EXHIBIT 20
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Landlord's Tenant's
Initials Initials
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LEASE AGREEMENT
BETWEEN
▇▇▇▇▇ ▇▇▇▇▇▇▇, LLC
("LANDLORD")
AND
ITO ACQUISITION CORP.
("TENANT")
LEASE AGREEMENT
TABLE OF CONTENTS
1. TERMS AND DEFINITIONS ................................................1
2. PREMISES AND COMMON AREAS.............................................3
3. TERM .................................................................5
4. POSSESSION ...........................................................5
5. MONTHLY BASIC RENT....................................................5
6. OPERATING EXPENSES....................................................6
7. SECURITY DEPOSIT .....................................................8
8. USE...................................................................8
9. NOTICES...............................................................9
10. BROKERS ..............................................................9
11. HOLDING OVER ........................................................10
12. TAXES ON TENANTS PROPERTY ...........................................10
13. CONDITION OF PREMISES ...............................................10
14. ALTERATIONS .........................................................10
15. REPAIRS .............................................................11
16. LIENS ...............................................................12
17. ENTRY BY LANDLORD ...................................................12
18. UTILITIES AND SERVICES ..............................................13
19. BANKRUPTCY ..........................................................13
20. INDEMNIFICATION AND EXCULPATION OF LANDLORD......................... 13
21. DAMAGE TO TENANTS PROPERTY ..........................................14
22. TENANT'S INSURANCE ..................................................14
23. DAMAGE OR DESTRUCTION ...............................................15
24. EMINENT DOMAIN ......................................................17
25. DEFAULTS AND REMEDIES................................................17
26. ASSIGNMENT AND SUBLETTING ...........................................20
27. SUBORDINATION........................................................22
28. ESTOPPEL CERTIFICATE ................................................22
29. HAZARDOUS MATERIALS..................................................23
30. RULES AND REGULATIONS ...............................................26
31. CONFLICT OF LAWS ....................................................26
32. SUCCESSORS AND ASSIGNS ..............................................26
33. SURRENDER OF PREMISES ...............................................26
34. ATTORNEY'S FEES .....................................................26
35. PERFORMANCE BY TENANT ...............................................26
36. MORTGAGE PROTECTION .................................................27
37. DEFINITION OF LANDLORD ..............................................27
38. WAIVER ..............................................................27
39. IDENTIFICATION OF TENANT ............................................27
40. PARKING .............................................................27
41. FORCE MAJEURE .......................................................28
42. TERMS, HEADING AND CONSTRUCTION......................................28
43. TIME ................................................................28
44. PRIOR AGREEMENT; AMENDMENTS..........................................28
45. SEVERABILITY ........................................................28
46. RECORDING............................................................28
47. LIMITATION OF LIABILITY AND TIME ....................................28
48. TRAFFIC IMPACT ......................................................29
49. MODIFICATIONS FOR LENDER OR GOVERNMENT ..............................29
50. FINANCIAL STATEMENTS ................................................29
51. QUITE ENJOYMENT .....................................................29
52. TENANT'S SIGNS.......................................................29
53. NO LIGHT, AIR OR VIEW EASEMENT.......................................30
54. TENANT AS CORPORATION, PARTNERSHIP, OR LIMITED LIABILITY COMPANY.....30
55. DEVELOPMENT AND EASEMENTS ...........................................30
56. COUNTERPARTS ........................................................30
57. NO OFFER ............................................................30
58. CONSENT TO ASSIGNMENT/TERMINATION OF EXISTING LEASE..................30
59. JOINT AND SEVERAL LIABILITY .........................................31
EXHIBITS:
A. Legal Description of the Land B. Standards for Utilities and Services C.
Sample Form of Tenant Estoppel Certificate D. Rules and Regulation E. Traffic
and Parking Rules and Relation F. Depiction of Build Area
LEASE AGREEMENT
THIS LEASE AGREEMENT, ("Lease") is made as of December 19, 2002, between ▇▇▇▇▇
▇▇▇▇▇▇▇ LLC, a California limited liability company ("Landlord"), and ITO
ACQUISITION CORP. a California Corporation ("Tenant"), for all of the space
(collectively, the "Premises") contained within the data processing building
containing approximately 68,807 square feet of space and located at ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ (the "Building"). The Building is part of the Building
site, which includes the parking areas and other improvements on the land
("Land") described on attached Exhibit A (collectively, the "Project").
1. TERMS AND DEFINITIONS. For the purposes of this Lease, the following terms
shall have the following definition:
(a) Addresses:
Landlord's Address: c/o Windell Investments, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
Tenant's Address: All notices to Tenant hereunder shall be delivered
to the Premises.
(b) Approximate Square Feet: The parties agree that the Building
contains approximately 68,807 square feet ("Square Foot/Feet") and that the
square footage is not subject to revision notwithstanding the fact that the
actual square footage of the Building may be more or less than 68,807.
(c) Broker(s): None.
(d) Commencement Date: December 20, 2002.
(e) Exhibits: "A" through "E", inclusive, all of which are attached to
this Lease and are incorporated herein by this reference. Defined or initially
capitalized terms in the attached document have the same meaning as in this
Lease unless otherwise expressly provided in those documents.
[END OF PAGE]
(f) Monthly Basic Rent:
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Period Rent Per Rentable Square Foot Monthly Basic Rent
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From 1/1/03 until 12/31/03 $1.35 $92,899.45
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From 1/1/04 until 12/31/04 $1.425 $98,049.98
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From 1/1/05 until 12/31/05 $1.50 $103,210.50
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From 1/1/06 until 12/31/06 $1.575 $108,371.03
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From 1/1/07 until 12/31/07 $1.65 $113,531.55
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From 1/1/08 until 12/31/08 $1.725 $118,692.08
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From 1/1/09 until 12/31/09 $1.80 $123,852.60
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Concurrently with Tenant's execution of this Lease, Tenant shall pay
Landlord the first month of Monthly Basic Rent in the amount $92,889.45.
Notwithstanding anything to the contrary contained herein, Tenant shall have no
obligation to pay rent and all rent shall be abated from the Commencement Date
through December 31, 2002.
(g) Parking: Tent shall have the right without cost or expense to use
the 160 vehicle Parking spaces most closely adjacent to the Building at the
Project during the term and any extended term of this Lease.
(h) Security Deposit: $121,478.33, which shall be payable concurrently
with Tenant's execution of this Lease.
(i) Tenant's Percentage: 100%, based on the Rentable Square Feet
contained in the Premises set forth in Subparagraph 1) and the Rentable Square
Feet contained in the Project ("Project Rentable Square Feet"). Subject to the
provisions of Subparagraph 6(a)(i), Tenant's Percentage shall be adjusted, if
ever, upon completion of the New Building (as defined below) and determination
of the exact number of Rentable Square Feet WITHIN the New Building to equal a
fraction whose numerator is the number of Rentable Square Feet within the
Premises and whose denominator is the Project Rentable Square Feet (which shall
include the Building and the New Building) The rentable square footage of the
New Building shall be determined by a third party space accountant selected by
Landlord in its sole and absolute discretion. Tenant shall have the right to
remeasure the rentable square footage of the New Building if in its reasonable
discretion it does not agree with the determination of such third party space
accountant
(j) Term: Eighty-four (84) calendar months (plus the applicable
fraction of a month if the actual Commencement Date is other than the first day
of a calendar month).
(k) Option(s) to Extend: Landlord hereby grants to Tenant the option to
extend the term of this Lease for two (2) additional sixty (60) month period(s)
commencing when the prior term expires upon each and all of the following terms
and conditions.:
(i) Tenant gives to Landlord and Landlord actually receives on
a date which is prior to the date that the option period would commence
(if exercised) by at least six (6) months, and not more than nine (9)
months an unconditional written notice of the exercise of the option(s)
to extend this Lease for said additional term(s), time being of
essence. If said notification of the exercise of said option(s) is
(are) not so given and received, the option(s) shall automatically
expire; said option(s) may (if more than one) only be exercised
consecutively;
(ii) All of the terms and conditions of this Lease except
where specifically modified by this option shall apply;
The Monthly Basic Rent for each month of the option period shall be adjusted on
the first day of the Extension (the "Adjustment Date") to the "fair rental
value" of the Premises on the Adjustment Date as follows:
(a) At least one hundred eighty (180) days before the Adjustment Date,
Landlord and Tenant shall meet in an effort to negotiate in good faith, the fair
rental value of the Premises as of the Adjustment Date. If Landlord and Tenant
have not agreed on the fair rental value of the Premises at least one hundred
(100) days before the Adjustment Date, Landlord and Tenant shall attempt to
agree in good faith upon a single appraiser not later than seventy-five (75)
days before the Adjustment Date. If Landlord and Tenant are unable to agree upon
a single appraiser within this time period, then Landlord and Tenant shall each
appoint One (1) appraiser not later than sixty-five (65) days before the
Adjustment Date. Within ten (10) days thereafter the two appointed appraisers
shall appoint a third appraiser. If either Landlord or Tenant fails to appoint
its appraiser within the prescribed time period, the single appraiser appointed
shall determine the fair rental value of the Premises. If both parties fail to
appoint appraisers within the prescribed time periods, then the first appraiser
thereafter selected by a party shall determine the fair rental value of the
Premises. Each party shall bear the cost of its own appraiser, and the parties
shall share equally the cost of a single or a third appraiser, if applicable.
Each appraiser shall have at least five (5) years experience in the appraisal of
comparable buildings in Southern California and shall be a member of one or more
professional organizations such as MAI or an equivalent.
(b) For purposes of such appraisal, "fair rental value" shall mean the
price that a ready and willing tenant would pay, as of the Adjustment Date, as
monthly rent to a ready and willing landlord of a comparable buildings in Orange
County, California for space comparable to the Premises if that property were
exposed for lease on the open market for a reasonable period of time with a
lease comparable to the Lease and with tenant improvements comparable to those
in the Premises. If a single appraiser is chosen, then such appraisal shall
determine the fair rental value of the Premises. Otherwise, the fair rental
value of the Premises shall be the arithmetic average of the two of the three
appraisals which are closest in amount, and the third appraisal shall be
disregarded. In no event, however, shall the then-existing monthly rent ever be
reduced by reason of such computation, nor shall there be any rent concession or
additional tenant improvement allowance for the extension term. Landlord and
Tenant shall instruct the appraiser(s) to complete their determination of the
fair rental value not later than thirty (30) days before the Adjustment Date. If
the fair rental value is not determined before the Adjustment Date, then Tenant
shall continue to pay to Landlord the monthly rent in effect immediately prior
to such Extension until the fair rental value is determined. When the fair
rental value of the Premises is determined, Landlord shall deliver notice of
that amount to Tenant, and Tenant shall pay to Landlord, within ten (10) days
after receipt of such notice, the difference between the monthly rent actually
paid by Tenant to Landlord and the new monthly rent determined under this
paragraph.
(l) Use: Data processing facility and general office use.
2. PREMISES AND COMMON AREAS. Subject to all the provisions of this
Lease, Landlord leases to Tenant and Tenant leases from Landlord the Premises,
which Premises are improved for use as a data processing
facility and for office use, those Premises being agreed to have the
Approximate Rentable Square Feet designated in Subparagraph 1(b).
(b) Tenant shall have the nonexclusive right to use, in common with
other present and future tenants in the Project, the following areas ("Common
Areas") appurtenant to the Premises, subject to the Rules and Regulations
referred to in Paragraph 30 and to other reasonable rules and regulations which
Landlord may deem advisable for the Common Areas:
(i) The Project's common entrances, ramps and drives;
(ii) Loading and unloading areas, trash areas, parking areas,
and similar areas and facilities appurtenant to the Building;
(iii) The roadways, sidewalks, walkways, parkways, driveways
and landscaped areas and similar areas and facilities within the
Project which are made available for the use or benefit of all Project
tenants and their invitees and other visitors; and
(iv) The parking areas, including driveways and alleys.
(c) Landlord reserves the right from time to time without unreasonable
interference with Tenant's use or security:
(i) To install, use, maintain, repair and replace pipes,
ducts, conduits, wires and appurtenant meters and equipment for service
within the Building above the ceiling surfaces, below the floor
surfaces, and within the walls, and to relocate any pipes, ducts,
conduits, wires and appurtenant meters and equipment included in the
Premises which are located in the Premises or located elsewhere outside
the Premises, and to expand the Project; provided, however, that
notwithstanding anything to the contrary contained herein, the Building
shall not be expanded and Landlord shall have no right to construct or
locate the New Building on any portion of the Project except for that
portion of the Project which is labeled as the "Build Area" on Exhibit
F attached hereto;
(ii) To make changes to the Common Areas, including, without
limitation, changes in the location, size, shape and number of
driveways, entrances parking spaces, parking areas, loading and
unloading areas, ingress, egress, direction of traffic, landscaped
areas and walkways provided that Tenant shall at all times have the
right to use the number of parking spaces designated in Subparagraph
1(g);
(iii) To temporarily close or designate for other uses any of
the Common Areas for purposes of improvement, maintenance or repair, so
long as reasonable access to the Premises remains available;
(iv) To designate other land outside the boundaries of the
Building to be a part of the Common Areas;
(v) To add additional buildings and improvements
(collectively, "New Building") to the Build Area, including, without
limitation an office and/or R&D building containing up to 70,000 square
feet of space;
(vi) To use the Common Areas while engaged in making
additional improvements, repairs or alterations to the Building or the
Project, or any portion thereof; and
(vii) To do and perform such other acts and make such other
changes in, to or with respect to the Common Areas as Landlord may deem
to be appropriate.
The preceding reservation of rights to Use the Common Areas shall not impose on
Landlord any obligation to maintain or repair the Common Areas or any other
portion of the Premises except as expressly set forth in this Lease. In making
any additions, repairs alterations or improvements to the Project, Landlord
shall use all commercially reasonable efforts to minimize any interference with
Tenant, its business and its use. Landlord acknowledges that Tenant intends to
use the Premises as a data processing facility and that any interruption to
Tenant's business or in Tenant's use or access to the Premises could have a
material adverse effect on Tenant and its business. Landlord shall indemnify,
defend and hold Tenant and its officers directors, shareholders, agents
employees and contractors (the "Tenant Parties" or, individually, a "Tenant
Party") harmless from all damages, costs and expenses (including attorneys'
fees), judgments loss, damage injury, liability, claims and losses, including,
without limitation, injury to Tenant's business and loss of income and profit
(collectively, "Tenant Claims") arising from any additions, repairs, alterations
or improvements to the Project made by or for Landlord except to the extent that
such Tenant Claims arise out of the Tenant's negligence. In case any action or
proceeding shall be brought against the Tenant Parties or any of them by reason
of any such Tenant Claim, Landlord, upon notice from Tenant, shall defend the
same at Landlord's expense by counsel approved in writing by Tenant.
3. TERM. Subject to the provisions of Subparagraph 1(k), The Terms
shall be for the period designated in Subparagraph 1(j), beginning on the
Commencement Date under Subparagraph 1(d) and ending on the expiration of that
period, unless the Lease shall be terminated sooner as hereinafter provided
4. POSSESSION. Landlord and Tenant agree that Systems Management
Specialists Inc., a Delaware corporation ("SMS") is currently in possession of
the Premises. Tenant agrees to accept delivery directly from SMS.
5. MONTHLY BASIC RENT
(a) Tenant agrees to pay Landlord as Monthly Basic Rent for the
Premises the Monthly Basic Rent designated in Subparagraph 1(f) in advance on
the first day of each calendar month during the Term. If the Term commences or
ends on a day other than the first day of a calendar month, then the rent for
such period shall be prorated in the proportion that the number of days this
Lease is in effect during such period bears to thirty (30). In addition to the
Monthly Basic Rent, Tenant agrees to pay as additional rental the amount of
rental and other charges required by this Lease. In no event shall Monthly Basic
Rent ever be less than the initial Monthly Basic Rent. All rental shall be paid
to Landlord, without prior demand and without any deduction or offset, in lawful
money of the United States of America at the address of Landlord designated in
Subparagraph 1(a) or to such other person or at such other place as Landlord may
from time to time designate in writing.
(b) Rent and all other payments required to be made by Tenant to
Landlord under this Lease shall be deemed to be and treated as rent and payable
and recoverable as "rent", and Landlord shall have the same rights against
Tenant for default in any such payment as in the case of nonpayment of Monthly
Basic Rent.
(c) If Tenant fails to pay any installment of rent within ten (10) days
following the date due (which ten days is not intended to be a grace period) or
if Tenant fails to make any other payment for which Tenant is obligated under
this Lease when due, then Tenant shall pay to Landlord as additional rent a late
charge equal to six percent (6%) of the amount due to compensate Landlord for
the extra costs incurred as a result of such late payment. The parties agree
that such late charge represents a fair and reasonable estimate of the costs
that Landlord will incur by reason of late payment by Tenant. Acceptance of any
late charge shall not constitute a waiver of the Tenant's default with respect
to the overdue amount, or prevent Landlord from exercising any other rights and
remedies available to Landlord.
(d) If the amount of rent or any other payment due under this Lease now
or in the future violates the terms of any government restrictions on such rent
or payment, then the rent or payment due during the period of such restrictions
shall be the maximum amount allowable under those restrictions. Upon termination
of the restrictions, Landlord shall, to the extent it is legally permitted,
recover from Tenant the difference between the
amounts received during the period of the restrictions and the amounts Landlord
would have received had there been no restrictions.
6. OPERATING EXPENSES
(a) For purposes of this Lease, the following terms are
defined as follows:
(i) "Tenant's Percentage" shall have the meaning set
forth in Subparagraph 1(h).
However, upon completion of any New Building, Tenant's Percentage shall remain
at 100% with respect to Operating Expenses relating exclusively to the Building
and any facilities in or portion of the Project exclusively serving the
Building. In addition, any Operating Expenses relating exclusively to the New
Building and any facilities or portion of the Project exclusively serving the
New Building shall be excluded from Operating Expenses.
(ii) "JIVAC Costs" means all costs incurred in the
operation, repair and maintenance
and replacement of the systems for heating ventilating and air conditioning the
buildings in the Project including, without limitation, supplies, materials,
equipment, tools, and contracted services.
(iii) "Taxes and Assessments shall mean: (1) Real
property taxes and fees and expenses
incurred in contesting the amount or validity of any real property tax; (2) Any
assessment fee, tax, levy, charge, penalty or similar imposition imposed by any
authority, improvement district or special assessment district upon or in
respect of the Premises, Building, Project, or Common Areas, or any potion
thereof, including any such charges imposed for the use or occupancy of the
Building, Project, or Premises, or upon this transaction or any document to
which Tenant is a party; and (3) Any new or increased assessment, tax, fee, levy
or charge in substitution, partially or totally, of any assessment, tax, fee,
charge previously included under Subparagraphs 6(a)(iii)(l) and (2), including
without limitation, increases due to tax rate increases or reassessment of the
Premises, Building, Common Areas, or Project or any portion thereof for any
reason; provided however that Taxes and Assessments shall not include any
inheritance personal income or estate taxes. Upon any reassessment of the
Project in connection with development of the New Building, Taxes and
Assessments shall include Taxes and Assessments relating to the New Building but
shall be equitably adjusted as reasonably determined by Landlord so that the
amount of Taxes and Assessments which Tenant is liable for or required to pay
(which is equal to Tenant's Percentage times Taxes and Assessments) shall not
increase as the result of such reassessment except to the extent that Tenant is
materially benefited by any improvements to the Common Areas or other facilities
serving the Project.
(iv) "Insurance Costs" means all costs of premiums
for insurance that Landlord
procures under Section 22(c) of this Lease.
(v) "Capital Costs" means all costs incurred to make
any capital improvements,
replacements or repairs to the Building, Project, or Common Areas, or any
portion thereof, including, without limitation, structural additions or repairs,
which: (1) are now or may hereafter be required by any statute, ordinance or
regulation of any governmental or enforcement agency; or (2) are needed to
operate and maintain the Building, Project, or Common Areas, or any portion
thereof, at the same quality levels as prior to the improvement or repair.
Capital Costs shall not include the cost of constructing the New Building.
(b) "Operating Expenses" shall consist of all direct costs of
ownership, operation, repair or maintenance (including necessary supplies,
material tools and equipment) of the Building Project, or Common Areas,
including any expansions of the Project, or Common Areas by Landlord or any
portion thereof, and all indirect costs that are reasonably attributable to the
operation, repair and maintenance of the Building, Project, and Common Areas, or
any portion thereof, for any calendar year, including costs for the following by
way of illustration, but not limitation:
HVAC Costs; Taxes and Assessments; Insurance Costs; Capital Costs;
costs connected with providing electrical telephone, cable and other
electronic data transmission services (including, without limitation,
any costs (whether or not Capital Costs) arising from the maintenance,
repair
and/or replacement of all or any component of electrical, plumbing,
mechanical lighting, HVAC or other building systems, and/or the
maintenance, repair and/or replacement of lighting fixtures, light
bulbs, air filtration or distribution devices (provided that Landlord
shall have no obligation to provide any utilities), window panes,
window coating and/or other energy-saving measures); janitorial service
and window cleaning; waste disposal; parking facilities; Common Areas
signage; landscaping and gardening; security; and accounting legal,
administrative and consulting fees. Notwithstanding anything to the
contrary contained herein, Tenant shall have no obligation to reimburse
Landlord for any capital improvements made by Landlord except to the
extent that such capital improvements are included within the
definition of Capital Costs.
Notwithstanding anything to the contrary contained herein, Operating
Expenses shall not include any costs incurred in the management of the
Building, Project, and Common Areas.
(c) Except only for (i) any interest, points and fees on debts
or amortization on any mortgage or mortgages or other debt instrument evidencing
indebtedness of Landlord and (ii) costs arising from the payment of any claims
against Landlord (for which Tenant is not responsible) secured by judgments or
liens against the Premises, this Lease is and shall be construed as an absolute
"triple net" lease arrangement, the Monthly Basic Rent shall be completely net
to the Landlord, and Tenant shall be directly responsible for and pay Tenant's
Percentage of all Operating Expenses as set forth in clauses (i) through (v),
below:
(i) beginning with the Commencement Date and on or
before the expiration of each one
(1) year period thereafter (each, a "Lease Year"), Landlord shall deliver to
Tenant an estimate of Tenant's Percentage of annual Operating Expenses payable
in twelve (12) equal monthly installments on the first day of every month as
additional rent together with Tenant's payment of Monthly Basic Rent. Landlord
may from time to time during the Lease Year revise Landlord's estimate of annual
Operating Expenses and Tenant's monthly estimated payments. If after the first
Lease Year Landlord has not furnished Tenant with a written estimate for any
Lease Year, Tenant shall continue to pay monthly installments of Tenant's
Percentage of Operating Expenses at the rate established for the immediately
preceding Lease Year (if applicable), provided that, when a written estimate of
Operating Expenses for the current Lease Year is delivered to Tenant, Tenant
shall, on or before the next monthly payment date, pay all accrued and unpaid
monthly estimates based on the new estimate.
(ii) On or before May 1 of each Lease Year after the
first Lease Year (or as soon
thereafter as is practical) Landlord shall deliver to Tenant a statement (the
"Statement") setting out Tenant's Percentage of actual Operating Expenses for
the immediately preceding Lease Year. If Tenant's Percentage of actual Operating
Expenses for the previous Lease Year differs from the total estimated monthly
payments of Tenant's Percentage of Operating Expenses made by Tenant for such
Lease Year, Tenant shall pay the amount of the deficiency within thirty (30)
days of receipt of the Statement or Landlord shall credit the difference, as the
case may be; in the case of a credit due, Landlord shall credit against Tenant's
next ensuing installment(s) of Monthly Basic Rent an amount equal to the
difference until the credit is exhausted. If a credit is due from Landlord on
the last day of the Term, Landlord shall credit against any payments due from
Tenant under this Lease an amount equal to the credit or, if no payments are
due, or may become due from Tenant, Landlord shall pay Tenant the amount of the
credit. The obligations of Tenant and Landlord to make payments required under
this Paragraph 6 shall survive the termination of this Lease.
(iii) If any dispute arises as to the accuracy of
Operating Expenses as set forth in
the Statement, Tenant shall nevertheless make the payment in accordance with any
notice given by Landlord, but Tenant shall have the right, after reasonable
notice and at reasonable times, to inspect Landlord's accounting records at
Landlord's accounting office and, if after such inspection, Tenant still
disputes the amount of Operating Expenses owed, Landlord shall immediately refer
the matter for prompt certification by third party certified public accountants
selected by Landlord and reasonably acceptable to Tenant, who shall be deemed to
be acting as experts and not arbitrators, which certification shall be
conclusive and binding on both parties. Any adjustment required to any previous
payment made by Tenant or Landlord by reason of any such decision shall be made
within ten (10) days of
such certification. Tenant agrees to pay the cost of such certification unless
it is determined that Landlord's original Statement overstated Operating
Expenses by more than five percent (5%).
(iv) Operating Expenses due from Tenant in any Lease
Year which has less than 365 days
because the Term expires on other than the last day of that Lease Year shall be
prorated on a per-day basis.
(v) Without limiting the foregoing, including
Landlord's right to adjust the estimate
of Operating Expenses from time to time, should Landlord incur any Capital
Costs, Landlord may elect, in Landlord's sole and absolute discretion, to
require payment of such Capital Costs within thirty (30) business days following
demand therefor together with such supporting documentation as Tenant may
reasonably require.
(d) Notwithstanding anything to the contrary contained
immediately above, as to each specific category of expense which one or more
tenants of the Project either pays directly to third parties or actually
reimburses Landlord (for example, separately metered utilities, property taxes
directly reimbursed to Landlord, etc.) then each such expense which is actually
paid or reimbursed shall not be included in "Operating Expenses" for purposes of
this Paragraph 6. Tenant's Percentage for each such category of expense shall be
adjusted by excluding from the denominator thereof the Rentable Square Feet of
all such tenants paying such category of expense directly to third parties or
actually reimbursing same directly to Landlord. Moreover, if Tenant directly
pays a third party or actually reimburses Landlord for any such category of
expense, each such category of expenses which is paid or actually reimbursed by
Tenant shall be excluded from the determination of Operating Expenses for Tenant
to the extent such expense (after deduction of that portion paid or directly
reimbursed by Tenant) was incurred with respect to space in the Project actually
leased to other tenants.
7. SECURITY DEPOSIT. The Security Deposit designated in Subparagraph
1(h) shall be held by Landlord as security for the faithful performance by
Tenant of all of Tenant's obligations under this Lease. If Tenant breaches any
obligation under this Lease, including, without limitation, under provisions
relating to the payment of rent, Landlord may (but shall not be required to)
use, apply or retain all or any part of the Security Deposit for the payment of
any rent or any other sun in default, or for the payment of any other amount
which Landlord may spend or become obligated to spend by reason of Tenant's
default or to help to compensate Landlord for any other loss or damage which
Landlord may suffer by reason of Tenant's default. If any portion of the
Security Deposit is so used or applied, Tenant shall, upon demand, deposit cash
with Landlord in an amount sufficient to restore the Security Deposit to its
original amount. Tenant's failure to do so shall be a material breach of this
Lease. Upon any increase in Monthly Basic Rent, Tenant shall, upon written
notice from Landlord, deposit with Landlord such additional funds to be added to
the security deposit in an amount equal to the proportionate increase in Monthly
Basic Rent. Landlord shall not be required to keep the Security Deposit separate
from its general funds, and Tenant shall not be entitled to interest on the
Security Deposit. If Tenant shall fully and faithfully perform all of its
obligations under this Lease, the Security Deposit or any balance thereof shall
be returned to Tenant (or, at Landlord's option, to the last permitted assignee
of Tenant's interests under s Lease) at the expiration of the Term, provided
that Landlord may retain the Security Deposit until such time as any amount due
from Tenant in accordance with Paragraph 6 has been determined and paid in full.
If Landlord sells its interest in the Premises during the Term and if Landlord
deposits with the purchaser of the Premises the then unappropriated portion of
the Security Deposit, Landlord shall be discharged from any further liability
with respect to the Security Deposit.
8. USE.
(a) Tenant shall use the Premises only for the use set forth
in Subparagraph 1(1), and shall not use or permit the Premises to be used for
any other purpose without Landlord's prior written consent, which may be
withheld in Landlord's sole and absolute discretion. Nothing contained herein
shall be deemed to give Tenant any exclusive right to such use in the Building
or Project or shall be deemed to be a warranty by Landlord that the Premises are
suitable for a particular use. Tenant shall not use or occupy the Premises in
violation of any present or future applicable law, and shall, upon written
notice from Landlord, discontinue any use of the Premises which is declared by
any applicable authority to be a violation of law. Tenant shall comply with any
direction of any such governmental authority which shall, by reason of the
nature of Tenant's use or occupancy of the
Premises, impose any duty upon Tenant or Landlord with respect
to the Premises or with respect to the use or occupation thereof.
Notwithstanding any circumstantial factors judicially developed as a means of
allocating the obligation to make alterations to the Premises in order to comply
with present or future laws, it is the intention of the parties that such
obligations with respect to the Premises are those of the Tenant and are
accordingly reflected in rental payments and other consideration under this
Lease. Tenant shall comply with all rules, orders, regulations and requirements
of such generally recognized fire rating organization(s) as Landlord may specify
from time to time. Tenant shall promptly, upon demand, reimburse Landlord for
any additional insurance premium charged by reason of Tenant's failure to comply
with the provisions of this Paragraph 8. Tenant shall take all steps required to
ensure that neither Tenant nor its contractors or invitees (i) Violate any
governmental regulations, ordinances, or laws applicable to the Premises, (ii)
do or permit anything to be done in or about the Premises which will in any way
obstruct or interfere with the rights of other tenants or occupants of the
Building or Project, or injure or annoy them, (iii) use or allow the Premises to
be used for any improper immoral, unlawful or objectionable purpose, or (iv)
cause, maintain or permit any nuisance in, on or about the Premises. Tenant
shall comply with all present and future covenants conditions and restrictions
or other restrictive covenants and obligations, whether or not of record, which
affect the use and operation of the Premises, the Building, the Common Areas or
the Project, or any portion thereof. Tenant shall not commit or suffer to be
committed any waste in or upon the Premises and shall keep the Premises in good
order, condition and repair. Tenant shall not place a load upon the Premises
exceeding the average pounds of live load per square foot of floor area
specified for the Building by Landlord's architect, with partitions to be
considered a part of the live load. Landlord reserves the right to prescribe the
weight and position of all files, safes and heavy equipment which Tenant desires
to place in the Premises so as to properly distribute the weight thereof.
Further, Tenant's business machines and mechanical equipment which cause
vibration or noise that may be transmitted to the Building structure or to any
other space in the Building or Project shall be so installed, maintained and
used by Tenant as to eliminate such vibration or noise. Tenant shall be
responsible for all structural engineering required to determine structural load
in the Premises.
(b) Landlord and Tenant acknowledge that the Americans With
Disabilities Act of 1990 (42 U.S.C. Section 12101 et seq.) and regulations and
guidelines promulgated thereunder, as all of the same may be amended and
supplemented from time to time (collectively, "ADA") establish requirements for
business operations, accessibility and barrier removal and that such
requirements may or may not apply to the Premises, the Building and the Project
depending on, among other things: (1) whether Tenant's business is deemed a
"public accommodation or "commercial facility", (2) whether such requirements
are "readily achievable", and (3) whether a given alteration affects a "primary
function area" or triggers "path of travel" requirements. The parties hereby
agree that: (a) Landlord shall be responsible for ADA Title III compliance in
the Common Areas in connection with any development of the New Building (b)
Tenant shall be responsible for ADA Title III compliance in the Premises,
including any tenant improvements or other work to be performed in the Premises
under or in connection with this Lease, (c) Landlord may perform, or require
that Tenant perform, and Tenant shall be responsible for the cost of ADA Title
III "path of travel" requirements triggered by Tenant Alterations in the
Premises, and (d) Landlord may perform, or require Tenant to perform, and Tenant
shall, except as provided in Clause (a), above, be responsible for the cost of
ADA Title III compliance in the Common Areas. Tenant shall be solely responsible
for requirements under Title I of the ADA relating to Tenant's employees.
9. NOTICES. Any notice, consent, or approval required or permitted to
be given under this Lease must be in writing and may be given by personal
delivery or by mail, and shall be deemed sufficiently given when actually
received by the intended party, whether personally delivered or mailed by
registered or certified mail, if to Tenant at the address designated in
Subparagraph l(a) until the commencement of the Term only, and thereafter at the
Premises, and if to Landlord at the addresses designated in Subparagraph 1(a).
Either party may specify a different address for notice purposes by written
notice to the other, except that Landlord may in any event use the Premises as
Tenant's address for notice purposes.
10. BROKERS. Each party warrants that it has had no dealings with any
real estate broker or agent in connection with the negotiation of this Lease.
Each party agrees to indemnify and defend the other from any cost, expense or
liability for any compensation, fee, commission or charge claimed by any other
party claiming by, through or on behalf of the other with respect to this Lease.
11. HOLDING OVER. Tenant shall vacate the Premises upon the expiration
or earlier termination of this Lease. Tenant shall reimburse Landlord for and
indemnify Landlord against all damages and liability which Landlord incurs from
Tenant's delay in vacating the Premises, including, without limitation, claims
by and liability to any succeeding tenant founded on such delay and any
attorneys' fees and costs. If Tenant does not vacate the Premises Upon the
expiration or earlier termination of the Lease and Landlord thereafter accepts
rent from Tenant, Tenant's occupancy of the Premises shall be a "month-to-month"
tenancy, subject to all of the terms of this Lease applicable to a
month-to-month tenancy, except that the Monthly Basic Rent then in effect shall
be increased by fifty percent (50%).
12. TAXES ON TENANT'S PROPERTY
(a) Tenant shall be liable for and shall pay, at least ten
(10) days before delinquency, all taxes levied against any personal property or
trade fixtures placed by Tenant in or about the Premises. If any such taxes on
Tenant's personal property or trade fixtures are levied against Landlord or
Landlord's property or if the assessed value of the Premises is increased by the
inclusion therein of a value placed upon such personal property or trade
fixtures of Tenant and if Landlord, after thirty (30) days prior notice to
Tenant, pays the taxes based upon such increased assessment, which Landlord
shall have the right to do regardless of the validity thereof, but only under
proper protest if requested by Tenant, Tenant shall, upon demand, repay to
Landlord the taxes so levied against Landlord, or the portion of such taxes
resulting from such increase in the assessment.
(b) If the tenant improvements in the Premises, whether
installed by Landlord or Tenant, or paid for by Landlord or Tenant and whether
or not affixed to the real property so as to become a part thereof, are assessed
for real property tax purposes at a valuation higher than the valuation at which
tenant improvements conforming to Landlord's standards for other space in the
Building are assessed, then the real property taxes and assessments levied
against the Building by reason of such higher assessed valuation shall be deemed
to be taxes levied against personal property of Tenant and shall be governed by
the provisions of Subparagraph 12(a). If the records of the County Assessor are
not available or sufficiently detailed to serve as a basis for determining
whether the tenant improvements are subject to a higher valuation than
improvements conforming to Landlord's Building standards, the actual cost of
construction shall be used.
(c) Any assessment, tax, fee, levy or charge allocable to or
measured by the area of the Premises or by any payments to be made by Tenant
under this Lease, including without limitation, any gross income tax or excise
tax levied by any governmental agency or political subdivision thereof with
respect to the receipt of rent or other payments under a lease, or upon or with
respect to the possession, leasing, operating, management, maintenance,
alteration, repair, use or occupancy by Tenant of the Premises or any portion
thereof, shall be deemed to be taxes levied against personal property of Tenant
and shall be governed by the provisions of Subparagraph 12(a).
13. CONDITIONS OF PREMISES AND PROPERTY. Except as expressly set forth
in this Lease, Landlord's lease of the Premises to Tenant shall be on an "AS IS"
basis without representations or warranties express or implied, and Tenant's
taking of possession of the Premises shall conclusively establish that the
Premises and the Building were in satisfactory condition at the time of that
possession. Subject to the limitations on Landlord set forth in Section 2,
Tenant accepts that from time to time there may be construction and improvement
work by Landlord on the Build Area.
14. ALTERATIONS
(a) Tenant shall make no alterations, additions, repairs or
improvements to the Premises (collectively, "Alteration(s)") except as expressly
permitted by this Paragraph 14. Tenant shall have no right to make any
Alterations to the structural portions of the Building which shall include the
foundation, floor/ceiling slabs, roof, curtain walls, exterior glass and
mullions columns, beams, shafts, stairs, stairwells, escalators, plazas,
artwork, sculptures, washrooms, mechanical, electrical and telephone closets and
all Common Areas and public areas and the mechanical electrical, life safety,
plumbing, sprinkler systems and HVAC systems (collectively, "Building Structure
and Systems") Landlord's consent to any other Alteration (i.e., other than to an
Alteration to any portion or component of the Building Structure and Systems or
that, in Landlord's reasonable judgment, could adversely affect any portion of
the Building Structure and Systems) shall not be unreasonably withheld.
Notwithstanding the other provisions of this Paragraph 14, Tenant may install
nominal office decorations (e.g., paintings) in the Premises without obtaining
Landlord's consent.
(b) Landlord may condition its consent to any type of
Alteration on such requirements as Landlord may deem necessary in its
subjective, good faith discretion, including without limitation: (i) the manner
in which the work is to be done, (ii) the right of approval over the entity
which shall perform or contract to perform the work (which approval may be
withheld if, among other things, that entity is not properly licensed under all
applicable laws or if Landlord deems the insurance carried by that entity to be
inadequate), (iii) the times during which the work is to be accomplished, (iv)
the issuance at Tenant's sole cost of a performance or labor and material
payment bond ensuring lien-free completion of the proposed Alterations, or (v)
delivery to Landlord of preliminary and final sets of plans for the proposed
Alterations. Tenant shall give Landlord at least ten (10) business days prior
written notice of the expected commencement date of any work related to the
Premises. Tenant shall be responsible for obtaining all permits required by law
for all work done by Tenant under this Lease and Tenant warrants that such work
shall comply with all applicable governmental laws, codes, or ordinances,
including without limitation, the ADA. Notwithstanding anything to the contrary
contained herein, Tenant may, however, make non-structural installations to the
interior of the Premises (excluding the roof), as long as they are not visible
from the outside, do not involve puncturing, relocating or removing the roof or
any existing walls, and the cumulative cost thereof during the term of this
Lease does not exceed $25,000.
(c) Upon the expiration or earlier termination of this Lease,
(1) all or any part of the Alterations to or in connection with the Premises
shall, at the option of Landlord, either (a) become the property of Landlord and
remain and be Surrendered with the Premises, or (b) be removed from the Premises
and the Premises restored to their condition immediately before those
Alterations were made, all by and at the expense of Tenant.
(d) All articles of personal property and all business and
trade fixtures, machinery and equipment, furniture and movable partitions owned
by Tenant ("Tenant's Effects") shall be and remain the property of Tenant and
may be removed by Tenant at any time during the Term. If Tenant fails to remove
all of Tenant's Effects from the Premises upon termination of this Lease,
Landlord may, at its option, remove Tenant's Effects and store Tenant's Effects
without liability to Tenant for loss of Tenant's Effects. Tenant agrees to pay
Landlord upon demand any and all expenses incurred by Landlord in removing
Tenant's Effects, including court costs, attorneys' fees and storage charges on
Tenant's Effects, for any length of time that Tenant's Effects shall be in
Landlord's possession. Landlord may, at its option, without notice, sell
Tenant's Effects, or any of the same, at a private sale and without legal
process, for such price as Landlord may obtain, and apply the proceeds of such
sale to any amounts due under this Lease from Tenant to Landlord and to the
expenses incident to the removal and sale of Tenant's Effects. Tenant waives the
provisions of California Civil Code sections 1980-1991.
15. REPAIRS
(a) Tenant shall keep, maintain and preserve the Premises in
good order, condition and repair, and shall, when and if needed, at Tenant's
sole cost and expense, make all repairs to the Premises and every part thereof,
including, without limitation, the interior surfaces of the ceilings, walls and
floors, all doors, all interior windows, all non-standard plumbing, pipes,
electrical wiring, light fixtures and bulbs, switches, furnishings, signs and
special items and equipment installed by or at the expense of Tenant. Landlord
shall have no obligation to alter, remodel, improve, repair, decorate or paint
the Premises or any part thereof. Tenant and Landlord affirm that Landlord has
made no representations to Tenant respecting the condition of the Premises, the
Building, the Common Areas, or the Project except as specifically set forth in
this Lease.
(b) Anything Contained in Paragraph 15(a) to the contrary
notwithstanding, Landlord shall repair (including any necessary replacements)
and maintain the Common Areas, including the landscaping, parking areas and
exterior lighting, and the structural portions of the Building and the Building
plumbing, heating, ventilating, air conditioning and electrical systems and the
costs of such repairs and maintenance shall be included in Operating Expenses.
Landlord shall not be liable for any failure to make any such repairs or to
perform any maintenance unless such failure shall persist for any unreasonable
time after written notice of the need of such repairs or maintenance is given to
Landlord by Tenant. Except as provided in Paragraph 23, there shall be no
abatement of rent to the extent of any insurance proceeds payable to Tenant
under insurance policies which Tenant maintains or is required to carry under
this Lease and no liability of Landlord by reason of any injury to or
interference with Tenant's business arising from the making of any repairs,
alterations or improvements in or to any portion of the Building, the Premises,
the Common Areas, or the Project or in or to fixtures, appurtenances and
equipment therein. Tenant waives the right to make repairs at Landlord's expense
under any law, state or ordinance flow or hereafter in effect. No provisions of
this Lease shall be construed as obligating Landlord to perform any repairs,
alterations or decorations except as otherwise expressly provided under this
Lease.
(c) Tenant shall be responsible for the maintenance of all
telephone cable, and any fiber optic wiring serving the Premises (collectively
the "Building Cable"). Landlord shall not be responsible and shall have no
liability for interruption in or failure of telephone or electronic data
transmission services. Tenant shall abide by all reasonable written and
nondiscriminatory rules and regulations hereafter promulgated by Landlord
regarding access to the Building Cable. Tenant shall indemnify, defend and hold
Landlord harmless from and against any and all claims, losses, liabilities,
costs and expenses, including without limitation, actual attorneys' fees,
incurred by Landlord and related to Tenant's access to or work performed in
connection with the Building Cable.
(d) At Landlord's election as part of Operating Expenses,
Landlord may elect from time to time to procure and keep in effect as part of
Operating Expenses, the following maintenance and service contacts: (i)
landscaping, (ii) heating, ventilation and air conditioning equipment (iii)
boiler, fired or unfired pressure vessels, (iv) fire sprinkler and/or standpipe
and hose or other automatic fire extinguishing systems including fire alarm
and/or smoke detection systems, (v) roof covering and drain maintenance, and
(vi) asphalt and parking lot maintenance.
16. LIENS. Tenant shall not pet any mechanics', materialmens' or other
liens to be filed against any portion of the Building or the Project or against
Tenant's leasehold interest in the Premises as a result of work performed by or
for Tenant. Landlord shall have the right at all reasonable times to post and
keep posted on the Premises any notices which it deems necessary for protection
from such liens. If any such liens are filed, Landlord may, without waiving its
rights and remedies based on such breach of Tenant and without releasing Tenant
from any of its obligations, cause such liens to be released by any means it
shall deem proper, including payments in satisfaction of the claim giving rise
to such lien. Tenant shall pay to Landlord at Once, upon notice by Landlord, any
sum paid by Landlord to remove such liens, together with interest on that sum at
(a) the maximum rate permitted by then-existing usury law, if applicable or (b)
the then-existing usury law is not applicable, one and one-half percent (1-1/2%)
per month ("Lease Interest Rate") from the date of Landlord's payment.
17. ENTRY BY LANDLORD. Landlord reserves and shall at all reasonable
times have the right to enter the Premises to inspect the same, to supply
janitor service and any other service to be provided by Landlord to Tenant under
this Lease, to show the Premises to prospective Purchasers or tenants, to post
notices of non-responsibility to improve or repair the Premises or any other
portion of the Building, without any such act being deemed an eviction of Tenant
and without abatement of rent. Landlord shall have the right, but not the
obligation, to enter on the Premises and into the Building for the purpose of
performing any obligation on Tenant's part to be performed following a Tenant
default pursuant to Paragraph 25, below, and Tenant shall pay all costs incurred
by Landlord at the Lease Interest Rate. Landlord may, order to carry out all
such purposes, erect scaffolding and other necessary structures where reasonably
required by the character of the work to be performed. Subject to the
limitations set forth in Section 2, Tenant waives any claim for damages for any
injury or inconvenience to or interference with Tenant's business, any loss of
occupancy or quiet enjoyment of the Premises, and any other loss in, upon and
about the Premises resulting from any entry permitted under this paragraph.
Landlord shall at all times have and retain a key with which to unlock all doors
in the Premises, excluding Tenant's vaults and safes. Landlord shall have the
right to use any and all means which Landlord may deem proper to open any door
in an emergency in order to obtain entry to or within the Premises. Any entry to
the Premises obtained by Landlord by any means shall not be deemed to be a
forcible or unlawful entry into the Premises or an eviction of Tenant from the
Premises or any portion thereof; and any damages caused on account thereof shall
be paid by Tenant if that entry was caused by the acts or omissions of Tenant,
its agents or contractors.
18. UTILITIES AND SERVICES. Tenant represents that it is familiar with
the standards for all utilities servicing the Premises, including, without
limitation, the capacity of the feeders to the Building and the risers and
wiring installations. Tenant shall contract directly with all utility companies
and similar providers for utilities and services to the Premises and pay
directly for all such services (which shall include, without limitation, all
water, sewer, electrical, cable and other electronic data transmission
services), and Landlord shall have no obligation to provide any such services.
Notwithstanding the foregoing, any installation of utility lines, including,
without limitation, Building Cable whether or not through any existing conduits
or risers, and any trenching over the Premises to install wiring or cable,
whether or not over existing utility easements, shall be considered an
alteration to the Building Structure and Systems. Unless directly caused by the
gross active negligence or the intentional misconduct of Landlord, the
interruption of any utilities or services to the Building shall not result in
any liability of Landlord, Tenant shall not be entitled to any abatement or
reduction of rent by reason of such failure (whether such failure affects HVAC
services or otherwise), no eviction of Tenant shall result from such failure,
and Tenant shall not be relieved from the performance of any covenant or
agreement in this Lease because of such failure. Any such interruption shall
include, without limitation, failure of services caused by (i) accident,
breakage or repairs; (ii) strikes, lockouts or other labor disturbance or labor
dispute of any character; (iii) governmental regulation moratorium or other
action; (iv) inability despite the exercise of reasonable diligence to obtain
electricity, water or fuel; or (v) any other cause beyond Landlord's reasonable
control. Landlord shall, at Tenant's expense, take all reasonable actions as
Tenant may reasonably request to restore or cause the restoration of services
which have been interrupted
19. BANKRUPTCY. If Tenant shall file a petition in bankruptcy under any
provision of the Bankruptcy Code as then in effect, or if Tenant shall be
adjudicated a bankrupt in involuntary bankruptcy proceedings and such
adjudication shall not have been vacated within sixty (60) days from the date
thereof; or if a receiver or trustee of Tenant's property shall be appointed and
the order appointing such receiver or trustee shall not be set aside or vacated
within sixty (60) days after the entry thereof, or if Tenant shall assign
Tenant's estate or effects for the benefit of creditors (collectively, "Acts of
Insolvency"), or if this Lease shall, by operation of law or otherwise, pass to
any person or persons other than Tenant, then in any such event Landlord may
terminate this Lease, if Landlord so elects, with or without notice of such
election and with or without entry or action by Landlord. In such case,
notwithstanding any other provisions of this Lease, Landlord, in addition to any
and all rights and remedies allowed by law or equity, shall, upon such
termination, be entitled to recover damages in the amount provided in
Subparagraph 25(b), and neither Tenant nor any person claiming through or under
Tenant or by virtue of any statute or order of any court shall be entitled to
possession of the Premises but shall immediately surrender the Premises to
Landlord. Nothing contained herein shall limit or prejudice the right of
Landlord to recover, by reason of any such termination, damages equal to the
maximum allowed by any statute or rule of law in effect at the time when, and
governing the proceedings in which, such damages are to be proved, whether or
not such damages are greater, equal to or less than the amount of damages
otherwise recoverable under the provisions of this Paragraph 19.
20. INDEMNIFICATION AND EXCULPATION OF LANDLORD
(a) Tenant shall indemnify, defend and hold Landlord and its
officers, directors, shareholders, agents, employees and contractors (the
"Landlord Parties" or, individually a "Landlord Party") harmless from all
damages, costs and expenses (including attorneys' fees), judgments, loss,
damage, injury, liability, claims and losses (collectively, "Claims") arising
from Tenant's use of the Premises or the conduct of its business or from any
activity, work or thing done, permitted or suffered by Tenant in or about the
Premises, the Building, the Common Areas, any portion thereof, or any other part
of the Project except to the extent that such Claims arise out of the Landlord's
negligence. Tenant shall further indemnify, defend and hold the Landlord Parties
harmless from all Claims arising from any breach or default in the performance
of any obligation to be performed by Tenant under this Lease, or arising from
any act, neglect, fault or omission of Tenant or of its agents, employees or
contractors, and from and against all Claims incurred in, or arising out of,
such claim or any action or proceeding brought thereon except to the extent of
Landlord's negligence. In case any action or proceeding shall be brought against
the Landlord Parties or any of them by reason of any such Claim, Tenant, upon
notice from Landlord, shall defend the same at Tenant's expense by counsel
approved in writing by Landlord. Except as is otherwise provided in Section 2,
Tenant, as a material part of the consideration to Landlord, hereby assumes all
risk of damage to property or injury to persons in, upon or about the Premises
from any cause whatsoever except that which is caused by the gross active
negligence or willful conduct of the Landlord Parties or any of them or
Landlord's breach of this Lease. Except as is otherwise provided in Section 2,
Tenant hereby waives all its Claims in respect thereof against Landlord.
(b) Except as is otherwise provided in Section 2, Landlord
shall not be liable for injury or damage to the person or goods, wares,
merchandise or other property of Tenant, Tenant's employees contractors,
invitees, customers, or any other person in or about the Premises, whether such
damage or injury is caused by or results from fire, steam, electricity, gas,
water or rain, or from the breakage, leakage, obstruction or other defects of
pipes, fire sprinklers, wires, appliances, plumbing, air conditioning or
lighting fixtures, or from any other cause, whether the said injury or damage
results from other sources or places, and regardless of whether the cause of
such damage or injury or the means of repairing the same is accessible or not.
Landlord shall not be liable for any damages arising from any act or neglect of
any other tenant of Landlord. Notwithstanding Landlord's negligence or breach of
this Lease, except as otherwise provided in Section 2, Landlord shall not be
liable for injury to Tenant's business or for any loss of income or profit
therefrom.
21. DAMAGE TO TENANT'S PROPERTY. Tenant shall give prompt notice to
Landlord in case of fire or accidents in the Premises or in the Building or of
defects in the Premises or the Building or in any fixtures or equipment.
22. TENANT'S INSURANCE
(a) Tenant shall, during the Term and any other period of
occupancy, at its sole cost and expense, keep in full force the following
insurance:
(i) Standard form property insurance insuring against
all-risk perils ("All-Risk") and
sprinkler leakage. This insurance policy shall be upon all property owned by
Tenant, for which Tenant is legally liable or that was installed at Tenant's
expense, and which is located in the Building including, without limitation,
furniture, fittings, installations, fixtures (other than tenant improvements
installed by Landlord) and any other personal property, in an amount not less
than the full replacement cost thereof. If there is a dispute as to the amount
which comprises full replacement cost, the decision of Landlord or any
mortgagees of Landlord shall be conclusive.
(ii) Commercial General Liability Insurance insuring
Tenant against any liability
arising out of the lease, use, occupancy or maintenance of the Premises and all
areas appurtenant thereto. Such insurance shall be in the amount of $1,000,000
Combined Single Limit for injury to, or death of one or more persons in an
occurrence, and for damage to tangible property in an occurrence. The policy
shall insure the hazards of the Premises and Tenant's operations thereon,
independent contractors, and contractual liability (covering the indemnity
contained in Paragraph 20), and shall (1) name Landlord and Landlord's lender(s)
and mortgagee(s) as additional insureds, (2) contain a cross-liability
provision, and (3) contain a provision that the insurance provided Landlord
under this Subparagraph 22(a)(ii) shall be primary and non-contributing with any
other insurance available to Landlord.
(iii) Workers' Compensation and Employer's Liability
insurance as required by state
law.
(iv) Business interruption insurance coverage for all
Basic Monthly Rent and Operating
Expenses for a period of at least twelve (12) months.
(b) All policies to be procured by Tenant shall be written in
a form satisfactory to Landlord and shall be maintained with insurance companies
holding a General Policyholders Rating of "B+, V", as set forth in the most
current issue of Best's Insurance Guide or such other rating as may be required
by a lender having a lien on the Project. Within ten (10) days after the
execution of this Lease and before occupying the Premises, Tenant shall deliver
to Landlord copies of certificates evidencing the existence of the amounts and
forms of coverage satisfactory to Landlord. No such policy shall be cancelable
or reducible in coverage without at least thirty (30) days prior written notice
to Landlord. Tenant shall, at least ten (10) days before the expiration of such
policies, furnish Landlord with renewals or "binders" thereof; or Landlord may
order such insurance and charge the cost thereof to Tenant as additional rent.
If Landlord obtains any insurance that is the responsibility of Tenant under
this ▇▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇ shall deliver to Tenant a written statement setting
forth the cost of any such insurance and showing in reasonable detail the manner
in which it has been computed, and Tenant shall reimburse Landlord such amount
at the Lease Interest Rate until paid.
(c) During the Term, Landlord shall insure the Project
(excluding any property which Tenant is obligated to insure under Subparagraph
22(a)) against damage with All-Risk insurance in an amount equal to the full
replacement cost of the Project. Landlord shall also maintain the insurance
described in Section 22(a)(ii) above, in addition to, and not in lieu of, the
insurance required to be maintained by Tenant. Tenant acknowledges that Tenant's
insurance shall in any event provide primary coverage and that it has no right
to receive any proceeds from any insurance policies carried by Landlord.
(d) Tenant will not keep, use, sell or offer for sale in or
upon the Premises any article which may be prohibited by any insurance policy
periodically in force covering the Building. If Tenant's use of the Premises,
whether or not Landlord has consented to the same, results in any increase in
premiums for the insurance periodically carried by Landlord with respect to the
Building, Tenant shall pay any such increase in premiums as additional rent
within ten (10) days after being billed therefor by Landlord. In determining
whether increased premiums are a result of Tenant's use of the Premises, a
schedule issued by the organization computing the insurance rate on the Building
or the Tenant Improvements showing the various components of such rate shall be
conclusive evidence of the several items and charges which make up such rate.
Tenant shall promptly comply with all reasonable requirements of the insurance
authority or any present or future insurer relating to the Premises.
(e) If any of Landlord's insurance policies shall be canceled
or cancellation shall be threatened or the premium or coverage thereunder
changed or threatened to be changed in any way because of the use of the
Premises or any part thereof by Tenant or any assignee or subtenant of Tenant or
by anyone Tenant permits on the Premises and, if Tenant fails to remedy the
condition giving rise to such threatened or actual cancellation, or threatened
or actual change in coverage or premiums, then, (a) within forty-eight (48)
hours after notice thereof, Landlord may, at its option, enter upon the Premises
and attempt to remedy such condition, and Tenant shall promptly pay the cost
thereof to Landlord as additional rent and (b) within ten (10) business days
after notice thereof, Landlord may, at its option, terminate this Lease.
Landlord shall not be liable for any damage or injury caused to any property of
Tenant or of others located on the Premises resulting from such entry. If
Landlord is unable or elects not to remedy such condition, then Landlord shall
have all of the remedies for a Tenant default provided for in this Lease.
(f) All policies of insurance required hereunder shall include
a clause or endorsement denying the insurer any rights of subrogation against
the other party to the extent rights have been waived by the insured before the
occurrence of injury or loss. Landlord and Tenant Waive any rights of recovery
against the other for injury or loss due to hazards covered by policies of
insurance containing such a waiver of subrogation clause or endorsement to the
extent of the injury or loss covered thereby.
23. DAMAGE OR DESTRUCTION
(a) Definitions
(i) "Project Partial Damage" shall mean damage or
destruction to the improvements on
the Project, the repair cost of which damage or destruction is less than 50% of
the then Replacement Cost of the Project immediately prior to such damage or
destruction.
(ii) "Project Total Destruction" shall mean damage or
destruction to the Project, the
repair cost of which damage or destruction is 50% or more of the then
Replacement Cost of the Project immediately prior to such damage or destruction.
(iii) "Insured Loss" shall mean damage or destruction
to improvements on the Premises
which was caused by an event required to be covered by the insurance described
in Paragraph 22, irrespective of any deductible amounts or coverage limits
involved.
(iv) `Replacement Cost" shall mean the cost to repair
or rebuild the improvements
owned by Landlord and stated at the time of the occurrence to their condition
existing immediately prior thereto, including demolition, debris removal and
upgrading required by the operation of applicable building codes, ordinances or
laws, and without deduction for depreciation.
(b) Partial Damage -- Insured Loss. If a Project Partial
Damage that is an Insured Loss occurs, then Landlord shall, at Landlord's
expense, repair such damage (but not Tenant's trade fixtures) as soon as
reasonably possible and this Lease shall continue in full force and effect;
provided, however, that Tenant shall, at Tenant's election, make the repair of
any damage or destruction the total cost to repair of which is $10,000 or less,
and, in such event, Landlord shall make the insurance proceeds available to
Tenant on a reasonable basis for that purpose. Notwithstanding the foregoing, if
the required insurance was not in force or the insurance proceeds are not
sufficient to effect such repair, the "Insuring Party" which for purposes of
this Lease shall be deemed to be Landlord shall promptly contribute the shortage
in proceeds as and when required to complete said repairs. In the event,
however, the shortage in proceeds was due to the fact that, by reason of the
unique nature of the improvements, full replacement cost insurance coverage was
not commercially reasonable and available, Landlord shall have no obligation to
pay for the shortage in insurance proceeds or to fully restore the unique
aspects of the Premises unless Tenant provides Landlord with the funds to cover
same, or adequate assurance thereof, within ten (10) days following receipt of
written notice of such shortage and request therefor. If Landlord receives said
funds or adequate assurance thereof within said ten (10) day period, the party
responsible for making the repairs shall complete them as soon as reasonably
possible and this Lease shall remain in full force and effect. If Landlord does
not receive such funds or assurance within said period, Landlord may
nevertheless elect by written notice to Tenant within ten (10) days thereafter
to make such restoration and repair as is commercially reasonable with Landlord
paying any shortage in proceeds, in which case this Lease shall remain in full
force and effect. If in such case Landlord does not so elect, then this Lease
shall terminate sixty (60) days following the occurrence of the damage or
destruction. Unless otherwise agreed, Tenant shall in no event have any right to
reimbursement from Landlord for any funds contributed by Tenant to repair any
such damage or destruction. Project Partial Damage due to flood or earthquake
shall be subject to the following paragraph rather than this paragraph,
notwithstanding that there may be some insurance coverage, but the net proceeds
of any such insurance shall be made available for the repairs if made by either
party.
(c) Partial -- Uninsured Loss. If a Project Partial Damage
that is not an Insured Loss occurs, unless caused by a negligent or willful act
of Tenant (in which event Tenant shall make the repairs at Tenant's expense and
this Lease shall continue in full force and effect), Landlord may at Landlord's
option, either, (i) repair such damage as soon as reasonably possible at
Landlord's expense, in which event this Lease shall continue in full force and
effect, or (ii) provided that Landlord terminates all other similarly situated
leases, give written notice to Tenant within thirty (30) days after receipt by
Landlord of knowledge of the occurrence of such damage of Landlord's desire to
terminate this Lease as of the date sixty (60) days following the giving of such
notice. In the event Landlord elects to give such notice of Landlord's intention
to terminate this Lease, Tenant shall have the right within the (10) days after
the receipt of such notice to give written notice to Landlord of Tenant's
commitment to pay for the repair of such damage totally at Tenant's expense and
without reimbursement from Landlord. Tenant shall provide Landlord with the
required funds or satisfactory assurance thereof within thirty (30) days
following Tenant's said commitment. In such event, this Lease shall continue in
full force and effect, and Landlord shall proceed to make such repairs as soon
as reasonably possible and the required funds are available. If Tenant does not
give such notice and provide the funds or assurance thereof within the times
specified above this Lease shall terminate as of the date Specified in
Landlord's notice of termination.
(d) Total Destruction. Notwithstanding any other Provision hereof, if a Project
Total Destruction occurs (including any destruction required by any authorized
public authority), this Lease shall terminate as of such Project Total
Destruction, whether or not the damage or destruction is an Insured Loss or was
caused by a negligent or willful act of Tenant. In the event, however, that the
damage or destruction was caused by Tenant, Landlord shall have the tight to
recover damages from Tenant except as otherwise released and waived herein.
(e) Damage Near End of Term. If at any time during the last six (6) months of
the term of this Lease there is damage for which the cost to repair exceeds one
(I) month's Monthly Basic Rent, whether or not an Insured Loss, Landlord may, at
Landlord's option, terminate this Lease effective sixty (60) days following the
date of occurrence of such damage by giving written notice to Tenant of
Landlord's election to do so within thirty (30) days after the date of
occurrence of such damage; provided, however, that if Tenant at that time has an
exercisable option to extend this Lease or to purchase the Premises then Tenant
may preserve this Lease by, within twenty (20) days following the occurrence of
the damage, or before the expiration of the time provided in such option for its
exercise, whichever is earlier ("Exercise Period") (i) exercising such option
and (ii) providing Landlord with any shortage in insurance proceeds (or adequate
assurance thereof) needed to make the repairs. If Tenant duly exercises such
option during said Exercise period and provides Landlord with funds (or adequate
assurance thereof) to cover any shortage in insurance proceeds, Landlord shall,
at Landlord's expense repair such damage as soon as reasonably possible and this
Lease shall continue in full force and effect. If Tenant fails to exercise such
option and provide such funds or assurance during said Exercise Period, then
Landlord may at Landlord's Option terminate this Lease as of the expiration of
said sixty (60) day period following the occurrence of such damage by giving
written notice to Tenant of Landlord's election to do so within ten (10) days
after the expiration of the Exercise Period, notwithstanding any term of
provision in the grant of option to the contrary.
24. EMINENT DOMAIN. If the Project or any portion thereof are taken under the
power of eminent domain or sold under the threat of the exercise of said power
(all of which are herein called "condemnation"), this Lease shall terminate as
to the part so taken as of the date the condemning authority takes title or
possession, whichever first. If more than ten percent (10%) of the floor area of
the Premises, or more than twenty-five percent (25%) of the Land not occupied by
any building, is taken by condemnation, Tenant may, at Tenant's option, to be
exercised in writing within ten (10) days after Landlord shall have given Tenant
written notice of such taking (or in the absence of such notice, with ten (10)
days after the condemning authority shall have taken possession) terminate this
Lease as of the date the condemning authority takes such possession. If Tenant
does not terminate this Lease in accordance with the foregoing, this Lease shall
remain in fill force and effect as to the portion of the Premises remaining,
except that the Monthly Basic Rent shall be reduced in the same proportion as
the rentable floor area of the Premises taken bears to the total rentable floor
area of the building located on the Premises. No reduction of Monthly Basic Rent
shall occur if the only portion of the Premises taken is land on which there is
no building. Any award for the taking of all or any part of the Project under
the Power of eminent domain or any payment made under threat of the exercise of
such power shall be the property of Landlord, whether such award shall be made
as compensation for diminution in value of the leaseholder for the taking of the
fee, or as severance damages; provided, however, that Tenant shall be entitled
to any compensation separately awarded to Tenant for Tenant's relocation
expenses and/or loss of Tenant's trade fixtures. In the event that this Lease is
not terminated by reason of such condemnation, Landlord shall to the extent of
severance damages received, over and above the legal and other expenses incurred
by Landlord in the Condemnation matter, repair any damage to the Project caused
by such condemnation, except to the extent that Tenant has been reimbursed
therefore by the condemning authority.
25.DEFAULTS AND REMEDIES
(a) The occurrence of any one or more of the following events shall constitute a
default hereunder by Tenant:
(I) The vacating of the Premises without the intention to reoccupy same, or the
abandonment of the Premises.
(ii) The failure by Tenant to make any payment of rent or additional rent or any
other payment required to be made by Tenant under this Lease, as and when due,
provided that Tenant may cure such default by making such payment to Landlord
within three (3) days after written notice thereof from Landlord to Tenant;
provided, however, that any such notice shall be in lieu of, and not in addition
to, any notice required under Code of Civil Procedure Section 1161 regarding
unlawful detainer actions.
(iii) The failure by Tenant to observe or perform any of the express or implied
covenants or provisions of this Lease to be observed or performed by Tenant,
other than as specified in Subparagraphs 25(a)(i) or (II), provided that Tenant
may cure such default by curing such failure within thirty (30) days after
written notice thereof from Landlord to Tenant. Any such notice shall be in lieu
of, and not in addition to, any notice required under Code of Civil Procedure
Section 1161 regarding unlawful detainer actions. If the nature of Tenant's
default is such that it is reasonably capable of being cured but more than
thirty (30) days are required for its cure, then Tenant shall be deemed to have
cured such default if Tenant shall commence such cure within the thirty (30) day
period and thereafter diligently prosecutes such cure to completion.
(iv) (1) Acts of Insolvency; or (2) the attachment, execution or other judicial
seizure of substantially all of Tenant's assets located at the Premises or of
Tenant's interest in this Lease, provided that such default shall be deemed to
be cured where such seizure is discharged within thirty (30) days.
(v) The death, incapacity or Act of Insolvency of any guarantor or the
termination, cancellation or anticipatory breach or repudiation in whole or in
part of any guaranty.
(vi) The discovery by Landlord that any financial statement given to Landlord by
Tenant, or its successor in interest, or by any Transferee (defined below) or
sublessee pursuant to a Transfer or sublease, or by any guarantor, is materially
false.
(vii) Any breach or repudiation by any guarantor of the provisions of, or
obligations of such Guarantor under, any guaranty of this Lease.
(b) If any such default by Tenant occurs,, in addition to any other remedies now
or later available to Landlord at law or in equity, Landlord can terminate
Tenant's right to Possession of the Premises and terminate this Lease and all
rights of Tenant under this Lease. No act by landlord other than giving notice
thereof to Tenant shall terminate this Lease. Upon termination, Landlord may
recover from Tenant:
(i) the worth at the time of award of any unpaid rent which had been earned at
the time of such termination; plus
(ii) the worth at the time of award of the amount by which the unpaid rent which
would have been earned after termination until the time of award exceeds the
amount of such rental loss that Tenant proves could have been reasonably
avoided, plus
(iii) the worth at the time of award of the amount by which the unpaid rent for
the balance of the Term after the time of award exceeds the amount of such
rental loss that Tenant proves could be reasonably avoided; plus
(iv) any other amount necessary to compensate Landlord for all the 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
As used in Subparagraphs 25(b)(i) and (ii), the "WORTH AT THE TIME OF AWARD" is
computed by allowing interest at the Lease Interest Rate. As used in
Subparagraph 25(b)(iii), the "WORTH AT THE TIME OF AWARD" is Computed by
discounting such amount at the discount rate of the Federal Reserve Bank of San
Francisco at the time of award plus one percent (1%).
(c) If any such default by Tenant occurs, Landlord may utilize the remedy
described in California Civil Code Section 1951.4 (which says landlord may
continue the lease in effect after a tenant's breach and abandonment and recover
rent as it becomes due, if tenant has the right to sublet or assign subject to
reasonable limitations).
(d) If an abandonment of the Premises by Tenant occurs or if Landlord elects to
reenter as provided above or shall take possession of the Premises pursuant to
legal proceeding or pursuant to any notice provided by law, then if Landlord
does not elect to terminate this Lease as provided above, Landlord may from time
to time, without terminating this Lease, either recover all rent as it becomes
due or relet the Premises or any part thereof for the Term on terms and
conditions as Landlord in its sole discretion may deem advisable with the right
to make alterations and repairs to the Premises.
If Landlord elects to relet, then rentals received by Landlord from that
reletting shall be applied: first, to the payment of any indebtedness other than
rent due under this Lease from Tenant to Landlord; second, to the payment of any
cost of such reletting; third, to the payment of the cost of any alterations and
repairs to the Premises; fourth, to the payment of rent due and unpaid under
this Lease; and the residue, if any, shall be held by Landlord and applied to
payment of future rent as the same may become due and payable under this Lease.
Should that portion of such rentals received from such reletting during any
month, which is applied to the payment rent under this Lease, be less than the
rent payable during that month by Tenant under this Lease, then Tenant shall pay
such deficiency to Landlord immediately upon demand therefor by Landlord. Such
deficiency shall be calculated and paid monthly. Tenant shall also pay to
Landlord, as soon as ascertained, any costs and expenses incurred by Landlord in
such reletting or in making such alterations and repairs not covered by the
rentals received from such reletting.
(e) All rights, options and remedies of Landlord contained in this Lease shall
be construed and held to be cumulative, and no one of them shall be exclusive of
the other, and Landlord shall have the right to pursue any one or all of such
remedies or any other remedy or relief which may be provided by law, whether or
not stated in this Lease. Without limitation, Tenant acknowledges that Tenants
failure to timely comply with the requirements of Paragraphs 27, 28, 49, 50 and
55 may result in a lender refusing to loan Landlord funds or a buyer refusing to
purchase the Building on favorable terms (or at all), causing Landlord
substantial monetary damages. No waiver of any default of Tenant under this
Lease shall be implied from any acceptance by Landlord of any rent or other
payments due under this Lease (whether that acceptance occurs before or after
(i) a default has occurred or (ii) a three-day or other notice of default has
been given) or from any omission by Landlord to take any action on account of
such default if such default persists or is repeated, and no express waiver
shall affect defaults other than as specified in the waiver. The consent or
approval of Landlord to or of any act by Tenant requiring Landlord's consent or
approval shall not be deemed to waive or render unnecessary Landlord's consent
or approval to or of any subsequent similar acts by Tenant.
(f) Landlord shall be in default in the performance of any obligation required
to be performed by Landlord under the Lease if Landlord has failed to perform
such obligation within thirty (30) days after actual receipt of written notice
from Tenant specifying in detail Landlord's failure to perform; provided,
however, that if the nature of Landlord's obligation is such that more than
thirty (30) days are required for Landlord's performance, Landlord shall not be
deemed in default if Landlord commences such Performance within such thirty (30)
day period and thereafter diligently pursues the same to completion. Upon any
such default by Landlord, Tenant may exercise any of its rights provided at law
for a default by a landlord under a commercial lease.
(g) Landlord and Tenant waive all rights to a jury trial and agree that any
action or proceeding arising out of this Lease shall be heard by a court sitting
without a jury.
LANDLORD AND TENANT EACH ACKNOWLEDGES THAT IT HAS HAD THE ADVICE OF COUNSEL OF
ITS CHOICE WITH RESPECT TO ITS RIGHTS TO TRIAL BY JURY UNDER THE CONSTITUTIONS
OF THE UNITED STATES AND THE STATE OF CALIFORNIA. EACH PARTY EXPRESSLY AND
KNOWINGLY WAIVES AND RELEASES ALL SUCH RIGHTS TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER PARTY AGAINST THE OTHER ON ANY
MATTERS ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS LEASE, TENANT'S USE OR
OCCUPANCY OF THE PREMISES, OR ANY CLAIM FOR INJURY OR DAMAGE.
26. ASSIGNMENT AND SUBLETTING.
(a) Tenant shall not assign, encumber, or otherwise transfer (collectively,
"TRANSFER") all or any part of its interest in this Lease or in the
Premises or sublease all or any part of the Premises, or allow any
other person or entity to occupy or use all or any part of the
Premises, without obtaining Landlord's prior written consent which
consent shall not be unreasonably withheld or delayed. Any Transfer or
sublease without Landlord's prior written consent shall be voidable at
Landlord's election and shall constitute a default.
(b) If Tenant is a partnership or a limited liability company, a
withdrawal or change, in one or more transactions, of partners or
members owning in the aggregate a fifty percent (50%) or more interest
in the profits of the partnership or limited liability company, or any
transaction or event which results in a change in control of the
partnership or limited liability company, or if Tenant is a
corporation, any change or transfer in the aggregate of fifty percent
(50%) or more of its voting stock or beneficial interest, whether in
one or more transactions, shall constitute a Transfer and shall be
subject to these provisions. If Tenant is a corporation, partnership,
or limited liability company a sale, encumbrance or other transfer of
fifty percent (50%) or more of its assets in the aggregate, in one or
more transactions, shall also be a Transfer under this Lease and in
addition shall be void as to Landlord without Landlord's prior written
consent. No consent to a Transfer or sublease shall constitute a
future waiver of the provisions of this Paragraph 26.
(c) Tenant shall notify Landlord in writing of Tenant's intent to Transfer
or sublease all or part of this Lease or the Premises, the name of the
proposed assignee or sublessee, information concerning the financial
responsibility of the proposed assignee or sublessee and all the terms of
the proposed Transfer or subletting; within thirty (30) days after receipt
of all such information and all additional information requested by
Landlord concerning the proposed Transfer or sublease, Landlord shall elect
by notice to Tenant ("Landlord's Election") to do one of the following: (a)
consent to such proposed Transfer or sublease; or (b) refuse such consent,
which refusal shall be on reasonable grounds; .or, (c) effective within
sixty (60) days after the date Landlord gives its notice, terminate this
Lease, or in the case of a partial sublease, terminate this Lease as to the
portion of the Premises proposed to be sublet. However, if within thirty
(30) days after Landlord gives Landlord's Election of the alternative in
clause "(C)" Landlord receives written notice from Tenant that Tenant has
rescinded its proposed Transfer or sublease, this Lease shall continue in
effect.
As conditions to granting its consent to any Transfer or sublease, Landlord
may require:
(i) delivery to and approval by Landlord of a true copy of the fully
executed instrument of Transfer or sublease, and the delivery to Landlord
of an agreement executed by the transferee or sublessee in form and
substance satisfactory to Landlord and expressly enforceable by Landlord,
whereby the transferee or sublessee assumes and agrees to be bound by all
of the terms and provisions of this Lease and to perform all of the
obligations of Tenant under this Lease;
(ii) that any sublease provide that it is subject and subordinate to this
Lease and to all mortgages, that Landlord may enforce the provisions of the
sublease, including collection of rent, and that in the event of
termination of this Lease for any reason, including without limitation a
voluntary surrender by Tenant, or in the event of any reentry or
repossession of the Premises by Landlord, Landlord may, at its option,
either (x) terminate the sublease or (y) take over all of the right, title
and interest of Tenant, as sublessor, under such sublease, in which latter
case such sublessee shall attorn to Landlord, but that nevertheless
Landlord shall not be liable for any prepaid rents or security deposit paid
by such sublessee to such sublessor or for any other prior defaults or
breaches of such sublessor under such sublease
(d) Landlord shall have the right to approve or disapprove any proposed assignee
or subtenant. In exercising such right of approval or disapproval, Landlord
shall be entitled to take into account any fact or factor which Landlord
reasonably deems relevant to such decision, including but not necessarily
limited to the following, all of which are agreed to be reasonable factors for
Landlord's consideration:
(c) The financial strength of the proposed assignee or subtenant, including
the adequacy of its working capital to pay all expenses anticipated in
connection with any proposed remodeling of the Premises.
(d) (ii) The proposed use of the Premises by such proposed assignee or
subtenant and the compatibility of such proposed use within the quality
and nature of the other uses in the Project.
(e) (iii) Any violation which the proposed use by such proposed assignee or
subtenant would cause of any other rights granted by Landlord to other
tenants of the Project.
(f) (iv) Any adverse impact of the proposed use of the Premises by such
proposed assignee or subtenant upon the parking or other services
provided for Project tenants generally.
(g) (v) Whether there then exists any default by Tenant pursuant to this
Lease or any non-payment or non-perfonce by Tenant under this Lease
which, with the passage of tine or the giving of notice, would
constitute a default under this Lease.
(h) (vi) The business reputation, character, history and nature of the
business of the proposed assignee or subtenant. (vii) Whether the
proposed assignee or subtenant is a tenant or existing subtenant, or is
an affiliate of or associated with any tenant or existing subtenant of
the Project or is a person with whom Landlord has negotiated for space
in the Project during the twelve (12) month period ending with the date
Landlord receives notice of such proposed assignment or subletting.
(i) (viii) Whether the proposed assignee or subtenant is a governmental
entity or agency.
(j) Tenant's remedy for any breach of this Section shall be limited to
compensatory damages and injunctive relief. Landlord and Tenant
acow1edge that the express standards and provisions set forth in this
Lease dealing with assignment and subletting, including those set forth
in this Subparagraph (d), have been freely negotiated and are
reasonable at the date hereof taking into account Tenant's proposed use
of the Premises and the nature and quality of the Building and Project.
(e) Whether or not Landlord shall consent to a Transfer or sublease
under the provisions of this Paragraph 26, (i) Tenant shall pay
Landlord's Processing fees and attorneys' fees incurred in determining
whether or not to so consent, and (ii) Tenant shall not be relieved of
any responsibility under this Lease without Landlord's express written
release, which Landlord may grant or withhold in its sole, subjective
discretion. If Land1ord shall consent to any Transfer, Tenant shall pay
to Landlord, as additional rent, one hundred percent (100%) of all net
sums or other consideration payable to and for the benefit of Tenant by
the transferee in consideration of the right to be the tenant, assignee
or sublessee of the Premises, as and when such sums and other
consideration are due and payable to or for the benefit of Tenant (or,
if Landlord so requires, and without any release of Tenant's liability
for the same, Tenant shall instruct the transferee to pay such sums and
other consideration directly to Landlord). If in connection with any
proposed sublease Tenant receives net sums or other consideration,
either initially or over the term of the sublease, in excess of the
rent called for under this Lease or, in case of the sublease of a
portion of the Premises, in excess of such rent fairly allocable to
such portion, after appropriate adjustments to assure that all other
payments called for under this Lease are taken into account, Tenant
shall pay to Landlord as additional rent one hundred percent (100%) of
the net sums or other consideration received by Tenant promptly after
its receipt. As used in this paragraph, "NET SUMS OR OTHER
CONSIDERATION" shall include without limitation the then fair value of
any non-cash consideration and shall be calculated after first
deducting reasonable costs incurred by Tenant in connection with the
Transfer or sublease, including without limitation commissions payable
to a broker not affiliated with Tenant, space modification costs in
connection with the Transfer or sublease, reasonable legal costs, free
rent concessions to the transferee or sublessee, and lease take-over
costs. Landjord's waiver of or consent to any Transfer or subletting
shall not relieve Tenant or any transferee or sublessee from any
obligation under this Lease whether or not accrued.
27. SUBORDINATION. Unless Landlord or any beneficiary or mortgagee with
a lien on the Building or any ground lessor with respect to the
Building elects otherwise as provided below in this Paragraph 27, this
Lease shall be subject and subordinate at all times to the following
without the necessity of any additional document being executed by
Tenant for the purpose of effecting a subordination:.
(a) the lien and provisions of any mortgage, deed of trust, or
declaration of covenants, conditions and restrictions which may
now exist or hereafter be executed by which the Building, Project,
any ground lease, or Landlord's interest or estate in any of those
items, is encumbered; and
(b) all ground leases which may now exist or hereafter be executed
affecting the Building. Landlord, any such beneficiary or mortgagee,
or any such ground lessor, shall at any time have the right to elect
to subordinate or cause to be subordinated to this Lease any such
liens and provisions or ground lease. Any election under this
Paragraph 27 may be made by giving notice thereof to Tenant at least
sixty (60) days before the election is to become effective. If any
ground lease terminates for any reason or any mortgage or deed of
trust is foreclosed or a conveyance in lieu of foreclosure is made for
any reason, Tenant shall, at the election of any successor-in-interest
to Landlord and regardless of any subordination, attorn to and become
the Tenant of the successor-in-interest to Landlord. Tenant waives any
tight to declare this Lease terminated or otherwise ineffectual
because of any such foreclosure, conveyance or ground lease
termination. Tenant shall execute and deliver, upon demand by Landlord
and in the form and content requested by Landlord, any additional
documents evidencing the priority or subordination of this Lease and
Tenant's obligation to attorn to and become the Tenant of any
successor-in-interest to Landlord as provided for under this Paragraph
27. Tenant's failure to sign and return any such documents within ten
(10) days of request shall constitute a material default by Tenant
under this Lease and Landlord may, at Landlord's option, terminate the
Lease provided written notice of such termination (which shall be in
lieu of and not in addition to the notice and cure period otherwise
provided for under Subparagraph 25(a)(iii) is received by Tenant prior
to Landlord's receipt of such documents
(c) Landlord represent and warrants to Tenant that as of the date first
set forth above there are no mortgages or deeds of trust encumbering
the Porject except for a loan and deed of trust currently held by
California National Bank ("CNB"). Notwithstanding anything to the
contrary contained in this Lease, this Lease shall not be subordinate
to any monetary encumbrance recorded after the date of this Lease
unless Landlord shall have provided Tenant with a non-disturbance
agreement in favor of Tenant from the holder of any such encumbrance
hereafter placed upon the Land. Any such non-disturbance agreement
shall be in form reasonably acceptable to Tenant and the holder of
such encumbrance and shall be signed by Landlord, Tenant and the
holder of such encumbrance. Landlord shall use all commercially
reasonable efforts (without any obligation to incur costs in excess of
One Thousand Dollars ($1,000) or initiate or pursue any legal action)
to obtain, within forty-five (45) days after the parties' execution of
this Lease, a commercially reasonable non-disturbance agreement from
CNB for Tenant's benefit .
(d) ESTOPPEL CERTIFICATE.
(a) Within ten (10) days following any written request which
Landlord or Tenant may make from time to time, the other party
shall execute and deliver to the other party an "Estoppel
Certificate", in a form substantially similar to the form of
attached Exhibit C or in any other form reasonably required by
such party. Landlord and Tenant intend that any statement
delivered pursuant to this Paragraph 28 may be relied upon by any
mortgagee, beneficiary, purchaser, third party or prospective
purchaser of the Building or any interest therein. If Tenant fails
to provide the estoppel certificate within ten (10) days after
receipt of a second notice from Landlord requesting the estoppel
certificate, Landlord's second notice shall be in lieu of and not
in addition to the notice and cure period otherwise provided for
under Subparagraph 25(a)(III). Tenant's failure to comply with its
obligations (100043966)
-fl
under this Paragraph 28(a) within ten (10) days after receipt of
Landlord's second notice shall constitute a material default by Tenant
under this Lease.
(b) A party's failure to deliver such Estoppel Certificate within such
time shall be conclusive upon such party (i) that this Lease is in full
force, without modification except as may be represented by the other
party, (ii) that there are no uncured defaults in the requesting
party's performance, and (iii) that not more than one (I) month's
rental has been paid in advance.
29. HAZARDOUS MATERIALS.
30. (a) As used in this Lease, the following words or phrases shall
have the following meanings:
31.
(i) "Agents" means Tenant's partners, officers, directors,
shareholders, employees, agents, contractors and any other third
parties entering upon the Project at the request or invitation of
Tenant.
(ii) "Claims" means claims, liabilities, losses, actions,
environmental suits, causes of action, legal or administrative
proceedings damages, fines, penalties, loss of rents, liens,
judgments, costs and expenses (including, without limitation,
attorneys' fees and costs of defense, and consultants',
engineers' and other professionals' fees and costs)
(III) "Hazardous" means: (a) hazardous; (b) toxic; (c) reactive; (d)
corrosive. (e) ignitable; (f) carcinogenic; (g) reproductive
toxic; (h) any other attribute of a Substance now or IN the
future referred to in, or regulated by, any Hazardous Materials
Laws; and (i) potentially injurious to health, safety or welfare,
the environment, the Premises, the Building, the Project, or any
portion thereof.
(iv) "Hazardous Materials" means any: (a) Substance which is Hazardous
regardless of whether that Substance is Hazardous by itself or in
combination with any other Substance; (b) Substance which is
regulated by any Hazardous Material Laws; (c) asbestos and
asbestos-containing materials; (d) urea formaldehyde; (e)
radioactive substance; (f) flammable explosives; (g) petroleum,
including crude oil or any fraction thereof; (h) polychlorinated
biphenyls; and (i) "hazardous substances," "hazardous
substances," "hazardous materials" or "hazardous wastes" under
any Hazardous Materials Laws.
(v) "Hazardous Materials Laws" means: (a) any existing or future
federal, state or local law, ordinance, regulation or code which
protects hea1th, safety or welfare, or the environment; (b) any
existing or future administrative or legal decision interpreting
any such law, ordinance, regulation or code; and (c) any common
law theory which may result in Claims against Landlord, the
Premises or any portion thereof.
(vi) "Permits" means any permit, authorization, license or approval
required by any applicable governmental agency.
(VII) "PREMISES" for purposes of this Paragraph 29 only, shall mean
the Premises, the air about the Premises and the soil, surface
water and ground water under the surface of the Project
(viii) "SUBSTANCE" means any substance, material, product, chemical,
waste, contaminant or pollutant.
(ix) "USE" means use, generate, manufacture, produce, store, release
or discharge.
(b) (i) Without limiting the generality of Paragraph 8 of this Lease,
and except as provided in Paragraphs 29(b)(ii) and 29(b)(iii), Tenant covenants
and agrees that Tenant and its Agents shall not bring into, maintain upon,
engage in any activity involving the Use of, or Use in or about the Project, or
transport to or from the Project, any Hazardous Materials. Notwithstanding the
provisions of Paragraphs 29(b)(ii) or 29(b)(iii), in no event shall Tenant or
its Agents release or dispose of any Hazardous Materials in, on, under or about
the Project.
(II) Notwithstanding the provisions of Paragraph 29(b)(i), if Tenant or
its Agents proposes to Use any Hazardous Materials, or to install or operate any
equipment which will or may Use Hazardous Materials ("Equipment"), then Tenant
shall first obtain Landlord's prior written consent, which consent may be given
or withheld by Landlord in its subjective, good faith judgment, within thirty
(30) days of Landlord's receipt of the last of documents or information
requested by Landlord as set forth in this Paragraph. Tenant's failure to
receive Landlord's consent within such thirty (30) day period shall be
conclusively deemed Landlord's withholding of consent. Tenant's request for
Landlord's consent shall include the following documents or information. (a) a
Hazardous Materials list pursuant to Paragraph 29(c) regarding the Hazardous
Materials Tenant proposes to Use or Equipment Tenant proposes to install and
operate; (b) reasonably satisfactory evidence that Tenant has obtained all
necessary Permits to Use those Hazardous Materials or to install and operate the
proposed Equipment; (c) reasonably satisfactory evidence that Tenant's Use of
the Hazardous Materials or installation and operation of the Equipment shall
comply with all applicable Hazardous Materials Laws, Tenant's permitted use
under this Lease and all restrictive covenants encumbering the Project; (d)
reasonably satisfactory evidence of Tenant's financial capability and
responsibility for potential Claims associated with the Use of the Hazardous
Materials or installation and operation of the Equipment; and (e) such other
documents or information as Landlord may reasonably request. Landlord may, at
its option, condition its consent upon any terms that Landlord, in its
subjective, good faith judgment, deems necessary to protect itself, the public
and the Project against potential problems, Claims arising out of Tenant's Use
of Hazardous Materials or installation and operation of Equipment including,
without limitation, (i) changes in the insurance provisions of the Lease, (ii)
installation of equipment, fixtures or personal property or alteration of the
Premises (all at Tenant's sole cost) to minimize the likelihood of a violation
of Hazardous Materials Laws as a result of Tenant's Use of the Hazardous
Materials or installation and operation of Equipment, or (iii) increasing the
amount of the security deposit. Neither Landlord's consent nor Tenant's
obtaining any Permits shall relieve Tenant of any of its obligations pursuant to
this Paragraph 29. Landlord's granting of consent to one request to Use
Hazardous Materials or install and operate Equipment shall not be deemed
Landlord's consent to any other such request. If Landlord grants its consent to
Tenant's request, no subtenant, assignee or successor of Tenant shall have the
tight to Use those Hazardous Materials or install or operate that Equipment
without again complying with the provisions of this Paragraph 29(b)(ii).
(iii) Notwithstanding the provisions of Paragraphs 29(b)(i)
and 29(b)(ii), Tenant may Use any Substance typically found or
used in applications of the type permitted by this Lease so
long as: (a) any such Substance is typically found only in
such quantity as is reasonably necessary for Tenant's
permitted use under Paragraph 8 of this Lease; (b) any such
Substance and all equipment necessary in connection with the
Substance are Used strictly in accordance with the
manufacturers' instructions therefor; (c) no such Substance is
released or disposed of in or about the Project; (d) any such
Substance and all equipment necessary in connection with the
Substance are removed from the Project and transported for Use
or disposal by Tenant in compliance with any applicable
Hazardous Materials Laws upon the expiration or earlier
termination of this Lease; and (e) Tenant and its Agents
comply with all applicable Hazardous Materials Laws.
(iv) Tenant shall not use or install in or about the Premises
any asbestos or asbestos-containing materials.
(c) Tenant shall deliver to Landlord, within thirty (30) days after
Tenant's receipt of Landlord's written request, a written list
identifying any Hazardous Materials that Tenant or its Agents then Uses
or has Used WITHIN the last twelve (12) month period in the Project.
Each such list shall state: (i) the use or purpose of each such
Hazardous Material; (ii) the approximate quantity of each such
Hazardous Material Used by Tenant; (iii) such other information as
Landlord may reasonably require; and (iv) Tenant's written
certification that neither Tenant nor its Agents have released,
discharged or disposed of any Hazardous Materials in or about the
Project, or transported any Hazardous Materials to or from the Project,
in violation of any applicable Hazardous Materials Laws. Landlord shall
not request Tenant to deliver a Hazardous Materials list more often
than once during each twelve (12) month period, unless Tenant or its
Agents have violated the provisions of this Paragraph 29 (in which case
(a) Landlord may request such lists as often as Landlord determines is
necessary until such violation is cured, and (b) Tenant shall provide
such lists within ten (10) days of each of Landlord's requests, or if
an emergency exists, such lists shall be immediately provided).
(d) Tenant shall furnish to Landlord copies of all notices, claims,
reports, complaints, warnings, asserted violations, documents or other
communications received or delivered by Tenant, as soon as possible and
in any event within five (5) days of such receipt or delivery, with
respect to any Use, disposal or transportation of Hazardous Materials
in or about the Premises, the Building or the Project. Whether or not
Tenant receives any such notice, claim, report, complaint, warning,
asserted violation, document or communication, Tenant shall immediately
notify Landlord, orally and in writing, if Tenant or any of its Agents
knows or has reasonable cause to believe that any Hazardous Materials,
or a condition involving or resulting from the same, is present, in
Use, has been disposed of, or transported to or from the Premises, the
Building or the Project other than as previously consented to by
Landlord in strict accordance with Paragraph 29(b).
(e) Tenant acknowledges that it, and not Landlord, is in possession and
control of the Premises for purposes of all reporting requirements
under any Hazardous Materials Laws. If Tenant or its Agents violate any
provision of this Paragraph 29, then Tenant shall immediately notify
Landlord in writing and shall be obligated, at Tenant's sole cost, to
▇▇▇▇▇, remediate, clean-up or remove from the Project, and dispose of,
all in compliance with all applicable Hazardous Materials Laws, all
Hazardous Materials Used by Tenant or its Agents. Such work shall
include, but not be limited to, all testing and investigation required
by any governmental authorities having jurisdiction, and preparation
and implementation of any remedial action plan required by any
governmental authorities having jurisdiction. All such work shall, in
each instance, be conducted to the satisfaction of all governmental
authorities having jurisdiction. If at any time Landlord determines
that Tenant is not complying with the provisions of this Paragraph 29
(e), then Landlord may, without prejudicing, limiting, releasing or
waiving Landlord's rights under this Paragraph 29, separately undertake
such work, and Tenant shall reimburse all costs incurred by Landlord
upon demand.
(f) Landlord's right of entry pursuant to Paragraph 17 shall include
the right to enter and inspect the Premises, and the tight to inspect
Tenant's books and records, to verify Tenant's compliance with, or
violations of, the Provisions of this Paragraph 29. Furthermore,
Landlord may conduct such investigations and tests as Landlord or
Landlord's lender or ground lessor may require. If Tenant has violated
the provisions of this Paragraph 29, or any applicable governmental
agency requires any such inspection, investigation or testing because
Tenant or its Agents have released Hazardous Materials, then Tenant, in
addition to its other obligations set forth in this Paragraph 29, shall
immediately reimburse Landlord for all costs incurred therewith.
(g) Tenant shall indemnify, protect, defend (with legal counsel
acceptable to Landlord in its subjective, good faith judgment) and hold
harmless Landlord, its partners and its and their respective
successors, assigns, partners, officers, shareholders, employees,
agents, lenders, ground lessors and attorneys, and the Project, from
and agaimt any and all Claims incurred by such indemnified persons, or
any of them, in connection with, or as the result of: (a) the presence,
Use or disposal of any Hazardous Materials into or about the Project,
or the transportation of any Hazardous Materials to or from the
Project, by Tenant or its Agents; (b) any injury to or death of persons
or damage to or destruction of property resulting from the presence,
Use or disposal of any Hazardous Materials into or about the Project,
or the transportation of any Hazardous Materials to or from the
Project, by Tenant or its Agents; (c) any violation of any Hazardous
Materials Laws by Tenant or its Agents; and (d) any failure of Tenant
or its Agents to observe the provisions of this Paragraph 29; and (e)
any storage tanks now located in, on or under the Project or hereafter
installed at the Project by Tenant. Payment shall not be a condition
precedent to enforcement of the foregoing indemnification provision. In
the event Tenant or its Agents releases any Hazardous Materials, then
Tenant's obligations hereunder shall include, without limitation, and
whether foreseeable or unforeseeable, all costs of any required or
necessary testing, investigation, studies, reports, repair, clean-up,
detoxification or decontamination of the Project, and the preparation
and implementation of any closure, removal, remedial action or other
required plans in connection therewith, and shall survive the
expiration or earlier termination of the term of this Lease. For
purposes of these indemnity provisions, any acts or omissions of
Tenant, its assignees, sublessees, Agents or others acting for or on
behalf of Tenant (regardless of whether they are negligent,
intentional, willful, or unlawful) shall be strictly attributable to
Tenant.
(h) Upon any violation of the provisions of this ▇▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇
shall be entitled to exercise any or all remedies available to a
landlord against a defaulting tenant including, but not limited to,
those set forth in Paragraph 25.
(i) Notwithstanding any other provision of this Lease, Tenant shall be
solely responsible for the operation, maintenance and compliance
with all applicable laws of all storage tanks currently located
in, on or under the Project and any such tanks hereafter installed
by Tenant at the Project. Tenant shall not add or replace any
storage tanks at the Project without Landlord's prior written
consent, which shall not be unreasonably withheld.
(j) By its signature to this Lease, Tenant confirms that: (i) Landlord has
not made any representation or warranty regarding the environmental
condition of the Premises, the Building or the Project; and (ii) Tenant has
conducted its own examination of (a) any storage tanks now located in, on
or under the Project and (b) the Premises, the Building and the Project
with respect to Hazardous Materials and accepts all of the same "AS IS".
(k) No termination, cancellation or release agreement entered into by
Landlord and Tenant shall release Tenant from its obligations under this
Paragraph 29 unless specifically agreed to by Landlord in writing at the
time of such agreement.
(l) Tenant's covenants and obligations under this Paragraph 29 shall also
apply to any assignee or sublessee of Tenant, and to any such assignee's or
sublessee's partners, officers, directors, shareholders, employees, agents,
contractors and any other third parties entering upon the Project at the
request or invitation of such assignee or sublessee.
30. RULES AND REGULATIONS. Tenant shall faithfully observe and comply with
the "RULES AND REGULATIONS" attached hereto as Exhibit D, and all
reasonable and nondiscriminatory modifications thereof and additions
thereto from time to time put into effect by Landlord. Landlord shall not
be responsible to Tenant for the violation or nonperformance by any other
tenant or occupant of the Building or Project of any of the Rules and
Regulations.
31. CONFLICT OF LAWS. This Lease shall be governed by and construed
pursuant to the laws of the State of California.
32. SUCCESSORS AND ASSIGNS. Except as OTHERWISE provided in this Lease, all
of the covenants, conditions and provisions of this Lease shall be binding
upon and shall inure to the benefit of the parties to this Lease and their
respective heirs, personal representatives, successors and assigns.
33. SURRENDER OF PREMISES. The voluntary or other surrender of this
Lease by Tenant, or a mutual cancellation of this Lease, shall not work
a merger, and shall, at the option of Landlord, operate as an
assignment to it of any or all subleases or subtenancies. Upon the
expiration or termination of this Lease, Tenant shall peaceably
surrender the Premises and all Tenant Improvements, alterations and
additions to the Premises, broom clean the Premises, leave the Premises
IN good order, repair and condition (including the due completion by
that expiration or termination of all repairs which Tenant is
responsible for making under this Lease), reasonable wear and tear
excepted, and comply with the provisions of Paragraph 14(C). The
delivery of keys to any employee of Landlord or to Landlord's agent or
any employee thereof shall not be sufficient to constitute a
termination of this Lease or a surrender of the Premises.
34. ATTORNEYS' FEES. If any legal proceeding arises in connection with
this Lease, in addition to any other remedy at law or in equity sought
or obtained by the prevailing party, the losing party shall pay the
reasonable legal and other fees and all costs of the prevailing party
incurred in connection with those proceedings.
35. PERFORMANCE BY TENANT. All covenants and agreements to be performed
by Tenant under any of the terms of this Lease shall be performed by
Tenant at Tenant's sole cost and expense and without any abatement of
rent. If Tenant shall fail to pay any sum of money owed to any party
other than Landlord, for which it is liable under this Lease, or Tenant
shall fail to perform any other act on ITS part to be performed under
this Lease after any notice and applicable cure period, Landlord may,
without waiving or releasing Tenant from Tenant's obligations, but
shall not be obligated to, make any such payment or perform any such
other act to be made or performed by Tenant. All sums so paid by
Landlord and all necessary incidental costs incurred by Landlord
together with interest thereon at the Lease Interest Rate, from the
date of such payment by Landlord, shall be payable to Landlord on
demand. Landlord shall have (in addition to any other right or remedy
of Landlord) all rights and remedies in the event of the nonpayment
thereof by Tenant as are set forth in Paragraph 25.
36. MORTGAGEE PROTECTION. In the event of any default on the part of
Landlord, Tenant will give notice by register or certified mail to any
beneficiary of a deed of trust or mortgage covering the Premises whose
address shall have been furnished to Tenant and shall offer such
beneficiary or mortgagee the opportunity to cure the default for thirty
(30) days after expiration of any period provided to Landlord under
this Lease to cure the default.
37. DEFINITION OF LANDLORD. The term "LANDLORD' as used in this Lease,
so far as covenants or obligations on the part of Landlord are
concerned, shall be limited to mean and include only the owner or
owners, at the time in question of the fee title of the Building or the
lessees under any ground lease, if any. In the event of any transfer,
assignment or other conveyance or transfers of any such title, Landlord
(and in case of any subsequent transfers or conveyances the
then-grantor) shall be automatically freed and relieved from and after
the date of such transfer, assignment or conveyance of all liability as
respects the performance of any covenants or obligations on the part of
Landlord contained in this Lease thereafter to be performed. The
transferee of such title shall be deemed to have assumed and agreed to
observe and perform any and all obligations of Landlord under this
Lease during its ownership of the Premises. Landlord may transfer its
interest in the Premises without the consent of Tenant and such
transfer or subsequent transfer shall not be deemed a violation on
Landlord's part of any of the terms and conditions of this Lease. With
respect to any indemnity by Tenant of Landlord under this Lease,
"LANDLORD" shall include, and the indemnity shall run to, Landlord and
its respective partners affiliates, shareholders directors, officers,
agents, lenders, employees, partners, successors and assigns.
38. WAIVER. The waiver by Landlord of any breach of any term, covenant
or condition contained in this Lease shall not be deemed to be a waiver
of any subsequent breach of the same or any other term, covenant or
condition contained in this Lease, nor shall any custom or practice to
which the parties may have adhered in the administration of the terms
of this Lease be deemed a waiver of or in any way affect the right of
Landlord to insist upon the performance by Tenant in strict accordance
with the terms of this Lease. The subsequent acceptance of rent under
this Lease by Landlord shall not be deemed to be a waiver of any
preceding breach by Tenant of any term, covenant or condition of this
Lease, other than the failure of Tenant to pay the particular rent so
accepted, regardless of Landlord's knowledge of such preceding breach
at the time of acceptance of such rent. No acceptance by Landlord of a
lesser sum than the sum then due shall be deemed to be other than on
account of the earliest installment of such rent or other amount due,
nor shall any endorsement or statement on any check or any letter
accompanying any check be deemed an accord and satisfaction, and
Landlord may accept such check or payment without prejudice to
Landlord's right to recover the balance of such installment or other
amount or pursue any other remedy available to Landlord
39. IDENTIFICATION OF TENANT. If more than one person signs this Lease
as Tenant the act of or notice from, or notice or refund to, or the
signature of, any one or more of them with respect to this Lease shall
be binding upon Tenant.
40. PARKING. Tenant shall be entitled to use, without cost or expense,
the number of vehicle parking spaces designated in Subparagraph 1(f).
Neither Tenant nor its employees or invitees shall use more parking
spaces than designated in Subparagraph 1(f). If Landlord determines in
its sole discretion that it is necessary for orderly and efficient
parking, all or any portion of any unreserved or unassigned parking
spaces which Tenant does not have the right to use may be assigned to,
made available to or reserved by Landlord for other tenants or users of
the Project. If Landlord has not assigned specific spaces to Tenant,
neither Tenant nor its employees shall use any spaces which have been
so specifically assigned by Landlord to other tenants or for other uses
such as visitor parking or which have been designated by Landlord or
governmental entities as being restricted to certain uses.
(a) Tenant shall not permit or allow any vehicles that belong
to or are controlled by Tenant or Tenant's employees,
suppliers, shippers, contractors, customers or invitees to
be loaded, unloaded or parked in areas other than those
designated for such activities
(b) If Tenant permits or allows any of the prohibited
activities described in this Paragraph 40, then Landlord
shall have the right, without notice, in addition to such
other rights and remedies that it may have, to remove, tow
away, or impound the vehicle involved and charge the cost
to Tenant, which cost shall be immediately payable upon
demand by Landlord with interest thereon at the Lease
Interest Rate from the date Landlord incurs that cost.
(c) The use by Tenant, its employees and invitees, of the
parking facilities of the Building shall be on the
additional terms and conditions set forth in attached
Exhibit E, and shall be subject to such other agreement
between Landlord and Tenant as may hereinafter be
established.
41. FORCE MAJEURE. Neither party shall have any liability whatsoever to
the other on account of (a) the inability of such party to fulfill, or
delay in fulfilling, any of such party's obligations under this Lease
or any Lease attachment by reason of strike, other labor trouble,
governmental preemption or priorities or other controls in connection
with a national or other public emergency, or shortages of fuel,
supplies or labor resulting therefrom, governmental permitting, or any
other cause, whether similar or dissimilar to the above, beyond such
party's reasonable control; or (b) any failure or defect in the supply,
quantity or character of electricity or water furnished to the
Premises, by reason of any requirement, act or omission of the public
utility or others furnishing the Building with electricity or water, or
for any other reason, whether similar or dissimilar to the above,
beyond Landlord's reasonable control. If this Lease or any Exhibit
specifies a time period for performance of an obligation of Landlord,
that time period shall be extended by the period of any delay in
Landlord's performance caused by any of the events of force majeure
described above. The provisions of this Paragraph 41 shall not apply to
either party's financial inability to perform its obligation under this
Lease.
42. TERMS, HEADINGS AND CONSTRUCTION. The title paragraph headings are
not a part of this Lease and shall have no effect upon the
construction or interpretation of any part of this Lease. "OR" is not
exclusive. Unless stated otherwise, references to paragraphs and
subparagraphs are to those in this Lease. This Lease shall be strictly
construed neither against Landlord nor Tenant.
43. TIME. Time is of the essence with respect to the performance of
every provision of this Lease in which time of performance is a
factor.
44. PRIOR AGREEMENT; AMENDMENTS. This Lease contains all of the
agreements of the parties hereto with respect to any matter covered or
mentioned in this Lease, and no prior agreements or understanding or
letter or proposal pertaining to any such matters shall be effective
for any purpose. No provisions of this Lease may be amended or added
to, whether by conduct, oral or written communications, or otherwise,
except by an agreement in writing signed by the parties hereto or
their respective successors-in-interest. No other provision of this
Lease shall modify the effect of this paragraph.
45. SEVERABILITY. Any provision of this Lease which shall prove to be
invalid, void or illegal shall in no way affect, impair or invalidate
any other provision of this Lease, and such other provisions shall
remain in full force.
46. RECORDING. Neither this Lease nor a short form memorandum of this
Lease shall be recorded.
47. LIMITATION ON LIABILITY AND TIME. In consideration of the benefits
accruing under this Lease, Tenant and all successors and assigns agree
that, in the event of any actua1 or alleged failure, breach or default
under this Lease by Landlord: (a) the sole and exclusive remedy shall
be against the Landlord's interest in the Project and the rents,
insurance proceeds and condemnation proceeds therefrom, (b) no partner
of Landlord shall be named as a party in any suit or proceeding (except
as may be necessary to secure jurisdiction of the partnership, if
applicable); (c) no partner of Landlord shall be required to answer or
otherwise plead to any service of process; (d) no judgment will be
taken against any partner of Landlord (if applicable); (e) no writ of
execution will ever be levied against the assets of any partner of
Landlord; and (f) the obligations of Landlord under this Lease do not
constitute personal obligations of the individual partners, directors,
officers or shareholders of Landlord, and Tenant shall not seek
recourse against the individual partners, directors, officers or
shareholders of Landlord or any of their personal assets for
satisfaction of any liability in respect to this Lease. In addition,
any claim, defense or other right of Landlord or Tenant arising in
connection with s Lease or negotiations before this Lease was signed
shall be barred unless the party making such claim files an action or
interposes such defense within three hundred sixty-five (365) days
after the date of the alleged event on which the party is basing its
claim, defense or right.
48. TRAFFIC IMPACT. Tenant agrees that Tenant and its employees,
invitees, and contractors shall comply with the provisions of Exhibit
E. (Traffic and Parking Rules and Regulations)
49. MODIFICATION FOR LENDER OR GOVERNMENT. If, in connection with
obtaining construction, interim or permanent financing or refinancing
for the Building or all or part of the Project, a lender shall request
reasonable modifications in this Lease as a Condition to such
financing, Tenant will not unreasonably withhold, delay or defer its
consent thereto, provided that such modifications do not increase the
obligations of Tenant under this Lease or materially adversely affect
the leasehold interest hereby created or Tenant's rights under this
Lease. In addition, the parties agree to promptly sign all documents
reasonably required by any agency from time to time in connection with
the Premises, provided that those documents do not materially adversely
affect the rights or obligations of the parties under this Lease.
50. FINANCIAL STATEMENTS. When reasonably requested by Landlord, Tenant
shall, upon ten (10) days notice from Landlord, provide Landlord with a
current financial statement and financial statements of the two (2)
years prior to the current financial statement year. Such statement(s)
shall be safeguarded by Landlord and shall be prepared in accordance
with generally accepted accounting principles and, if such is the
normal practice of Tenant, shall be audited by an independent certified
public accountant. If Tenant fails to provide such financial statements
within ten (10) days after receipt of a second notice from Landlord
requesting Tenant's financial statements, Landlord's second notice
shall be in lieu of and not in addition to the notice and cure period
otherwise provided for under Subparagraph 25(a)(iii). Tenant's failure
to comply with its obligations under this Paragraph 50 within ten (10)
days after receipt of Landlord's second notice shall constitute a
material default by Tenant under this Lease.
51. QUIET ENJOYMENT. Landlord covenants that upon Tenant paying the rent
required under this Lease and paying all other charges and performing
all of the covenants and provisions on Tenant's part to be observed and
performed under this Lease, Tenant shall and may peaceably and quietly
have, hold and enjoy the Premises in accordance with this Lease.
52. TENANTS SIGNS.
(a) Tenant may, at its sole cost and expense, place its
signs displaying its logo and graphics on the entrance
doors to the Premises and in Landlord designated
locations in the hallways on floors wholly leased by
Tenant.
(b) Subject to Landlord's reasonable approval of the sine,
appearance, method of installation, text and logo,
Tenant may install signage on the exterior of the
Building or on any Building sign monument or other
device constructed for the placement of tenant signs.
Subject to Landlord's prior reasonable approval, Tenant
shall have the right to maintain and make such
reasonable modifications to any sign that is currently
located on the Project and which is being used by SMS.
(c) All Tenant signs installed by Landlord or Tenant shall
comply with all applicable requirements of all
governmental authorities having jurisdiction and shall
be installed in a good and workmanlike manner. Such
signs shall be maintained and kept in good repair at
Tenant's sole cost and expense, and, on expiration or
earlier termination of the Term, removed, and all
damage caused by such removal repaired, at Tenant's
sole cost and expense.
53. NO LIGHT, AIR OR VIEW EASEMENT. Any diminution or
shutting off of light, air or view by any structure
which may be erected on the Land or on lands adjacent
to the Project shall in no way affect this Lease, ▇▇▇▇▇
any payment owed by Tenant under the Lease, or
otherwise impose any liability on Landlord.
54. TENANT AS CORPORATION, PARTNERSHIP, OR LIMITED
LIABILITY COMPANY. If Tenant executes this Lease as a
corporation or limited liability company, then Tenant
and the persons executing this Lease on behalf of
Tenant represent and warrant that the individuals
executing this Lease on Tenant's behalf are duly
authorized to execute and deliver this Lease on its
behalf. If tenant is a corporation, Tenant further
represents and warrants that this Lease has been
authorized in accordance with a duly adopted resolution
of the board of directors of Tenant, a copy of which is
to be delivered to Landlord on execution of this Lease,
and accordance with the bylaws of Tenant and that this
Lease is binding Upon Tenant in accordance with its
terms. If Tenant executes this Lease as a partnership,
(a) each general partner shall be jointly and severally
liable for keeping, observing and performing all the
provisions of this Lease to be kept, observed or
performed by Tenant and (b) the term "Tenant" shall
mean and include each general partner jointly and
severally and the act of or notice from, or notice or
refund to, or the signature of, any one or more of them
with respect to this Lease shall be binding on Tenant
and each and all of the general partners of Tenant with
the same effect as if each of them had so acted or so
given or received such notice or refund or so signed.
Dissolution of any partnership which is a Tenant under
this Lease shall be deemed to be an assignment jointly
to all of the partners who shall thereafter be subject
to the terms of this Lease as if each such former
partners had initially signed this Lease as individuals
55.
DEVELOPMENT AND EASEMENTS. Landlord reserves the right, from time to
time, to grant such easements, rights and dedications that Landlord
deems necessary or desirable, and to cause the recordation of parcel
and subdivision maps and restrictions, so long as such easements,
rights, dedications, maps and restrictions do not unreasonably
interfere with the use of the Premises by Tenant. Tenant shall
reasonably cooperate with Landlord, at Landlord's sole cost and
expense, in Landlord's efforts to develop the New Building and will,
within ten (10) days after request of Landlord, sign any of the
aforementioned documents and any other documents reasonably requested
by Landlord in connection with development of the New Building or any
other development permitted under this Lease (collectively,
"Documents"). If Tenant fails to execute any Document within ten (10)
days after receipt of a second notice from Landlord requesting the
execution of the Document, Landlord's second notice shall be in lieu
of and not in addition to the notice and cure period otherwise
provided for under Subparagraph 25(a)(iii). Tenant's failure to comply
with its obligations under this Paragraph 55 within ten (10) days
after receipt of Landlord's second notice shall constitute a material
default by Tenant under this Lea
56. COUNTERPARTS. This Lease may be executed in several
counterparts, each of which shall be deemed an
original, but all of which shall constitute one and the
same instrument
57. NO OFFER The submission of this Lease and any ancillary
documents to Tenant shall not constitute an offer to
Lease, and Landlord shall have no obligation of any
kind, express or implied, to lease the Premises to
Tenant until Landlord has approved, executed and
returned to Tenant a fully signed copy of this Lease
together with any ancillary documents Landlord may
require.
58. TERMINATION OF EXISITNG LEASE. Notwithstanding anything
to the contrary Contained in this Agreement, Landlord
and Tenant agree that this Lease and the terms and
conditions contained herein are expressly conditioned
upon satisfaction of the following conditions
("Termination Conditions") on or before 5:00 P.M.
(California time) on December 23, 2002 ("Deadline"):
(a) Landlord and SMS entering into a Lease Termination
Agreement with respect to that American Industrial Real
Estate Association Industrial/Commercial Single-Tenant
Lease-Net, dated December 13 , 1996, between Landlord
and SMS, as amended by the March 21, 2002 First
Amendment to Industrial/Commercial Single-Tenant
Lease-Net on terms and conditions acceptable to each
party to the Lease Termination Agreement in their
subjective discretion; and
(b)
Closingshall have occurred under that certain Asset Purchase
Agreement, between SMS and Tenant.
If any of the Termination Conditions is not satisfied by the
Deadline, this Lease shall automatically terminate and neither
party shall have any further rights, obligations or
liabilities under this Lease.
59. JOINT AND SEVERAL LIABILITY. This Lease and the obligations
set forth herein shall be the joint and several obligations of
all persons, entities or parties to this Lease and shall be
binding upon them and their heirs, personal representatives,
and permitted successors and assigns, if any.
THEREFORE, the parties have executed this Lease as of the date
first written above.
LANDLORD: TENANT:
BIRTH ▇▇▇▇▇▇▇ LLC, ITO ACQUISITION CORP., a California
a California liited liability corporation
company
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Executive Vice President