Property.
4.12 ENVIRONMENTAL PROTECTION: Landlord may voluntarily cooperate in a
reasonable manner with the efforts of all governmental agencies in reducing
actual or potential environmental damage. Tenant shall not be entitled to
terminate this Lease or to any reduction in or abatement of rent by reason of
such compliance or cooperation. Tenant agrees at all times to cooperate fully
with Landlord and to abide by all rules and regulations and requirements which
Landlord may reasonably prescribe in order to comply with the requirements and
recommendations of governmental agencies regulating, or otherwise involved in,
the protection of the environment.
ARTICLE 5
REPAIRS, MAINTENANCE, SERVICES AND UTILITIES
5.1 REPAIR AND MAINTENANCE: Except in the case of damage to or destruction of
the Leased Premises, the Building, the Outside Areas or the Property caused by
an Act of God or other peril, in which case the provisions of Article 10 shall
control, the parties shall have the following obligations and responsibilities
with respect to the repair and maintenance of the Leased Premises, the Building
and the Outside Areas.
A. Tenants Obligation: Tenant shall, at all times during the Lease Term
and at its sole cost and expense, regularly clean and continuously keep and
maintain in good order, condition and repair the Leased Premises and every part
thereof including, without limiting the generality of the foregoing, (i) all
interior walls, floors and ceilings, (ii) all windows, doors and skylights,
(iii) all electrical wiring, conduits, connectors and fixtures, (iv) all
plumbing, pipes, sinks, toilets, faucets and drains, (v) all lighting fixtures,
bulbs and lamps, (vi) all heating ventilating and air conditioning equipment,
and (vii) all entranceways to the Leased Premises. Tenant, if requested to do so
by Landlord, shall hire, at Tenant's sole cost and expense, a licensed heating,
ventilating and air conditioning contractor to regularly and periodically (not
less frequently than every three months) inspect and perform required
maintenance on the heating, ventilating and air conditioning equipment and
systems serving the Leased Premises, or alternatively, Landlord may, at its
election, contract in its own name for such regular and periodic inspections of
and maintenance on such heating, ventilating and air conditioning equipment and
systems and charge to Tenant, as additional Rent, the cost thereof. Tenant
shall, at all times during the Lease Term, keep in a clean and safe condition
the Outside Areas. Tenant shall regularly and periodically sweep and clean the
driveways and parking areas. Tenant shall, at its sole cost and expense, repair
all damage to the Leased Premises, the Building, the Outside Areas or the
Property caused by the activities of Tenant, its employees, invitees or
contractors promptly following written notice from Landlord to so repair such
damage. If Tenant shall fail to perform the required maintenance or fail to make
repairs required of it pursuant to this Paragraph within a reasonable period of
time following notice from Landlord to do so, then Landlord may, at its election
and without waiving any other remedy it may otherwise have under this Lease or
at Law, perform such maintenance or make such repairs and charge to Tenant, as
Additional Rent, the costs so incurred by Landlord for same. All glass within or
a part of the Leased Premises, excluding exterior, is at the sole risk of Tenant
and any broken glass shall promptly be replaced by Tenant at Tenant's expense
with glass of the same kind, size and quality.
B. Landlord's Obligation: Landlord shall, at all times during the Lease
Term, maintain in good condition and repair: (i) the exterior and structural
parts of the Building (including the foundation, subflooring, load-bearing and
exterior walls, and roof); and (ii) the landscaped areas located outside the
Building. The provisions of this Subparagraph B shall in no way limit the right
of Landlord to charge to Tenant, as Additional Rent pursuant to Article 3 (to
the extent permitted pursuant to Article 3), the costs incurred by Landlord in
performing such maintenance and/or making such repairs.
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5.2 UTILITIES: Tenant shall arrange, at its sole cost and expense and in its
own name, for the supply of gas and electricity to the Leased Premises where
applicable. In the event that such services are not separately metered, Landlord
may require Tenant, at its sole expense, to cause such meters to be installed.
Landlord shall maintain the water meter(s) in its own name, provided, however,
that if at any time during the Lease Term Landlord shall require Tenant to put
the water service in Tenant's name, Tenant shall do so at Tenant's sole cost.
Tenant shall be responsible for determining if the local supplier of water, gas
and electricity can supply the needs of Tenant and whether or not the existing
water, gas and electrical distribution systems within the Building and the
Leased Premises are adequate for Tenant's needs. Tenant shall be responsible for
determining if the existing sanitary and storm sewer systems now servicing the
Leased Premises and the Property are adequate for Tenant's needs. Tenant shall
pay all charges for water, gas, electricity, and storm and sanitary sewer
services as so supplied to the Leased Premises, irrespective of whether or not
the services are maintained in Landlord's or Tenant's name.
5.3 SECURITY: Tenant acknowledges that Landlord has not undertaken any duty
whatsoever to provide security for the Leased Premises, the Building, the
Outside Areas or the Property and accordingly, Landlord is not responsible for
the security of same or the protection of Tenant's property or Tenant's
employees, invitees or contractors. To the extent Tenant determines that such
security or protection services are advisable or necessary, Tenant shall arrange
for and pay the costs of providing same.
5.4 ENERGY AND RESOURCE CONSUMPTION: Landlord may voluntarily cooperate in a
reasonable manner with the efforts of governmental agencies and/or utility
suppliers in reducing energy or other resource consumption within the Property.
Tenant shall not be entitled to terminate this Lease or to any reduction in or
abatement of rent by reason of such compliance or cooperation. Tenant agrees at
all times to cooperate fully with Landlord and to abide by all reasonable rules
established by Landlord (i) in order to maximize the efficient operation of the
electrical, heating, ventilating and air conditioning systems and all other
energy or other resource consumption systems within the Property and/or (ii) in
order to comply with the requirements and recommendations of utility suppliers
and governmental agencies regulating the consumption of energy and/or other
resources.
5.5 LIMITATION OF LANDLORD'S LIABILITY: Landlord shall not be liable to Tenant
for injury to Tenant, its employees, agents, invitees or contractors, damage to
Tenant's property or loss of Tenant's business or profits, nor shall Tenant be
entitled to terminate this Lease or to any reduction in or abatement of rent by
reason of (i) Landlord's failure to provide security services or systems within
the Property for the protection of the Leased Premises, the Building or the
Outside areas, or the protection of Tenant's property or Tenant's employees,
invitees, agents or contractors, or (ii) Landlord's failure to perform any
maintenance or repairs to the Leased Premises, the Building, the Outside Areas
or the Property until Tenant shall have first notified Landlord, in writing, of
the need for such maintenance or repairs, and then only after Landlord shall
have had a reasonable period of time following its receipt of such notice within
which to perform such maintenance or repairs, or (iii) any failure,
interruption, rationing or other curtailment in the supply of water, electric
current, gas or other utility service to the Leased Premises, the Building, the
Outside Areas or the Property from whatever cause (other than Landlord's sole
active negligence or willful misconduct), or (iv) the unauthorized intrusion or
entry into the Leased Premises by third parties (other than Landlord). Under no
circumstances whatsoever shall Landlord be liable to Tenant for loss of Tenant's
business or profits, consequential damages, or punitive damages, nor shall
Tenant be entitled to, under any circumstances, terminate the Lease
ARTICLE 6
ALTERATIONS AND IMPROVEMENTS
6.1 TENANT: Tenant shall not make any alterations to or modifications of the
Leased Premises or construct any improvements within the Leased Premises until
Landlord shall have first approved, in writing, the plans and specifications
therefore, which approval shall not be unreasonably withheld. All such
modifications, alterations or improvements, once so approved, shall be made,
constructed or installed by Tenant at Tenant's expense (including all permit
fees and governmental charges related thereto), using a licensed contractor
first approved by Landlord, in substantial compliance with the Landlord approved
plans and specifications therefore. All work undertaken by Tenant shall be done
in accordance with all Laws and in a good and workmanlike manner using new
materials of good quality . Tenant shall not commence the making of any such
modifications or alterations or the construction of any such improvements until
(i) all required governmental approvals and permits shall have been obtained,
(ii) all requirements regarding insurance imposed by this Lease have been
satisfied, (iii) Tenant shall have given Landlord at least five business days
prior written notice of its intention to commence such work so that Landlord may
post and file notices of non-responsibility, and (iv) if requested by Landlord,
Tenant shall have obtained contingent liability and broad form builder's risk
insurance in an amount satisfactory to Landlord to cover any perils relating to
the proposed work not covered by insurance carried by Tenant pursuant to Article
9. In no event shall Tenant make any modifications, alterations or improvements
whatsoever to the Outside Areas or the exterior or structural components of the
Building including, without limitation, any cuts or penetrations in the floor,
roof or exterior walls of the Leased Premises. As used in this Article, the term
"modifications, alterations and/or improvements" shall include, without
limitation, the installation of additional electrical outlets, overhead lighting
fixtures, drains, sinks, partitions, doorways, or the like.
6.2 OWNERSHIP OF IMPROVEMENTS: All modifications, alterations and improvements
made or added to the Leased Premises by Tenant (other than Tenant's inventory,
equipment, movable furniture, wall decorations and trade fixtures) shall be
deemed real property and a part of the Leased Premises, but shall remain the
property of Tenant during the Lease Term. Any such modifications, alterations or
improvements, once completed, shall not be altered or removed from the Leased
Premises during the Lease Term without Landlord written approval first obtained
in accordance with the provisions of Paragraph 6.1 above. At the expiration or
sooner termination of this Lease, all such modifications, alterations and
improvements (other than Tenant's inventory, equipment, movable furniture, wall
decorations and trade fixtures) shall automatically become the property of
Landlord and shall be surrendered to Landlord as a part of the Leased Premises
as required pursuant to Article 2, unless Landlord shall require Tenant to
remove any of such modifications, alterations or improvements in accordance with
the provisions of Article 2, in which case Tenant shall so remove same. Landlord
shall have no obligation to reimburse to Tenant all or any portion of the cost
or value of any such modifications, alterations or improvements so surrendered
to Landlord. All modifications, alterations or improvements which are installed
or constructed on or attached to the Leased Premises by Landlord at Landlord's
expense shall be deemed real property and a
8
part of the Leased Premises and shall be the property of Landlord . All
lighting, plumbing, electrical, heating, ventilating and air conditioning
fixtures, partitioning, window coverings, wall coverings and floor coverings
installed by Tenant shall be deemed improvements to the Leased Premises and not
trade fixtures of Tenant.
6.3 ALTERATIONS REQUIRED BY LAW: Tenant shall make all modifications,
alterations and improvements to the Leased Premises, at its sole cost, that are
required by any Law because of (i) Tenant's particular use of the Leased
Premises, the Building, the Outside Areas or the Property, (ii) Tenant's
application for any permit or governmental approval, or (iii) Tenant's making of
any modifications, alterations or improvements to or within the Leased Premises.
If Landlord shall, at any time during the Lease Term, be required by any
governmental authority to make any modifications, alterations or improvements to
the Building or the Property, the cost incurred by Landlord in making such
modifications, alterations or improvements, including a ten percent per annum
cost of money factor, shall be amortized by Landlord over the useful life of
such modifications, alterations or improvements, as determined in accordance
with generally accepted accounting standards, and the monthly amortized cost of
such modifications, alterations and improvements as so amortized shall be
considered a Property Maintenance Cost.
6.4 LIENS: Tenant shall keep the Property and every part thereof free from any
liens and shall pay when due all bills arising out of any work performed,
materials furnished, or obligations incurred by Tenant, its agents, employees or
contractors relating to the Property. If any such claim of lien is recorded
against Tenant's interest in this Lease, the Property or any part thereof,
Tenant shall bond against, discharge or otherwise cause such lien to be entirely
released within ten days after the same has been so recorded. Tenant's failure
to do so shall be conclusively deemed a material default under the terms of this
Lease.
ARTICLE 7:
ASSIGNMENT AND SUBLETTING BY TENANT
7.1 BY TENANT: Tenant shall not sublet the Leased Premises for any portion
thereof or assign or encumber its interest in this Lease, whether voluntarily or
by operation of Law, without Landlord's prior written consent first obtained in
accordance with the provisions of this Article 7. Any attempted subletting,
assignment or encumbrance without Landlord's prior written consent, at
Landlord's election, shall constitute a default by Tenant under the terms of
this Lease. The acceptance of rent by Landlord from any person or entity other
than Tenant, or the acceptance of rent by Landlord from Tenant with knowledge of
a violation of the provisions of this Paragraph, shall not be deemed to be a
waiver by Landlord of any provision of this Article or this Lease or to be a
consent to any subletting by Tenant or any assignment or encumbrance of Tenant's
interest in this Lease.
7.2 MERGER OR REORGANIZATION: If Tenant is a corporation, any dissolution,
merger, consolidation or other reorganization of Tenant, or the sale or other
transfer in the aggregate over the Lease Term of a controlling percentage of the
capital stock of Tenant, shall be deemed a voluntary assignment of Tenant's
interest in this Lease. The phrase "(controlling percentage" means the ownership
of and the right to vote stock possessing more than fifty percent of the total
combined voting power of all classes of Tenant's capital stock issued,
outstanding and entitled to vote for the election of directors. If Tenant is a
partnership, a withdrawal or change, voluntary, involuntary or by operation of
Law, of any general partner, or the dissolution of the partnership, shall be
deemed a voluntary assignment of Tenant's interest in this Lease.
7.3 LANDLORD'S ELECTION: If Tenant shall desire to assign its interest under
this Lease or to sublet the Leased Premises, Tenant must first notify Landlord,
in writing, of its intent to so assign or sublet, at least thirty days in
advance of the date it intends to so assign its interest in this Lease or sublet
the Leased Premises but not sooner than one hundred eighty days in advance of
such date, specifying in detail the terms of such proposed assignment or
subletting, including the name of the proposed assignee or sublessee, the
proposed assignee's or sublessee's intended use of the Leased Premises, a
current financial statement of such proposed assignee or sublessee, the form of
documents to be used in effectuating such assignment or subletting and such
other information as Landlord may reasonably request. Landlord shall have a
period of fifteen days following receipt of such notice and the required
information within which to do one of the following: (a) cancel and terminate
this Lease effective as of the intended subletting or assignment date set forth
in Tenant's notice, or cancel and terminate this Lease only as to the portion of
the Premises being sublet, effective as of the intended subletting date, at
Landlord's election, or (b) if Landlord shall not have elected to cancel and
terminate this lease to either (i) consent to such requested assignment or
subletting subject to Tenant's compliance with the conditions set forth in
Paragraph 7.4 below or (ii) refuse to so consent to such requested assignment or
subletting, provided that such consent shall not be unreasonably refused. During
said fifteen day period, Tenant covenants and agrees to supply to Landlord, upon
request, all necessary or relevant information which Landlord may reasonably
request respecting such proposed assignment of subletting and/or the proposed
assignee or sublessee.
7.4 CONDITIONS TO LANDLORD'S CONSENT: If Landlord elects to consent, or shall
have been ordered to so consent by a court of competent jurisdiction, to such
requested assignment, subletting or encumbrance, such consent shall be expressly
conditioned upon the occurrence of each of the conditions below set forth, and
any purported assignment, subletting or encumbrance made or ordered prior to the
full and complete satisfaction of each of the following conditions shall be void
and, at the election of Landlord, which election may be exercised at any time
following such a purported assignment, subletting or encumbrance but prior to
the satisfaction of each of the stated conditions, shall constitute a material
default by Tenant under this Lease until cured by satisfying in full each such
condition by the assignee, sublessee or encumbrancer. The conditions are as
follows:
A. Landlord having approved in form and substance the assignment or
sublease agreement (or the encumbrance agreement), which approval shall not be
unreasonably withheld by Landlord if the requirements of this Article 7 are
otherwise complied with.
B. Each such sublessee or assignee having agreed, in writing satisfactory
to Landlord and its counsel and for the benefit of Landlord, to assume (except a
sublessee need only assume the obligations of this Lease applicable to the
subleased Premises), to be bound by, and to perform the obligations of this
Lease to be performed by Tenant (or, in the case of an encumbrance, each such
encumbrancer having similarly agreed to assume, be bound by and to perform
Tenant's obligations upon a foreclosure or transfer in lieu thereof).
C. Tenant having fully and completely performed all of its obligations
under the terms of this Lease within the last twelve (12) months prior to the
date of the intended assignment through and including the date of such
assignment or subletting.
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D. Tenant having reimbursed to Landlord all reasonable costs and
reasonable attorney's fees incurred by Landlord in conjunction with the
processing and documentation of any such requested subletting, assignment or
encumbrance.
E. Tenant having delivered to Landlord a complete and fully executed
duplicate original of such sublease agreement, assignment agreement or
encumbrance (as applicable) and all related agreements.
F. Tenant having paid, or having agreed in writing to pay as to future
payments, to Landlord fifty percent (50%) of all assignment consideration or
excess rentals to be paid to Tenant or to any other on Tenant's behalf or for
Tenant's benefit for such assignment or subletting as follows:
(1) If Tenant assigns its interest under this Lease and if all
or a portion of the consideration for such assignment is to be paid by the
assignee at the time of the assignment, that Tenant shall have paid to Landlord
and Landlord shall have received an amount equal to fifty percent (50%) of the
assignment consideration so paid or to be paid (whichever is the greater) at the
time of the assignment by the assignee; or
(2) If Tenant assigns its interest under this Lease and if
Tenant is to receive all or a portion of the consideration for such assignment
in future installments, that Tenant and Tenant's assignee shall have entered
into a written agreement with and for the benefit of Landlord satisfactory to
Landlord and its counsel whereby Tenant and Tenant's assignee jointly agree to
pay to Landlord an amount equal to fifty percent (50%) of all such future
assignment consideration installments to be paid by such assignee as and when
such assignment consideration is so paid.
(3) If Tenant subleases the Leased Premises, that Tenant and
Tenant's sublessee shall have entered into a written agreement with and for the
benefit of Landlord satisfactory to Landlord and its counsel whereby Tenant and
Tenant's sublessee jointly agree to pay to Landlord fifty percent (50%) of all
excess rentals to be paid by such sublessee as and when such excess rentals are
so paid.
7.5 ASSIGNMENT CONSIDERATION AND EXCESS RENTALS DEFINED: For purposes of this
Article, the term "assignment consideration" shall mean all consideration to be
paid by the assignee to Tenant or to any other on Tenant's behalf or for
Tenant's benefit as consideration for such assignment, less any commissions paid
by Tenant to a licensed real estate broker for arranging such assignment (not to
exceed then standard rates), and the term "excess rentals" shall mean all
consideration to be paid by the sublessee to Tenant or to any other on Tenant's
behalf or for Tenant's benefit for the sublease of the Leased Premises in excess
of the rent due to Landlord under the terms of this Lease for the same period,
less any commissions paid by Tenant to a licensed real estate broker for
arranging such sublease (not to exceed then standard rates). Tenant agrees that
the portion of any assignment consideration and/or excess rentals arising from
any assignment or subletting by Tenant which is to be paid to Landlord pursuant
to this Article now is and shall then be the property of Landlord and not the
property of Tenant. Assignment Consideration and Excess Rentals shall also
include: any consideration of any kind received, or to be received, by Tenant as
a result of the Transfer, if such sums are related to Tenant's interest in this
Lease or in the Premises, including payments from or on behalf of the transferee
(in excess of the book value thereof) for Tenant's assets, fixtures, leasehold
improvemetns, inventory, accounts, goodwill, equipment, furniture, and general
intangibles.
7.6 PAYMENTS: All payments required by this Article to be made to Landlord
shall be made in cash in full as and when they become due. At the time Tenant,
Tenant's assignee or sublessee makes each such payment to Landlord, Tenant or
Tenant's assignee or sublessee, as the case may be, shall deliver to Landlord an
itemized statement in reasonable detail showing the method by which the amount
due Landlord was calculated and certified by the party making such payment as
true and correct.
7.7 GOOD FAITH: The rights granted to Tenant by this Article are granted in
consideration of Tenant's express covenant that all pertinent allocations which
are made by Tenant between the rental value of the Leased Premises and the value
of any of Tenant's personal property which may be conveyed or leased generally
concurrently with and which may reasonably be considered a part of the same
transaction as the permitted assignment or subletting shall be made fairly,
honestly, and in good faith. If Tenant shall breach this Covenant of Good
Faith, Landlord may immediately declare Tenant to be in default under the terms
of this Lease and terminate this Lease and/or exercise any other rights and
remedies Landlord would have under the terms of this Lease in the case of a
material default by Tenant under this Lease.
7.8 EFFECT OF LANDLORD'S CONSENT: No subletting, assignment or encumbrance,
even with the consent of Landlord, shall relieve Tenant of its personal and
primary obligations to pay rent and to perform all of the other obligations to
be performed by Tenant hereunder. Consent by Landlord to one or more assignments
or encumbrances of Tenant's interest in this Lease or to one or more sublettings
of the Leased Premises shall not be deemed to be a consent to any subsequent
assignment, encumbrance or subletting. If Landlord shall have been ordered by a
court of competent jurisdiction to consent to a requested assignment or
subletting, or such an assignment or subletting shall have been ordered over the
objections of Landlord, such assignment or subletting shall not be binding
between the assignee (or sublessee) and Landlord until such time as all
conditions set forth in Paragraph 7.4 above have been fully satisfied (to the
extent not then satisfied) by the assignee or sublessee, including, without
limitation, the payment to Landlord of all agreed assignment considerations
and/or excess rentals then due Landlord.
7.9 PERMITTED TRANSACTIONS: Notwithstanding anything herein to the contrary,
Tenant may, without Landlord's prior written consent, without payment of any
amount to Landlord, and without any right of Landlord to terminate this Lease
with respect to any of the Premises, sublet the Leased Premises or assign the
Lease to (a) a subsidiary, affiliate, division or corporation controlling,
controlled by or under common control with Tenant, (b) a successor corporation
related to Tenant by merger, consolidation, nonbankruptcy reorganization, or
government action, or (c) a purchaser of substantially all of Tenant's assets
located in the Leased Premises, so long as any successor corporation or
purchaser described in the foregoing clauses (b) and (c) has, at the time of
such transaction, a net worth at least equal to Tenant's net worth as of the
Effective Date of this Lease. Tenant shall, however, give Landlord notice of any
of the foregoing transactions promptly after the effective date thereof.
Similarly, notwithstanding anything to the contrary in this Lease, neither the
sale or transfer of Tenant's capital stock, including, without limitation, a
transfer in connection with the merger, consolidation or nonbankruptcy
reorganization of Tenant and any sale through any private or public offering,
nor the pledge of or grant of a security interest in any of the Tenant's capital
stock, shall be deemed an assignment, subletting or other transfer of the Lease
or the Leased Premises.
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ARTICLE 8
LIMITATION ON LANDLORD'S LIABILITY AND INDEMNITY
8.1 LIMITATION ON LANDLORD'S LIABILITY AND RELEASE: Landlord shall not be
liable to Tenant for, and Tenant hereby releases Landlord and its partners,
principals, officers, and agents and employees from, any and all liability,
whether in contract, tort or on any other basis, for any injury to or any damage
sustained by Tenant, Tenant's agents, employees, contractors or invitees; any
damage to Tenant's property; or any loss to Tenant's business, loss of Tenant's
profits or other financial loss of Tenant resulting from or attributable to the
condition of, the management of, the repair or maintenance of, the protection
of, the supply of services or utilities to, the damage to or destruction of the
Leased Premises, the Building, the Project or the Common Areas, including
without limitation (i) the failure, interruption, rationing or other curtailment
or cessation in the supply of electricity, water, gas or other utility service
to the Project, the Building or the Leased Premises; (ii) the vandalism or
forcible entry into the Building or the Leased Premises; (iii) the penetration
of water into or onto any portion of the Leased Premises through roof leaks or
otherwise; (iv) the failure to provide security and/or adequate lighting in or
about the Project, the Building or the Leased Premises; (v) the existence of any
design or construction defects within the Project, the Building or the Leased
Premises; (vi) the failure of any mechanical systems to function properly (such
as the HVAC systems); (vii) the blockage of access to any portion of the
Project, the Building or the Leased Premises, except that Tenant does not so
release Landlord from such liability to the extent such damage was proximately
caused by Landlord's gross negligence, willful misconduct, or Landlord's failure
to perform an obligation expressly undertaken pursuant to this Lease after a
reasonable period of time shall have lapsed following receipt of written notice
from Tenant to so perform such obligation provided however, under no
circumstances whatsoever shall Landlord be liable to Tenant for loss of Tenant's
business or profits, consequential damages, or punitive damages nor shall Tenant
be entitled to, under any circumstances, terminate the Lease.
8.2 TENANTS INDEMNIFICATION OF LANDLORD: Tenant shall defend with competent
counsel satisfactory to Landlord any claims made or legal actions filed or
threatened against Landlord with respect to the violation of any law, or the
death, bodily injury, personal injury, property damage, or interference with
contractual or property rights suffered by any third party (including other
tenants within the Project) occurring within the Leased Premises or resulting
from Tenant's use or occupancy of the Leased Premises, the Building or the
Outside Areas, or resulting from Tenant's activities in or about the Leased
Premises, the Building, the Outside Areas or the Property, and Tenant shall
indemnify and hold Landlord, Landlord's principals, employees, agents and
contractors harmless from any loss, liability, penalties, or expense whatsoever
(including any loss attributable to vacant space which otherwise would have been
leased, but for such activities) resulting therefrom, except to the extent
proximately caused by the gross negligence or willful misconduct of Landlord.
This indemnity agreement shall survive until the latter to occur of (i) the date
of the expiration, or sooner termination, of this Lease, or (ii) the date Tenant
actually vacates the Leased Premises.
ARTICLE 9:
9.1 TENANT'S INSURANCE: Tenant shall maintain insurance complying with all of
the following:
A. Tenant shall procure, pay for and keep in full force and effect, at
all times during the Lease Term, the following:
(1) Commercial general liability insurance insuring Tenant against
liability for personal injury, bodily injury, death and damage to property
occurring within the Leased Premises, or resulting from Tenants use or occupancy
of the Leased Premises, the Building, the Outside Areas or the Property, or
resulting from Tenant's activities in or about the Leased Premises or the
Property, with combined single limit coverage of no less than the amount of
Tenant's Required Liability coverage (as set forth in Article 1), which
insurance shall contain a "broad form liability" endorsement insuring Tenant's
performance of Tenant's obligation to indemnify Landlord as contained in Article
8.2.
(2) Fire and property damage insurance in so-called "fire and extended
coverage" form insuring Tenant against loss from physical damage to Tenant's
personal property, inventory, trade fixtures and improvements within the Leased
Premises with coverage for the full actual replacement cost thereof;
(6) Workers compensation insurance and any other employee benefit
insurance sufficient to comply with all Laws; and
(7) With respect to making of alterations or the construction of
improvements or the like undertaken by Tenant, contingent liability and
builder's risk insurance, in an amount and with coverage satisfactory to
Landlord.
B. Each policy of liability insurance required to be carried by Tenant
pursuant to this Paragraph or actually carried by Tenant with respect to the
Leased Premises or the Property (i) shall, except with respect to insurance
required by Subparagraph A(6)
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above, name Landlord, and such others as are designated by Landlord, as
additional insureds; (ii) shall be primary insurance providing that the insurer
shall be liable for the full amount of the loss, up to and including the total
amount of liability set forth in the declaration of coverage, without the right
of contribution from or prior payment by any other insurance coverage of
Landlord; (iii) shall be in a form satisfactory to Landlord; (iv) shall be
carried with companies reasonably acceptable to Landlord; (v) shall provide that
such policy shall not be subject to cancellation, lapse or change except after
at least thirty days prior written notice to Landlord; and (vi) shall contain a
so-called "severability" or "cross liability" endorsement. Each policy of
property, insurance maintained by Tenant with respect to the Leased Premises or
the Property or any property therein (i) shall provide that such policy shall
not be subject to cancellation , lapse or change except after at least thirty
days prior written notice to Landlord and (ii) shall contain a waiver and/or a
permission to waive by the insurer of any right of subrogation against Landlord,
its principals, officers, employees, agents and contractors, which might arise
by reason of any payment under such policy or by reason of any omission of
Landlord, its principals, officers, employees, agents or contractors.
C. Prior to the time Tenant or any of its contractors enters the Leased
Premises, Tenant shall deliver to Landlord, with respect to each policy of
insurance required to be carried by tenant pursuant to this Article, a copy of
such policy (appropriately authenticated by the insurer as having been issued,
premium paid) or a certificate of the insurer certifying in form satisfactory to
Landlord that a policy has been issued, premium paid, providing the coverage
required by this Paragraph and containing the provisions specified herein. With
respect to each renewal or replacement of any such insurance, the requirements
of this Paragraph must be complied with not less than thirty days prior to the
expiration or cancellation of the policy being renewed or replaced. Landlord
may, at any time and from time to time, inspect and/or copy any and all
insurance policies required to be carried by Tenant pursuant to this Article.
If Landlord's Lender, or if this Lease is extended, at time of such extension,
insurance broker or advisor or counsel reasonably determines at any time that
the amount of coverage set forth in Paragraph 9.1A for any policy of insurance
Tenant is required to carry pursuant to this Article is not adequate, then
Tenant shall increase the amount of coverage for such insurance to such greater
amount as Landlord's Lender, or if this Lease is extended, at time of such
extension, insurance broker or advisor or counsel reasonably deems adequate;
provided, however, such increased level of coverage may not exceed the level of
coverage for such insurance commonly carried by comparable businesses similarly
situated and operating under similar circumstances.
9.2 LANDLORD'S INSURANCE: With respect to insurance maintained by Landlord:
A. Landlord shall maintain, as the minimum coverage required of it by this
Lease, fire and property damage insurance in so-called "all risk" form insuring
Landlord (and such others as Landlord may designate) against loss from physical
damage to the Building with coverage of not less than one hundred percent of the
full actual replacement cost thereof and against loss of rents for a period of
not less than six months. Such fire and property damage insurance, (i) shall be
written in so-called "all risk" form, excluding only those perils commonly
excluded from such coverage by Landlord's then property damage insurer; (ii)
shall provide coverage for physical damage to the improvements so insured for up
to the entire full actual replacement cost thereof; (iii) may be endorsed to
cover loss or damage caused by any additional perils against which Landlord may
elect to insure, including earthquake and/or flood; (iv) may provide coverage
for loss of rents for a period of up to twelve months; and/or (v) may contain
"deductibles" not exceeding Two Thousand Five Hundred Dollars per occurrence or
up to ten percent of the Building's replacement value in the case of earthquake
and/or flood insurance). Landlord shall not be required to cause such insurance
to cover any of Tenant's personal property, inventory and trade fixtures, or any
modifications, alterations or improvements made or constructed by Tenant to or
within the Leased Premises.
B. Landlord shall maintain comprehensive general liability insurance
insuring Landlord (and such others as are designated by Landlord) against
liability for personal injury, bodily injury, death, and damage to property
occurring in, on or about, or resulting from the use or occupancy of the
Property, or any portion thereof, with combined single limit coverage of at
least Two Million Dollars. Landlord may carry such greater coverage as Landlord
or Landlord's Lender, insurance broker or advisor or counsel may from time to
time determine is reasonably necessary for the adequate protection of Landlord
and the Property.
C. Landlord may maintain any other insurance which in the opinion of its
insurance broker or advisor or legal counsel is prudent to carry under the given
circumstances.
9.3 MUTUAL WAIVER OF SUBROGATION: Landlord hereby releases Tenant, and Tenant
hereby releases Landlord and their respective principals, officers, agents,
assigns, subtenants, employees and servants, from any and all liability for
loss, damage or injury to the property of the other in or about the Leased
Premises or the Property which is caused by or results from a peril or event or
happening which would be covered by insurance required to be carried by the
party sustaining such loss under the terms of this Lease, or is covered by
insurance actually carried and in force at the time of the loss, by the party
sustaining such loss: provided, however that such waiver shall be effective
only to the extent permitted by the insurance covering such loss and to the
extent such insurance is not prejudiced thereby: Each Party shall obtain, to
the extent available, a Waiver of Subrogation from its respective insurance
carrier.
ARTICLE 10:
DAMAGE TO LEASE PREMISES
10.1 LANDLORD'S DUTY TO RESTORE: If the Leased Premises, the Building or the
Outside Areas are damaged by any peril after the Effective Date of this Lease,
Landlord shall restore the same, as and when required by this Paragraph, unless
this Lease is terminated by Landlord pursuant to Paragraph 10.3 or by Tenant
pursuant to Paragraph 10.4. If this Lease is not so terminated, then upon
availability of the insurance proceeds to Landlord (if the loss is covered by
insurance) and the issuance of all necessary governmental permits, Landlord
shall commence and diligently prosecute to completion the restoration of the
Leased Premises, the Building or the Outside Areas, as the case may be, to the
extent then allowed by Law, to substantially the same condition in which it
existed as of the Lease Commencement Date. Landlord's obligation to restore
shall be limited to the improvements constructed by Landlord. Landlord shall
have no obligation to restore any Improvements made by Tenant to the Leased
Premises or any of Tenant's personal property, inventory or trade fixtures.
Upon completion of the restoration by Landlord, Tenant shall forthwith replace
or fully repair all improvements constructed by Tenant to like or similar
condition as existed at the time of such damage or destruction.
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10.2 INSURANCE PROCEEDS: All insurance proceeds available from the fire and
property damage insurance carried by Landlord shall be paid to and become the
property of Landlord. If this Lease is terminated pursuant to either Paragraph
10.3 or 10.4, all insurance proceeds available from insurance carried by Tenant
which cover loss of property that is Landlord's property or would become
Landlord's property on termination of this Lease shall be paid to and become the
property of Landlord, and the remainder of such proceeds shall be paid to and
become the property of Tenant. If this Lease is not terminated pursuant to
either Paragraph 10.3 or 10.4 all insurance proceeds available from insurance
carried by Tenant which cover loss to property that is Landlord's property shall
be paid to and become the property of Landlord, and all proceeds available from
such insurance which cover loss to property which would only become the property
of Landlord upon the termination of this Lease shall be paid to and remain the
property of Tenant.
10.3 LANDLORD'S RIGHT TO TERMINATE: Landlord shall have the option to terminate
this Lease in the event any of the following occurs, which option may be
exercised only be by delivery to Tenant of a written notice of election to
terminate within thirty days after the date of such damage or destruction.
A. The Building is damaged by any peril covered by valid and collectible
insurance actually carried by Landlord and in force at the time of such damage
or destruction (an "insured peril") to such an extent that the estimated cost to
restore the Building exceeds the lesser of (i) the insurance proceeds available
from insurance actually carried by Landlord (excluding the amount of any
deductible), or (ii) thirty-seven-and-one-half percent (37.5%) of the then
actual replacement cost thereof;
B. The Building is damaged by an uninsured peril, which peril Landlord
was required to insure against pursuant to the provisions of Article 9 of this
Lease, to such an extent that the estimated cost to restore the Building exceeds
the lesser of (i) the insurance proceeds which would have been available had
Landlord carried such required insurance (excluding the amount of any
deductible), or (ii) seventy-five percent of the then actual replacement cost
thereof:
C. The Building is damaged by an uninsured peril, which peril
Landlord was not required to insure against pursuant to the provisions of
Article 9 of this Lease, to such an extent that the cost to restore would exceed
ten-percent (10%) of the cost of the Building.
D. The Building is damaged by any peril and, because of the Laws then
in force, the Building (i) can not be restored at reasonable cost or (ii) if
restored, can not be used for the same use being made thereof before such
damage.
10.4 TENANT'S RIGHT TO TERMINATE: If the Leased Premises, the Building or the
Outside Areas are damaged by any peril and Landlord does not elect to terminate
this Lease or is not entitled to terminate this Lease pursuant to this Article,
then as soon as reasonably practicable, Landlord shall furnish Tenant with the
written opinion of Landlord's architect or construction consultant as to when
the restoration work required of Landlord may be complete. Tenant shall have
the option to terminate this Lease in the event any of the following occurs,
which option may be exercised in the case of A or B below only by delivery to
Landlord of a written notice of election to terminate within twenty (20) days
after Tenant receives from Landlord the estimate of the time needed to complete
such restoration:
A. If the time estimated to substantially complete the restoration
exceeds six months from and after the date of such damage; or
B. If the damage occurred within nine months of the last day of the
Lease Term and the time estimated to substantially complete the restoration
exceeds ninety days from and after the date such restoration is commenced; or
C. Landlord does not complete the restoration within six months from the
date of the damage, provided that such six month period of time shall be
extended for such number of days (but no more than 20 days) as Landlord may be
delayed by reason of Force Majeure.
10.5 TENANT'S WAIVER: Landlord and Tenant agree that the provisions of
Paragraph 10.4 above, captioned "Tenant's Right to Terminate", are intended to
supersede and replace the provisions contained in California Civil Code, Section
1932, Subdivision 2, and California Civil Code, Section 1934, and accordingly,
Tenant hereby waives the provisions of said Civil Code Sections and the
provisions of any successor Code Sections or similar laws hereinafter enacted.
10.6 ABATEMENT OF RENT: In the event of damage to the Leased Premises which
does not result in the termination of this Lease, the Base Monthly Rent (and any
Additional Rent) shall be temporarily abated during the period of restoration in
proportion to the degree to which Tenant's use of the Leased Premises is
impaired by such damage.
ARTICLE 11
CONDEMNATION
11.1 TENANT'S RIGHT TO TERMINATE: Except as otherwise provided in Paragraph
11.4 below regarding temporary takings, Tenant shall have the option to
terminate this Lease if, as a result of any taking, (i) all of the Leased
Premises is taken, (ii) any material portion of the Leased Premises is taken and
the part of the Leased Premises that remains cannot, within a reasonable period
of time, be made reasonably suitable for the continued operation of Tenant's
business, or (iii) there is a taking of a portion of the Outside Areas and, as a
result of such taking, Landlord cannot provide parking spaces to Tenant within
the Property (or within a reasonable distance therefrom) equal in number to the
number of parking spaces shown on Article 1 (including, if Landlord elects,
construction of multi-deck parking structures or restriping for compact cars
where permitted by Law). Tenant must exercise such option within a reasonable
period of time, to be effective on the later to occur of (i) the date that
possession of that portion of the Leased Premises or the Outside Areas that is
condemned is taken by the condemnor or (ii) the date Tenant vacated the Leased
Premises.
11.2 LANDLORD'S RIGHT TO TERMINATE: Except as otherwise provided in Paragraph
11.4 below regarding temporary takings, Landlord shall have the option to
terminate this Lease if, as a result of any taking, (i) all or a substantial
part of the Leased Premises is taken, (ii) more than thirty-three and one-third
percent of the Outside Areas is taken, or (iii) because of the Laws then in
force, the Leased Premises may not be used for the same use being made thereof
before such taking, whether or not restored as
13
required by Paragraph 11.3 below. Any such option to terminate by Landlord must
be exercisable within a reasonable period of time, to be effective as of the
date possession is taken by the condemnor.
11.3 RESTORATION: If any part of the Leased Premises, the Building or the
Outside Areas is taken and this Lease is not terminated then Landlord shall
repair any damage occasioned thereby to the remainder thereof to a condition
reasonably suitable for Tenant's continued operations and otherwise, to the
extent practicable, in the manner and to the extent provided in Paragraph 10.1.
11.4 TEMPORARY TAKING: If any portion of the Leased Premises is temporarily
taken for a period of one year or less and such period does not extend beyond
the Lease Expiration Date, this Lease shall remain in effect. If any portion of
the Leased Premises is temporarily taken for a period which either exceeds six
months or which extends beyond the Lease Expiration Date, then Tenant shall each
independently have the option to terminate this Lease, effective on the date
possession is taken by the condemnor.
11.5 DIVISION OF CONDEMNATION AWARD: Any award for any taking of the Property,
the Building, the Outside Areas or the Leased Premises, or any portion thereof,
shall belong to and be paid to Landlord, and Tenant hereby assigns to Landlord
all of its right, title and interest in any such award; provided, however, that
Tenant shall be entitled to receive any portion of the award that is made
specifically (i) for the taking of personal property, inventory or trade
fixtures belong to Tenant, (ii) for the interruption of Tenant's business or its
moving costs, (iii) for loss of Tenant's goodwill, or (iv) for any temporary
taking where this Lease is not terminated as a result of such taking. The
rights of Landlord and Tenant regarding any condemnation shall be determined as
provided in this Article, and each party hereby waives the provisions of Section
1265.130 of the California Code of Civil Procedure, and the provisions of any
similar law hereinafter enacted, allowing either party to petition the Superior
Court to terminate this Lease and/or otherwise allocate condemnation awards
between Landlord and Tenant in the event of a taking of the Leased Premises.
11.6 ABATEMENT OF RENT: In the event of a taking of the Leased Premises which
does not result in a termination of this Lease (other than a temporary taking),
then, as of the date possession is taken by the condemning authority, the Base
Monthly Rent shall be reduced in the same proportion that the area of that part
of the Leased Premises so taken (less any addition to the area of the Leased
Premises by reason of any reconstruction) bears to the area of the Leased
Premises immediately prior to such taking.
11.7 TAKING DEFINED: The term "taking" or "taken" as used in this Article 11
shall mean any transfer or conveyance of all or any portion of the Property to a
public or quasi-public agency or other entity having the power of eminent domain
pursuant to or as a result of the exercise of such power by such an agency,
including any inverse condemnation and/or any sale or transfer by Landlord of
all or any portion of the Property to such an agency under threat of
condemnation or the exercise of such power.
ARTICLE 12:
DEFAULT AND REMEDIES
12.1 EVENTS OF TENANT'S DEFAULT: Tenant shall be in default of its obligation
under this Lease if any of the following events occur:
A. Tenant shall have failed to pay Base Monthly Rent or any Additional
Rent when due; or
B. Tenant shall have done or permitted to have been done any act, use or
thing in its use, occupancy or possession of the Leased Premises or the Building
or the Outside which is prohibited by the terms of this Lease; or
C. Tenant shall have failed to perform any term, covenant or condition
of this Lease, except those requiring the payment of Base Monthly Rent or
Additional Rent, or defaults specified on ▇, ▇, ▇, ▇, ▇, ▇, ▇, J of this Section
12.1, within ten days after written notice from Landlord to Tenant specifying
the nature of such failure and requesting Tenant to perform same provided that
such failure cannot be cured within such 10 day period, so long as Tenant
commences to cure within such 10 day period, Tenant shall have 30 days to cure
such failure.
D. Tenant shall have sublet the Leased Premises or assigned or
encumbered its interest in this Lease in violation of the provisions contained
in Article 7, whether voluntarily or by operation of Law; or
E. Tenant shall have abandoned the Leased Premises; or
F. Tenant or any Guarantor of this Lease shall have permitted or
suffered the sequestration or attachment of, or execution on, or the appointment
of a custodian or receiver with respect to, all or any substantial part of the
property or assets of Tenant (or such Guarantor) or any property or asset
essential to the conduct of Tenant's (or such Guarantors) business, and Tenant
(or such Guarantor) shall have failed to obtain a return or release of the same
within thirty days thereafter, or prior to sale pursuant to such sequestration,
attachment or levy, whichever is earlier; or
G. Tenant or any Guarantor of this Lease shall have made a general
assignment of all or a substantial part of its assets for the benefit of its
creditors; or
H. Tenant or any Guarantor of this Lease shall have allowed (or sought)
to have entered against it a decree or order which (i) grants or constitutes an
order for relief, appointment of a trustee, or confirmation or a reorganization
plan under the bankruptcy laws of the United States; (ii) approves as properly
filed a petition seeking liquidation or reorganization under said bankruptcy
laws or any other debtor's relief law or similar statue of the United States or
any state thereof; or (iii) otherwise directs the winding up or liquidation of
Tenant; provided, however, if any decree or order was entered without Tenant's
consent or over Tenant's objection, Landlord may not terminate this Lease
pursuant to this Subparagraph if such decree or order is rescinded or reversed
within thirty days after its original entry.
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I. Tenant or any Guarantor of this Lease shall have availed itself of the
protection of any debtor's relief law, moratorium law or other similar Law which
does not require the prior entry of a decree or order.
J. Tenant shall have failed to deliver an estoppel certificate within the
time and as required by Section 13.6 or failure to deliver any document or
instrument within the time as required by Section 13.3.
12.2 LANDLORD'S REMEDIES: In the event of any default by Tenant, and without
limiting Landlord's right to indemnification as provided in Article 8.2,
Landlord shall have the following remedies, in addition to all other rights and
remedies provided by Law or otherwise provided in this Lease, to which Landlord
may resort cumulatively, or in the alternative:
A. Landlord may, at Landlord's election, keep this Lease in effect and
enforce, by an action at law or in equity, all of its rights and remedies under
this Lease including, without limitation, (i) the right to recover the rent and
other sums as they become due by appropriate legal action, (ii) the right to
make payments required by Tenant, or perform Tenant's obligations and be
reimbursed by Tenant for the cost thereof with interest at the then maximum rate
of interest not prohibited by Law from the date the sum is paid by Landlord
until Landlord is reimbursed by Tenant, and (iii) the remedies of injunctive
relief and specific performance to prevent Tenant from violating the terms of
this Lease and/or to compel Tenant to perform its obligations under this Lease,
as the case may be.
B. Landlord may, at Landlord's election, terminate this Lease by giving
Tenant written notice of termination, in which event this Lease shall terminate
on the date set forth for termination in such notice. Any termination under this
Subparagraph shall not relieve Tenant from its obligation to pay to Landlord all
Base Monthly Rent and Additional Rent then or thereafter due, or any other sums
due or thereafter accruing to Landlord, or from any claim against Tenant for
damages previously accrued or then or thereafter accruing. In no event shall any
one or more of the following actions by Landlord, in the absence of a written
election by Landlord to terminate this Lease, constitute a termination of this
Lease:
1. Appointment of a receiver or keeper in order to protect Landlord's
interest hereunder;
2. Consent to any subletting of the Leased Premises or assignment of this
Lease by Tenant, whether pursuant to the provisions hereof or otherwise; or
3. Any other action by Landlord or Landlord's agents intended to mitigate
the adverse effects of any breach of this Lease by Tenant, including, without
limitation, any action taken to maintain and preserve the Lease Premises or any
action taken to relet the Leased Premises, or any portion thereof, for the
account of Tenant and in the name of Tenant.
C. In the event Tenant breaches this Lease and abandons the Leased
Premises, Landlord may terminate this Lease, but this Lease shall not terminate
unless Landlord gives Tenant written notice of termination. If Landlord does not
terminate this Lease by giving written notice of termination, Landlord may
enforce all its rights and remedies under this Lease, including the right to
recover rent as it becomes due under this Lease as provided in California Civil
Code Section 1951.4 as in effect on the Effective Date of this Lease.
D. 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 of this Lease. For
purposes of computing damages pursuant to Section 1951.2, an interest rate equal
to the maximum rate of interest then not prohibited by Law shall be used where
permitted. Such damages shall include, without limitation:
(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; and
(2) Any other amount 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 without limitation, the following: (i) expenses for
cleaning, repairing or restoring the Leased Premises; (ii) expenses for
altering, remodeling or otherwise improving the Leased Premises for the purpose
of reletting, including removal of existing leasehold improvements and/or
installation of additional leasehold improvements (regardless of how the same is
funded, including reduction of rent, a direct payment or allowance to a new
tenant, or otherwise); (iii) broker's fees, advertising costs and other expenses
of reletting the Leased Premises; (iv) costs of carrying and maintaining the
Leased Premises, such as taxes, insurance premiums, utility charges and security
precautions; (v) expenses incurred in removing, disposing of and/or storing any
of Tenant's personal property, inventory or trade fixtures remaining therein;
(vi)attorney's fees, expert witness fees, court costs and other reasonable
expenses incurred by Landlord (but not limited to taxable costs) in retaking
possession of the Leased, establishing damages hereunder, and re-leasing the
Leased Premises; and (vii) any other expenses, costs or damages otherwise
incurred or suffered as a result of Tenant's default.
12.3 LANDLORD'S DEFAULT AND TENANT'S REMEDIES: In the event Landlord fails to
perform any of its obligations under this Lease, Landlord shall nevertheless not
be in default under the terms of this Lease until such time as Tenant shall have
first given Landlord written notice specifying the nature of such failure to
perform its obligations, and then only after Landlord shall have had a
reasonable period of time following its receipt of such notice within which to
perform such obligations. In the event of Landlord's default as above set forth,
then, and only then, Tenant shall have the following remedies only:
A. Tenant may then proceed in equity or at law to compel Landlord to
perform its obligations and/or to recover damages proximately caused by such
failure to perform (except as and to the extent Tenant has waived its right to
damages as provided in this Lease).
B. Tenant, at its option, may then cure any default of Landlord at
Landlord's cost. If, pursuant to this Subparagraph, Tenant reasonably pays any
sum to any third party or does any act that requires the payment of any sum to
any third part at any time by
15
reason of Landlord's default, the sum paid by Tenant shall be immediately due
from Landlord to Tenant at the time Tenant supplies Landlord with an invoice
therefore (provided such invoice sets forth and is accompanied by a written
statement of Tenant setting forth in reasonable detail the amount paid, the
party to whom it was paid, the date it was paid, and the reasons giving rise to
such payment), together with interest at twelve percent per annum from the date
of such invoice until Tenant is reimbursed by Landlord. Tenant may not offset
such sums against any installment of rent due Landlord under the terms of this
Lease.
12.4 LIMITATION ON TENANT'S RECOURSE: If Landlord is a corporation, trust,
partnership, joint venture, unincorporated association, or other form of
business entity, Tenant agrees that (i) the obligations of Landlord under this
Lease shall not constitute personal obligations of the officers, directors,
trustees, partners, joint venturers, members, owners, stockholders, or other
principals of such business entity and (ii) Tenant shall have recourse only to
the assets of such business entity for the satisfaction of such obligations and
not against the assets of such officers, directors, trustees, partners, joint
venturers, members, owners, stockholders or principals (other than to the extent
of their interest in the assets owned by such business entity). Additionally, if
Landlord is a partnership, then Tenant convenants and agrees:
A. No partner of Landlord shall be sued or named as a party in any suit or
action brought by Tenant with respect to any alleged breach of this Lease
(except to the extent necessary to secure jurisdiction over the partnership and
then only for that sole purpose);
B. No service of process shall be made against any partner of Landlord
except for the sole purpose of securing jurisdiction over the partnership; and
C. No writ of execution will ever be levied against the assets of any
partner of Landlord other than to the extent of his interest in the assets of
the partnership.
Tenant further agrees that each of the foregoing covenants and agreements shall
be enforceable by Landlord and by any partner of Landlord and shall be
applicable to any actual or alleged misrepresentation or nondisclosure made
respecting this Lease or the Leased Premises or any factual or alleged failure,
default or breach of any covenant or agreement either expressly or implicitly
contained in this Lease or imposed by statue or at common law.
12.5 TENANT'S WAIVER: Landlord and Tenant agree that the provisions of Paragraph
12.3 above are intended to supersede and replace the provisions of California
Civil Code Sections 1932(1), 1941 and 1942, and accordingly, Tenant hereby
waives the provisions of California Civil Code Sections 1932(1), 1941 and 1942
and/or any similar or successor Law regarding Tenant's right to terminate this
Lease or to make repairs and deduct the expenses of such repairs from the rent
due under this Lease. Tenant hereby waives any right of redemption or relief
from forfeiture under the Laws of the State of California, or under any other
present or future Law, in the event Tenant is evicted or Landlord takes
possession of the Leased Premises by reason of any default by Tenant.
ARTICLE 13
GENERAL PROVISIONS
13.1 TAXES ON TENANT'S PROPERTY: Tenant shall pay before delinquency any and all
taxes, assessments, license fees, use fees, permit fees and public charges of
whatever nature or description levied, assessed or imposed against Tenant or
Landlord by a governmental agency arising out of, caused by reason of or based
upon Tenant's estate in this Lease, Tenant's ownership of property, improvements
made by Tenant to the Leased Premises or the Outside Areas, improvements made by
Landlord for Tenant's use within the Leased Premises or the Outside Areas,
Tenant's use (or estimated use) of public facilities or services or Tenant's
consumption (or estimated consumption) of public utilities, energy, water or
other resources. Upon demand by Landlord, Tenant shall furnish Landlord with
satisfactory evidence of these payments. If any such taxes, assessments, fees or
public charges are levied against Landlord, Landlord's property, the Building or
the Property, or if the assessed value of the Building or the Property is
increased by the inclusion herein of a value placed upon same, then Landlord,
after giving written notice to Tenant, shall have the right, regardless of the
validity thereof, to pay such taxes, assessment, fee or public charge and ▇▇▇▇
Tenant, as Additional Rent, the amount of such taxes, assessment, fee or public
charge so paid on Tenant's behalf. Tenant shall, within thirty (30) days from
the date it receives an invoice from Landlord setting forth the amount of such
taxes, assessment, fee or public charge and ▇▇▇▇ Tenant, as Additional Rent, the
amount of such taxes, assessment, fee or public charge so paid on Tenant's
behalf, Tenant shall, within thirty (30) days from the date it receives an
invoice from Landlord setting forth the amount of such taxes, assessment, fee or
public charge so levied, pay to Landlord, as Additional Rent, the amount set
forth in said invoice. Failure by Tenant to pay the amount so invoiced within
said ten day period shall be conclusively deemed a default by Tenant under this
Lease. Tenant shall have the right, and the Landlord's full cooperation if
Tenant is not then in default under the terms of this Lease, to bring suit in
any court of competent jurisdiction to recover from the taxing authority the
amount of any such taxes, assessment, fee or public charge so paid.
13.2 HOLDING OVER: This Lease shall terminate without further notice on the
Lease Expiration Date (as set forth in Article 1). Any holding over by Tenant
after expiration of the Lease Term shall neither constitute a renewal nor
extension of this Lease nor give Tenant any rights in or to the Leased Premises
except as expressly provided in this Paragraph. Any such holding over shall be
deemed an unlawful detainer of the Leased Premises unless Landlord has consented
to same. Any such holding over to which Landlord has consented shall be
construed to be a tenancy from month to month, on the same terms and conditions
herein specified insofar as applicable, except that the Base Monthly Rent shall
be increased to an amount equal to one hundred fifty percent of the Base Monthly
Rent payable during the last full month immediately preceding such holding over.
13.3 SUBORDINATION TO MORTGAGES: This Lease is subject to and subordinate to all
underlying ground leases, mortgages and deeds of trust which affect the Building
or the Property and which are of public record as of the Effective Date of this
Lease, and to all renewals, modifications, consolidations, replacements and
extensions thereof. However, if the lessor under any such ground lease or any
lender holding any such mortgage or deed of trust shall advise Landlord that it
desires or requires this Lease to be made prior and superior thereto, then, upon
written request of Landlord to Tenant, Tenant shall promptly execute,
acknowledge and deliver any and all documents or instruments which Landlord and
such lessor or lender deem necessary or desirable to make this Lease prior
thereto. Tenant hereby consents to Landlord's ground leasing the land underlying
the Building or the Property and/or encumbering
16
the Building or the Property as security for future loans on such terms as
Landlord shall desire, all of which future ground leases, mortgages or deeds of
trust shall be subject to and subordinate to this Lease. However, if any lessor
under any such future ground lease or any lender holding such future mortgage or
deed of trust shall desire or require that this Lease be made subject to and
subordinate to such future ground lease, mortgage or deed of trust, then Tenant
agrees, within ten days after Landlord's written request therefor, to execute,
acknowledge and deliver to Landlord any and all documents or instruments
requested by Landlord or by such lessor or lender as may be necessary or proper
to assure the subordination of this Lease to such future ground lease, mortgage
or deed of trust, but only if such lessor or lender agrees to recognize Tenant's
rights under this Lease and agrees not to disturb Tenant's quiet possession of
the Leased Premises so long as Tenant is not in default under this Lease.
13.4 TENANT'S ATTORNMENT UPON FORECLOSURE: Tenant shall, upon request, attorn
(i) to any purchaser of the Building or the Property at any foreclosure sale or
private sale conducted pursuant to any security instrument encumbering the
Building or the Property, (ii) to any grantee or transferee designated in any
deed given in lieu of foreclosure of any security interest encumbering the
Building or the Property, or (iii) to the lessor under any underlying ground
lease of the land underlying the Building or the Property, should such ground
lease be terminated; provided that such purchaser, grantee or lessor recognizes
Tenant's rights under this Lease.
13.5 MORTGAGEE PROTECTION: In the event of any default on the part of Landlord,
Tenant will give notice by registered mail to any Lender or lessor under any
underlying ground lease who shall have requested, in writing, to Tenant that it
be provided with such notice, and Tenant shall offer such Lender or lessor a
reasonable opportunity to cure the default, including the lesser of the time to
do the following: obtain possession of the Leased Premises by power of sale,
judicial foreclosure, other appropriate legal proceedings, or receivership if
reasonably necessary to effect a cure.
13.6 ESTOPPEL CERTIFICATES: Tenant will, following any request by Landlord,
promptly execute and deliver to Landlord an estoppel certificate (i) certifying
that this Lease is unmodified and in full force and effect, or, if modified,
stating the nature of such modification and certifying that this Lease, as so
modified, is in full force and effect, (ii) stating the date to which the rent
and other charges are paid in advance, if any, (iii) acknowledging that there
are not, to Tenant's knowledge, any uncured defaults on the part of Landlord
hereunder, or specifying such defaults if any are claimed, and (iv) certifying
such other information about this Lease as may be reasonably requested by
Landlord, its Lender or prospective lenders, investor or purchaser of the
Building or the Property. Tenant's failure to execute and deliver such estoppel
certificate within ten days after Landlord's request therefore shall be a
material default by Tenant under this Lease, and Landlord shall have all of the
rights and remedies available to Landlord as Landlord would otherwise have in
the case of any other material default by Tenant, including the right to
terminate this Lease and ▇▇▇ for damages proximately caused thereby, it being
agreed and understood by Tenant that Tenant's failure to do deliver such
estoppel certificate in a timely manner could result in Landlord being unable to
perform committed obligations to other third parties which were made by Landlord
in reliance upon this covenant of Tenant. Landlord and Tenant intend that any
statement delivered pursuant to this Paragraph may be relied upon by any Lender
or purchaser or prospective Lender or purchaser of the Building, the Property,
or any interest herein.
13.7 TENANT'S FINANCIAL INFORMATION: Tenant shall, within ten business days
after Landlord's request therefore, deliver to Landlord a copy of a current
financial statement and any such other information reasonably requested by
Landlord regarding Tenant's financial condition. Landlord shall be entitled to
disclose such financial statements or other information to its Lender, to any
present or prospective principal of or investor in Landlord, or to any
prospective Lender or purchaser of the Building, the Property or any portion
thereof or interest herein. Any such financial statement or other information
shall be confidential and shall not be disclosed by Landlord to any third party
except as specifically provided in this Paragraph, or upon Tenant's reasonable
consent, unless the same becomes a part of the public domain without the fault
of Landlord.
13.8 TRANSFER BY LANDLORD: Landlord and its successors in interest shall have
the right to transfer their interest in the Building, the Property, or any
portion thereof at any time and to any person or entity. In the event of any
such transfer, the Landlord originally named herein (and in the case of any
subsequent transfer, the transferor), from the date of such transfer, (i) shall
be automatically relieved, without any further act by any person or entity, of
all liability for the performance of the obligations of the Landlord hereunder
which may accrue after the date of such transfer and (ii) shall be relieved of
all liability for the performance of the obligations of the Landlord hereunder
which have accrued before the date of transfer if its transferee agrees to
assume and perform all such prior obligations of the Landlord hereunder. Tenant
shall attorn to any such transferee. After the date of any such transfer, the
term "Landlord" as used herein shall mean the transferee of such interest in the
Building or the Property.
13.9 FORCE MAJEURE: The obligations of each of the parties under this Lease
(other than the obligations to pay money) shall be temporarily excused if such
party is prevented or delayed in performing such obligation by reason of any
strikes, lockouts or labor disputes; inability to obtain labor, materials, fuels
or reasonable substitutes therefore; governmental restrictions, regulations,
controls action or inaction; civil commotion; inclement weather, fire or other
acts of God; or other causes (except financial inability) beyond the reasonable
control of the party obligated to perform (including acts or omissions of the
other party) for a period equal to the period of any such prevention, delay or
stoppage.
13.10 NOTICES: Any notice required or desired to be given by a party regarding
this Lease shall be in writing and shall be personally served, or in lieu of
personal service may be given by depositing such notice in the United States
mail, registered or certified, postage prepaid, addressed to the other party as
follows:
A. If addressed to Landlord, to Landlord at its Address for Notices (as set
forth in Article 1).
B. If addressed to Tenant, to Tenant at its Address for Notices (as set
forth in Article 1).
Any notice given by registered mail shall be deemed to have been given on the
third business day after its deposit in the United States mail. Any notice given
by certified mail shall be deemed given on the date receipt was acknowledged to
the postal authorities. Any
17
notice given by mail other than registered or certified mail shall be deemed
given only if received by the other party, and then on the date of receipt. Each
party may, by written notice to the other in the manner aforesaid, change the
address to which notices addressed to it shall thereafter be mailed.
13.11 ATTORNEY'S FEES: In the event any party shall bring any action,
arbitration proceeding or legal proceeding alleging a breach of any provision of
this Lease, to recover rent, to terminate this Lease, or to enforce, protect,
determine any term or covenant of this Lease or rights or duties hereunder of
either party, the prevailing party shall be entitled to recover from the non-
prevailing party as a part of such action or proceeding, or in a separate action
for that purpose brought within one year from the determination of such
proceeding, reasonable attorney's fees, expert witness fees, court costs and
other reasonable expenses incurred by the prevailing party. In the event that
Landlord shall be required to retain counsel to enforce any provision of this
Lease, and if Tenant shall thereafter cure (or desire to cure) such default,
Landlord shall be conclusively deemed the prevailing party and Tenant shall pay
to Landlord all attorney's fees, expert witness fees, court costs and other
reasonable expenses so incurred by Landlord promptly upon demand. Landlord may
enforce this provision by either (i) requiring Tenant to pay such fees and costs
as a condition to curing its default or (ii) bringing a separate action to
enforce such payment, it being agreed by and between Landlord and Tenant that
Tenant's failure to pay such fees and costs upon demand shall constitute a
breach of this Lease in the same manner as a failure by Tenant to pay the Base
Monthly Rent, giving Landlord the same rights and remedies as if Tenant failed
to pay the Base Monthly Rent.
13.12 DEFINITIONS: Any term that is given a special meaning by any provision in
this Lease shall, unless otherwise specifically stated, have such meaning
whenever used in this Lease or in any Addenda or amendment hereto. In addition
to the terms defined in Article 1, the following terms shall have the following
meanings:
A. REAL PROPERTY TAXES: The term "Real Property Tax" or "Real Property
Taxes" shall each mean (i) all taxes, assessments, levies and other charges of
any kind or nature whatsoever, general and special, foreseen and unforeseen
(including all installments of principal and interest required to pay any
general or special assessments for public improvements and any increases
resulting from reassessments caused by any change in ownership or new
construction), now or hereafter imposed by any governmental or quasi-
governmental authority or special district having the direct or indirect power
or tax or levy assessments, which are levied or assessed for whatever reason
against the Project or any portion thereof, or Landlord's interest herein, or
the fixtures, equipment and other property of Landlord that is an integral part
of the Project and located thereon, or Landlord's business of owning, leasing or
managing the Project or the gross receipts, income or rentals from the Project;
(ii) all charges, levies or fees imposed by any governmental authority against
Landlord by reason of or based upon the use of or number of parking spaces
within the Project, the amount of public services or public utilities used or
consumed (e.g. water, gas electricity, sewage or surface water disposal) at the
Project, the number of persons employed by tenants of the Project, the size
(whether measured in area, volume, number of tenants or whatever) or the value
of the Project, or the type of use or uses conducted within the Project; and
(iii) all costs and fees (including attorneys fees) incurred by Landlord in
contesting any Real Property Tax and in negotiating with public authorities as
to any Real Property Tax. If, at any time during the Lease Term, the taxation or
assessment of the Project prevailing as of the Effective Date of this Lease
shall be altered so that in lieu of or in addition to any Real Property Tax
described above there shall be levied, assessed or imposed (whether by reason of
a change in the method of taxation or assessment, creation of a new tax or
charge, or any other cause) an alternate, substitute, or additional tax or
charge (i) on the value, size, use or occupancy of the Project or Landlord's
interest therein (ii) on a measured by the gross receipts, income or rentals
from the Project, or on Landlord's business of owning, leasing or managing the
Project or (iii) computed in any manner with respect to the operation of the
Project, then any such tax or charge, however designated, shall be included
within the meaning of the terms "Real Property Tax" or "Real Property Taxes" for
purposes of this Lease. If any Real Property Tax is partly based upon property
or rents related to the Project, then only that part of such Real Property Tax
that is fairly allocable to the Project shall be included within the meaning of
the terms "Real Property Tax" or "Real Property Taxes." Notwithstanding the
foregoing, the terms "Real Property Tax" or "Real Property Taxes" shall not
include estate, inheritance, transfer, gift or franchise taxes of Landlord or
the federal or state income tax imposed on Landlord's income from all sources,
or any tax or assessment expense in excess of the amount which would be payable
if such tax or assessment expense were paid in installments over the longest
possible term.
B. LANDLORD'S INSURANCE COSTS: The term "Landlords Insurance Costs" shall
mean the costs to Landlord to carry and maintain the policies of fire and
property damage insurance for the Building and the Property and general
liability insurance required, or permitted, to be carried by Landlord pursuant
to Article 9, together with any deductible amounts paid by Landlord upon the
occurrence of any insured casualty or loss.
C. PROPERTY MAINTENANCE COSTS: The term "Property Maintenance Costs" shall
mean all costs and expenses (except Landlord's Insurance Costs and Real Property
Taxes) paid or incurred by Landlord in protecting, operating, maintaining,
repairing and preserving the Property and all parts thereof, including without
limitation, (i) professional management fees (not to exceed three percent of the
Property's scheduled base monthly rental income), (ii) the amortizing portion of
any costs incurred by Landlord in the making of any modifications, alterations
or improvements required by any governmental authority as set forth in Article
6, which are so amortized during the Lease Term, and (iii) such other costs as
may be paid or incurred with respect to operating, maintaining and preserving
the Property, such as repairing and resurfacing the exterior surfaces of the
buildings (including roofs), repairing and resurfacing paved areas, repairing
structural parts of the buildings, and replacing, when necessary, electrical,
plumbing, heating, ventilating and air conditioning systems serving the
buildings. Notwithstanding the foregoing, Property Maintenance Costs shall not
include: (a) Costs for earthquake and flood insurance in excess of commercially
reasonable premiums, but in no event more than two times the premium of all-risk
insurance, insurance deductibles exceeding Ten Thousand Dollars ($10,000.00),
(b) Costs to repair, replace, restore or maintain the structural portions of the
Buildings (including roofs but not including roofing), (c) Costs which could
properly be capitalized under generally accepted accounting principals, except
to the extent amortized over the useful life of the capital item in question,
and (d) Costs in excess of $2,500.00 per year in connection with the presence of
any Hazardous Material, except to the extent caused by the release or emission
of the Hazardous Material in question by Tenant.
D. READY FOR OCCUPANCY: The term "Ready for Occupancy" shall mean the date
upon which (i) the Leased Premises are available for Tenant's occupancy in a
broom clean condition and (ii) the improvements, if any, to be made to the
Leased
18
Premises by Landlord as a condition to Tenant's obligation to accept possession
of the Leased Premises have been substantially completed and the appropriate
governmental building department (i.e. The City building department, if the
Property is located within a City, or otherwise the County building department)
shall have approved the construction of the improvements as complete or is
willing to so approve the construction of the improvements as complete subject
only to compliance with specified conditions which are the responsibility of
Tenant to satisfy or is willing to allow Tenant to occupy subject to its
receiving assurances that specified work will be completed.
E. PROPERTY OPERATING EXPENSES: The term "Property Operating Expenses"
shall mean and include all the Real Property Taxes, plus all Landlord's
Insurance Costs, plus all the Property Maintenance Costs, plus an accounting fee
equal to five percent of all such costs.
F. LAW: The term "Law" shall mean any judicial decision and any statute,
constitution, ordinance, resolution, regulation, rule administrative order, or
other requirement of any municipal, county, state, federal, or other
governmental agency or authority having jurisdiction over the parties to this
Lease, the Leased Premises, the Building or the Property, or any of them in
effect either at the Effective Date of this Lease or at any time during the
Lease Term, including, without limitation, any regulation, order, or policy of
any quasi-official entity or body (e.g. a board of fire examiners or a public
utility or special district).
G. LENDER: The term "Lender" shall mean the holder of any Note or other
evidence of indebtedness secured by the Property or any portion thereof.
H. PRIVATE RESTRICTIONS: The term "Private Restrictions" shall mean all
recorded covenants, conditions and restrictions, private agreements, easements,
and any other recorded instruments affecting the use of the Property, as they
may exist from time to time.
I. RENT: The term "rent" shall mean collectively Base Monthly Rent and all
Additional Rent.
13.13 GENERAL WAIVERS: 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 first party's consent to or approval of any
subsequent similar act by the other party. No waiver of any provision hereof or
any breach of any provision hereof shall be effective unless in writing and
signed by the waiving party. The receipt by Landlord of any rent or payment with
or without knowledge of the breach of any other provision hereof shall not be
deemed a waiver of any such breach. No waiver of any provision of this Lease
shall be deemed a continuing waiver unless such waiver specifically states so in
writing and is signed by both Landlord and Tenant. 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 any other provisions
herein contained.
13.14 MISCELLANEOUS: Should any provision of this Lease prove to be invalid or
illegal, such invalidity or illegality, shall in no way affect, impair or
invalidate any other provision hereof, and such remaining provisions shall
remain in full force and effect. Time is of the essence with respect to the
performance of every provision of this Lease in which time of performance is a
factor. Any copy of this Lease which is executed by the parties shall be deemed
an original for all purposes. This Lease shall, subject to the provisions
regarding assignment, apply to and bind the respective heirs, successors,
executors, administrators and assigns of Landlord and Tenant. The term "party"
shall mean Landlord or Tenant as the context implies. If Tenant consists of more
than one person or entity, then all members of Tenant shall be jointly and
severally liable hereunder. This Lease shall be construed and enforced in
accordance with the Laws of the State in which the Leased Premises are located.
The language in all parts of this Lease shall in all cases be construed as a
whole according to its fair meaning, and not strictly for or against either
Landlord or Tenant. The captions used in this Lease are for convenience only and
shall not be considered in the construction or interpretation of any provision
hereof. When the context of this Lease requires, the neuter gender includes the
masculine, the feminine, a partnership or corporation or joint venture, and the
singular includes the plural. The terms "must", "shall", "will", and "agree" are
mandatory. The term "may" is permissive. When a party is required to do
something by this Lease, it shall do so at its sole cost and expense without
right of reimbursement from the other party unless specific provision is made
therefore. Where Tenant is obligated not to perform any act or is not permitted
to perform any act, Tenant is also obligated to restrain any others reasonably
within its control, including agents, invitees, contractors, subcontractors and
employees, from performing said act. Landlord shall not become or be deemed a
partner or a join venturer with Tenant by reason of any of the provisions of
this Lease.
13.15 REASONABLE EXPENDITURES: Any expenditures by a party permitted or required
under the Lease, for which such party is entitled to demand and does demand
reimbursement from the other party, shall be limited to the fair market value of
the goods and services involved, shall be reasonably incurred, and shall be
substantiated by documentary evidence available for inspection and review by the
other party or its representative during normal business hours.
ARTICLE 14
CORPORATE AUTHORITY
BROKERS AND ENTIRE AGREEMENT
14.1 CORPORATE AUTHORITY: If Tenant is a corporation, each individual executing
this Lease on behalf of said corporation represents and warrants that Tenant is
validly formed and duly authorized and existing, that Tenant is qualified to do
business in the State in which the Leased Premises are located, that Tenant has
the full right and legal authority to enter into this Lease, that he is duly
authorized to execute and deliver this Lease on behalf of Tenant in accordance
with the bylaws and/or a board of director's resolution of Tenant, and that this
Lease is binding upon Tenant in accordance with its terms. Tenant shall,
concurrently with the execution of this Lease, deliver to Landlord a certified
copy of the resolution of its board of directors authorizing or ratifying the
execution of this Lease, together with certificate of incumbancy.
19
14.2 BROKERAGE COMMISSIONS: Tenant warrants that it has not had any dealings
with any real estate broker(s), leasing agent(s), finder(s) or salesmen, other
than the Brokers (as named in Article 1) with respect to the lease by it of the
Leased Premises pursuant to this Lease, and that it will indemnify, defend with
competent counsel, and hold Landlord harmless from any liability for the payment
of any real estate brokerage commissions, leasing commissions or finder's fees
claimed by any other real estate broker(s), leasing agent(s), finder(s), or
salesmen to be earned or due and payable by reason of Tenant's agreement or
promise (implied or otherwise) to pay (or to have Landlord pay) such a
commission or finder's fee by reason of its leasing the Leased Premises pursuant
to this Lease.
14.3 ENTIRE AGREEMENT: This Lease, the Exhibits (as described in Article 1) and
the Addenda (as described in Article 1), which Exhibits and Addenda are by this
reference incorporated herein, constitute the entire agreement between the
parties, and there are no other agreements, understandings or representations
between the parties relating to the lease by Landlord of the "Leased Premises to
Tenant, except as expressed herein. No subsequent changes, modifications or
additions to this Lease shall be binding upon the parties unless in writing an
signed by both Landlord and Tenant.
14.4 LANDLORD'S REPRESENTATION: Tenant acknowledges that neither Landlord nor
any of its agents made any representations or warranties respecting the Project,
the Building or the Leased Premises, upon which Tenant relied in entering into
this Lease, which are not expressly set forth in this Lease. Tenant further
acknowledges that neither Landlord nor any of its agents made any
representations as to (i) whether the Leased Premises may be used for Tenant's
intended use under existing Law, or (ii) the suitability of the Leased Premises
for the conduct of Tenant's business, or (iii) the exact square footage of the
Leased Premises, and that Tenant relied solely upon its own investigations
respecting said matters. Tenant expressly waives any and all claims for damage
by reason of any statement, representation, warranty, promise or other agreement
of Landlord or Landlord's agent(s), if any, not contained in this Lease or in
any Addenda hereto.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of the
respective dates below set forth with the intent to be legally bound thereby as
of the Effective Date of this Lease first above set forth.
AS LANDLORD
-----------
▇▇▇▇▇▇▇▇ CORPORATION,
a California Corporation
By:_____________________________
▇▇▇▇▇ ▇. ▇▇▇▇
Date:___________________________
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AS TENANT
---------
Efficient Networks, Inc.
a Delaware Corporation
By:_______________________________
Title:____________________________
Date:_____________________________
If Tenant is a CORPORATION, the authorized officers must sign on behalf of
the corporation and indicate the capacity in which they are signing. This Lease
must be executed by the chairman of the board, president or vice president, and
the secretary, assistant secretary, the chief financial officer or assistant
treasurer, unless the bylaws or a resolution of the board of directors shall
otherwise provide, in which event a certified copy of the bylaws or a certified
copy of the resolution, as the case may be, must be attached to this Lease.
21
EXHIBIT "A"
[PLAN APPEARS HERE]
EXHIBIT "B"
[FLOOR PLAN APPEARS HERE]
Page 1 of 3
EXHIBIT "B"
[PLAN APPEARS HERE]
The cross-hatched area represents the area located at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇ ▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇.
Page 2 of 3
EXHIBIT B
[PLAN APPEARS HERE]
Page 3 of 3
EXHIBIT "C"
ACCEPTANCE AGREEMENT
This Acceptance Agreement is made as of __________, 2000 by and between the
parties hereto with regard to that Lease dated March 16, 2000, by and between
▇▇▇▇▇▇▇▇ Corporation, a California corporation, as Landlord ("Landlord"), and
Efficient Networks, Inc., a Delaware corporation as Tenant ("Tenant"), affecting
those premises commonly known as University Park, located at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇, and Building B, Suite B, in the City of Los Gatos, State of
California (the "Premises"). The parties agree as follows:
1. All improvements required to be constructed by Landlord by the Lease
have been completed in accordance with the terms of the Lease and are hereby
accepted by Tenant, subject to the completion of punchlist items identified on
Exhibit "A" (Punch List) attached hereto.
2. Possession of the Premises has been delivered to Tenant and Tenant has
accepted and taken possession of the Premises.
3. The Lease Commencement Date is _________.
4. The Lease Term shall expire on __________ unless sooner terminated
according to the terms of the Lease or by mutual agreement.
5. The Base Monthly Rent due pursuant to the Lease is as follows:
Year 1= $100,183.20 per month
Year 2= $104,190.53 per month
Year 3= $108,358.15 per month
Year 4= $112,692.48 per month
Year 5= $117,200.17 per month
6. Landlord has received a Security Deposit in the amount of $117,200.17.
7. Landlord has received Prepaid Rent in the amount of $100,183.20, which
shall be applied to the first installment (s) of Base Monthly Rent.
8. The Lease is in full force and effect, neither party is in default of
its obligations under the Lease, and Tenant has no offsets, claims, or defenses
to the enforcement of the Lease.
AS LANDLORD: AS TENANT:
▇▇▇▇▇▇▇▇ Corporation, a California Corporation Efficient Networks, Inc.,
a Delaware Corporation.
By:________________________________________ By:__________________________
Title:_____________________________________ Title:_______________________
Dated:_____________________________________ Dated:_______________________
EXHIBIT "D"
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RULES & REGULATIONS
1. No sign, placard, picture, advertisement, name or notice shall be
inscribed, displayed, or printed or affixed on or to any part of the outside or
inside of the Building without the written consent of the Landlord first had and
obtained and Landlord shall have the right to remove any such sign, placard,
picture, advertisement, name or notice without notice to and at the expense of
Tenant.
All approved signs or lettering on doors shall be printed, painted, affixed
or inscribed at the expense of Tenant by a person approved of by Landlord.
Tenant shall not place anything or allow anything to be placed near the
glass of any window, door, partition or wall which may appear unsightly from
outside the Premises; provided, however, that Landlord may furnish and install a
Building standard window covering at all exterior windows. Tenant shall not
without prior written consent of Landlord cause or otherwise sunscreen any
window.
2. The sidewalks, halls, passages, exits, entrances, elevators and stairways
shall not be obstructed by any of the tenants or used by them for any purpose
other than for ingress and egress from their respective Premises.
3. Tenant shall not alter any lock or install any new or additional locks or
any bolts on any doors or windows of the Premises.
4. Tenant shall not allow any chairs with wheels or casters to be used without
a carpet protector or chairmat. Failure to follow this requirement which results
in carpet damage will result in Tenant being charged for replacement of the
carpet.
5. The toilet rooms, urinals, wash bowls and other apparatus shall not be used
for any purpose other than that for which they were constructed and no foreign
substance of any kind whatsoever shall be thrown therein and the expense of any
breakage, stoppage or damage resulting from the violation of this rule shall be
borne by the Tenant who, or whose employees or invitees shall have caused it.
6. Tenant shall not overload the floor of the Premises or in any way deface
the Premises or any part thereof.
7. No furniture, freight or equipment of any kind shall be brought in the
Building without the prior notice to Landlord and all moving of the same into or
out of the Building shall be done in such manner as Landlord shall designate.
Landlord shall have the right to prescribe the weight, size and position of all
safes and other heavy equipment brought into the Building and also the times and
manner of moving the same in and out of the Building. Safes or other heavy
objects shall, if considered necessary by Landlord, stand on supports of such
thickness as is necessary to properly distribute the weight. Landlord will not
be responsible for loss of or damage to any such safe or property from any cause
and all damage done to the Building by moving or maintaining any such safe or
other property shall be repaired at the expense of Tenant.
8. Tenant shall not use, keep or permit to be used or kept any foul or noxious
gas or substance in the Premises, or permit the Premises to be occupied or used
in a manner offensive or objectionable to the Landlord or other occupants of the
Building by reason or noise, odors and/or vibrations, or interfere in any way
with other tenants or those having business therein, nor shall any animals or
birds be brought in or kept in or about the Premises or the Building.
9. No cooking, except by microwave oven and minor food preparation ordinarily
occurring in similar office lunchrooms, shall be done or permitted by any Tenant
on the Premises, nor shall the Premises be used for the storage of merchandise,
for washing clothes, for lodging, or for any improper, objectionable or immoral
purposes.
10. Tenant shall not use or keep in the Premises of the Building any kerosene,
gasoline, or inflammable or combustible fluid or material, or use any method of
heating or air conditioning other than that supplied by the Landlord.
11. Landlord will direct electricians as to where and how telephone and
telegraph wires are to be introduced. No boring or cutting for wires will be
allowed without the consent of the Landlord. The locations of telephones, call
boxes and other office equipment affixed to the Premises shall be subject to the
approval of Landlord.
12. On Saturdays, Sundays, and legal holidays, and on other days between the
hours of 6:00 PM and 8:00 AM the following day, access to the Building, or to
the halls, corridors, elevators or stairways in the Building, or to the Premises
may be refused unless the person seeking access is known to the person or
employee of the Building in charge and has a pass or is properly identified. The
Landlord shall in no case be liable for damages for any error with regard to
admission to or exclusion from the Building of any person. In case of invasion,
mob, riot, public excitement, or other commotion, the Landlord reserves the
right to prevent access to the Building during the continuance of the same by
closing of the doors or otherwise, for the safety of the tenants and protection
of property in the Building and the Building.
EXHIBIT "E"
TENANT IMPROVEMENT AGREEMENT
1. Design and Construction of Improvements in and about the Leased Premises
------------------------------------------------------------------------
("Tenant Improvements"): Landlord agrees to construct within, under, and above
-----------------------
the Building housing the Leased Premises certain "Tenant Improvements" (or
"Interior Improvements") as set forth in this Exhibit "E" and Exhibit "B" at its
sole cost and expense, and which comply with the following guidelines and
requirements:
1. Landlord shall remove the wall between the existing "shipping room"
and "manufacturing room" in Building A to create one large
manufacturing area.
2. Landlord shall repair any damage to the existing 2' x 4' acoustical
tile T-Bar ceiling resulting from the removal of the wall in the
manufacturing room.
3. Landlord shall repair any damage to the existing V.C.T. floor caused
from the removal of the wall in the manufacturing room. Such a repair
might leave a narrow strip of tile running through the center of the
room depending on how the two floors line up after the removal of the
wall.
4. Landlord shall repair and paint the walls damaged by the removal of
the wall.
5. Landlord shall shampoo the carpets throughout the Premises.
Tenant agrees to pay the entire cost of construction (if any) of Tenant
Improvements in excess of those described above and in Exhibit "B". Tenant shall
pay such excess amount within thirty (30) days of receipt of a written statement
from Landlord therefore, and Landlord may require Tenant to pay such excess
amount prior to, and as a condition of, the commencement of construction of the
improvements.
2. Time for Construction of Tenant Improvements:
--------------------------------------------
Promptly following the vacation of the Premises by the current tenant,
Landlord shall use its best efforts to allow the construction of the Tenant
Improvements. Landlord shall commence construction of the Tenant Improvements
and shall use its best efforts to complete the improvements within twenty (20)
days from the commencement of the work; provided, however, that Landlord shall
be excused for a delay in the completion of construction of the Tenant
Improvements for such period of time as construction is delayed because of any
law, regulation, ordinance, or order of any public agency, or because of acts of
God, labor disputes, strikes, inability to obtain materials or labor, fires,
floods, inclement weather, earthquakes, epidemics, quarantine, restrictions,
freight embargoes, acts of public agencies, or other causes or contingencies
beyond the control of Landlord.
AS LANDLORD: AS TENANT:
▇▇▇▇▇▇▇▇ Corporation, a California Efficient Networks, Inc.
Corporation
By: /s/ [ILLEGIBLE]^^ By /s/ [ILLEGIBLE]^^
------------------------------- ------------------------------
Title: CEO Title Vice President
---------------------------- ---------------------------
Dated: 4/13/00 By:_____________________________
----------------------------
Title:__________________________
Dated: MARCH 23, 2000
--------------------------
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