EXHIBIT 10.35
INDUSTRIAL LEASE
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(Single Tenant; Net; Stand-Alone)
"AS-IS"
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THIS LEASE is made as of the 4th day of January 2000, by and between The
Irvine Company, hereafter called "Landlord," and ▇▇▇▇▇▇▇▇▇▇.▇▇▇, INC., a
Delaware corporation hereinafter called "Tenant."
ARTICLE I. BASIC LEASE PROVISIONS
Each reference in this Lease to the "Basic Lease Provisions" shall mean and
refer to the following collective terms, the application of which shall be
governed by the provisions in the remaining Articles of this Lease.
1. Premises: The Premises are more particularly described in Section 2.1.
2. Address of Building: ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
3. Use of Premises: Warehousing, office, retail distribution and other legal
related uses (including, without limitation, the retail distribution of
alcoholic beverages to the extent permitted under applicable laws).
4. Commencement Date: February 1, 2000
5. Lease Term: The Term of this Lease shall expire at midnight on October 31,
2005.
6. Basic Rent: One Hundred Ten Thousand Nine Hundred Fifty-eight Dollars
($110,958.00) per month, based on $0.80 per rentable square foot.
Basic Rent is subject to adjustment as follows:
Commencing November 1, 2000, the Basic Rent shall be One Hundred Sixty-Six
Thousand Four Hundred Thirty-Eight Dollars ($166,438.00) per month, based
on $1.20 per rentable square foot.
Commencing November 1, 2001, the Basic Rent shall be One Hundred Seventy
Three Thousand Three Hundred Seventy-Three Dollars ($173,373.00) per month,
based on $1.25 per rentable square foot.
Commencing November 1, 2002, the Basic Rent shall be One Hundred Eighty
Thousand Three Hundred Seven Dollars ($180,307.00) per month, based on
$1.30 per rentable square foot.
Commencing November 1, 2003, the Basic Rent shall be One Hundred Eighty
Seven Thousand Two Hundred Forty-Two Dollars ($187,242.00) per month, based
on $1.35 per rentable square foot.
Commencing November 1, 2004, the Basic Rent shall be One Hundred Ninety
Four Thousand One Hundred Seventy-Seven Dollars ($194,177.00) per month,
based on $1.40 per rentable square foot.
7. Guarantor(s): None
8. Floor Area of Premises: approximately 138,698 rentable square feet
9. Security Deposit: $213,595.00, plus Letter of Credit (see Section 4.4).
10. Broker(s): Ernst & Young
11. Additional Insureds: Insignia/ESG of California, Inc.
12. Address for Payments and Notices:
LANDLORD TENANT
INSIGNIA/ESG OF CALIFORNIA, INC. ▇▇▇▇▇▇▇▇▇▇.▇▇▇, INC.
▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
With a copy of notices to: With a copy of notices to:
IRVINE INDUSTRIAL COMPANY ▇▇▇▇▇▇▇▇▇▇.▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇ Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Vice President, Industrial Operations ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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▇▇▇▇▇▇▇▇▇▇.▇▇▇
Attn: Vice President of Operations
▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
13. Tenant's Liability Insurance Requirement: $2,000,000.00
14. Vehicle Parking Spaces: All on-Site spaces
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ARTICLE II. PREMISES
SECTION 2.1. LEASED PREMISES. Landlord leases to Tenant and Tenant leases
from Landlord the premises shown in EXHIBIT A (the "Premises"), including the
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building identified in Item 2 of the Basic Lease Provisions (which together with
the underlying real property, is called the "Building"), and containing
approximately the floor area set forth in Item 8 of the Basic Lease Provisions.
The Building is located on the site (the "Site") shown on EXHIBIT A-1 attached
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hereto.
SECTION 2.2. ACCEPTANCE OF PREMISES. Tenant acknowledges that neither
Landlord nor any representative of Landlord has made any representation or
warranty with respect to the Premises or the Building or the suitability or
fitness of either for any purpose, including without limitation any
representations or warranties regarding zoning or other land use matters, and
that neither Landlord nor any representative of Landlord has made any
representations or warranties regarding (i) what other tenants or uses may be
permitted or intended in the Building and the Project, or (ii) any exclusivity
of use by Tenant with respect to its permitted use of the Premises as set forth
in Item 3 of the Basic Lease Provisions. Tenant further acknowledges that
neither Landlord nor any representative of Landlord has agreed to undertake any
alterations or additions to the Premises except as expressly provided in this
Lease. It is further understood that Tenant shall take possession of the
Premises as of the Commencement Date of this Lease in an "as-is" condition
without further obligation on Landlord's part as to improvements whatsoever
except as expressly provided in Section 7.2 below.
SECTION 2.3. BUILDING NAME AND ADDRESS. Tenant shall not utilize any name
selected by Landlord from time to time for the Building as any part of Tenant's
corporate or trade name. Landlord shall have the right to change the name,
address, number or designation of the Building without liability to Tenant.
ARTICLE III. TERM
SECTION 3.1. GENERAL. The Term shall be for the period shown in Item 5 of
the Basic Lease Provisions. The Term shall commence ("Commencement Date") on the
date set forth in Item 4 of the Basic Lease Provisions and shall expire on the
corresponding date (the "Expiration Date") of the expiration of the Term.
SECTION 3.2. DELAY IN POSSESSION. If Landlord, for any reason whatsoever,
cannot deliver possession of the Premises to Tenant on or before the
Commencement Date, this Lease shall not be void or voidable nor shall Landlord
be liable to Tenant for any resulting loss or damage. However, Tenant shall not
be liable for any rent and the Commencement Date shall not occur until Landlord
delivers possession of the Premises and the Premises are in fact available for
Tenant's occupancy, except that if Landlord's failure to so deliver possession
on the Commencement Date is attributable to any action or inaction by Tenant,
then the Commencement Date shall not be advanced to the date on which possession
of the Premises is tendered to Tenant, and Landlord shall be entitled to full
performance by Tenant (including the payment of rent) from the date Landlord
would have been able to deliver the Premises to Tenant but for Tenant delay(s).
SECTION 3.3. RIGHT TO EXTEND THIS LEASE. Provided that Tenant is not in
default under any provision of this Lease, either at the time of exercise of the
extension right granted herein or at the time of the commencement of such
extension, and provided further that Tenant is occupying the entire Premises and
has not assigned this Lease or sublet, in the aggregate, more than twenty-five
percent (25%) of the Premises (other than an assignment or subletting permitted
to be made without Landlord's consent pursuant to Section 9.4 below), Tenant may
extend the Term of this Lease for one (1) period of sixty (60) months. Tenant
shall exercise its right to extend the Term by and only by delivering to
Landlord, not less than six (6) months or more than nine (9) months prior to the
expiration date of the Term, Tenant's irrevocable written notice of its
commitment to extend (the "Commitment Notice"). The Basic Rent payable under the
Lease during any extension of the Term shall be determined as provided in the
following provisions.
If Landlord and Tenant have not by then been able to agree upon the Basic
Rent for the extension of the Term, then within one hundred twenty (120) and
ninety (90) days prior to the expiration date of the Term, Landlord shall notify
Tenant in writing of the Basic Rent that would reflect the prevailing market
rental rate for a 60-month renewal of comparable space in the Project (together
with any increases thereof during the extension period) as of the commencement
of the extension period ("Landlord's Determination"). Should Tenant disagree
with the Landlord's Determination, then Tenant shall, not later than twenty (20)
days thereafter, notify Landlord in writing of Tenant's determination of those
rental terms ("Tenant's Determination"). In no event, however, shall Landlord's
Determination or Tenant's Determination be less than the Basic Rent payable by
Tenant during the final month of the initial Term. Within ten (10) days
following delivery of the Tenant's Determination, the parties shall attempt to
agree on an appraiser to determine the fair market rental. If the parties are
unable to agree in that time, then each party shall designate an appraiser
within ten (10) days thereafter. Should either party fail to so designate an
appraiser within that time, then the appraiser designated by the other party
shall determine the fair market rental. Should each of the parties timely
designate an appraiser, then the two appraisers so designated shall appoint a
third appraiser who shall, acting alone, determine the fair market rental for
the Premises. Any appraiser designated hereunder shall have an MAI certification
with not less than five (5) years experience in the valuation of commercial
industrial buildings in the vicinity of the Project.
Within thirty (30) days following the selection of the appraiser and such
appraiser's receipt of the Landlord's Determination and the Tenant's
Determination, the appraiser shall determine whether the rental rate determined
by Landlord or by Tenant more accurately reflects the fair market rental rate
for the 60-month renewal of the Lease for the Premises, as reasonably
extrapolated to the commencement of the extension period.
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Accordingly, either the Landlord's Determination or the Tenant's Determination
shall be selected by the appraiser as the fair market rental rate for the
extension period. In making such determination, the appraiser shall consider
rental comparables for the Project (provided that if there are an insufficient
number of comparables within the project, the appraiser shall consider rental
comparables for similarly improved space within the vicinity of the Project with
appropriate adjustment for location and quality of project), taking into account
any concessions (or lack thereof) or brokerage commissions obligations (or lack
thereof) in making its determination of the fair market rental rate. At any time
before the decision of the appraiser is rendered, either party may, by written
notice to the other party, accept the rental terms submitted by the other party,
in which event such terms shall be deemed adopted as the agreed fair market
rental. The fees of the appraiser(s) shall be borne entirely by the party whose
determination of the fair market rental rate was not accepted by the appraiser.
Within twenty (20) days after the determination of the fair market rental,
Landlord shall prepare an appropriate amendment to this Lease setting forth the
Basic Rent payable by Tenant for the extension period (as determined pursuant to
the foregoing provisions), and Tenant shall execute and return same to Landlord
within twenty (20) days. Should the fair market rental not be established by the
commencement of the extension period, then Tenant shall continue paying rent at
the rate in effect during the last month of the initial Term, and a lump sum
adjustment shall be made promptly upon the determination of such new rental.
If Tenant fails to timely comply with any of the provisions of this
paragraph, Tenant's right to extend the Term shall be extinguished and the Lease
shall automatically terminate as of the expiration date of the Term, without any
extension and without any liability to Landlord. Any attempt to assign or
transfer any right or interest created by this paragraph shall be void from its
inception (other than an assignment made in connection with an assignment of
this Lease permitted to be made without Landlord's consent pursuant to Section
9.4 below). Tenant shall have no other right to extend the Term beyond the
single sixty (60) month extension period created by this paragraph. Unless
agreed to in a writing signed by Landlord and Tenant, any extension of the Term,
whether created by an amendment to this Lease or by a holdover of the Premises
by Tenant, or otherwise, shall be deemed a part of, and not in addition to, any
duly exercised extension period permitted by this paragraph.
ARTICLE IV. RENT AND OPERATING EXPENSES
SECTION 4.1. BASIC RENT. From and after the Commencement Date, Tenant shall
pay to Landlord without deduction or offset, Basic Rent for the Premises in the
total amount shown (including subsequent adjustments, if any) in Item 6 of the
Basic Lease Provisions. Any rental adjustment shown in Item 6 shall be deemed to
occur on the specified monthly anniversary of the Commencement Date, whether or
not that date occurs at the end of a calendar month. The rent shall be due and
payable in advance commencing on the Commencement Date (as prorated for any
partial month) and continuing thereafter on the first day of each successive
calendar month of the Term. No demand, notice or invoice shall be required for
the payment of Basic Rent. An installment of rent in the amount of one (1) full
month's Basic Rent at the initial rate specified in Item 6 of the Basic Lease
Provisions shall be delivered to Landlord concurrently with Tenant's execution
of this Lease and shall be applied against the Basic Rent first due hereunder.
SECTION 4.2. OPERATING EXPENSES.
(a) Tenant shall pay to Landlord, as additional rent, "Building Costs"
and "Property Taxes," as those terms are defined below, incurred by Landlord in
the operation of the Building. For convenience of reference, Property Taxes and
Building Costs shall be referred to collectively as "Operating Expenses".
(b) Commencing prior to the start of the first full "Expense Recovery
Period" (as defined below) of the Lease, and prior to the start of each full or
partial Expense Recovery Period thereafter, Landlord shall give Tenant a written
estimate of the amount of Operating Expenses for the Expense Recovery Period.
Tenant shall pay the estimated amounts to Landlord in equal monthly
installments, in advance, with Basic Rent. If Landlord has not furnished its
written estimate for any Expense Recovery Period by the time set forth above,
Tenant shall continue to pay cost reimbursements at the rates established for
the prior Expense Recovery Period, if any; provided that when the new estimate
is delivered to Tenant, Tenant shall, at the next monthly payment date, pay any
accrued cost reimbursements based upon the new estimate. For purposes hereof,
"Expense Recovery Period" shall mean every twelve month period during the Term
(or portion thereof for the first and last lease years) commencing July 1 and
ending June 30. Estimates of Operating Expenses payable by Tenant during each
Expense Recovery Period shall not be greater than one hundred ten percent (110%)
of actual Operating Expenses for the immediately preceding Expense Recovery
Period unless, in Landlord's reasonable estimation, it is expected that actual
Operating Expenses for the Expense Recovery Period in question will be greater
than one hundred ten percent (110%) of actual Operating Expenses for the
immediately preceding Expense Recovery Period. The foregoing limitation on
estimated payments of Operating Expenses shall in no way limit Tenant's
obligation to pay actual Operating Expenses as provided in this Section 4.2, it
being the intent of the parties that Tenant shall be fully responsible for
actual Operating Expenses (whether or not Tenant's estimated payments are ▇▇▇▇
or less than actual Operating Expenses).
(c) Within one hundred twenty (120) days after the end of each Expense
Recovery Period, Landlord shall furnish to Tenant a statement showing in
reasonable detail the actual or prorated Operating Expenses incurred by Landlord
during the period, and the parties shall within thirty (30) days thereafter make
any payment or allowance necessary to adjust Tenant's estimated payments, if
any, to Tenant's actual owed amounts as shown by the annual statement. Any delay
or failure by Landlord in delivering any statement hereunder shall not
constitute a waiver of Landlord's right to require Tenant to pay Operating
Expenses pursuant hereto. Any amount due Tenant
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shall be credited against installments next coming due under this Section 4.2,
and any deficiency shall be paid by Tenant together with the next installment
coming due under this Section 42. If Tenant has not made estimated payments
during the Expense Recovery Period, any amount owing by Tenant pursuant to
subsection (a) above shall be paid to Landlord in accordance with Article XVI.
Should Tenant fail to object in writing to Landlord's determination of actual
Operating Expenses within sixty (60) days following delivery of Landlord's
expense statement, Landlord's determination of actual Operating Expenses for the
applicable Expense Recovery Period shall be conclusive and binding on the
parties and any future claims to the contrary shall be barred.
Provided Tenant is not then in default under this Lease beyond any
applicable notice and cure periods, Tenant shall have the right to have an
independent certified public accountant audit Landlord's Operating Expenses,
subject to the terms and conditions hereof. In no event, however, shall such
auditor be compensated by Tenant on a "contingency" basis, or on any other basis
tied to the results of said audit. Tenant shall give written notice to Landlord
of Tenant's intent to audit Operating Expenses, if at all, within sixty (60)
days following delivery of Landlord's expense statement for the Expense Recovery
Period in question. Following at least ten (10) business days notice to
Landlord, such audit shall be conducted at a mutually agreeable time during
normal business hours at the office of Landlord or its management agent where
records are maintained in Santa ▇▇▇▇▇ County, California. Landlord shall in good
faith cooperate with Tenant during any such audit. If Tenant's audit reveals
that actual Operating Expenses have been overstated by five percent (5%) or
more, then, subject to Landlord's right to review and/or contest the results of
the audit (as provided below), Landlord shall reimburse Tenant within thirty
(30) days after Tenant's demand therefor for Tenant's reasonable actual out-of-
pocket costs of such audit supported by bona-fide "paid" invoices therefor. All
information obtained by Tenant and/or its auditor in connection with any audit,
as well as any compromise, settlement or adjustment reached between Landlord and
Tenant as a result thereof, shall be held in strict confidence by Tenant and its
auditor and, except as may be required pursuant to any litigation or as may
otherwise be required by law, shall not be disclosed to any third party,
directly or indirectly, by Tenant or its auditor or any of their respective
officers, agents or employees. Landlord may require Tenant's auditor to execute
a separate confidentiality agreement affirming the foregoing as a condition
precedent to any audit. If, following Landlord's review of Tenant's audit,
Landlord disputes the same, Landlord shall have the right, upon written notice
to Tenant within a reasonable time following its receipt of the audit, to
contest such audit by demanding binding arbitration with JAMS Endispute in Santa
▇▇▇▇▇ County, California ("JAMS"). Tenant agrees to submit to such arbitration
upon such written notice from Landlord. Within ten (10) business days following
submission of the dispute by Landlord to JAMS, JAMS shall designate three (3)
arbitrators and each party may, within five (5) business days thereafter, veto
one (1) of the three (3) persons so designated. If two (2) different designated
arbitrators have been vetoed, the third arbitrator shall hear and decide the
matter. Any arbitration pursuant to this paragraph shall be decided within
thirty (30) days of submission to JAMS. The decision of the arbitrator shall be
final and binding on the parties. The award rendered by the arbitrator shall be
final, and judgment may be entered upon it in accordance with applicable law in
any court having jurisdiction thereof. Except by written consent of the person
or entity sought to be joined, no arbitration under this paragraph shall
include, by consolidation, joinder or in any other manner, any person or entity
not a party to this Lease unless (i) such person or entity is substantially
involved in a common question of fact or law, (ii) the presence of such person
or entity is required if complete relief is to be accorded in the arbitration,
or (iii) the interest or responsibility of such person or entity in the matter
in not insubstantial. All costs associated with the arbitration (excluding the
cost of the audit) shall be awarded to the prevailing party as determined by the
arbitrator. The foregoing agreement to arbitrate shall be specifically
enforceable under prevailing law. In the event that, based on Tenant's audit
(and, if the results thereof are contested by Landlord as provided above, the
award rendered by the arbitrator), it is determined that actual Operating
Expenses have been overstated by Landlord, then any overpayment of actual
Operating Expenses by Tenant revealed thereby (less any prior credits or rebates
given with respect thereto) shall be credited by Landlord against installments
next becoming due under this Section 4.2 (or, if the Lease has expired or
terminated at the time of such determination, such overpayment (less any prior
credits or rebates given with respect thereto) shall be rebated by Landlord to
Tenant within thirty (30) days following such determination). Conversely, in the
event that, based on Tenant's audit (and, if the results thereof are contested
by Landlord as provided above, the award rendered by the arbitrator), it is
determined that actual Operating Expenses have been understated by Landlord,
then any deficiencies in the payment of actual Operating Expenses by Tenant
revealed thereby (less any prior payments made by Tenant with respect thereto)
shall be paid by Tenant together with the next installment coming due under this
Section 4.2 (or, if the Lease has expired or terminated at the time of such
determination, such deficiency (less any prior payments made by Tenant with
respect thereto) shall be paid by Tenant upon notice from Landlord).
(d) Even though the Lease has terminated and the Tenant has vacated
the Premises, when the final determination is made of Operating Expenses for the
Expense Recovery Period in which the Lease terminates, Tenant shall upon notice
pay the entire amount of actual Operating Expenses due over the estimated
expenses paid. Conversely, any overpayment made in the event actual Operating
Expenses due are less than the estimated expenses paid shall be rebated by
Landlord to Tenant within thirty (30) days after the final determination.
(e) If, at any time during any Expense Recovery Period, any one or
more of the Operating Expenses are increased to a rate(s) or amount(s) in excess
of the rate(s) or amount(s) used in calculating the estimated expenses for the
year, then the estimate of Operating Expenses shall be increased for the month
in which such rate(s) or amount(s) becomes effective and for all succeeding
months by an amount equal to the increase. Landlord shall give Tenant written
notice of the amount or estimated amount of the increase, the month in which the
increase will become effective, and the month for which the payments are due.
Tenant shall pay the increase to Landlord as a part of Tenant's monthly payments
of estimated expenses as provided in paragraph (b) above, commencing with the
month in which effective.
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(f) The term "Building Costs" shall include all expenses of operation
and maintenance of the Building and all landscaping, walkways, parking areas and
lighting of the Site to the extent such expenses are not billed to and paid
directly by Tenant; and shall include the following charges by way of
illustration but not limitation: water and sewer charges; insurance premiums or
reasonable premium equivalents should Landlord elect to self-insure any risk
that Landlord is authorized to insure hereunder, license, permit, and inspection
fees; heat; light; power; air conditioning; supplies; materials; equipment;
tools; the cost of any environmental, insurance, tax or other consultant
utilized by Landlord in connection with the Building; costs incurred in
connection with compliance of any laws or changes in laws applicable to the
Building; the cost of any capital investments (other than tenant improvements
for specific tenants) to the extent of the amortized amount thereof over the
useful life of such capital investments calculated at a market cost of funds,
all as reasonably determined by Landlord, for each such year of useful life
during the Term; costs incurred in connection with the Ground Lease (as such
term is defined in Section 6.2(b)) or any renewals, amendments or replacements
of same, including but not limited to base rent, taxes and insurance premiums
payable thereunder, to the extent such costs relate to the Site; labor;
reasonably allocated wages and salaries, fringe benefits, and payroll taxes for
administrative and other personnel directly applicable to the Building,
including both Landlord's personnel and outside personnel; any expense incurred
pursuant to Sections 6.1, 6.2, 7.2, and 10.2; and a reasonable
overhead/management fee for the professional operation of the Building.
Notwithstanding anything to the contrary contained herein, the amount of such
overhead/management fee to be charged to Tenant shall be determined by
multiplying the actual fee charged (which from time to time may be with respect
to the Building only or the Building together with other properties owned by
Landlord and/or its affiliates) by a fraction, the numerator of which is the
floor area of the Premises (as set forth in Item No. 8 of the Basic Lease
Provisions) and the denominator of which is the total square footage of space
charged with such fee actually leased to tenants (including Tenant). It is
understood that Building Costs shall include competitive charges for direct
services provided by any subsidiary or division of Landlord, and may include the
Building's or the Site's proportionate share of the cost of maintenance or
repair contracts which cover the Building and/or the Site and other buildings
and/or projects in Landlord's portfolio, as reasonably allocated by Landlord.
(g) The term "Property Taxes" as used herein shall include the
following: (i) all real estate taxes or personal property taxes, as such
property taxes may be reassessed from time to time; and (ii) other taxes,
charges and assessments which are levied with respect to this Lease, to the
Building or to the Site, and any improvements, fixtures and equipment and other
property of Landlord located in the Building or on the Site, except that general
net income and franchise taxes imposed against Landlord shall be excluded; and
(iii) all assessments and fees for public improvements, services, and facilities
and impacts thereon, including without limitation arising out of any Community
Facilities Districts, "▇▇▇▇▇ ▇▇▇▇" districts, similar assessment districts, and
any traffic impact mitigation assessments or fees; and (iv) any tax, surcharge
or assessment which shall be levied in addition to or in lieu of real estate or
personal property taxes, other than taxes covered by Article VIII; and (v) costs
and expenses incurred in contesting the amount or validity of any Property Tax
by appropriate proceedings. Landlord reserves the right at its election to at
any time contest the amount or validity of any Property Taxes by appropriate
proceedings. In the event that Landlord elects to so contest any Property Taxes,
Landlord shall provide Tenant with written notice thereof and, if such contest
relates to any alterations, additions or improvements made by Tenant, then
Landlord shall permit Tenant, at its election, to reasonably participate, at its
sole cost and expense, with Landlord in pursuing such tax contest to the extent
that it relates to any alterations, additions or improvements made by Tenant. In
addition, if Tenant reasonably believes that the amount or validity of any
increase in Property Taxes that is due to a change in ownership or any
alterations, additions or improvements made by Tenant is improper, Tenant may
notify Landlord in writing of Tenant's desire that such increase in Property
Taxes be contested by Landlord (which notice by Tenant shall include the basis
for Tenant's contention that such increase in Property Taxes is improper). Upon
Landlord's receipt of any such notice from Tenant and unless Landlord has
otherwise elected to contest the same, Landlord and Tenant shall promptly meet
to discuss the merits of contesting the Property Taxes in question. If,
following such discussion, Tenant desires that Landlord proceed with contesting
such increase in Property Taxes, then, following written notice thereof to
Landlord given within fifteen (15) days following such discussion, Landlord
shall pursue contesting such increase in Property Taxes by appropriate
proceedings (and Landlord shall keep Tenant informed of the status of any such
tax contest and permit Tenant, at its election, to reasonably participate, at
its sole cost and expense, with Landlord in pursuing such tax contest). If
Landlord is successful in contesting any Property Taxes and is entitled to
receive a refund for any overpayment of Property Taxes, Tenant shall be entitled
to a refund of any overpayment of the contested Property Taxes made by Tenant,
which refund shall be made by Landlord to Tenant within thirty (30) days
following Landlord's receipt of such refund from the applicable taxing
authority.
SECTION 4.3. SECURITY DEPOSIT. Concurrently with Tenant's delivery of this
Lease, Tenant shall deposit with Landlord the sum, if any, stated in Item 9 of
the Basic Lease Provisions, to be held by Landlord as security for the full and
faithful performance of Tenant's obligations under this Lease (the "Security
Deposit"). Subject to the last sentence of this Section, the Security Deposit
shall be understood and agreed to be the property of Landlord upon Landlord's
receipt thereof. Upon any default by Tenant, including specifically Tenant's
failure to pay rent or to abide by its obligations under Sections 7.1 and 15.3
below and Tenant's failure to cure the same within any applicable cure period,
whether or not Landlord is informed of or has knowledge of the default, the
Security Deposit shall be deemed to be automatically and immediately applied,
without waiver of any rights Landlord may have under this Lease or at law or in
equity as a result of the default, as a setoff for full or partial compensation
for that default. If any portion of the Security Deposit is applied after a
default by Tenant, Tenant shall within five (5) days after written demand by
Landlord deposit cash with Landlord in an amount sufficient to restore the
Security Deposit to its original amount. Landlord shall not be required to keep
this Security Deposit separate from its general funds, and Tenant shall not be
entitled to interest on the Security Deposit. If Tenant fully performs 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 assignee of
Tenant's interest in this Lease) within thirty (30) days after the
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expiration of the Term, provided that Landlord may retain the Security Deposit
to the extent and until such time as all amounts due from Tenant in accordance
with this Lease have been determined and paid in full.
SECTION 4.4. LETTER OF CREDIT. In addition to the Security Deposit and as
additional security for the full and faithful performance of Tenant's
obligations under this Lease, Tenant shall deliver to landlord, concurrently
with Tenant's execution and delivery of this Lease, a letter of credit in the
amount of One Million Dollars ($1,000,000.00), which letter of credit shall be
in form and with the substance of Exhibit F attached hereto, and issued by a
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financial institution reasonably acceptable to Landlord. The letter of credit
shall provide for automatic yearly renewals throughout the Term of this Lease.
Upon (i) any default by Tenant, including specifically Tenant's failure to pay
rent or to abide by its obligations under Sections 7.1 and 15.3 below and
Tenant's failure to cure the same within any applicable cure period, and (ii)
Landlord's application of the entire Security Deposit, Landlord shall be
entitled to draw upon said letter of credit by the issuance of Landlord's sole
written demand to the issuing financial institution. Any such draw shall be
without waiver or any rights Landlord may have under this Lease or at law or in
equity as a result of the default, as a setoff for full or partial compensation
for the default. If any portion of the letter of credit is drawn after a default
by Tenant, Tenant shall within five (5) days after written demand by Landlord
restore the letter of credit. Upon the expiration of the twelfth (12th), twenty-
fourth (24th), thirty-sixth (36th), forty-eighth (48th) and sixty-ninth (69th)
Lease months during the Term, in the event Tenant has not been in monetary or
material non-monetary default under this Lease during the immediately preceding
twelve (12) month period ending on each such expiration date (or the immediately
preceding twenty-one (21) month period ending on the expiration of the sixty-
ninth (69th) Lease month with respect to the final reduction) (each period being
referred to herein as a "Reduction Period"), and provided further that Tenant
has not during the applicable Reduction Period been more than five (5) days late
more than twice with respect to any payments of rent due under this Lease, then
upon the written request of Tenant, Landlord shall authorize in writing a
reduction to the principal amount of the letter of credit in the amount of Two
Hundred Thousand Dollars ($200,000.00) with respect to the Reduction Period in
question. In the event Tenant has been in monetary or material non-monetary
default under this Lease during a particular Reduction Period or has during such
Reduction Period been more than five (5) days late more than twice with respect
to any payments of rent due under this Lease, then Tenant's right to a
$200,000.00 reduction for such Reduction Period shall be forever forfeited by
Tenant (notwithstanding the fact that Tenant may be entitled to a $200,000.00
reduction hereunder with respect to subsequent Reduction Period(s)).
ARTICLE V. USES
SECTION 5.1. USE. Tenant shall use the Premises only for the purposes
stated in Item 3 of the Basic Lease Provisions, all in accordance with
applicable laws and restrictions and pursuant to approvals to be obtained by
Tenant from all relevant and required governmental agencies and authorities. The
parties agree that any contrary use shall be deemed to cause material and
irreparable harm to Landlord and shall entitle Landlord to injunctive relief in
addition to any other available remedy. Tenant, at its expense, shall procure,
maintain and make available for Landlord's inspection throughout the Term, all
governmental approvals, licenses and permits required for the proper and lawful
conduct of Tenant's permitted use of the Premises. Tenant shall not use or allow
the Premises to be used for any unlawful purpose, nor shall Tenant permit any
nuisance or commit any waste in the Premises. Tenant shall not do or permit to
be done anything which will invalidate or increase the cost of any insurance
policy(ies) covering the Building or its contents (unless, with respect to any
such increase in such cost, Tenant shall promptly upon demand reimburse Landlord
for the increased cost), and shall comply with all applicable insurance
underwriters rules and the requirements of the Pacific Fire Rating Bureau or any
other organization performing a similar function. Tenant shall comply at its
expense with all present and future laws, ordinances, restrictions, regulations,
orders, rules and requirements of all governmental authorities that pertain to
Tenant or its use of the Premises, including without limitation all federal and
state occupational health and safety requirements, whether or not Tenant's
compliance will necessitate expenditures or interfere with its use and enjoyment
of the Premises. Tenant shall comply at its expense with all present and future
covenants, conditions, easements or restrictions now or hereafter affecting or
encumbering the Building, and any amendments or modifications thereto, including
without limitation the payment by Tenant of any periodic or special dues or
assessments charged against the Premises or Tenant which may be allocated to the
Premises or Tenant in accordance with the provisions thereof. 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
Section, and shall indemnify Landlord from any liability and/or expense
resulting from Tenant's noncompliance.
SECTION 5.2. SIGNS. Except as approved in writing by Landlord, which
approval shall not be unreasonably withheld, conditioned or delayed, Tenant
shall have no right to maintain identification signs in any location in, on or
about the Premises or the Building and shall not place or erect any signs,
displays or other advertising materials that are visible from the exterior of
the Building. The size, design, graphics, material, style, color and other
physical aspects of any permitted sign shall be subject to Landlord's written
approval prior to installation (which approval may be withheld in Landlord's
discretion), any covenants, conditions or restrictions encumbering the Premises,
Landlord's signage program, if any, as in effect from time to time ("Signage
Criteria"), and any applicable municipal or other governmental permits and
approvals. Tenant acknowledges having received and reviewed a copy of the
current Signage Criteria, if applicable. Tenant shall be responsible for the
cost of any permitted sign, including the fabrication, installation, maintenance
and removal thereof. If Tenant fails to maintain its sign, or if Tenant fails to
remove same upon termination of this Lease and repair any damage caused by such
removal, Landlord may do so at Tenant's expense.
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SECTION 5.3. HAZARDOUS MATERIALS.
(a) For purposes of this Lease, the term "Hazardous Materials"
includes (i) any "hazardous materials" as defined in Section 25501(n) of the
California Health and Safety Code, (ii) any other substance or matter which
results in liability to any person or entity from exposure to such substance or
matter under any statutory or common law theory, and (iii) any substance or
matter which is in excess of permitted levels set forth in any federal,
California or local law or regulation pertaining to any hazardous or toxic
substance, material or waste.
(b) Tenant shall not cause or permit any Hazardous Materials to be
brought upon, stored, used, generated, released or disposed of on, under, from
or about the Premises or the Site (including without limitation the soil and
groundwater thereunder) without the prior written consent of Landlord.
Notwithstanding the foregoing, Tenant shall have the right, without obtaining
prior written consent of Landlord, to use, store, handle and dispose of within
the Premises (a) reasonable quantities of customary janitorial supplies that may
contain Hazardous Materials, (b) packaged products intended for resale to
consumers that may contain Hazardous Materials (including, without limitation,
hair spray, household cleaners, automotive products, antifreeze, dog food,
fertilizer), and (c) standard office products that may contain Hazardous
Materials (such as photocopy toner, "White Out", and the like), provided
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however, that (i) Tenant shall maintain such supplies and products in their
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original retail packaging, shall follow all instructions on such packaging with
respect to the use, storage, handling and disposal of such supplies and
products, and shall otherwise comply with all applicable laws with respect to
such supplies and products (including, without limitation, securing all required
governmental approvals relating to the lawful use, storage, handling and
disposal of such supplies and products), and (ii) all of the other terms and
provisions of this Section 5.3 shall apply with respect to Tenant's use,
storage, handling and disposal of all such supplies and products. Landlord may,
in its sole discretion, place such conditions as Landlord deems appropriate with
respect to any such Hazardous Materials, and may further require that Tenant
demonstrate that any such Hazardous Materials are necessary or useful to
Tenant's business and will be generated, stored, used and disposed of in a
manner that complies with all applicable laws and regulations pertaining thereto
and with good business practices. Tenant understands that Landlord may utilize
an environmental consultant to assist in determining conditions of approval in
connection with the storage, generation, release, disposal or use of Hazardous
Materials by Tenant on or about the Premises, and/or to conduct periodic
inspections of the storage, generation, use, release and/or disposal of such
Hazardous Materials by Tenant on and from the Premises, and Tenant agrees that
any costs incurred by Landlord in connection therewith shall be reimbursed by
Tenant to Landlord as additional rent hereunder upon demand.
(c) Prior to the execution of this Lease, Tenant shall complete,
execute and deliver to Landlord an Environmental Questionnaire and Disclosure
Statement (the "Environmental Questionnaire") in the form of Exhibit B attached
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hereto. The completed Environmental Questionnaire shall be deemed incorporated
into this Lease for all purposes, and Landlord shall be entitled to rely fully
on the information contained therein. On each anniversary of the Commencement
Date until the expiration or sooner termination of this Lease, Tenant shall
disclose to Landlord in writing the names and amounts of all Hazardous Materials
which were stored, generated, used, released and/or disposed of on, under or
about the Premises for the twelve-month period prior thereto, and which Tenant
desires to store, generate, use, release and/or dispose of on, under or about
the Premises for the succeeding twelve-month period. In addition, to the extent
Tenant is permitted to utilize Hazardous Materials upon the Premises, Tenant
shall promptly provide Landlord with complete and legible copies of all the
following environmental documents relating thereto: reports filed pursuant to
any self-reporting requirements; permit applications, permits, monitoring
reports, workplace exposure and community exposure warnings or notices and all
other reports, disclosures, plans or documents (even those which may be
characterized as confidential) relating to water discharges, air pollution,
waste generation or disposal, and underground storage tanks for Hazardous
Materials; orders, reports, notices, listings and correspondence (even those
which may be considered confidential) of or concerning the release,
investigation of, compliance, cleanup, remedial and corrective actions, and
abatement of Hazardous Materials; and all complaints, pleadings and other legal
documents filed by or against Tenant related to Tenant's use, handling, storage,
release and/or disposal of Hazardous Materials.
(d) Landlord and its agents shall have the right, but not the
obligation, to inspect, sample and/or monitor the Premises, the Site and/or the
soil or groundwater thereunder at any time to determine whether Tenant is
complying with the terms of this Section 5.3, and in connection therewith Tenant
shall provide Landlord with full access to all relevant facilities, records and
personnel. If Tenant is not in compliance with any of the provisions of this
Section 5.3, or in the event of a release of any Hazardous Material on, under or
about the Premises and/or the Site caused or permitted by Tenant, its agents,
employees, contractors, licensees or invitees, Landlord and its agents shall
have the right, but not the obligation, without limitation upon any of
Landlord's other rights and remedies under this Lease, to immediately enter upon
the Premises and/or the Site without notice and to discharge Tenant's
obligations under this Section 5.3 at Tenant's expense, including without
limitation the taking of emergency or long-term remedial action. Landlord and
its agents shall endeavor to minimize interference with Tenant's business in
connection therewith, but shall not be liable for any such interference. In
addition, Landlord, at Tenant's expense, shall have the right, but not the
obligation, to join and participate in any legal proceedings or actions
initiated in connection with any claims arising out of the storage, generation,
use, release and/or disposal by Tenant or its agents, employees, contractors,
licensees or invitees of Hazardous Materials on, under, from or about the
Premises and/or the Site.
(e) If the presence of any Hazardous Materials on, under, from or
about the Premises and/or the Site caused or permitted by Tenant or its agents,
employees, contractors, licensees or invitees results in (i) injury to any
person, (ii) injury to or any contamination of the Premises and/or the Site, or
(iii) injury to or contamination of any real or personal property wherever
situated, Tenant, at its expense, shall promptly take all actions necessary to
return the Premises, the Site and any other affected real or personal property
owned by Landlord to the condition
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existing prior to the introduction of such Hazardous Materials and to remedy or
repair any such injury or contamination, including without limitation, any
cleanup, remediation, removal, disposal, neutralization or other treatment of
any such Hazardous Materials. Notwithstanding the foregoing, Tenant shall not,
without Landlord's prior written consent, take any remedial action in response
to the presence of any Hazardous Materials on, under or about the Premises, the
Site or any other affected real or personal property owned by Landlord or enter
into any similar agreement, consent, decree or other compromise with any
governmental agency with respect to any Hazardous Materials claims; provided
however, Landlord's prior written consent shall not be necessary in the event
that the presence of Hazardous Materials on, under or about the Premises, the
Site or any other affected real or personal property owned by Landlord (i)
imposes an immediate threat to the health, safety or welfare of any individual
or (ii) is of such a nature that an immediate remedial response is necessary and
it is not possible to obtain Landlord's consent before taking such action. To
the fullest extent permitted by law, Tenant shall indemnify, hold harmless,
protect and defend (with attorneys acceptable to Landlord) Landlord and any
successors to all or any portion of Landlord's interest in the Premises, the
Site and any other real or personal property owned by Landlord from and against
any and all liabilities, losses, damages, diminution in value, judgments, fines,
demands, claims, recoveries, deficiencies, costs and expenses (including without
limitation attorneys' fees, court costs and other professional expenses),
whether foreseeable or unforeseeable, arising directly or indirectly out of the
use, generation, storage, treatment, release, on- or off-site disposal or
transportation of Hazardous Materials on, into, from, under or about the
Premises, the Site and any other real or personal property owned by Landlord to
the extent that such use, generation, storage, treatment, release, on- or off-
site disposal and/or transportation is caused or permitted by Tenant, its
agents, employees, contractors, licensees or invitees, specifically including
without limitation the cost of any required or necessary repair, restoration,
cleanup or detoxification of the Premises, the Site and any other real or
personal property owned by Landlord, and the preparation of any closure or other
required plans, whether or not such action is required or necessary during the
Term or after the expiration of this Lease. If Landlord at any time discovers
that Tenant or its agents, employees, contractors, licensees or invitees may
have caused or permitted the release of a Hazardous Material on, under, from or
about the Premises, the Site or any other real or personal property owned by
Landlord, Tenant shall, at Landlord's request, immediately prepare and submit to
Landlord a comprehensive plan, subject to Landlord's approval, specifying the
actions to be taken by Tenant to return the Premises, the Site or any other real
or personal property owned by Landlord to the condition existing prior to the
introduction of such Hazardous Materials. Upon Landlord's approval of such
cleanup plan, Tenant shall, at its expense, and without limitation of any rights
and remedies of Landlord under this Lease or at law or in equity, immediately
implement such plan and proceed to cleanup such Hazardous Materials in
accordance with all applicable laws and as required by such plan and this Lease.
The provisions of this subsection (e) shall expressly survive the expiration or
sooner termination of this Lease.
(f) Landlord hereby discloses to Tenant, and Tenant hereby
acknowledges, certain facts relating to Hazardous Materials at the Premises
and/or the Site known by Landlord to exist as of the date of this Lease, as more
particularly described in Exhibit C attached hereto. Tenant shall have no
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liability or responsibility with respect to the Hazardous Materials facts
described in Exhibit C, nor with respect to any Hazardous Materials which Tenant
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proves were not caused or permitted by Tenant, its agents, employees,
contractors, licensees or invitees. Notwithstanding the preceding two sentences,
Tenant agrees to notify its agents, employees, contractors, licensees, and
invitees of any exposure or potential exposure to Hazardous Materials at the
Premises and/or the Site that Landlord brings to Tenant's attention in the form
of a written notice, setting forth with particularity the exposure or potential
exposure to which Landlord refers.
ARTICLE VI. SERVICES
SECTION 6.1. UTILITIES AND SERVICES. Tenant shall be responsible for and
shall pay promptly, directly to the appropriate supplier, all charges for water,
gas, electricity, sewer, heat, light, power, telephone, refuse pickup,
janitorial service, interior landscape maintenance and all other utilities,
materials and services furnished directly to Tenant or the Premises or used by
Tenant in, on or about the Premises during the Term, together with any taxes
thereon. Landlord shall not be liable for damages or otherwise for any failure
or interruption of any utility or other service furnished to the Premises, and
no such failure or interruption shall be deemed an eviction or entitle Tenant to
terminate this Lease or withhold or ▇▇▇▇▇ any rent due hereunder, provided,
however, if any such failure or interruption is due to the sole active
negligence or willful misconduct of Landlord, its employees or authorized agents
(a "Landlord-Caused Service Interruption") and is not restored by Landlord
within five (5) business days following written notice by Tenant of the
Landlord-Caused Service Interruption in question, then Tenant shall be entitled
to an abatement of Basic Rent reasonably allocable to that portion of the
Premises that Tenant is prevented from using by reason of such Landlord-Caused
Service Interruption, which abatement shall commence on the sixth (6th) business
day following Tenant's notice of the Landlord-Caused Service Interruption in
question and shall continue for the balance of the period during which Tenant is
so prevented from using the affected portion of the Premises. The foregoing
abatement provisions shall be the sole and exclusive remedy of Tenant with
respect to any Landlord-Caused Service Interruption. Landlord shall use
commercially reasonable efforts to restore any Landlord-Caused Service
Interruption as soon as reasonably possible following its receipt of notice of
the occurrence thereof. Landlord shall at all reasonable times have free access
to all electrical and mechanical installations of Landlord.
SECTION 6.2. PARKING.
(a) Tenant shall be entitled to Tenant's Share of the vehicle parking
spaces on those portions of the Common Areas designated by Landlord for parking,
on an unreserved and unassigned basis. Tenant shall not use more parking spaces
than such number. Tenant shall not permit or allow any vehicles that belong to
or are controlled by Tenant or Tenant's employees, suppliers, shippers,
customers or invitees to be loaded, unloaded or parked in areas other than those
designated by Landlord for such activities. If Tenant permits or allows any of
the
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prohibited activities described above, then Landlord shall have the right,
without notice, in addition to such other rights and remedies that Landlord may
have, to remove or tow away the vehicle involved and charge the costs to Tenant.
Parking shall be limited to striped parking stalls, and no parking shall be
permitted in any driveways, access ways or in any similar area. Nothing
contained in this Lease shall be deemed to create liability upon Landlord for
any damage to motor vehicles of visitors or employees, for any loss of property
from within those motor vehicles, or for any injury to Tenant, its visitors or
employees, unless ultimately determined to be caused by the sole active
negligence or willful misconduct of Landlord, its employees or authorized
agents. Landlord shall have the right to establish, and from time to time amend,
and to enforce in a non-discriminatory manner against all users all reasonable
rules and regulations (including the designation of areas for employee parking)
that Landlord may deem necessary and advisable for the proper and efficient
operation and maintenance of parking. Landlord shall have the right to
construct, maintain and operate lighting facilities within the parking areas; to
change the area, level, location and arrangement of the parking areas and
improvements therein; and to do and perform such other acts in and to the
parking areas and improvements therein as, in the use of good business judgment,
Landlord shall determine to be advisable, except that Landlord shall not make
any material changes to the parking areas unless such changes are otherwise
required by law or are necessitated by any taking by any lawful authority by
exercise of the right of eminent domain (or sold to prevent a taking) (subject,
however, to Tenant's rights under Section 12.3 below) or any matters beyond the
reasonable control of Landlord. Parking areas shall be used only for parking
vehicles. Tenant shall be liable for any damage to the parking areas caused by
Tenant or Tenant's employees, suppliers, shippers, customers or invitees,
including without limitation damage from excess oil leakage. Except as otherwise
permitted pursuant to Section 7.3 below, Tenant shall have no right to install
any fixtures, equipment or personal property in the parking areas.
(b) Tenant acknowledges that a portion of the Common Area ("Ground
Lease Premises") used for access to and parking for the Site is subject to that
certain Ground Lease dated March 8, 1999 between the City and County of San
Francisco ("Ground Lessor") and Landlord, a copy of which is attached hereto as
Exhibit G (as the same may be amended, the "Ground Lease"). Without limiting the
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requirements of Section 6.2(a) and except as set forth in Section 6.2(c) below,
Tenant shall be bound by and comply with all of the terms, covenants and
conditions applicable to Landlord under the Ground Lease with respect to the
Ground Lease Premises (including without limitation all waivers of claims given
by Landlord) and shall satisfy all applicable terms, covenants and conditions of
the Ground Lease relating to the Ground Lease Premises for the benefit of both
Landlord and Ground Lessor. Landlord shall provide Tenant with timely written
notice of all amendments to the Ground Lease.
(c) Notwithstanding Section 6.2(b) above, (i) the responsibility for
maintenance and repair of the Ground Lease Premises shall be governed by Section
7.2 of this Lease; (ii) the responsibility for paying base rent, taxes and other
charges under Sections 5 and 6 of the Ground Lease shall be the responsibility
of Landlord (but the cost of which shall constitute Operating Expenses as
provided in Section 4.2(f)); (iii) the responsibility for procuring insurance
required under Section 18.1 of the Ground Lease shall be the responsibility of
Landlord (but the cost of which shall constitute an Operating Expense as
provided in Section 4.2(f)); (iv) Section 15 of the Ground Lease (assignment and
subletting) shall not be applicable to Tenant as Tenant does not have an
exclusive right to use the Ground Lease Premises; (v) Tenant shall have no
obligation to provide or right to receive an estoppel certificate under Section
20 of the Ground Lease; (vi) the responsibility for the condition of the Ground
Lease Premises upon the expiration or earlier termination of this Lease shall be
governed by Section 15.3 of this Lease; and (vii) Tenant shall have no
responsibility for paying the security deposit under Section 23 of the Ground
Lease except to the extent such deposit is depleted as a result of Tenant's
failure to comply with the terms, covenants and conditions of this Lease
(including this Section 6.2).
ARTICLE VII. MAINTAINING THE PREMISES
SECTION 7.1. TENANT'S MAINTENANCE AND REPAIR. Tenant at its sole expense
shall comply with all applicable laws and governmental regulations governing the
Premises and make all repairs necessary to keep the Premises in the condition as
existed on the Commencement Date (or on any later date that the improvements may
have been installed), excepting ordinary wear and tear and subject to Landlord's
obligations under Section 7.2 below, including without limitation the electrical
and mechanical systems, any air conditioning, ventilating or heating equipment
which serves the Premises, all walls (excluding exterior walls), glass, windows,
doors, door closures, hardware, fixtures, electrical, plumbing, fire
extinguisher equipment and other equipment. Any damage or deterioration of the
Premises shall not be deemed ordinary wear and tear if the same could have been
prevented by good maintenance practices by Tenant. As part of its maintenance
obligations hereunder, Tenant shall, at Landlord's request, provide Landlord
with copies of all maintenance schedules, reports and notices prepared by, for
or on behalf of Tenant. Tenant shall obtain preventive maintenance contracts
from a licensed heating and air conditioning contractor to provide for regular
inspection and maintenance of the heating, ventilating and air conditioning
systems servicing the Premises, all subject to Landlord's reasonable approval.
All repairs shall be at least equal in quality to the original work, shall be
made only by a licensed contractor approved in writing in advance by Landlord
and shall be made only at the time or times reasonably approved by Landlord. Any
contractor utilized by Tenant shall be subject to Landlord's standard
requirements for contractors, as modified from time to time. Landlord shall have
the right at all times, upon not less than twenty-four (24) hours written notice
to Tenant (which notice may be given by facsimile) (except in emergencies or any
suspected violation by Tenant of the provisions of Section 5.3 above, in which
case no notice shall be required), to inspect Tenant's maintenance of all
equipment (including without limitation air conditioning, ventilating and
heating equipment) provided Landlord uses commercially reasonably efforts to
minimize interference with Tenant's business operations with the Premises during
any such inspections, and may impose reasonable restrictions and requirements
with respect to repairs, as provided in Section 7.3 (provided any such
restrictions or requirements do not unreasonably limit or restrict Tenant's use
of the Premises for the purposes permitted under this Lease), and the provisions
of Section 7.4 shall
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apply to all repairs. Alternatively, Landlord may elect to make any repair or
maintenance required hereunder on behalf of Tenant and at Tenant's expense, and
Tenant shall promptly reimburse Landlord for all costs incurred upon submission
of an invoice.
SECTION 7.2. LANDLORD'S MAINTENANCE AND REPAIR. Subject to Section 7.1 and
Article XI, Landlord shall provide service, maintenance and repair with respect
to the roof (including roof membrane), foundations, interior load bearing walls,
and footings of the Building, all landscaping, walkways, parking areas, exterior
lighting of the Site, any latent defects in the construction of the Building,
and the exterior surfaces of the exterior walls of the Building, except that
Tenant at its expense shall make all repairs which Landlord deems reasonably
necessary as a result of the act or negligence of Tenant, its agents, employees,
invitees, subtenants or contractors. Landlord shall have the right to employ or
designate any reputable person or firm, including any employee or agent of
Landlord or any of Landlord's affiliates or divisions, to perform any service,
repair or maintenance function. Landlord need not make any other improvements or
repairs except as specifically required under this Lease, and nothing contained
in this Section shall limit Landlord's right to reimbursement from Tenant for
maintenance, repair costs and replacement costs as provided elsewhere in this
Lease. Tenant understands that it shall not make repairs at Landlord's expense
or by rental offset. Tenant further understands that Landlord shall not be
required to make any repairs under this Section 7.2 unless and until Tenant has
notified Landlord in writing of the need for such repair (or Landlord otherwise
has actual knowledge of the need for such repair) and Landlord shall have a
reasonable period of time thereafter to commence and complete said repair, if
warranted. All costs of any maintenance and repairs on the part of Landlord
provided hereunder shall be considered part of Building Costs.
SECTION 7.3. ALTERATIONS. Tenant shall make no alterations, additions or
improvements to the Premises or the outside areas without the prior written
consent of Landlord, which consent shall not be unreasonably withheld.
Notwithstanding the foregoing, Tenant shall be permitted, without Landlord's
prior consent (but otherwise subject to all other terms and conditions of this
Section 7.3), to make any alterations, additions or improvements to the Premises
which, in the aggregate, cost less than Two Dollars ($2.00) per square foot of
the improved portions of the Premises (excluding warehouse square footage) and
do not (i) affect the exterior of the Building or outside areas (or be visible
from adjoining sites), or (ii) affect or penetrate any of the structural
portions of the Building, including but not limited to the roof, or (iii)
require any material change to any mechanical systems of the Premises, or any
governmental permit as a prerequisite to the construction thereof, or (iv)
interfere in any manner with the proper functioning of or Landlord's access to
any mechanical, electrical, plumbing or HVAC systems, facilities or equipment
located in or serving the Building. Tenant shall provide Landlord with not less
than ten (10) days prior written notice of any alterations, additions or
improvements permitted to be made by Tenant without Landlord's prior consent
pursuant to the immediately preceding sentence. Landlord may impose, as a
condition to Tenant making any alterations, additions or improvements (whether
or not Landlord's consent thereto is required hereunder), any requirements that
Landlord in its reasonable discretion may deem reasonable or desirable,
including but not limited to a requirement that all work be covered by a lien
and completion bond satisfactory to Landlord and requirements as to the manner,
time, and contractor for performance of the work. Tenant shall obtain all
required permits for the work and shall perform the work in compliance with all
applicable laws, regulations and ordinances, all covenants, conditions and
restrictions affecting the Premises, and the Rules and Regulations (hereafter
defined). If any governmental entity requires, as a condition to any proposed
alterations, additions or improvements to the Premises by Tenant, that
improvements be made to the outside areas, and if Landlord consents to such
improvements to the outside areas (which consent shall not be unreasonably
withheld, conditioned or delayed), then Tenant shall, at Tenant's sole expense,
make such required improvements to the outside areas in such manner, utilizing
such materials, and with such contractors (including, if required by Landlord,
Landlord's contractors) as Landlord may require in its reasonable discretion.
Under no circumstances shall Tenant make any improvement which incorporates any
Hazardous Materials, including without limitation asbestos-containing
construction materials into the Premises. Any request for Landlord's consent
shall be made in writing and shall contain architectural plans describing the
work in detail reasonably satisfactory to Landlord (and Landlord shall respond
to Tenant's request for consent within ten (10) business days following
Landlord's receipt of such architectural plans). Unless Landlord otherwise
agrees in writing, all alterations, additions or improvements affixed to the
Premises or the outside areas (excluding moveable trade fixtures and furniture)
shall become the property of Landlord and shall be surrendered with the Premises
at the end of the Term, except that Landlord may, by written notice to Tenant,
require Tenant to remove by the Expiration Date, or sooner termination date of
this Lease, all or any alterations, decorations, fixtures, additions,
improvements and the like installed either by Tenant or by Landlord at Tenant's
request and to repair any damage to the Premises arising from that removal
(which notice may be given by Landlord at any time, except that, if at the time
Tenant requests Landlord's consent to any alterations, decorations, fixtures,
additions or improvements, Tenant specifically requests in writing that Landlord
make such election concurrently with its consent (with specific reference in
Tenant's written request to the requirements of this sentence), then Landlord
shall provide such notice, if at all, concurrently with its consent to the
alterations, decorations, fixtures, additions or improvements in question).
Except as otherwise provided in this Lease or in any Exhibit to this Lease,
should Landlord make any alteration or improvement to the Premises for Tenant,
Landlord shall be entitled to prompt reimbursement from Tenant for all costs
incurred.
Landlord acknowledges that Tenant desires to install (a) antennas and
satellite dishes on the roof of the Building, (b) refrigeration equipment within
the Premises, and (c) supplemental heating, ventilation and air conditioning
equipment upon the roof of the Building. The planning, installation,
construction and removal of such improvements by Tenant shall be subject to and
made in accordance with the terms and conditions of this Lease, including,
without limitation, the terms and conditions of this Section 7.3 above (and, for
purposes of such application, the term "Premises" as used therein shall be
deemed to include the roof of the Building).
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SECTION 7.4. MECHANIC'S LIENS. Tenant shall keep the Premises free from any
liens arising out of any work performed, materials furnished, or obligations
incurred by or for Tenant. Upon request by Landlord, Tenant shall promptly cause
any such lien to be released by posting a bond in accordance with California
Civil Code Section 3143 or any successor statute. In the event that Tenant shall
not, within thirty (30) days following the imposition of any lien, cause the
lien to be released of record by payment or posting of a proper bond, Landlord
shall have, in addition to all other available remedies, the right to cause the
lien to be released by any means it deems proper, including payment of or
defense against the claim giving rise to the lien. All expenses so incurred by
Landlord, including Landlord's attorneys' fees, and any consequential or other
damages incurred by Landlord arising out of such lien, shall be reimbursed by
Tenant promptly following Landlord's demand, together with interest from the
date of payment by Landlord at the maximum rate permitted by law until paid.
Tenant shall give Landlord no less than twenty (20) days' prior notice in
writing before commencing construction of any kind on the Premises so that
Landlord may post and maintain notices of nonresponsibility on the Premises.
SECTION 7.5. ENTRY AND INSPECTION. Landlord shall at all reasonable times,
upon not less than twenty-four (24) hours written notice to Tenant (which notice
may be given by facsimile) (except in emergencies or any suspected violation by
Tenant of the provisions of Section 5.3 above, in which case no notice shall be
required) have the right to enter the Premises to inspect them, to supply
services in accordance with this Lease, to protect the interests of Landlord in
the Premises, and to submit the Premises to prospective or actual ~ purchasers
or encumbrance holders (or, during the last one hundred and eighty (180) days of
the Term, to prospective tenants), all without being deemed to have caused an
eviction of Tenant and without abatement of rent except as provided elsewhere in
this Lease. Landlord shall have the right, if desired, to retain a key (or other
applicable means of providing access) which unlocks all of the doors in the
Premises, excluding Tenant's secured cages, vaults and safes, and Landlord shall
have the right to use any and all means which Landlord may deem proper to open
the doors in an emergency in order to obtain entry to the Premises, and any
entry to the Premises obtained by Landlord shall not under any circumstances be
deemed to be a forcible or unlawful entry into, or a detainer of, the Premises,
or any eviction of Tenant from the Premises. Landlord agrees to use commercially
reasonably efforts to minimize interference with Tenant's business operations
with the Premises during any such entries made by Landlord hereunder. With
respect to any entries by Landlord into any computer or communications rooms
within the Premises, Tenant shall, at its election, be permitted to have a
representative accompany Landlord during any such entries (provided, however,
any such entries by Landlord shall not be delayed due to the unavailability of
such representative at the time of Landlord's desired entry).
ARTICLE VIII. TAXES AND ASSESSMENTS ON TENANT'S PROPERTY
Tenant shall be liable for and shall pay, at least ten (10) days before
delinquency, all taxes and assessments levied against all personal property of
Tenant located in the Premises, and against any alterations, additions or like
improvements made to the Premises by or on behalf of Tenant. When possible
Tenant shall cause its personal property and alterations to be assessed and
billed separately from the real property of which the Premises form a part. If
any taxes on Tenant's personal property and/or alterations are levied against
Landlord or Landlord's property and if Landlord pays the same, or if the
assessed value of Landlord's property is increased by the inclusion of a value
placed upon the personal property and/or alterations of Tenant and if Landlord
pays the taxes based upon the increased assessment, Tenant shall pay to Landlord
the taxes so levied against Landlord or the proportion of the taxes resulting
from the increase in the assessment. In calculating what portion of any tax ▇▇▇▇
which is assessed against Landlord separately, or Landlord and Tenant jointly,
is attributable to Tenant's alterations and personal property, Landlord's
reasonable determination shall be conclusive.
ARTICLE IX. ASSIGNMENT AND SUBLETTING
SECTION 9.1. RIGHTS OF PARTIES.
(a) Notwithstanding any provision of this Lease to the contrary but
subject to Section 9.4 below, Tenant will not, either voluntarily or by
operation of law, assign, sublet, encumber, or otherwise transfer all or any
part of Tenant's interest in this lease, or permit the Premises to be occupied
by anyone other than Tenant, without Landlord's prior written consent, which
consent shall not unreasonably be withheld in accordance with the provisions of
Section 9.l(b). Except as otherwise provided in Section 9.4 below, no assignment
(whether voluntary, involuntary or by operation of law) and no subletting shall
be valid or effective without Landlord's prior written consent and, at
Landlord's election, any such assignment or subletting or attempted assignment
or subletting shall constitute a material default of this Lease. Landlord shall
not be deemed to have given its consent to any assignment or subletting by any
other course of action, including its acceptance of any name for listing in the
Building directory. To the extent not prohibited by provisions of the Bankruptcy
Code, 11 U.S.C. Section 101 et seq. (the "Bankruptcy Code"), including Section
365(f)(1), Tenant on behalf of itself and its creditors, administrators and
assigns waives the applicability of Section 365(e) of the Bankruptcy Code unless
the proposed assignee of the Trustee for the estate of the bankrupt meets
Landlord's standard for consent as set forth in Section 9.1(b) of this Lease. If
this Lease is assigned to any person or entity pursuant to the provisions of the
Bankruptcy Code, any and all monies or other considerations to be delivered in
connection with the assignment shall be delivered to Landlord, shall be and
remain the exclusive property of Landlord and shall not constitute property of
Tenant or of the estate of Tenant within the meaning of the Bankruptcy Code. Any
person or entity to which this Lease is assigned pursuant to the provisions of
the Bankruptcy Code shall be deemed to have assumed all of the obligations
arising under this Lease on and after the date of the assignment, and shall upon
demand execute and deliver to Landlord an instrument confirming that assumption.
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(b) If Tenant desires to transfer an interest in this Lease, it shall
first notify Landlord of its desire and shall submit in writing to Landlord: (i)
the name and address of the proposed transferee; (ii) the nature of any proposed
subtenant's or assignee's business to be carried on in the Premises; (iii) the
terms and provisions of any proposed sublease or assignment, including a copy of
the proposed assignment or sublease form; (iv) evidence of insurance of the
proposed assignee or subtenant complying with the requirements of Exhibit D
---------
hereto; (v) a completed Environmental Questionnaire from the proposed assignee
or subtenant; and (vi) any other information reasonably and timely requested by
Landlord and reasonably related to the transfer. Except as provided in
Subsection (e) of this Section, Landlord shall not unreasonably withhold its
consent with respect to any transfer for which its consent is required
hereunder, provided: (1) the use of the Premises will be consistent with the
provisions of this Lease; (2) the proposed assignee or subtenant has not been
required by any prior landlord, lender or governmental authority to take
remedial action in connection with Hazardous Materials contaminating a property
arising out of the proposed assignee's or subtenant's actions or use of the
property in question and is not subject to any enforcement order issued by any
governmental authority in connection with the use, disposal or storage of a
Hazardous Material; (3) at Landlord's election, insurance requirements shall be
brought into conformity with Landlord's then current leasing practice; (4) any
proposed subtenant or assignee demonstrates that it is financially responsible
by submission to Landlord of all reasonable information as Landlord may request
concerning the proposed subtenant or assignee, including, but not limited to, a
balance sheet of the proposed subtenant or assignee as of a date within ninety
(90) days of the request for Landlord's consent and statements of income or
profit and loss of the proposed subtenant or assignee for the two-year period
preceding the request for Landlord's consent, and/or a certification signed by
the proposed subtenant or assignee that it has not been evicted or been in
arrears in rent at any other leased premises for the 3-year period preceding the
request for Landlord's consent; (5) any proposed subtenant or assignee
demonstrates to Landlord's reasonable satisfaction a record of successful
experience in business; and (6) the proposed transfer will not impose additional
burdens or adverse tax effects on Landlord, If Tenant has any exterior sign
rights under this Lease, such rights are personal to Tenant and may not be
assigned or transferred to any assignee of this Lease or subtenant of the
Premises without Landlord's prior written consent (except in connection with an
assignment or subletting permitted to be made without Landlord's consent
pursuant to Section 9.4 below), which may be withheld in Landlord's sole and
absolute discretion.
If Landlord consents to the proposed transfer, Tenant may within
ninety (90) days after the date of the consent effect the transfer upon the
terms described in the information furnished to Landlord; provided that any
material change in the terms shall be subject to Landlord's consent as set forth
in this Section. Landlord shall approve or disapprove any requested transfer
within fifteen (15) business days following receipt of Tenant's written request,
the information set forth above, and the fee set forth below.
(c) Notwithstanding the provisions of Subsection (b) above, other than
with respect to a subletting for less than fifty percent (50%) of the Premises,
in lieu of consenting to a proposed assignment or subletting, Landlord may elect
to (i) sublease the Premises (or the portion proposed to be subleased), or take
an assignment of Tenant's interest in this Lease, upon the same terms as offered
to the proposed subtenant or assignee (excluding terms relating to the purchase
of personal property, the use of Tenant's name or the continuation of Tenant's
business), or (ii) terminate this Lease as to the portion of the Premises
proposed to be subleased or assigned with a proportionate abatement in the rent
payable under this Lease, effective on the date that the proposed sublease or
assignment would have become effective. Landlord may thereafter, at its option,
assign or re-let any space so recaptured to any third party, including without
limitation the proposed transferee of Tenant. The provisions of this Subsection
(c) shall not apply to any assignment of this Lease or subletting of the
Premises permitted to be made without Landlord's consent pursuant to Section 9.4
below.
(d) Tenant agrees that fifty percent (50%) of any amounts paid by the
assignee or subtenant, however described, in excess of (i) the Basic Rent
payable by Tenant hereunder, or in the case of a sublease of a portion of the
Premises, in excess of the Basic Rent reasonably allocable to such portion, plus
(ii) Tenant's direct out-of-pocket costs which Tenant certifies to Landlord have
been paid to provide occupancy related services to such assignee or subtenant of
a nature commonly provided by landlords of similar space, shall be the property
of Landlord and such amounts shall be payable directly to Landlord by the
assignee or subtenant or, at Landlord's option, by Tenant. At Landlord's
request, a written agreement shall be entered into by and among Tenant, Landlord
and the proposed assignee or subtenant confirming the requirements of this
subsection.
(e) Tenant shall pay to Landlord a fee of Five Hundred Dollars
($500.00) if and when any transfer hereunder is requested by Tenant, other than
with respect to any assignment of this Lease or subletting of the Premises
permitted to be made without Landlord's consent pursuant to Section 9.4 below.
Such fee is hereby acknowledged as a reasonable amount to reimburse Landlord for
its costs of review and evaluation of a proposed assignee/sublessee, and
Landlord shall not be obligated to commence such review and evaluation unless
and until such fee is paid.
SECTION 9.2. EFFECT OF TRANSFER. Except as otherwise provided in Section
9.1(c) above, no subletting or assignment, even with the consent of Landlord,
shall relieve Tenant of its obligation to pay rent and to perform all its other
obligations under this Lease. Moreover, Tenant shall indemnify and hold Landlord
harmless, as provided in Section 10.3, for any act or omission by an assignee or
subtenant. Each assignee, other than Landlord, shall be deemed to assume all
obligations of Tenant under this Lease and shall be liable jointly and severally
with Tenant for the payment of all rent, and for the due performance of all of
Tenant's obligations, under this Lease. No transfer shall be binding on Landlord
unless any document memorializing the transfer is delivered to Landlord and,
other than with respect to any assignment of this Lease or subletting of the
Premises permitted to be made without Landlord's consent pursuant to Section 9.4
below, both the assignee/subtenant and Tenant deliver to Landlord an executed
consent to transfer instrument prepared by Landlord and consistent with the
requirements of this Article.
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The acceptance by Landlord of any payment due under this Lease from any other
person shall not be deemed to be a waiver by Landlord of any provision of this
Lease or to be a consent to any transfer. Consent by Landlord to one or more
transfers shall not operate as a waiver or estoppel to the future enforcement by
Landlord of its rights under this Lease.
SECTION 9.3. SUBLEASE REQUIREMENTS. The following terms and conditions
shall apply to any subletting by Tenant of all or any part of the Premises and
shall be deemed included in each sublease:
(a) Each and every provision contained in this Lease (other than with
respect to the payment of rent hereunder) is incorporated by reference into and
made a part of such sublease, with "Landlord" hereunder meaning the sublandlord
therein and "Tenant" hereunder meaning the subtenant therein.
(b) Tenant hereby irrevocably assigns to Landlord all of Tenant's
interest in all rentals and income arising from any sublease of the Premises,
and Landlord may collect such rent and income and apply same toward Tenant's
obligations under this Lease; provided, however, that until a default occurs in
the performance of Tenant's obligations under this Lease, Tenant shall have the
right to receive and collect the sublease rentals. Landlord shall not, by reason
of this assignment or the collection of sublease rentals, be deemed liable to
the subtenant for the performance of any of Tenant's obligations under the
sublease. Tenant hereby irrevocably authorizes and directs any subtenant, upon
receipt of a written notice from Landlord stating that an uncured default exists
in the performance of Tenant's obligations under this Lease, to pay to Landlord
all sums then and thereafter due under the sublease. Tenant agrees that the
subtenant may rely on that notice without any duty of further inquiry and
notwithstanding any notice or claim by Tenant to the contrary. Tenant shall have
no right or claim against the subtenant or Landlord for any rentals so paid to
Landlord.
(c) In the event of the termination of this Lease, Landlord may, at
its sole option, take over Tenant's entire interest in any sublease and, upon
notice from Landlord, the subtenant shall attorn to Landlord. In no event,
however, shall Landlord be liable for any previous act or omission by Tenant
under the sublease or for the return of any advance rental payments or deposits.
under the sublease that have not been actually delivered to Landlord, nor shall
Landlord be bound by any sublease modification executed without Landlord's
consent or for any advance rental payment by the subtenant in excess of one
month's rent. The general provisions of this Lease, including without limitation
those pertaining to insurance and indemnification, shall be deemed incorporated
by reference into the sublease despite the termination of this Lease.
SECTION 9.4. CERTAIN TRANSFERS. The sale of all or substantially all of
Tenant's assets (other than bulk sales in the ordinary course of business) or,
if Tenant is a corporation, an unincorporated association, or a partnership, the
transfer, assignment or hypothecation of any stock or interest in such
corporation, association, or partnership in the aggregate of twenty-five percent
(25%) (except for publicly traded shares of stock constituting a transfer of
twenty-five percent (25%) or more in the aggregate) shall be deemed an
assignment within the meaning and provisions of this Article. Notwithstanding
the foregoing, Landlord's consent shall not be required for any of the following
transfers (each of which shall be a "Permitted Transfer"): (a) an assignment of
this Lease to any entity which controls, is controlled by or is under common
control with Tenant, (b) an assignment of this Lease to any successor entity
resulting from the merger or consolidation with Tenant, or (c) an assignment of
this Lease to any entity which acquires all or substantially all of the assets
or stock of Tenant, so long as, in each instance, (i) with respect to a
Permitted Transfer described in subsections (b) and/or (c) above, the net worth
of the assignee immediately following such assignment is at least equal to the
lesser of (A) the greater of the net worth of Tenant as of the execution of this
Lease by Landlord or the net worth of Tenant immediately prior to the date of
such assignment, or (B) One Hundred Million Dollars ($100,000,000), evidence of
which, reasonably satisfactory to Landlord, shall be presented to Landlord prior
to such assignment, (ii) Tenant shall provide to Landlord, prior to such
assignment, written notice of such assignment and such assignment documentation
and other information as Landlord may reasonably request in connection
therewith, and (iii) except as otherwise specifically provided in this Article,
all of the other terms and requirements of this Article shall apply with respect
to such assignment. In addition, Landlord's consent shall not be required for
the sublease of all or any portion of the Premises to any entity which controls,
is controlled by or is under common control with Tenant so long as (i) Tenant
shall provide to Landlord, prior to such sublease, written notice of such
sublease and such sublease documentation and other information as Landlord may
reasonably request in connection therewith, and (ii) except as otherwise
specifically provided in this Article, all of the other terms and requirements
of this Article shall apply with respect to such sublease. For purposes of this
Section 9.4, the term "control" means possession, directly or indirectly, of the
power to direct or cause the direction of the management, affairs and policies
of the entity in question, whether through the ownership of voting securities,
by contract or otherwise.
ARTICLE X. INSURANCE AND INDEMNITY
SECTION 10.1. TENANT'S INSURANCE. Tenant, at its sole cost and expense,
shall provide and maintain in effect the insurance described in Exhibit D.
---------
Evidence of that insurance must be delivered to Landlord prior to the
Commencement Date.
SECTION 10.2. LANDLORD'S INSURANCE. Landlord may, at its election, provide
any or all of the following types of insurance, with or without deductible and
in amounts and coverages as may be determined by Landlord in its discretion
(provided, however, if deductibles are included with such insurance, the amount
of such deductibles shall be reasonable and comparable to those being carried
with respect to comparable projects in the area): "all risk" property insurance,
subject to standard exclusions, covering the Building, and such other risks as
Landlord or its mortgagees may from time to time deem appropriate, including
leasehold improvements made by
-14-
Landlord, and commercial general liability coverage. Landlord shall not be
required to carry insurance of any kind on Tenant's property, including
leasehold improvements, trade fixtures, furnishings, equipment, plate glass,
signs and all other items of personal property, and shall not be obligated to
repair or replace that property should damage occur. All proceeds of insurance
maintained by Landlord upon the Building shall be the property of Landlord,
whether or not Landlord is obligated to or elects to make any repairs. At
Landlord's option, Landlord may self-insure all or any portion of the risks for
which Landlord elects to provide insurance hereunder.
SECTION 10.3. TENANT'S INDEMNITY. To the fullest extent permitted by law
and except for claims, liabilities, costs and expenses arising from the sole
active negligence or willful misconduct of Landlord, its employees or authorized
agents, Tenant shall defend, indemnify, protect, save and hold harmless
Landlord, its agents, and any and all affiliates of Landlord, including, without
limitation, any corporations or other entities controlling, controlled by or
under common control with Landlord, from and against any and all claims,
liabilities, costs or expenses arising either before or after the Commencement
Date from Tenant's use or occupancy of the Premises or the Building, or from the
conduct of its business, or from any activity, work, or thing done, permitted or
suffered by Tenant or its agents, employees, invitees or licensees in or about
the Premises or the Building, or from any default in the performance of any
obligation on Tenant's part to be performed under this Lease, or from any act or
negligence of Tenant or its agents, employees, visitors, patrons, guests,
invitees or licensees (including without limitation any act or omission which
gives rise to Landlord's obligation to indemnify Ground Lessor and certain other
parties under the Ground Lease described in Section 6.2(b)). Landlord may, at
its option, require Tenant to assume Landlord's defense in any action covered by
this Section through counsel satisfactory to Landlord. The provisions of this
Section shall expressly survive the expiration or sooner termination of this
Lease.
SECTION 10.4. LANDLORD'S NONLIABILITY. Landlord shall not be liable to
Tenant, its employees, agents and invitees, and Tenant hereby waives all claims
against Landlord for loss of or damage to any property, or any injury to any
person, or loss or interruption of business or income, or any other loss, cost,
damage, injury or liability whatsoever (including without limitation any
consequential damages and lost profit or opportunity costs) resulting from, but
not limited to, Acts of God, acts of civil disobedience or insurrection, fire,
explosion, falling plaster, steam, gas, electricity, water or rain which may
leak or flow from or into any part of the Building or from the breakage,
leakage, obstruction or other defects of the pipes, sprinklers, wires,
appliances, plumbing, air conditioning, electrical works or other fixtures in
the Building. it is understood that any such condition may require the temporary
evacuation or closure of all or a portion of the Building. Except as provided in
Sections 11.1 and 12.1 below, there shall be no abatement of rent and no
liability of Landlord by reason of any injury to or interference with Tenant's
business (including without limitation consequential damages and lost profit or
opportunity costs) arising from the making of any repairs, alterations or
improvements to any portion of the Building, including repairs to the Premises,
nor shall any related activity by Landlord constitute an actual or constructive
eviction; provided, however, that in making repairs, alterations or
improvements, Landlord shall interfere as little as reasonably practicable with
the conduct of Tenant's business in the Premises. Neither Landlord nor its
agents shall be liable for interference with light or other similar intangible
interests. Tenant shall immediately notify Landlord in case of fire or accident
in the Premises or the Building and of defects in any improvements or equipment.
SECTION 10.5. WAIVER OF SUBROGATION. Landlord and Tenant each hereby waives
all rights of recovery against the other and the other's agents on account of
loss and damage occasioned to the property of such waiving party to the extent
only that such loss or damage is required to be insured against under any "all
risk" property insurance policies required by this Article X; provided however,
that (i) the foregoing waiver shall not apply to the extent of Tenant's
obligations to pay deductibles under any such policies and this Lease, and (ii)
if any loss is due to the act, omission or negligence or willful misconduct of
Tenant or its agents, employees, contractors, guests or invitees, Tenant's
liability insurance shall be primary and shall cover all losses and damages
prior to any other insurance hereunder. By this waiver it is the intent of the
parties that neither Landlord nor Tenant shall be liable to any insurance
company (by way of subrogation or otherwise) insuring the other party for any
loss or damage insured against under any "all-risk" property insurance policies
required by this Article, even though such loss or damage might be occasioned by
the negligence of such party, its agents, employees, contractors, guests or
invitees. The provisions of this Section shall not limit the indemnification
provisions elsewhere contained in this Lease.
ARTICLE XI. DAMAGE OR DESTRUCTION
SECTION 11.1. RESTORATION.
(a) If the Building is damaged, Landlord shall repair that damage as
soon as reasonably possible, at its expense, unless: (i) Landlord reasonably
determines that the cost of repair is not covered by Landlord's fire and
extended coverage insurance plus such additional amounts Tenant elects, at its
option, to contribute, excluding however the deductible (for which Tenant shall
be responsible for Tenant's proportionate share); (ii) Landlord reasonably
determines that the Premises cannot, with reasonable diligence, be fully
repaired by Landlord (or cannot be safely repaired because of the presence of
hazardous factors, including without limitation Hazardous Materials, earthquake
faults, and other similar dangers) within two hundred seventy (270) days after
the date of the damage; (iii) an event of default by Tenant has occurred and is
continuing at the time of such damage; or (iv) the damage occurs during the
final twelve (12) months of the Term. Should Landlord elect not to repair the
damage for one of the preceding reasons, Landlord shall so notify Tenant in
writing within sixty (60) days after the damage occurs and this Lease shall
terminate as of the date of that notice.
(b) Unless Landlord elects to terminate this Lease in accordance with
subsection (a) above, this Lease shall continue in effect for the remainder of
the Term; provided that so long as Tenant is not in default
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under this Lease, if the damage is so extensive that Landlord reasonably
determines that the Premises cannot, with reasonable diligence, be repaired by
Landlord (or cannot be safely repaired because of the presence of hazardous
factors, earthquake faults, and other similar dangers) so as to allow Tenant's
substantial use and enjoyment of the Premises within two hundred seventy (270)
days after the date of damage, then Tenant may elect to terminate this Lease by
written notice to Landlord within the sixty (60) day period stated in subsection
(a).
(c) Commencing on the date of any damage to the Building, and ending
on the sooner of the date the damage is repaired or the date this Lease is
terminated, the rental to be paid under this Lease shall be abated in the same
proportion that the floor area of the Building that is rendered unusable (as
reasonably determined by Tenant) by the damage from time to time bears to the
total floor area of the Building, but only to the extent that any business
interruption insurance proceeds are received by Landlord therefor from Tenant's
insurance described in Exhibit D.
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(d) Notwithstanding the provisions of subsections (a), (b) and (c) of
this Section, and subject to the provisions of Section 10.5 above, the cost of
any repairs shall be borne by Tenant, and Tenant shall not be entitled to rental
abatement or termination rights, if the damage is due to the fault or neglect of
Tenant or its employees, subtenants, invitees or representatives. In addition,
the provisions of this Section shall not be deemed to require Landlord to repair
any improvements or fixtures that Tenant is obligated to repair or insure
pursuant to any other provision of this Lease.
(e) Tenant shall fully cooperate with Landlord in removing Tenant's
personal property and any debris from the Premises to facilitate all inspections
of the Premises and the making of any repairs. Notwithstanding anything to the
contrary contained in this Lease, if Landlord in good faith believes there is a
risk of injury to persons or damage to property from entry into the Building or
Premises following any damage or destruction thereto, Landlord may restrict
entry into the Building or the Premises by Tenant, its employees, agents and
contractors in a non-discriminatory manner, without being deemed to have
violated Tenant's rights of quiet enjoyment to, or made an unlawful detainer of,
or evicted Tenant from, the Premises. Upon request, Landlord shall consult with
Tenant to determine if there are safe methods of entry into the Building or the
Premises solely in order to allow Tenant to retrieve files, data in computers,
and necessary inventory, subject however to all indemnities and waivers of
liability from Tenant to Landlord contained in this Lease and any additional
indemnities and waivers of liability which Landlord may require.
SECTION 11.2. LEASE GOVERNS. The parties agree that the provisions of this
Lease, including without limitation Section 11.1, shall govern any damage or
destruction and shall accordingly supersede any contrary statute or rule of law.
ARTICLE XII. EMINENT DOMAIN
SECTION 12.1. TOTAL OR PARTIAL TAKING. If all or a material portion of the
Premises (i.e., such portion of the Premises, as reasonably determined by
Tenant, without which Tenant cannot reasonably operate its business within the
Premises) is taken by any lawful authority by exercise of the right of eminent
domain, or sold to prevent a taking, either Tenant or Landlord may terminate
this Lease effective as of the date possession is required to be surrendered to
the authority. In the event title to a portion of the Premises is taken or sold
in lieu of taking, and if Landlord elects to restore the Premises in such a way
as to alter the Premises materially, either party may terminate this Lease, by
written notice to the other party, effective on the date of vesting of title. In
the event neither party has elected to terminate this Lease as provided above,
then Landlord shall promptly, after receipt of a sufficient condemnation award,
proceed to restore the Premises to substantially their condition prior to the
taking, and a proportionate allowance shall be made to Tenant for the rent
corresponding to the time during which, and to the part of the Premises of
which, Tenant is deprived on account of the taking and restoration. In the event
of a taking, Landlord shall be entitled to the entire amount of the condemnation
award without deduction for any estate or interest of Tenant; provided that
nothing in this Section shall be deemed to give Landlord any interest in, or
prevent Tenant from seeking any award against the taking authority for, the
taking of personal property and fixtures belonging to Tenant or for relocation
or business interruption expenses or for loss of goodwill recoverable from the
taking authority.
SECTION 12.2. TEMPORARY TAKING. No temporary taking of the Premises shall
terminate this Lease or give Tenant any right to abatement of rent, and any
award specifically attributable to a temporary taking of the Premises shall
belong entirely to Tenant. A temporary taking shall be deemed to be a taking of
the use or occupancy of the Premises for a period of not to exceed one hundred
eighty (180) days.
SECTION 12.3. TAKING OF PARKING AREA. In the event that (i) there is a
taking of (a) more than twenty percent (20%) of the vehicle parking spaces
located on the Site as of the Commencement Date, or (b)more than ten percent
(10%) percent of the area designated on Exhibit A-2 attached hereto as the
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"Fenced Area", and (ii) Landlord is unable to substitute reasonably equivalent
parking in a location reasonably close to the Building within thirty (30) days
following the taking, then Tenant may, at its option, terminate this Lease by
written notice to Landlord within fifteen (15) days following the expiration of
such thirty (30) day period. if this Lease is not so terminated by Tenant, there
shall be no abatement of rent and this Lease shall continue in effect.
ARTICLE XIII. SUBORDINATION; ESTOPPEL CERTIFICATE; FINANCIALS
SECTION 13.1. SUBORDINATION. At the option of Landlord, this Lease shall be
either superior or subordinate to all ground or underlying leases, mortgages and
deeds of trust, if any, which may hereafter affect the
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Premises, and to all renewals, modifications, consolidations, replacements and
extensions thereof; provided, that so long as Tenant is not in default under
this Lease beyond any applicable cure period, this Lease shall not be terminated
or Tenant's quiet enjoyment of the Premises disturbed in the event of
termination of any such ground or underlying lease, or the foreclosure of any
such mortgage or deed of trust, to which Tenant has subordinated this Lease
pursuant to this Section. In the event of a termination or foreclosure, Tenant
shall become a tenant of and attorn to the successor-in-interest to Landlord
upon the same terms and conditions as are contained in this Lease, and shall
execute any instrument reasonably required by Landlord's successor for that
purpose. Tenant shall also, upon written request of Landlord, execute and
deliver all instruments as may be required from time to time to subordinate the
rights of Tenant under this Lease to any ground or underlying lease or to the
lien of any mortgage or deed of trust (provided that such instruments include
the nondisturbance and attornment provisions set forth above), or, if requested
by Landlord,, to subordinate, in whole or in part, any ground or underlying
lease or the lien of any mortgage or deed of trust to this Lease.
SECTION 13.2. ESTOPPEL CERTIFICATE.
(a) Tenant shall, at any time upon not less than ten (10) days prior
written notice from Landlord, execute, acknowledge and deliver to Landlord, in
any form that Landlord may reasonably require, a statement in writing (i)
certifying that this Lease is unmodified and in full force and effect (or, if
modified, stating the nature of the modification and certifying that this Lease,
as modified, is in full force and effect) and the dates to which the rental,
additional rent and other charges have been paid in advance, if any, and (ii)
acknowledging that, to Tenant's knowledge, there are no uncured defaults on the
part of Landlord, or specifying each default if any are claimed, and (iii)
setting forth all further information that Landlord may reasonably require.
Tenant's statement may be relied upon by any prospective purchaser or
encumbrancer of the Premises.
(b) Notwithstanding any other rights and remedies of Landlord,
Tenant's failure to deliver any estoppel statement within the provided time
shall be conclusive upon Tenant that (i) this Lease is in full force and effect,
without modification except as may be represented by Landlord, (ii) there are no
uncured defaults in Landlord's performance, and (iii) not more than one month's
rental has been paid in advance.
SECTION 13.3. FINANCIALS.
(a) Tenant shall deliver to Landlord, prior to the execution of this
Lease and thereafter at any time upon Landlord's request, Tenant's current
financial statements, certified true, accurate and complete by an officer of
Tenant, including a balance sheet and profit and loss statement for the most
recent prior year (collectively, the "Statements"), which Statements shall
accurately and completely reflect the financial condition of Tenant. Landlord
agrees that it will keep the Statements confidential, except that Landlord shall
have the right to deliver the same to any proposed purchaser or encumbrancer of
the Premises; provided, however, any such disclosure shall be strictly limited
to bona fide prospective purchasers and encumbrancers (and their respective
accountants, attorneys and financial advisers) and then shall only be permitted
to the extent that such bona fide prospective purchasers and encumbrancers (and
their respective accountants, attorneys and financial advisers to whom such
disclosures will be made) shall agree to preserve the confidentiality of the
substance and contents the Statements in question.
(b) Tenant acknowledges that Landlord is relying on the Statements in
its determination to enter into this Lease, and Tenant represents to Landlord,
which representation shall be deemed made on the date of this Lease and again on
the Commencement Date, that no material change in the financial condition of
Tenant, as reflected in the Statements, has occurred since the date Tenant
delivered the Statements to Landlord, other than such changes as Tenant may
disclose to Landlord in writing prior to Landlord's execution of this Lease. The
Statements are represented and warranted by Tenant to be correct and to
accurately and fully reflect Tenant's true financial condition as of the date of
submission by any Statements to Landlord.
ARTICLE XIV. DEFAULTS AND REMEDIES
SECTION 14.1. TENANT'S DEFAULTS. In addition to any other event of default
set forth in this Lease, the occurrence of any one or more of the following
events shall constitute a default by Tenant (and, for purposes of this Lease,
the term "default", as used in each context relating to Tenant, shall mean):
(a) The failure by Tenant to make any payment of rent or additional
rent required to be made by Tenant, as and when due, where the failure continues
for a period of three (3) business days after written notice from Landlord to
Tenant; provided, however, that any such notice shall be in lieu of, and not in
addition to, any notice required under California Code of Civil Procedure
Section 1161 and 1161(a) as amended. For purposes of these default and remedies
provisions, the term "additional rent" shall be deemed to include all amounts of
any type whatsoever other than Basic Rent to be paid by Tenant pursuant to the
terms of this Lease.
(b) Assignment, sublease, encumbrance or other transfer of the Lease
by Tenant, either voluntarily or by operation of law, whether by judgment,
execution, transfer by intestacy or testacy. or other means, without the prior
written consent of Landlord (other than an assignment of this Lease or a
subletting of the Premises permitted to be made without Landlord's consent
pursuant to Section 9.4 above).
(c) The discovery by Landlord that any financial statement provided by
Tenant, or by any affiliate, successor or guarantor of Tenant, was materially
false.
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(d) The failure of Tenant to timely and fully provide any
subordination agreement, estoppel certificate or financial statements in
accordance with the requirements of Article XIII.
(e) The failure or inability 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 any other subsection of this
Section, where the failure continues for a period of thirty (30) days after
written notice from Landlord to Tenant or such shorter period as is specified in
any other provision of this Lease; provided, however, that any such notice shall
be in lieu of, and not in addition to, any notice required under California Code
of Civil Procedure Section 1161 and 1161(a) as amended. However, if the nature
of the failure is such that more than thirty (30) days are reasonably required
for its cure, then Tenant shall not be deemed to be in default if Tenant
commences the cure within thirty (30) days, and thereafter diligently pursues
the cure to completion.
(f) (i) The making by Tenant of any general assignment for the benefit
of creditors; (ii) the filing by or against Tenant of a petition to have Tenant
adjudged a Chapter 7 debtor under the Bankruptcy Code or to have debts
discharged or a petition for reorganization or arrangement under any law
relating to bankruptcy (unless, in the case of a petition filed against Tenant,
the same is dismissed within thirty (30) days); (iii) the appointment of a
trustee or receiver to take possession of substantially all of Tenant's assets
located at the Premises or of Tenant's interest in this Lease, if possession is
not restored to Tenant within thirty (30) days; (iv) the attachment, execution
or other judicial seizure of substantially all of Tenant's assets located at the
Premises or of Tenant's interest in this Lease, where the seizure is not
discharged within thirty (30) days; or (v) Tenant's convening of a meeting of
its creditors for the purpose of effecting a moratorium upon or composition of
its debts. Landlord shall not be deemed to have knowledge of any event described
in this subsection unless notification in writing is received by Landlord, nor
shall there be any presumption attributable to Landlord of Tenant's insolvency.
In the event that any provision of this subsection is contrary to applicable
law, the provision shall be of no force or effect
SECTION 14.2. LANDLORD'S REMEDIES.
(a) In the event of any default by Tenant, or in the event of the
abandonment of the Premises by Tenant, then in addition to any other remedies
available to Landlord, Landlord may exercise the following remedies:
(i) Landlord may terminate Tenant's right to possession of the
Premises by any lawful means, in which case this Lease shall terminate and
Tenant shall immediately surrender possession of the Premises to Landlord. Such
termination shall not affect any accrued obligations of Tenant under this Lease.
Upon termination, Landlord shall have the right to reenter the Premises and
remove all persons and property. Landlord shall also be entitled to recover from
Tenant:
(1) The worth at the time of award of the unpaid rent and
additional rent which had been earned at the time of termination;
(2) The worth at the time of award of the amount by which the
unpaid rent and additional rent which would have been earned after termination
until the time of award exceeds the amount of such loss that Tenant proves could
have been reasonably avoided;
(3) The worth at the time of award of the amount by which the
unpaid rent and additional rent for the balance of the Term after the time of
award exceeds the amount of such loss that Tenant proves could be reasonably
avoided;
(4) Any other amount necessary to compensate Landlord for all
the detriment proximately caused by Tenant's failure to perform its obligations
under this Lease or which in the ordinary course of things would be likely to
result from Tenant's default, including, but not limited to, the cost of
recovering possession of the Premises, refurbishment of the Premises, marketing
costs, commissions and other expenses of reletting, including necessary repair,
the unamortized portion of any tenant improvements and brokerage commissions
funded by Landlord in connection with this Lease, reasonable attorneys' fees,
and any other reasonable costs; and
(5) At Landlord's election, all other amounts in addition to
or in lieu of the foregoing as may be permitted by law. The term "rent" as used
in this Lease shall be deemed to mean the Basic Rent and all other sums required
to be paid by Tenant to Landlord pursuant to the terms of this Lease. Any sum,
other than Basic Rent, shall be computed on the basis of the average monthly
amount accruing during the twenty-four (24) month period immediately prior to
default, except that if it becomes necessary to compute such rental before the
twenty-four (24) month period has occurred, then the computation shall be on the
basis of the average monthly amount during the shorter period. As used in
subparagraphs (1) and (2) above, the "worth at the time of award" shall be
computed by allowing interest at the rate of ten percent (10%) per annum. As
used in subparagraph (3) above, the "worth at the time of award" shall be
computed by discounting the amount at the discount rate of the Federal Reserve
Bank of San Francisco at the time of award plus one percent (1%).
(ii) Landlord may elect not to terminate Tenant's right to
possession of the Premises, in which event Landlord may continue to enforce all
of its rights and remedies under this Lease, including the right to collect all
rent as it becomes due. Efforts by the Landlord to maintain, preserve or relet
the Premises, or the appointment of a receiver to protect the Landlord's
interests under this Lease, shall not constitute a termination of the Tenant's
right to possession of the Premises. In the event that Landlord elects to avail
itself of the remedy
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provided by this subsection (ii), Landlord shall not unreasonably withhold its
consent to an assignment or subletting of the Premises subject to the reasonable
standards for Landlord's consent as are contained in this Lease.
(b) Landlord shall be under no obligation to observe or perform any
covenant of this Lease on its part to be observed or performed which accrues
after the date of any default by Tenant unless and until the default is cured by
Tenant, it being understood and agreed that the performance by Landlord of its
obligations under this Lease are expressly conditioned upon Tenant's full and
timely performance of its obligations under this Lease. The various rights and
remedies reserved to Landlord in this Lease or otherwise shall be cumulative
and, except as otherwise provided by California law, Landlord may pursue any or
all of its rights and remedies at the same time.
(c) No delay or omission of Landlord to exercise any right or remedy
shall be construed as a waiver of the right or remedy or of any default by
Tenant. The acceptance by Landlord of rent shall not be a (i) waiver of any
preceding breach or default by Tenant of any provision of this Lease, other than
the failure of Tenant to pay the particular rent accepted, regardless of
Landlord's knowledge of the preceding breach or default at the time of
acceptance of rent, or (ii) a waiver of Landlord's right to exercise any remedy
available to Landlord by virtue of the breach or default. The acceptance of any
payment from a debtor in possession, a trustee, a receiver or any other person
acting on behalf of Tenant or Tenant's estate shall not waive or cure a default
under Section 14.1. No payment by Tenant or receipt by Landlord of a lesser
amount than the rent required by this Lease shall be deemed to be other than a
partial payment on account of the earliest due stipulated rent, nor shall any
endorsement or statement on any check or letter be deemed an accord and
satisfaction and Landlord shall accept the check or payment without prejudice to
Landlord's right to recover the balance of the rent or pursue any other remedy
available to it. No act or thing done by Landlord or Landlord's agents during
the Term shall be deemed an acceptance of a surrender of the Premises, and no
agreement to accept a surrender shall be valid unless in writing and signed by
Landlord. No employee of Landlord or of Landlord's agents shall have any power
to accept the keys to the Premises prior to the termination of this Lease, and
the delivery of the keys to any employee shall not operate as a termination of
the Lease or a surrender of the Premises.
SECTION 14.3. LATE PAYMENTS.
(a) Any rent due under this Lease that is not received by Landlord
within five (5) days of the date when due shall bear interest at the maximum
rate permitted by law from the date due until fully paid. The payment of
interest shall not cure any default by Tenant under this Lease. In addition,
Tenant acknowledges that the late payment by Tenant to Landlord of rent will
cause Landlord to incur costs not contemplated by this Lease, the exact amount
of which will be extremely difficult and impracticable to ascertain. Those costs
may include, but are not limited to, administrative, processing and accounting
charges, and late charges which may be imposed on Landlord by the terms of any
ground lease, mortgage or trust deed covering the Premises. Accordingly, if any
rent due from Tenant shall not be received by Landlord or Landlord's designee
within five (5) days after the date due, then Tenant shall pay to Landlord, in
addition to the interest provided above, a late charge in a sum equal to the
greater of five percent (5%) of the amount overdue or Two Hundred Fifty Dollars
($250.00) for each delinquent payment. Acceptance of a late charge by Landlord
shall not constitute a waiver of Tenant's default with respect to the overdue
amount, nor shall it prevent Landlord from exercising any of its other rights
and remedies.
(b) Following each second consecutive installment of rent that is not
paid within five (5) days following notice of nonpayment from Landlord, Landlord
shall have the option to require that beginning with the first payment of rent
next due, rent shall no longer be paid in monthly installments but shall be
payable quarterly three (3) months in advance (provided, however, if Tenant
thereafter pays three (3) consecutive quarterly payments in a timely manner, the
payment of rent hereunder shall thereupon revert to monthly installments).
Should Tenant deliver to Landlord, at any time during the Term, two (2) or more
insufficient checks, the Landlord may require that all monies then and
thereafter due from Tenant be paid to Landlord by cashier's check.
SECTION 14.4. RIGHT OF LANDLORD TO PERFORM. All covenants and agreements to
be performed by Tenant under this Lease shall be performed at Tenant's sole cost
and expense and without any abatement of rent or right of set-off. If Tenant
fails to pay any sum of money, other than rent, or fails to perform any other
act on its part to be performed under this Lease, and the failure continues
beyond any applicable grace period set forth in Section 14.1, then, upon notice
to Tenant and in addition to any other available remedies, Landlord may, at its
election make the payment or perform the other act on Tenant's part. Landlord's
election to make the payment or perform the act on Tenant's part shall not give
rise to any responsibility of Landlord to continue making the same or similar
payments or performing the same or similar acts. Tenant shall, promptly upon
demand by Landlord, reimburse Landlord for all sums paid by Landlord and all
necessary incidental costs, together with interest at the maximum rate permitted
by law from the date of the payment by Landlord. Landlord shall have the same
rights and remedies if Tenant fails to pay those amounts as Landlord would have
in the event of a default by Tenant in the payment of rent.
SECTION 14.5. DEFAULT BY LANDLORD. Landlord shall not be deemed to be in
default in the performance of any obligation under this Lease unless and until
it has failed to perform the obligation within thirty (30) days after written
notice by Tenant to Landlord specifying in reasonable detail the nature and
extent of the failure; provided, however, that if the nature of Landlord's
obligation is such that more than thirty (30) days are required for its
performance, then Landlord shall not be deemed to be in default if it commences
performance within the thirty (30) day period and thereafter diligently pursues
the cure to completion.
SECTION 14.6. EXPENSES AND LEGAL FEES. All sums reasonably incurred by
Landlord in connection with any event of default by Tenant under this Lease or
holding over of possession by Tenant after the
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expiration or earlier termination of this Lease, including without limitation
all costs, expenses and actual accountants, appraisers, attorneys and other
professional fees, and any collection agency or other collection charges, shall
be due and payable by Tenant to Landlord on demand, and shall bear interest at
the rate of ten percent (10%) per annum. Should either Landlord or Tenant bring
any action in connection with this Lease, the prevailing party shall be entitled
to recover as a part of the action its reasonable attorneys' fees, and all other
costs. The prevailing party for the purpose of this paragraph shall be
determined by the trier of the facts.
SECTION 14.7. WAIVER OF JURY TRIAL. LANDLORD AND TENANT EACH ACKNOWLEDGES
THAT IT IS AWARE OF AND HAS HAD THE ADVICE OF COUNSEL OF ITS CHOICE WITH RESPECT
TO ITS RIGHTS TO TRIAL BY JURY, AND EACH PARTY DOES HEREBY EXPRESSLY AND
KNOWINGLY WAIVE AND RELEASE ALL SUCH RIGHTS TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER PARTY HERETO AGAINST THE OTHER
(AND/OR AGAINST ITS OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, OR SUBSIDIARY OR
AFFILIATED ENTITIES) ON ANY MATTERS WHATSOEVER ARISING OUT OF OR IN ANY WAY
CONNECTED WITH THIS LEASE, TENANT'S USE OR OCCUPANCY OF THE PREMISES, AND/OR ANY
CLAIM OF INJURY OR DAMAGE.
SECTION 14.8. SATISFACTION OF JUDGMENT. The obligations of Landlord do not
constitute the personal obligations of the individual partners, trustees,
directors, officers or shareholders of Landlord or its constituent partners.
Should Tenant recover a money judgment against Landlord, such judgment shall be
satisfied only out of the proceeds of sale received upon execution of such
judgment and levied thereon against the right, title and interest of Landlord in
the Building and out of the rent or other income from such property receivable
by Landlord or out of consideration received by Landlord from the sale or other
disposition of all or any part of Landlord's right, title or interest in the
Building (including from any Taking, in whole or in part, of the Site) or from
any insurance policies maintained by Landlord with respect to the Site, and no
action for any deficiency may be sought or obtained by Tenant.
SECTION 14.9. LIMITATION OF ACTIONS AGAINST LANDLORD. Any claim, demand or
right of any kind by Tenant which is based upon or arises in connection with
this Lease shall be barred unless Tenant commences an action thereon within
twelve (12) months after the date that the act, omission, event or default upon
which the claim, demand or right arises, has occurred.
ARTICLE XV. END OF TERM
SECTION 15.1. HOLDING OVER. This Lease shall terminate without further
notice upon the expiration of the Term, and any holding over by Tenant after the
expiration shall not constitute a renewal or extension of this Lease, or give
Tenant any rights under this Lease, except when in writing signed by both
parties. If Tenant holds over for any period after the expiration (or earlier
termination) of the Term without the prior written consent of Landlord, such
possession shall constitute a tenancy at sufferance only; such holding over with
the prior written consent of Landlord shall constitute a month-to-month tenancy
commencing on the first (1st) day following the termination of this Lease. In
either of such events, possession shall be subject to all of the terms of this
Lease, except that the monthly Basic Rent shall be the greater of (a) two
hundred percent (200%) of the Basic Rent for the month immediately preceding the
date of termination or (b) the then currently scheduled Basic Rent for
comparable space in the Building. If Tenant fails to surrender the Premises upon
the expiration of this Lease despite demand to do so by Landlord, Tenant shall
indemnify and hold Landlord harmless from all loss or liability, including
without limitation, any claims made by any succeeding tenant relating to such
failure to surrender. Acceptance by Landlord of rent after the termination shall
not constitute a consent to a holdover or result in a renewal of this Lease. The
foregoing provisions of this Section are in addition to and do not affect
Landlord's right of re-entry or any other rights of Landlord under this Lease or
at law.
SECTION 15.2. MERGER ON TERMINATION. The voluntary or other surrender of
this Lease by Tenant, or a mutual termination of this Lease, shall terminate any
or all existing subleases unless Landlord, at its option, elects in writing to
treat the surrender or termination as an assignment to it of any or all
subleases affecting the Premises.
SECTION 15.3. SURRENDER OF PREMISES; REMOVAL OF PROPERTY. Upon the
Expiration Date or upon any earlier termination of this Lease, Tenant shall quit
and surrender possession of the Premises to Landlord in as good order, condition
and repair as when received or as hereafter may be improved by Landlord or
Tenant, reasonable wear and tear and repairs which are Landlord's obligation
excepted, and shall, without expense to Landlord, remove or cause to be removed
from the Premises all personal property and debris, except for any items that
Landlord may by written authorization allow to remain, and all alterations,
additions and improvements which Landlord, by written notice pursuant to Section
7.3 above, requires Tenant to remove. Tenant shall repair all damage to the
Premises resulting from the removal, which repair shall include the patching and
filling of holes and repair of structural damage, provided that Landlord may
instead elect to repair any structural damage at Tenant's expense. If Tenant
shall fail to comply with the provisions of this Section, Landlord may effect
the removal and/or make any repairs, and the cost to Landlord shall be
additional rent payable by Tenant upon demand. If Tenant fails to remove
Tenant's personal property from the Premises upon the expiration of the Term,
Landlord may remove, store, dispose of and/or retain such personal property, at
Landlord's option, in accordance with then applicable laws, all at the expense
of Tenant. If requested by Landlord, Tenant shall execute, acknowledge and
deliver to Landlord an instrument in writing releasing and quitclaiming to
Landlord all right, title and interest of Tenant in the Premises.
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ARTICLE XVI. PAYMENTS AND NOTICES
All sums payable by Tenant to Landlord shall be paid, without deduction or
offset, in lawful money of the United States to Landlord at its address set
forth in Item 12 of the Basic Lease Provisions, or at any other place as
Landlord may designate in writing. Unless this Lease expressly provides
otherwise, as for example in the payment of rent pursuant to Section 4.1, all
payments shall be due and payable within five (5) days after demand. All
payments requiring proration shall be prorated on the basis of a thirty (30) day
month and a three hundred sixty (360) day year. Any notice, election, demand,
consent, approval or other communication to be given or other document to be
delivered by either ▇▇▇▇▇ to the other may be delivered in person or by courier
or overnight delivery service to the other party, or may be deposited in the
United States mail, duly registered or certified, postage prepaid, return
receipt requested, and addressed to the other party at the address set forth in
Item 12 of the Basic Lease Provisions (and notices to the Premises may be made
whether or not Tenant has departed from, abandoned or vacated the Premises), or
may be delivered by telegram, telex or telecopy, provided that receipt thereof
is telephonically confirmed. Either party may, by written notice to the other,
served in the manner provided in this Article, designate a different address. If
any notice or other document is sent by mail, it shall be deemed served or
delivered twenty-four (24) hours after mailing. If more than one person or
entity is named as Tenant under this Lease, service of any notice upon any one
of them shall be deemed as service upon all of them.
ARTICLE XVII. RULES AND REGULATIONS
Tenant agrees to observe faithfully and comply strictly with the Rules and
Regulations, attached as Exhibit E, and any reasonable and nondiscriminatory
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amendments, modifications and/or additions as may be adopted and published by
written notice to tenants by Landlord for the safety, care, security, good
order, or cleanliness of the Premises. Landlord shall not be liable to Tenant
for any violation of the Rules and Regulations or the breach of any covenant or
condition in any lease by any other tenant or such tenant's agents, employees,
contractors, quests or invitees. One or more waivers by Landlord of any breach
of the Rules and Regulations by Tenant or by any other tenant(s) shall not be a
waiver of any subsequent breach of that rule or any other. Tenant's failure to
keep and observe the Rules and Regulations shall constitute a default under this
Lease. In the case of any conflict between the Rules and Regulations and this
Lease, this Lease shall be controlling.
ARTICLE XVIII. BROKER'S COMMISSION
The parties recognize as the broker(s) who negotiated this Lease the
firm(s), if any, whose name(s) is (are) stated in Item 10 of the Basic Lease
Provisions, and agree that Landlord shall be responsible for the payment of
brokerage commissions to those broker(s) unless otherwise provided in this
Lease. Tenant warrants that it has had no dealings with any other real estate
broker or agent in connection with the negotiation of this Lease, and Tenant
agrees to indemnify and hold Landlord harmless from any cost, expense or
liability (including reasonable attorneys' fees) for any compensation,
commissions or charges claimed by any other real estate broker or agent employed
or claiming to represent or to have been employed by Tenant in connection with
the negotiation of this Lease. The foregoing agreement shall survive the
termination of this Lease. If this Lease terminates prior to the Expiration Date
as the result of any default by Tenant, Landlord shall be entitled to recover
from Tenant the unamortized portion of any brokerage commission funded by
Landlord in addition to any other damages to which Landlord may be entitled.
Landlord warrants that it has had no dealings with any other real estate broker
or agent in connection with the negotiation of this Lease, and Landlord agrees
to indemnify and hold Tenant harmless from any cost, expense or liability
(including reasonable attorneys' fees) for any compensation, commissions or
charges claimed by any other real estate broker or agent employed or claiming to
represent or to have been employed by Landlord in connection with the
negotiation of this Lease. The foregoing agreement shall survive the termination
of this Lease.
ARTICLE XIX. TRANSFER OF LANDLORD'S INTEREST
In the event of any transfer of Landlord's fee interest in the Premises,
the transferor shall be automatically relieved of all obligations on the part of
Landlord accruing under this Lease from and after the date of the transfer,
provided that any funds held by the transferor in which Tenant has an interest
shall be turned over, subject to that interest, to the transferee and provided
the transferee assumes in writing all of the transferor's obligations under this
Lease accruing from and after the date of the transfer and Tenant is notified of
the transfer as required by law. No holder of a mortgage and/or deed of trust to
which this Lease is or may be subordinate, and no landlord under a so-called
sale-leaseback, shall be responsible in connection with the Security Deposit,
unless the mortgagee or holder of the deed of trust or the landlord actually
receives the Security Deposit. It is intended that the covenants and obligations
contained in this Lease on the part of Landlord shall, subject to the foregoing,
be binding on Landlord, its successors and assigns, only during and in respect
to their respective successive periods of ownership.
ARTICLE XX. INTERPRETATION
SECTION 20.1. GENDER AND NUMBER. Whenever the context of this Lease
requires, the words "Landlord" and "Tenant" shall include the plural as well as
the singular, and words used in neuter, masculine or feminine genders shall
include the others.
SECTION 20.2. HEADINGS. The captions and headings of the articles and
sections of this Lease are for convenience only, are not a part of this Lease
and shall have no effect upon its construction or interpretation.
SECTION 20.3. JOINT AND SEVERAL LIABILITY. If more than one person or
entity is named as Tenant, the obligations imposed upon each shall be joint and
several and the act of or notice from, or notice or
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refund to, or the signature of, any one or more of them shall be binding on all
of them with respect to the tenancy of this Lease, including, but not limited
to, any renewal, extension, termination or modification of this Lease.
SECTION 20.4. SUCCESSORS. Subject to Articles IX and XIX, all rights and
liabilities given to or imposed upon Landlord and Tenant shall extend to and
bind their respective heirs, executors, administrators, successors and assigns.
Nothing contained in this Section is intended, or shall be construed, to grant
to any person other than Landlord and Tenant and their successors and assigns
any rights or remedies under this Lease.
SECTION 20.5. TIME OF ESSENCE. Time is of the essence with respect to the
performance of every provision of this Lease.
SECTION 20.6. CONTROLLING LAW. This Lease shall be governed by and
interpreted in accordance with the laws of the State of California.
SECTION 20.7. SEVERABILITY. If any term or provision of this Lease, the
deletion of which would not adversely affect the receipt of any material benefit
by either party or the deletion of which is consented to by the party adversely
affected, shall be held invalid or unenforceable to any extent, the remainder of
this Lease shall not be affected and each term and provision of this Lease shall
be valid and enforceable to the fullest extent permitted by law.
SECTION 20.8. WAIVER AND CUMULATIVE REMEDIES. One or more waivers by
Landlord or Tenant of any breach of any term, covenant or condition contained in
this Lease shall not be a waiver of any subsequent breach of the same or any
other term, covenant or condition. Consent to any act by one of the parties
shall not be deemed to render unnecessary the obtaining of that party's consent
to any subsequent act. No breach by Tenant of this Lease shall be deemed to have
been waived by Landlord unless the waiver is in a writing signed by Landlord.
The rights and remedies of Landlord under this Lease shall be cumulative and in
addition to any and all other rights and remedies which Landlord may have.
SECTION 20.9. INABILITY TO PERFORM. In the event that either party shall be
delayed or hindered in or prevented from the performance of any work or in
performing any act required under this Lease by reason of any cause beyond the
reasonable control of that party, then the performance of the work or the doing
of the act shall be excused for the period of the delay and the time for
performance shall be extended for a period equivalent to the period of the
delay. The provisions of this Section shall not operate to excuse Tenant from
the prompt payment of rent or from the timely performance of any other
obligation under this Lease within Tenant's reasonable control.
SECTION 20.10. ENTIRE AGREEMENT. This Lease and its exhibits and other
attachments cover in full each and every agreement of every kind between the
parties concerning the Premises and the Building, and all preliminary
negotiations, oral agreements, understandings and/or practices, except those
contained in this Lease, are superseded and of no further effect. Tenant waives
its rights to rely on any representations or promises made by Landlord or others
which are not contained in this Lease. No verbal agreement or implied covenant
shall be held to modify the provisions of this Lease, any statute, law, or
custom to the contrary notwithstanding.
SECTION 20.11. QUIET ENJOYMENT. Upon the observance and performance of all
the covenants, terms and conditions on Tenant's part to be observed and
performed, and subject to the other provisions of this Lease, Tenant shall
peaceably and quietly hold and enjoy the Premises for the Term without hindrance
or interruption by Landlord or any other person claiming by or through Landlord.
SECTION 20.12. SURVIVAL. All covenants of Landlord or Tenant which
reasonably would be intended to survive the expiration or sooner termination of
this Lease, including without limitation any warranty or indemnity hereunder,
shall so survive and continue to be binding upon and inure to the benefit of the
respective parties and their successors and assigns.
ARTICLE XXI. EXECUTION AND RECORDING
SECTION 21.1. COUNTERPARTS. This Lease may be executed in one or more
counterparts, each of which shall constitute an original and all of which shall
be one and the same agreement.
SECTION 21.2. CORPORATE AND PARTNERSHIP AUTHORITY. Each individual
executing this Lease on behalf of the corporation or partnership represents and
warrants that he or she is duly authorized to execute and deliver this Lease on
behalf of the corporation or partnership, and that this Lease is binding upon
the corporation or partnership in accordance with its terms. Each party, upon
the request of the other party, shall deliver a certified copy of its board of
directors resolution or partnership agreement or certificate authorizing or
evidencing the execution of this Lease.
SECTION 21.3. EXECUTION OF LEASE; NO OPTION OR OFFER. The submission of
this Lease to Tenant shall be for examination purposes only, and shall not
constitute an offer to or option for Tenant to lease the Premises. Execution of
this Lease by Tenant and its return to Landlord shall not be binding upon
Landlord, notwithstanding any time interval, until Landlord has in fact executed
and delivered this Lease to Tenant, it being intended that this Lease shall only
become effective upon execution by Landlord and delivery of a fully executed
counterpart to Tenant.
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SECTION 21.4. RECORDING. Tenant shall not record this Lease without the
prior written consent of Landlord. Tenant, upon the request of Landlord, shall
execute and acknowledge a "short form" memorandum of this Lease for recording
purposes.
SECTION 21.5. AMENDMENTS. No amendment or termination of this Lease shall
be effective unless in writing signed by authorized signatories of Tenant and
Landlord, or by their respective successors in interest. No actions, policies,
oral or informal arrangements, business dealings or other course of conduct by
or between the parties shall be deemed to modify this Lease in any respect.
SECTION 21.6. EXECUTED COPY. Any fully executed photocopy or similar
reproduction of this Lease shall be deemed an original for all purposes.
SECTION 21.7. ATTACHMENTS. All exhibits, amendments, riders and addenda
attached to this Lease are hereby incorporated into and made a part of this
Lease.
ARTICLE XXII. MISCELLANEOUS
SECTION 22.1. [Intentionally deleted].
SECTION 22.2. [Intentionally deleted].
SECTION 22.3. CHANGES REQUESTED BY LENDER. If, in connection with obtaining
financing for the Building, the lender shall request reasonable modifications in
this Lease as a condition to the financing, Tenant will not unreasonably
withhold or delay its consent, provided that the modifications do not materially
increase the obligations of Tenant or materially and adversely affect the
leasehold interest created by this Lease.
SECTION 22.4. MORTGAGEE PROTECTION. No act or failure to act on the part of
Landlord which would otherwise entitle Tenant to be relieved of its obligations
hereunder or to terminate this Lease shall result in such a release or
termination unless (a) Tenant has given notice by registered or certified mail
to any beneficiary of a deed of trust or mortgage covering the Premises whose
address has been furnished to Tenant and (b) such beneficiary is afforded a
reasonable opportunity to cure the default by Landlord (which in no event shall
be less than sixty (60) days). including, if necessary to effect the cure, time
to obtain possession of the Premises by power of sale or judicial foreclosure
provided that such foreclosure remedy is diligently pursued. Tenant agrees that
each beneficiary of a deed of trust or mortgage covering the Premises is an
express third party beneficiary hereof, Tenant shall have no right or claim for
the collection of any deposit from such beneficiary or from any purchaser at a
foreclosure sale unless such beneficiary or purchaser shall have actually
received and not refunded the deposit, and Tenant shall comply with any written
directions by any beneficiary to pay rent due hereunder directly to such
beneficiary without determining whether an event of default exists under such
beneficiary's deed of trust, and Landlord hereby consents to any such compliance
made in good faith by Tenant.
SECTION 22.5. COVENANTS AND CONDITIONS. All of the provisions of this Lease
shall be construed to be conditions as well as covenants as though the words
specifically expressing or imparting covenants and conditions were used in each
separate provision.
SECTION 22.6. SECURITY MEASURES. Tenant hereby acknowledges that Landlord
shall have no obligation whatsoever to provide guard service or other security
measures for the benefit of the Premises. Tenant assumes all responsibility for
the protection of Tenant, its agents, invitees and property from acts of third
parties. Nothing herein contained shall prevent Landlord, at its sole option,
from providing security protection for the Premises or any part thereof, in
which event the reasonable cost thereof shall be included within the definition
of Building Costs.
SECTION 22.7. CONDITION TO LEASE. Tenant acknowledges that the Premises are
presently being leased to Silicon Graphics, Inc. ("SGI") pursuant to a certain
lease agreement dated June 30, 1995 (as amended, the "Existing SGI Lease"). This
Lease is expressly conditioned on the full execution of a lease termination
agreement on or before January 31, 2000, by and between Landlord and SGI, in a
form acceptable to Landlord in its sole discretion, pursuant to which Landlord
and SGI agree to an early termination of the Existing SGI Lease ("Condition to
Lease"). Landlord makes no representation or warranty to Tenant of any kind that
the Condition to Lease will be satisfied-on or before January 31, 2000 or any
other date. If for any reason the Condition to Lease is not satisfied on or
before January 31, 2000, this Lease shall automatically become null and void,
and shall be of no further force or effect. Tenant acknowledges and agrees that
Landlord shall have no obligation whatsoever to satisfy the Condition to Lease.
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LANDLORD: TENANT:
THE IRVINE COMPANY ▇▇▇▇▇▇▇▇▇▇.▇▇▇, INC.,
a Delaware corporation
By /s/ ▇▇▇▇▇▇▇ ▇. Sim By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------ --------------------------------
▇▇▇▇▇▇▇ ▇. Sim, Executive Vice Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
President of The Irvine Company Title: President
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇. By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------ --------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇., President Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Irvine Industrial Company, Title: Corporate Secretary
A division of The Irvine Company
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