EXHIBIT 10
LEASE
(SINGLE TENANT; NET)
BETWEEN
THE IRVINE COMPANY
AND
TELENETICS CORPORATION
TABLE OF CONTENTS
ARTICLE I. BASIC LEASE PROVISIONS ............................................1
ARTICLE II. PREMISES .........................................................3
SECTION 2.1. LEASED PREMISES ......................................3
SECTION 2.2. ACCEPTANCE OF PREMISES ...............................3
SECTION 2.3. BUILDING NAME AND ADDRESS ............................3
SECTION 2.4. LANDLORD'S RESPONSIBILITIES ..........................3
ARTICLE III. TERM ............................................................4
SECTION 3.1. GENERAL ..............................................4
SECTION 3.2. EARLY OCCUPANCY ......................................4
SECTION 3.3. RIGHT TO EXTEND THIS LEASE ...........................4
ARTICLE IV. RENT AND OPERATING EXPENSES ......................................5
SECTION 4.1. BASIC RENT ...........................................5
SECTION 4.2. OPERATING EXPENSES ...................................5
SECTION 4.3. SECURITY DEPOSIT .....................................7
ARTICLE V. USES...............................................................8
SECTION 5.1. USE ..................................................8
SECTION 5.2. SIGNS ................................................8
SECTION 5.3. HAZARDOUS MATERIALS ..................................8
ARTICLE VI. COMMON AREAS; SERVICES ..........................................10
SECTION 6.1. UTILITIES AND SERVICES ..............................10
SECTION 6.2. OPERATION AND MAINTENANCE OF COMMON AREAS ...........10
SECTION 6.3. USE OF COMMON AREAS .................................10
SECTION 6.4. PARKING .............................................11
SECTION 6.5. CHANGES AND ADDITIONS BY LANDLORD ...................11
ARTICLE VI. MAINTAINING THE PREMISES ........................................11
SECTION 7.1. TENANT'S MAINTENANCE AND REPAIR .....................11
SECTION 7.2. LANDLORD'S MAINTENANCE AND REPAIR ...................11
SECTION 7.3. ALTERATIONS .........................................12
SECTION 7.4. MECHANICS LIENS .....................................13
SECTION 7.5. ENTRY AND INSPECTION ................................13
ARTICLE IX. ASSIGNMENT AND SUBLETTING .......................................13
SECTION 9.1. RIGHTS OF PARTIES ...................................13
SECTION 9.2. EFFECT OF TRANSFER ..................................15
SECTION 9.3. SUBLEASE REQUIREMENTS ...............................15
SECTION 9.4. CERTAIN TRANSFERS ...................................15
ARTICLE X. INSURANCE AND INDEMNITY ..........................................16
SECTION 10.1. TENANT'S INSURANCE .................................16
SECTION 10.2. LANDLORD'S INSURANCE ...............................16
SECTION 10.3. TENANT'S INDEMNITY .................................16
SECTION 10.4. LANDLORD'S NONLIABILITY ............................16
SECTION 10.5. WAIVER OF SUBROGATION ..............................16
ARTICLE XI. DAMAGE OR DESTRUCTION ...........................................17
SECTION 11.1. RESTORATION ........................................17
SECTION 11.2 LEASE GOVERNS ......................................17
ARTICLE XII. EMINENT DOMAIN .................................................18
SECTION 12.1. TOTAL OR PARTIAL TAKING ............................18
SECTION 12.2. TEMPORARY TAKING ...................................18
SECTION 12.3. TAKING OF PARKING AREA .............................18
ARTICLE XIII. SUBORDINATION; ESTOPPEL CERTIFICATE; FINANCIALS ...............18
SECTION 13.1. SUBORDINATION ......................................18
SECTION 13.2. ESTOPPEL CERTIFICATE ...............................18
SECTION 13.3. FINANCIALS .........................................18
ARTICLE XIV. EVENTS OF DEFAULT AND REMEDIES .................................19
SECTION 14.1. TENANT'S DEFAULTS ..................................19
SECTION 14.2. LANDLORD'S REMEDIES ................................20
SECTION 14.3. LATE PAYMENTS ......................................21
SECTION 14.4. RIGHT OF LANDLORD TO PERFORM .......................21
SECTION 14.5. DEFAULT BY LANDLORD ................................21
SECTION 14.6. EXPENSES AND LEGAL FEES ............................21
SECTION 14.7. WAIVER OF JURY TRIAL ...............................21
SECTION 14.8. SATISFACTION OF JUDGMENT ...........................22
ARTICLE XV. END OF TERM .....................................................22
SECTION 15.1. HOLDING OVER.........................................22
SECTION 15.2. MERGER ON TERMINATION ...............................22
SECTION 15.3. SURRENDER OF PREMISES; REMOVAL OF PROPERTY ..........22
ARTICLE XVI. PAYMENTS AND NOTICES ...........................................22
ARTICLE XVII. RULES AND REGULATIONS .........................................23
ARTICLE XVIII. BROKER'S COMMISSION ..........................................23
ARTICLE XIX. TRANSFER OF LANDLORD'S INTEREST ................................23
ARTICLE XX. INTERPRETATION ..................................................23
SECTION 20.1. GENDER AND NUMBER ...................................23
SECTION 20.2. HEADINGS ............................................23
SECTION 20.3. JOINT AND SEVERAL LIABILITY .........................23
SECTION 20.4. SUCCESSORS ..........................................23
SECTION 20.5. TIME OF ESSENCE .....................................23
SECTION 20.6. CONTROLLING LAW/VENUE ...............................24
SECTION 20.7. SEVERABILITY ........................................24
SECTION 20.8. WAIVER AND CUMULATIVE REMEDIES .....................24
SECTION 20.9. INABILITY TO PERFORM ................................24
SECTION 20.10. ENTIRE AGREEMENT ...................................24
SECTION 20.11. QUIET ENJOYMENT ....................................24
SECTION 20.12. SURVIVAL ...........................................24
SECTION 20.13. INTERPRETATION .....................................24
ARTICLE XXI. EXECUTION AND RECORDING ........................................24
SECTION 21.1. COUNTERPARTS ........................................24
SECTION 21.2. CORPORATE, LIMITED LIABILITY COMPANY AND
PARTNERSHIP AUTHORITY ....................................24
SECTION 21.3. EXECUTION OF LEASE; NO OPTION OR OFFER .............24
SECTION 21.4. RECORDING ..........................................24
SECTION 21.5. AMENDMENTS .........................................25
SECTION 21.6. EXECUTED COPY ......................................25
SECTION 21.7. ATTACHMENTS ........................................25
ARTICLE XXII. MISCELLANEOUS .................................................25
SECTION 22.1. NONDISCLOSURE OF LEASE TERMS .......................25
SECTION 22.3. CHANGES REQUESTED BY LENDER ........................25
SECTION 22.4. MORTGAGEE PROTECTION ...............................25
SECTION 22.5. COVENANTS AND CONDITIONS ...........................25
SECTION 22.6. SECURITY MEASURES ..................................26
EXHIBITS
EXHIBIT A DESCRIPTION OF PREMISES
EXHIBIT B ENVIRONMENTAL QUESTIONNAIRE
EXHIBIT C LANDLORD'S DISCLOSURES
EXHIBIT D INSURANCE REQUIREMENTS
EXHIBIT E RULES AND REGULATIONS
EXHIBIT X WORK LETTER
EXHIBIT Y PROJECT SITE PLAN
LEASE
-----
(SINGLE TENANT; NET)
THIS LEASE is made as of the 7th day of JUNE, 2004, by and between THE
IRVINE COMPANY, a Delaware corporation hereafter called "LANDLORD," and
TELENETICS CORPORATION, a California 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.
Address of Building: 39 Parker, Irvine, CA
2. Project Description (if applicable): ▇▇▇▇▇▇ Technology Center
3. Use of Premises: General office (to the extent permitted by the City's
5.4 Industrial Zoning Ordinance) and warehouse.
4. Commencement Date: October 1, 2004
5. Expiration Date: September 30, 2009
6. Basic Rent: Thirteen Thousand Seven Hundred Forty-Four Dollars
($13,744.00) per month, based on $.73 per rentable square foot.
Basic Rent is subject to adjustment as follows:
Commencing October 1, 2005, the Basic Rent shall be Fourteen Thousand
Three Hundred Nine Dollars ($14,309.00) per month, based on $.76 per
rentable square foot.
Commencing October 1, 2006, the Basic Rent shall be Fourteen Thousand
Eight Hundred Seventy-Four Dollars ($14,874.00) per month, based on
$.79 per rentable square foot.
Commencing October 1, 2007, the Basic Rent shall be Fifteen Thousand
Four Hundred Thirty-Nine Dollars ($15,439.00) per month, based on $.82
per rentable square foot.
Commencing October 1, 2008, the Basic Rent shall be Sixteen Thousand
Four Dollars ($16,004.00) per month, based on $.85 per rentable square
foot.
7. Guarantor(s): None
8. Floor Area: Approximately 18,828 rentable square feet
9. Security Deposit: $17,604.00
10. Broker(s): CRESA Partners
11. Additional Insureds: None
1
12. Address for Payments and Notices:
LANDLORD TENANT
THE IRVINE COMPANY TELENETICS CORPORATION
dba Office Properties ▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Vice President, Operations, Technology Portfolio
with a copy of notices to:
THE IRVINE COMPANY
dba Office Properties
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Senior Vice President, Operations
Office Properties
13. Tenant's Liability Insurance Requirement: $2,000,000.00
14. Vehicle Parking Spaces: Sixty-two (62)
2
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"),
containing approximately the rentable square footage set forth as the "Floor
Area" in Item 8 of the Basic Lease Provisions. The Premises consist of all of
the Floor Area within the building identified in Item 1 of the Basic Lease
Provisions (the Premises together with such building and the underlying real
property, are called the "Building"), and is a portion of the project identified
in Item 2 of the Basic Lease Provisions and shown in Exhibit Y, if any (the
"Project"). If the Project is not already completed, Landlord makes no
representation that the Project, if any, as shown on Exhibit Y, (a) will be
completed or that it will be constructed as shown on Exhibit Y without change,
or (b) to the extent the Project is constructed, it will not be changed from the
Project as shown on Exhibit Y. All references to "Floor Area" in this Lease
shall mean the rentable square footage set forth in Item 8 of the Basic Lease
Provisions. The rentable square footage set forth in Item 8 may include or have
been adjusted by various factors, including, without limitation, a load factor
for any vertical penetrations, stairwells or similar features or areas of the
Building. Tenant agrees that the Floor Area set forth in Item 8 shall be binding
on Landlord and Tenant for purposes of this Lease regardless of whether any
future or differing measurements of the Premises or the Building are consistent
or inconsistent with the Floor Area set forth in Item 8.
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, the Building or the Project or their
respective suitability or fitness for any purpose, including without limitation
any representations or warranties regarding the compliance of Tenant's use of
the Premises with the applicable zoning or regarding any other land use matters,
and Tenant shall be solely responsible as to such matters. Further, 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 or the Project, (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, or (iii) any construction of portions of the Project not yet
completed. Tenant further acknowledges that neither Landlord nor any
representative of Landlord has agreed to undertake any alterations or additions
or construct any improvements to the Premises except as expressly provided in
this Lease. As of the Early Occupancy Date, Tenant shall be conclusively deemed
to have accepted the Premises and those portions of the Building and Project in
which Tenant has any rights under this Lease, which acceptance shall mean that
it is conclusively established that the Premises and those portions of the
Building and Project in which Tenant has any rights under this Lease were in
satisfactory condition and in conformity with the provisions of this Lease,
subject only to those defective or incomplete portions of the Tenant
Improvements constructed by Landlord pursuant to the Work Letter attached hereto
as Exhibit X ("Work Letter"), which Tenant shall have itemized on a written
punch list and delivered to Landlord within thirty (30) days after the Early
Occupancy Date (as deemed in Section 3.1). Nothing contained in this Section
shall affect the commencement of the Term or the obligation of Tenant to pay
rent. Landlord shall diligently complete all punch list items of which it is
notified as provided above.
SECTION 2.3. BUILDING NAME AND ADDRESS. Tenant shall not utilize any
name selected by Landlord from time to time for the Building and/or the Project
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 or Project
without liability to Tenant.
SECTION 2.4. LANDLORD'S RESPONSIBILITIES.
(a) Notwithstanding the provisions of Section 7.2 of this Lease,
Landlord shall correct, repair and/or replace any non-compliance of the Building
exterior, the Tenant Improvements and/or the Common Areas with all applicable
building permits and codes in effect as of the Early Occupancy Date, including
without limitation, the provisions of Title III of the Americans With
Disabilities Act ("ADA") in effect as of the Early Occupancy Date. Said costs of
compliance shall be Landlord's sole cost and shall not be part of Project Costs.
Landlord shall correct, repair or replace any non-compliance of the Building
exterior, the Tenant Improvements and the Common Areas with any revisions or
amendments to the ADA in effect after the Early Occupancy Date, provided that
the amortized cost of such repairs or replacements (amortized over the useful
life thereof using a market cost of funds reasonably determined by Landlord)
shall be included as Project Costs payable by Tenant. All other ADA compliance
issues which pertain to the Premises, including without limitation, in
connection with Tenant's construction of any alterations or other improvements
in the Premises (and any resulting ADA compliance requirements in the Common
Areas if Landlord shall consent to same as more particularly provided in Section
7.3 of this Lease) and the operation of Tenant's business and employment
practices in the Premises, shall be the responsibility of Tenant at its sole
cost and expense. The repairs, corrections or replacements required of Landlord
or of Tenant under the foregoing provisions of this Section 2.4(b) shall be made
promptly following notice of non-compliance from any applicable governmental
agency.
(b) Landlord warrants to Tenant that the building systems serving the
Premises, including without limitation, the roof, mechanical, electrical,
plumbing, air conditioning, heating, ventilating, and existing dock equipment
(i.e. doors, levelers, and lights) shall be in good operating condition on the
Early Occupancy Date. Provided that Tenant shall notify Landlord of a
non-compliance with the foregoing warranty on or before one hundred eighty (180)
days from and after the Early Occupancy Date, then Landlord shall, except as
otherwise provided in this Lease, promptly after receipt of written notice from
Tenant setting forth the nature and extent of such non-compliance, rectify same
at Landlord's cost and expense. Tenant's acceptance of the Premises shall be
3
subject to the foregoing and to the provisions of this Lease regarding delivery
of possession and completion by Landlord of all punch-list items.
ARTICLE III. TERM
SECTION 3.1. GENERAL. The term of this Lease ("Term") shall commence
on the date set forth in Item 4 of the Basic Lease Provisions (the
"COMMENCEMENT DATE"), and shall expire on the date set forth in Item 5 of the
Basic Lease Provisions (the "EXPIRATION DATE").
SECTION 3.2. EARLY OCCUPANCY. Landlord agrees that Tenant shall be
permitted to occupy the Premises not earlier than August 1, 2004 (THE "EARLY
OCCUPANCY DATE"), subject to the following terms and conditions: (a)
concurrently with the execution and delivery of this Lease, and prior to any
such early occupancy by Tenant, Tenant shall deliver to Landlord (i) the first
installment of Basic Rent and Operating Expenses due under the Lease (ii) the
Security Deposit set forth in Item 9 of the Basic Lease Provisions, and (iii)
the required certificate(s) of insurance and a completed Environmental
Questionnaire (see EXHIBIT C attached hereto); and (b) Tenant's occupancy of
the Premises prior to the Commencement Date shall be subject to all of the
covenants and conditions on Tenant's part contained in this Lease (including,
without limitation, the covenants contained in Sections 5.3, 6.1, 7.1, 7.3,
7.4, 10.1 and 10.3 of the Lease), except for the obligation to pay Basic Rent
and Operating Expenses.
SECTION 3.3. RIGHT TO EXTEND THIS LEASE. Provided that no Event of
Default has occurred 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 or sublet any of its interest in this
Lease (except in connection with a "Permitted Transfer" as hereinafter
defined), then 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 nine (9) months or more than
twelve (12) 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 then-scheduled 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. 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), but the appraiser shall not
attribute any factor for market tenant improvement allowances or brokerage
commissions 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 for the
extension period, and Tenant shall execute and return same to Landlord within
ten (10) days after Tenant's receipt of same. 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 exercise its right to extend within the time
period set forth in the initial paragraph of this Section 3.3, then 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 (except in connection with a Permitted
4
Transfer) shall be void from its inception. 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, the rental amount for the
Premises shown in Item 6 of the Basic Lease Provisions (the "BASIC RENT"),
including subsequent adjustments, if any. Any rental adjustment to Basic Rent
shown in Item 6 shall be deemed to occur on the specified monthly anniversary of
the Commencement Date, whether or not the Commencement 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 and one (1)
month's estimated Tenant's Share of Operating Expenses (as defined in Section
4.2) shall be delivered to Landlord concurrently with Tenant's execution of this
Lease and shall be applied against the Basic Rent and Operating Expenses first
due hereunder.
SECTION 4.2. OPERATING EXPENSES.
(a) From and after the Commencement Date, Tenant shall pay to Landlord,
as additional rent, Tenant's Share of all Operating Expenses, as defined in
Section 4.2(f), incurred by Landlord in the operation of the Building and the
Project. The term "TENANT'S SHARE" means one hundred percent (100%) of Operating
Expenses determined by Landlord to benefit or relate substantially to the
Building rather than the entire Project, plus that portion of any Operating
Expenses determined by multiplying the cost of such item by a fraction, the
numerator of which is the Floor Area and the denominator of which is the total
rentable square footage, as determined from time to time by Landlord, of (i) all
of the buildings in the Project, as determined by Landlord, for expenses
determined by Landlord to benefit or relate substantially to the entire Project
rather than any specific building or (ii) all or some of the buildings within
the Project as well as all or a portion of other property owned by Landlord
and/or its affiliates, for expenses which benefit or relate to such buildings
within the Project and such other real property. In the event that Landlord
determines in its sole and absolute discretion that any premises within any
building within the Project or any portion of a building or project within a
larger area incurs a non-proportional benefit from any expense, or is the
non-proportional cause of any such expense, Landlord may, allocate a greater
percentage of such Operating Expense to such premises, building or project, as
applicable. The full amount of any management fee payable by Landlord for the
management of Tenant's Premises that is calculated as a percentage of the rent
payable by Tenant shall be paid in full by Tenant as additional rent.
(b) Prior to the start of each full Expense Recovery Period (as defined
in this Section 4.2), Landlord shall give Tenant a written estimate of the
amount of Tenant's Share of Operating Expenses for the applicable Expense
Recovery Period. Failure to provide such estimate shall not relieve Tenant from
its obligation to pay Tenant's Share of Operating Expenses or estimated amounts
thereof, if and when Landlord provides such estimate or final payment amount.
Tenant shall pay the estimated amounts to Landlord in equal monthly
installments, in advance concurrently with payments of 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 monthly the estimated
Tenant's Share of Operating Expenses in effect during the prior Expense Recovery
Period; provided that when the new estimate is delivered to Tenant, Tenant
shall, at the next monthly payment date, pay any accrued estimated Tenant's
Share of Operating Expenses 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, provided that Landlord shall have the right to change the date
on which an Expense Recovery Period commences in which event appropriate
reasonable adjustments shall be made to Tenant's Share of Operating Expenses so
that the amount payable by Tenant shall not materially vary as a result of such
change.
(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 Tenant's Share of 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 of Tenant's Share of Operating Expenses, if any, to the
actual Tenant's Share of Operating Expenses 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 Tenant's Share
of Operating Expenses pursuant hereto. Any amount due Tenant 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. Should Tenant fail
to object in writing to Landlord's determination of Tenant's Share of Operating
Expenses within three hundred sixty (360) days following delivery of Landlord's
expense statement, Landlord's determination of Tenant's Share of Operating
Expenses for the applicable Expense Recovery Period shall be conclusive and
binding on the parties for all purposes and any future claims to the contrary
shall be barred.
(d) Even though this Lease has terminated and the Tenant has vacated
the Premises, when the final determination is made of Tenant's Share of
Operating Expenses for the Expense Recovery Period in which this Lease
terminates, Tenant shall within thirty (30) days of written notice pay the
entire increase over the estimated
5
Tenant's Share of Operating Expenses already paid. Conversely, any overpayment
by Tenant shall be rebated by Landlord to Tenant not later than thirty (30) days
after such 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 Tenant's Share of
Operating Expenses for the year, then the estimate of Tenant's Share of
Operating Expenses may be increased by written notice from Landlord for the
month in which such rate(s) or amount(s) becomes effective and for all
succeeding months by an amount equal to Tenant's Share of the increase. If
Landlord gives Tenant written notice of the amount or estimated amount of the
increase, the month in which the increase will or has become effective, then
Tenant shall pay the increase to Landlord as a part of Tenant's monthly payments
of the estimated Tenant's Share of Operating Expenses as provided in Section
4.2(b), commencing with the month following Tenant's receipt of Landlord's
notice. In addition, Tenant shall pay upon written request any such increases
which were incurred prior to the Tenant commencing to pay such monthly increase.
(f) The term "OPERATING EXPENSES" shall mean and include all Project
Costs, as defined in subsection (g), and Property Taxes, as defined in
subsection (h).
(g) The term "PROJECT COSTS" shall include all expenses of operation,
repair and maintenance of the Building and the Project, including without
limitation all appurtenant Common Areas (as defined in Section 6.2), and shall
include the following charges by way of illustration but not limitation: water
and sewer charges; insurance premiums and deductibles and/or reasonable premium
and deductible equivalents should Landlord elect to self-insure all or any
portion of any risk that Landlord is authorized to insure hereunder; license,
permit, and inspection fees; light; power; window washing; trash pickup;
heating, ventilating and air conditioning; supplies; materials; equipment;
tools; the cost of any environmental, insurance, tax or other consultant
utilized by Landlord in connection with the Building and/or Project;
establishment of reasonable reserves for replacements and/or repairs; costs
incurred in connection with compliance with any laws or changes in laws
applicable to the Building or the Project; the cost of any capital investments
or replacements (other than tenant improvements for specific tenants) to the
extent of the amortized amount thereof over the useful life of such capital
investments or replacements calculated at a market cost of funds, all as
determined by Landlord, for each such year of useful life during the Term; costs
associated with the maintenance of an air conditioning, heating and ventilation
service agreement, and maintenance of an intrabuilding network cable service
agreement for any intrabuilding network cable telecommunications lines within
the Project, and any other installation, maintenance, repair and replacement
costs associated with such lines; capital costs associated with a requirement
related to demands on utilities by Project tenants, including without limitation
the cost to obtain additional phone connections; labor; reasonably allocated
wages and salaries, fringe benefits, and payroll taxes for administrative and
other personnel directly applicable to the Building and/or Project, including
both Landlord's personnel and outside personnel; any expense incurred pursuant
to Sections 6.1, 6.2, 6.4, 7.2, and 10.2; and a reasonable overhead/management
fee for the professional operation of the Project. It is understood and agreed
that Project Costs may include competitive charges for direct services
(including, without limitation, management and/or operations services) provided
by any subsidiary, division or affiliate of Landlord.
(h) The term "PROPERTY TAXES" as used herein shall include any form of
federal, state, county or local government or municipal taxes, fees, charges or
other impositions of every kind (whether general, special, ordinary or
extraordinary) related to the ownership, leasing or operation of the Premises,
Building or Project, including without limitation, 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 or to the Building and/or the
Project, and any improvements, fixtures and equipment and other property of
Landlord located in the Building and/or the Project, (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; (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) taxes based on the
receipt of rent (including gross receipts or sales taxes applicable to the
receipt of rent), and (vi) costs and expenses incurred in contesting the amount
or validity of any Property Tax by appropriate proceedings. Notwithstanding the
foregoing, general net income or franchise taxes imposed against Landlord shall
be excluded.
(i) Notwithstanding anything to the contrary contained in this Section
4.2, in no event shall Operating Expenses include any of the following:
(1) Leasing commissions, attorneys' fees, costs, disbursements
and other expenses incurred by Landlord or its agents in connection with
negotiations for leases with tenants, other occupants or prospective tenants or
other occupants of the Project, and similar costs incurred in connection with
disputes with and/or enforcement of any lease with tenants, other occupants, or
prospective tenants or other occupants of the Project;
(2) "Tenant allowances", "tenant concessions", work letter
payments, and other costs or expenses (including permit, license and inspection
fees) incurred in completing, fixturing, furnishing, renovating or otherwise
improving, decorating or redecorating space for tenants or other occupants of
the Project, or vacant, leasable space in the Project, including space
planning/interior design fees for same;
(3) Except as specifically authorized in this Lease, costs of
a capital nature, including, but not limited to, capital additions, capital
improvements, capital alterations, capital replacements, capital equipment and
capital tools, and/or capital redesign;
6
(4) Costs or expenses (including fines, penalties and legal
fees) incurred due to the breach by Landlord of its obligations under this
Lease, that would not have been incurred but for such breach;
(5) Penalties for late payment of any Operating Expenses by
Landlord, including, without limitation, with respect to Property Taxes,
equipment leases, etc.;
(6) Payments in respect of overhead and/or profit to any
subsidiary or affiliate of Landlord, as a result of a non competitive selection
process for services (other than the management fee) on or to the Project, or
for goods, supplies or other materials, to the extent that the costs of such
services, goods, supplies or materials exceed the costs that would have been
paid if the services, goods, supplies or materials had been provided by parties
unaffiliated with Landlord, of similar skill, competence and experience, on a
competitive basis;
(7) Payments of principal, finance charges or interest on debt
or amortization on any deed of trust or other debt encumbering the Project, and
rental payments (or increases in same) under any ground or underlying lease or
leases encumbering the Project (except to the extent the same may be made to pay
or reimburse, or may be measured by Property Taxes);
(8) Except for a management fee which is reasonable and
commercially competitive for similar projects in the area, costs of Landlord's
general overhead and general administrative expenses (individual, partnership or
corporate, as the case may be) and wages, salaries and other compensation and
benefits (as well as adjustments thereto) for all employees and personnel of
Landlord above the level of manager for the Project, which costs would not be
chargeable to Operating Expenses in accordance with generally accepted
accounting principles, consistently applied;
(9) Advertising and promotional expenses;
(10) Costs or expenses for the acquisition of sculpture,
paintings or other works of art, but not the reasonable expenses of maintaining,
repairing and insuring same;
(11) Costs for which Landlord is actually reimbursed by
insurance;
(12) Contributions to political or charitable organizations;
(13) Costs incurred in removing the property of former tenants
and/or other occupants of the Project;
(14) The costs of any "tap fees" or one time lump sum sewer,
water or other utility connection fees for the Project;
(15) "In house" legal and/or accounting fees;
(16) Any costs for the fulfillment of obligations which are
specifically allocated to Landlord pursuant to the provisions of this Lease; and
(17) Any costs to remediate, cleanup, remove, dispose and/or
neutralize any Hazardous Materials, except: (i) to the extent Tenant is
responsible therefor pursuant to the provisions of Section 5.3 of this Lease, or
(ii) to the extent such Hazardous Materials were neither present on or about the
Project as of the Commencement Date of this Lease, nor caused or knowingly
permitted by Landlord, it's employees, authorized agents or contractors.
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 all of Tenant's obligations under this Lease (the
"Security DEPOSIT"). 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. 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, and may be utilized by Landlord in its
sole and absolute discretion towards the payment of all expenses by Landlord for
which Tenant would be required to reimburse Landlord under this Lease, including
without limitation brokerage commissions and Tenant Improvement costs. Upon any
Event of Default by Tenant (as defined in Section 14.1), Landlord may, in its
sole and absolute discretion, retain, use or apply the whole or any part of the
Security Deposit to pay any sum which Tenant is obligated to pay under this
Lease, sums that Landlord may expend or be required to expend by reason of the
Event of Default by Tenant or any loss or damage that Landlord may suffer by
reason of the Event of Default or costs incurred by Landlord in connection with
the repair or restoration of the Premises pursuant to Section 15.3 of this Lease
upon expiration or earlier termination of this Lease. In no event shall Landlord
be obligated to apply the Security Deposit upon an Event of Default and
Landlord's rights and remedies resulting from an Event of Default, including
without limitation, Tenant's failure to pay Basic Rent, Tenant's Share of
Operating Expenses or any other amount due to Landlord pursuant to this Lease,
shall not be diminished or altered in any respect due to the fact that Landlord
is holding the Security Deposit. If any portion of the Security Deposit is
applied by Landlord as permitted by this Section, 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. If Tenant
fully performs its obligations under this Lease, the Security Deposit 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 expiration of the
Term,
7
provided that Tenant agrees 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 and Tenant agrees that Tenant
shall have no claim against Landlord for Landlord's retaining such Security
Deposit to the extent provided in this Section.
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 do or permit
anything to be done in or about the Premises which will in any way interfere
with the rights of other occupants of the Building or the Project, or 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 or the Project. Tenant shall
not perform any work or conduct any business whatsoever in the Project other
than inside 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, the Project and/or their contents, and shall comply with all
applicable insurance underwriters rules. 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/or Project, 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, in its
sole and absolute discretion, Tenant shall have no right to maintain signs in
any location in, on or about the Premises, the Building or the Project and shall
not place or erect any signs 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 determination, as
determined solely by Landlord, prior to installation, that signage is in
compliance with any covenants, conditions or restrictions encumbering the
Premises and Landlord's signage program for the Project, as in effect from time
to time and approved by the City in which the Premises are located ("Signage
Criteria"). Prior to placing or erecting any such signs, Tenant shall obtain and
deliver to Landlord a copy of any applicable municipal or other governmental
permits and approvals and comply with any applicable insurance requirements for
such signage. Tenant shall be responsible for the cost of any permitted sign,
including the fabrication, installation, maintenance and removal thereof and the
cost of any permits therefor. If Tenant fails to maintain its sign in good
condition, or if Tenant fails to remove same upon termination of this Lease and
repair and restore any damage caused by the sign or its removal, Landlord may do
so at Tenant's expense. Landlord shall have the right to temporarily remove any
signs in connection with any repairs or maintenance in or upon the Building. The
term "sign" as used in this Section shall include all signs, designs, monuments,
displays, advertising materials, logos, banners, projected images, pennants,
decals, pictures, notices, lettering, numerals or graphics.
SECTION 5.3. HAZARDOUS MATERIALS.
(a) For purposes of this Lease, the term "HAZARDOUS MATERIALS" includes (i) any
"hazardous material" as defined in Section 25501(o) of the California Health and
Safety Code, (ii) hydrocarbons, polychlorinated biphenyls or asbestos, (iii) any
toxic or hazardous materials, substances, wastes or materials as defined
pursuant to any other applicable state, federal or local law or regulation, and
(iv) any other substance or matter which may result in liability to any person
or entity as result of such person's possession, use, release or distribution of
such substance or matter under any statutory or common law theory. (b) Tenant
shall not cause or knowingly permit any Hazardous Materials to be brought upon,
stored, used, generated, released or disposed of on, under, from or about the
Premises (including without limitation the soil and groundwater thereunder)
without the prior written consent of Landlord, which consent may be given or
withheld in Landlord's sole and absolute discretion. Notwithstanding the
foregoing, Tenant shall have the right, without obtaining prior written consent
of Landlord, to utilize within the Premises a reasonable quantity of standard
office products that may contain Hazardous Materials (such as photocopy toner,
"White Out", and the like), PROVIDED HOWEVER, that (i) Tenant shall maintain
such products in their original retail packaging, shall follow all instructions
on such packaging with respect to the storage, use and disposal of such
products, and shall otherwise comply with all applicable laws with respect to
such products, and (ii) all of the other terms and provisions of this Section
5.3 shall apply with respect to Tenant's storage, use and disposal of all such
products. Landlord may, in its sole and absolute discretion, place such
conditions as Landlord deems appropriate with respect to Tenant's use of 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
8
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; however, Tenant shall have no obligation to
reimburse Landlord for any costs incurred in connection with any environmental
consultant retained by Landlord pursuant to this Section unless Tenant shall not
be in compliance of its obligations under this Section.
(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
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, emergency response or action plans, 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, upon at least 24 hours prior written or oral notice to Tenant, to
inspect, sample and/or monitor the Premises 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 facilities, records and personnel related thereto. 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 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 with at least 24 hours
prior written or oral notice to Tenant (except in cases of emergency when no
notice shall be required), 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.
(e) If the presence of any Hazardous Materials on, under, from or about
the Premises or the Project caused or knowingly 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 or the Project,
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 and the Project and any other affected real or personal
property owned by Landlord to the condition existing prior to the introduction
of such Hazardous Materials and to remedy or repair any such injury or
contamination, including without limitation, any cleanup, remediation, removal,
disposal, neutralization or other treatment of any such Hazardous Materials.
Notwithstanding the foregoing, Tenant shall not, without Landlord's prior
written consent, which consent may be given or withheld in Landlord's sole and
absolute discretion, take any remedial action in response to the presence of any
Hazardous Materials on, from, under or about the Premises or the Project 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 or the Project
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 and (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 and the Project 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 Building or the Project and any other real or personal property
owned by Landlord caused or knowingly permitted by Tenant, its agents,
employees, contractors, licensees or invitees. Such indemnity obligation shall
specifically include, without limitation, the cost of any required or necessary
repair,
9
restoration, cleanup or detoxification of the Premises, the Building and the
Project and any other real or personal property owned by Landlord, 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
and any loss of rental due to the inability to lease the Premises or any portion
of the Building or Project as a result of such Hazardous Material or remediation
thereof. If it is at any time discovered that Tenant or its agents, employees,
contractors, licensees or invitees may have caused or knowingly permitted the
release of a Hazardous Material on, under, from or about the Premises, the
Building or the Project 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 Building or the
Project 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 Section 5.3(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 Project 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 liability or
responsibility with respect to the Hazardous Materials facts described in
EXHIBIT C, nor with respect to any Hazardous Materials which Tenant proves were
neither released on the Premises during the Term nor 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 that Landlord brings to Tenant's
attention. Tenant hereby acknowledges that this disclosure satisfies any
obligation of Landlord to Tenant pursuant to California Health & Safety Code
Section 25359.7, or any amendment or substitute thereto or any other disclosure
obligations of Landlord.
ARTICLE VI. COMMON AREAS; 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,
telecommunications service, 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. If any utilities or
services are not separately metered or assessed to Tenant, Landlord shall make a
reasonable determination of Tenant's proportionate share of the cost of such
utilities and services, and Tenant shall pay such amount to Landlord, as an item
of additional rent, within twenty (20) days after receipt of Landlord's
statement or invoice therefor. Alternatively, Landlord may elect to include such
cost in the definition of Project Costs in which event Tenant shall pay Tenant's
proportionate share of such costs in the manner set forth in Section 4.2. Tenant
shall also pay to Landlord as an item of additional rent, within ten (10) days
after receipt of Landlord's statement or invoice therefor, a reasonable charge
(which shall be in addition to the electricity charge paid to the utility
provider) for Tenant's "after hours" usage of each HVAC unit servicing the
Premises. "After hours" shall mean more than two hundred eighty-three (283)
hours of usage of each HVAC unit servicing the Premises during any month during
the Term, and shall be determined based upon the operation of the applicable
HVAC unit during each month on a "non-cumulative" basis (without regard to
Tenant's usage or nonusage of said unit during other months during the Term).
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. Landlord shall
at all reasonable times have free access to the Building and Premises to
install, maintain, repair, replace or remove all electrical and mechanical
installations of Landlord. Tenant acknowledges that the costs incurred by
Landlord related to providing above-standard utilities to Tenant, including,
without limitation, telephone lines, may be charged to Tenant.
SECTION 6.2. OPERATION AND MAINTENANCE OF COMMON AREAS. During the
Term, Landlord shall operate all Common Areas within the Project. The term
"COMMON Areas" shall mean all areas which are not held for exclusive use by
persons entitled to occupy space, and all other appurtenant areas and
improvements within the Project provided by Landlord for the common use of
Landlord and tenants and their respective employees and invitees, including
without limitation parking areas and structures, driveways, sidewalks,
landscaped and planted areas, hallways and interior stairwells not located
within the premises of any tenant, common electrical rooms and roof access
entries, common entrances and lobbies, elevators, and restrooms not located
within the premises of any tenant.
SECTION 6.3. USE OF COMMON AREAS. The occupancy by Tenant of the
Premises shall include the use of the Common Areas in common with Landlord and
with all others for whose convenience and use the Common Areas may be provided
by Landlord, subject, however, to compliance with all reasonable rules and
regulations as are prescribed from time to time by Landlord. Landlord shall
operate and maintain the Common Areas in the manner Landlord may determine to be
appropriate. All costs incurred by Landlord for the maintenance and operation of
the Common Areas shall be included in Project Costs except to the extent any
particular cost incurred is related to or associated with a specific tenant and
can be charged to such tenant of the Project. Landlord shall at all times during
the Term have exclusive control of the Common Areas, and may restrain or permit
any use or occupancy, except as authorized by Landlord's rules and regulations.
Tenant shall keep the Common Areas clear of any obstruction or unauthorized use
related to Tenant's operations or use of Premises, including without limitation,
planters and furniture. Nothing in this Lease shall be deemed to impose
liability upon Landlord for any
10
damage to or loss of the property of, or for any injury to, Tenant, its invitees
or employees. Landlord may temporarily close any portion of the Common Areas for
repairs, remodeling and/or alterations, to prevent a public dedication or the
accrual of prescriptive rights, or for any other reason deemed sufficient by
Landlord, without liability to Landlord.
SECTION 6.4. PARKING. Tenant shall be entitled to the number of vehicle
parking spaces set forth in Item 14 of the Basic Lease Provisions, which spaces
shall be unreserved and unassigned, on those portions of the Common Areas
designated by Landlord for parking. Tenant shall not use more parking spaces
than such number. All parking spaces shall be used only for parking of vehicles
no larger than full size passenger automobiles, sports utility vehicles or
pickup trucks. 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 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 within the Common Areas shall be limited to striped parking stalls, and
no parking shall be permitted in any driveways, access ways or in any area which
would prohibit or impede the free flow of traffic within the Common Areas. There
shall be no parking of any vehicles for longer than a forty-eight (48) hour
period unless otherwise authorized by Landlord, and vehicles which have been
abandoned or parked in violation of the terms hereof may be towed away at the
owner's expense. 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. Landlord
shall have the right to establish, and from time to time amend, and to enforce
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
within the Common Areas. 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;
to restrict parking by tenants, their officers, agents and employees to employee
parking areas; to enforce parking charges (by operation of meters or otherwise);
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. Any person using the parking area shall observe all
directional signs and arrows and any posted speed limits. In no event shall
Tenant interfere with the use and enjoyment of the parking area by other tenants
of the Project or their employees or invitees. Parking areas shall be used only
for parking vehicles. Washing, waxing, cleaning or servicing of vehicles, or the
storage of vehicles for longer than 48-hours, is prohibited unless otherwise
authorized by Landlord. 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. Tenant
shall have no right to install any fixtures, equipment or personal property in
the parking areas.
SECTION 6.5. CHANGES AND ADDITIONS BY LANDLORD. Landlord reserves the
right to make alterations or additions to the Building or the Project, or to the
attendant fixtures, equipment and Common Areas. Landlord may at any time
relocate or remove any of the various buildings, parking areas, and other Common
Areas, and may add buildings and areas to the Project from time to time. No
change shall entitle Tenant to any abatement of rent or other claim against
Landlord, provided that the change does not deprive Tenant of reasonable access
to or use of the Premises.
ARTICLE VII. MAINTAINING THE PREMISES
SECTION 7.1. TENANT'S MAINTENANCE AND REPAIR. Tenant at its sole
expense shall maintain and make all repairs and replacements necessary to keep
the Premises and the Building in the condition as existed on the Early Occupancy
Date (or on any later date that the improvements may have been installed),
excepting ordinary wear and tear, including without limitation all interior
glass, doors, door closures, hardware, fixtures, electrical, plumbing, fire
extinguisher equipment and other equipment installed in the Premises and all
Alterations constructed by Tenant pursuant to Section 7.3 below. 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. All repairs and replacements 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 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 may impose reasonable restrictions and requirements with
respect to repairs, as provided in Section 7.3, and the provisions of Section
7.4 shall apply to all repairs. Alternatively, Landlord may elect to perform any
repair and maintenance of the electrical and mechanical systems and any air
conditioning, ventilating or heating equipment serving the Premises and include
the cost thereof as part of Tenant's Share of Operating Expenses. If Tenant
fails to properly maintain and/or repair the Premises as herein provided
following Landlord's notice and the expiration of the applicable cure period (or
earlier if Landlord determines that such work must be performed prior to such
time in order to avoid damage to the Premises or Building or other detriment),
then Landlord may elect, but shall have no obligation, to perform any repair or
maintenance required hereunder on behalf of Tenant and at Tenant's expense, and
Tenant shall reimburse Landlord upon demand 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 any air conditioning, ventilating or
11
heating equipment which serves the Premises (exclusive, however, of supplemental
HVAC equipment serving only the Premises), and shall maintain in good repair the
roof, foundations, footings, the exterior surfaces of the exterior walls of the
Building (including exterior glass), and the structural, electrical and
mechanical systems, 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 to the roof,
foundations, footings, the exterior surfaces of the exterior walls of the
Building (excluding exterior glass), or structural, electrical or mechanical
systems unless and until Tenant has notified Landlord in writing 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,
repairs and replacement on the part of Landlord provided hereunder shall be
considered part of Project Costs.
SECTION 7.3. ALTERATIONS. Except as otherwise provided in this Section,
Tenant shall make no alterations, additions, fixtures or improvements
("ALTERATIONS") to the Premises or the Building without the prior written
consent of Landlord, which consent may be granted or withheld in Landlord's sole
and absolute discretion. In the event that any requested Alteration would result
in a change from Landlord's building standard materials and specifications for
the Project ("STANDARD IMPROVEMENTS"), Landlord may withhold consent to such
Alteration in its sole and absolute discretion. In the event Landlord so
consents to a change from the Standard Improvements (such change being referred
to as a "NON-STANDARD IMPROVEMENT"), Tenant shall be responsible for the cost of
replacing such Non-Standard Improvement with the applicable Standard Improvement
("REPLACEMENTS") which Replacements shall be completed prior to the Expiration
Date or earlier termination of this Lease. Landlord's consent shall not be
required for any Alterations which cost less than Two Dollars ($2.00) per square
foot of the improved portions of the Premises (excluding warehouse square
footage) during any calendar year of the Term, 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 change to the basic
floor plan of the Premises (including, without limitation, the adding of any
additional "office" square footage) or any change to any structural or
mechanical systems of the Premises, or (iv) fail to comply with any applicable
governmental requirements or require any governmental permit as a prerequisite
to the construction thereof, or (v) result in the Premises requiring building
services beyond the level normally provided to other tenants, or (vi) 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, or (vii) diminish the value of the Premises
including, without limitation, using lesser quality materials than those
existing in the Premises, or (viii) alter or-replace Standard Improvements.
Landlord may impose any reasonable condition to its consent, including but not
limited to a requirement that the installation and/or removal of all Alterations
and Replacements costing in excess of One Hundred Thousand Dollars ($100,000.00)
be covered by a lien and completion bond satisfactory to Landlord in its
reasonable discretion, and reasonable requirements as to the manner and time of
performance of such work. Landlord shall in all events, whether or not
Landlord's consent is required, have the right to approve the contractor
performing the installation and removal of Alterations and Replacements and
Tenant shall not permit any contractor not approved by Landlord to perform any
work on the Premises or on the Building. Tenant shall obtain all required
permits for the installation and removal of Alterations and Replacements and
shall perform the installation and removal of Alterations and Replacements in
compliance with all applicable laws, regulations and ordinances, including
without limitation the Americans with Disabilities Act, all covenants,
conditions and restrictions affecting the Project, and the Rules and Regulations
as described in Article XVII. Tenant understands and agrees that Landlord shall
be entitled to a supervision fee in the amount of five percent (5%) of the cost
of the Alterations. Under no circumstances shall Tenant make any Alterations or
Replacements which incorporate any Hazardous Materials, including without
limitation asbestos-containing construction materials into the Premises, the
Building or the Common Area. If any governmental entity requires, as a condition
to any proposed Alterations by Tenant, that improvements be made to the Common
Areas, and if Landlord consents to such improvements to the Common Areas (which
consent may be withheld in the sole and absolute discretion of Landlord), then
Tenant shall, at Tenant's sole expense, make such required improvements to the
Common Areas in such manner, utilizing such materials, and with such
contractors, architects and engineers as Landlord may require in its sole and
absolute discretion. Any request for Landlord's consent to any proposed
Alterations shall be made in writing and shall contain architectural plans
describing the work in detail reasonably satisfactory to Landlord. Landlord may
elect to cause its architect to review Tenant's architectural plans, and the
reasonable cost of that review shall be reimbursed by Tenant. Should the work
proposed by Tenant and consented to by Landlord modify the basic floor plan of
the Premises, then Tenant shall, at its expense, furnish Landlord with as-built
drawings and CAD disks compatible with Landlord's systems and standards. Unless
Landlord otherwise agrees in writing, all Alterations made or affixed to the
Premises, the Building or to the Common Area (excluding moveable trade fixtures
and furniture), including without limitation all Tenant Improvements constructed
pursuant to the Work Letter (except as otherwise provided in the Work Letter),
shall become the property of Landlord and shall be surrendered with the Premises
at the end of the Term; except that Landlord may, by notice to Tenant given
either prior to or following the expiration or termination of this Lease,
require Tenant to remove by the Expiration Date, or sooner termination date of
this Lease, or within ten (10) days following notice to Tenant that such removal
is required if notice is given following the Expiration Date or sooner
termination, all or any of the Alterations installed either by Tenant or by
Landlord at Tenant's request, including without limitation all Tenant
Improvements constructed pursuant to the Work Letter (except as otherwise
provided in the Work Letter), and to repair any damage to the Premises, the
Building or the
12
Common Area arising from that removal and restore the Premises to their
condition prior to making such Alterations.
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 (but
in no event later than fifteen (15) business days following such request) 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, shall be reimbursed by Tenant
upon 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 or Common Area and shall again notify Landlord that
construction has commenced, such notice to be given on the actual date on which
construction commences, so that Landlord may post and maintain notices of
nonresponsibility on the Premises or Common Area, as applicable, which notices
Landlord shall have the right to post and which TENANT agrees it shall not
disturb. TENANT shall also provide Landlord notice in writing within ten (10)
days following the date on which such work is substantially completed. The
provisions of this Section shall expressly survive the expiration or sooner
termination of this Lease.
SECTION 7.5. ENTRY AND INSPECTION. Landlord shall at all reasonable
times, upon written or oral notice (except in emergencies, when no notice shall
be required) have the right to enter the Premises to inspect them, to supply
services in accordance with this Lease, to have access to install, repair,
maintain, replace or remove all electrical and mechanical installations of
Landlord and 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 or when an uncured
Tenant Event of Default exists, 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 which unlocks all of the doors in the Premises, excluding
Tenant's 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.
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, if required by Landlord, against all Non
Standard Improvements to the Premises (as defined in Section 7.3) made by
Landlord or Tenant, and against any Alterations (as defined in Section 7.3) made
to the Premises or the Building by or on behalf of Tenant. If requested by
Landlord, Tenant shall cause its personal property, Non-Standard Improvements
and Alterations to be assessed and billed separately from the real property of
which the Premises form a part. If any taxes required to be paid by Tenant on
Tenant's personal property, Non-Standard Improvements 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, Non-Standard Improvements and/or
Alterations and if Landlord pays the taxes based upon the increased assessment,
Landlord shall have the right to require that Tenant 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 Non-Standard Improvements, 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, and
except as to "Permitted Transfers" expressly permitted without Landlord's
consent pursuant to Section 9.4, 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 the Premises, 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 9.1(b). 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 shall be void and of no force and effect and any such
attempted assignment or subletting shall constitute an Event of Default of this
Lease. Landlord shall not be deemed to have given its consent to any assignment
or subletting by any course of action other than written consent. 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(0(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
13
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.
(b) If Tenant desires to transfer an interest in this Lease or the
Premises, 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 transferee's business to be carried on in the
Premises; (iii) the terms and provisions of any proposed sublease, assignment or
other transfer, including a copy of the proposed assignment, sublease or
transfer form; (iv) evidence that the proposed assignee, subtenant or transferee
will comply with the requirements of EXHIBIT D hereto; (v) a completed
Environmental Questionnaire from the proposed assignee, subtenant or transferee;
(vi) any other information requested by Landlord and reasonably related to the
transfer and (vii) the fee described in Section 9.1(e). Except as provided in
Section 9.1 (c), Landlord shall not unreasonably withhold its consent, provided
that the parties agree that it shall be reasonable for Landlord to withhold its
consent if: (1) the use of the Premises will not be consistent with the
provisions of this Lease or with Landlord's commitment to other tenants of the
Building and Project; (2) the proposed assignee or subtenant has 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 or is subject to any enforcement order issued by any governmental
authority in connection with the use, disposal or storage of a Hazardous
Material; (3) insurance requirements of the proposed assignee or subtenant may
not be brought into conformity with Landlord's then current leasing practice;
(4) a proposed subtenant or assignee has not demonstrated to the reasonable
satisfaction of Landlord that it is financially responsible or has failed to
submit to Landlord all reasonable information as requested by Landlord
concerning the proposed subtenant or assignee, including, but not limited to, a
certified balance sheet of the proposed subtenant or assignee as of a date
within ninety (90) days of the request for Landlord's consent, 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 has not demonstrated to Landlord's reasonable satisfaction a record of
successful experience in business; (6) the proposed assignee or subtenant is an
existing tenant of the Building or Project or a prospect with whom Landlord is
negotiating to become a tenant at the Building or Project; or (7) the proposed
transfer will 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, 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 9.1. Landlord shall approve or disapprove any requested transfer within
thirty (30) days following receipt of Tenant's written request, the information
set forth above, and the fee set forth below.
(c) Notwithstanding the provisions of Section 9.1(b) above, in lieu of
consenting to a proposed assignment of this Lease or to a subletting of fifty
percent (50%) or more (in the aggregate) of the Floor Area of the Premises,
Landlord may elect, within the thirty (30) day period permitted for Landlord to
approve or disapprove a requested transfer, to (i) sublease the Premises (or the
portion proposed to be so subleased), or take an assignment of Tenant's interest
in this Lease, upon substantially 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 so
subleased or assigned with a proportionate abatement in the rent payable under
this Lease, effective thirty (30) days' following written notice by Landlord of
its election to so sublease or terminate. Landlord may thereafter, at its
option, assign, sublet or re-let any space so sublet, obtained by assignment or
obtained by termination to any third party, including without limitation the
proposed transferee of Tenant.
(d) In the event that Landlord approves the requested assignment or
subletting, 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 as
determined by Landlord, 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 within ten (10) days of Tenant's receipt thereof.
Landlord shall have the right to review or audit the books and records of
Tenant, or have such books and records reviewed or audited by an outside
accountant, to confirm any such direct out-of-pocket costs. In the event that
such direct out-of-pocket costs claimed by Tenant are overstated by more than
five percent (5%), Tenant shall reimburse Landlord for any of Landlord's costs
related to such review or audit. 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 Section 9.1(d).
(e) Tenant shall pay to Landlord a fee equal to the greater of (i)
Landlord's actual costs related to such assignment, subletting or other transfer
or (ii) Five Hundred Dollars ($500.00), to process any request by Tenant for an
assignment, subletting or other transfer under this Lease. Tenant shall pay
Landlord the sum of Five Hundred Dollars ($500.00) concurrently with Tenant's
request for consent to any assignment, subletting or other transfer, and
Landlord shall have no obligation to consider such request unless accompanied by
such payment. Tenant shall pay Landlord upon demand any costs in excess of such
payment to the extent Landlord's actual costs related to such
14
request exceeds $500.00. Such fee is hereby acknowledged as a reasonable amount
to reimburse Landlord for its costs of review and evaluation of a proposed
transfer.
SECTION 9.2. EFFECT OF TRANSFER. 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 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 assignment or
subletting shall be effective or binding on Landlord unless documentation in
form and substance satisfactory to Landlord in its reasonable discretion
evidencing the transfer, and in the case of an assignment, the assignee's
assumption of the obligations of Tenant under this Lease, is delivered to
Landlord and 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. 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 or
as a consent to any subsequent transfer.
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 there is an Event of
Default by Tenant, 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 Event of 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 for any reason,
including without limitation as the result of an Event of Default by Tenant or
by the mutual agreement of Landlord and Tenant, 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. In the event Landlord does
not elect to take over Tenant's interest in a sublease in the event of any such
termination of this Lease, such sublease shall terminate concurrently with the
termination of this Lease and such subtenant shall have no further rights under
such sublease and Landlord shall have no obligations to such subtenant.
SECTION 9.4. CERTAIN TRANSFERS. The following shall be deemed to
constitute an assignment of this Lease; (a) the sale of all or substantially all
of Tenant's assets (other than bulk sales in the ordinary course of business),
(b) if Tenant is a corporation, an unincorporated association, a limited
liability company or a partnership, the transfer, assignment or hypothecation of
any stock or interest in such corporation, association, limited liability
company 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, so long as no change in the controlling interest
of Tenant occurs as a result thereof), or (c) any other direct or indirect
change of control of Tenant, including, without limitation, change of control of
Tenant's parent company or a merger by Tenant or its parent company.
Notwithstanding the foregoing, Landlord's consent shall not be required for the
assignment of this Lease as a result of: (A) a merger by Tenant with or into
another entity or a consolidation or a reorganization of Tenant, (B) a sale of
all or substantially all of the assets or stock of Tenant, or (C) the assignment
of this Lease to an entity controlling, controlled by or under common control
with Tenant (collectively, a "PERMITTED TRANSFER"), so long as (i) the net worth
of the successor or reorganized entity after such Permitted Transfer is at least
equal to 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 Permitted Transfer, evidence of which, satisfactory to Landlord, shall be
presented to Landlord prior to such Permitted Transfer, (ii) Tenant shall
provide to Landlord, prior to such Permitted Transfer, written notice of such
Permitted Transfer and such assignment documentation and other information as
Landlord may require in connection therewith, and (iii) all of the other terms
and requirements Section 9.2 and 9.3 (but not of Section 9.1) shall apply with
respect to such Permitted Transfer.
15
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 Early
Occupancy 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
sole and absolute discretion: property insurance, subject to standard
exclusions, covering the Building and/or Project, and such other risks as
Landlord or its mortgagees may from time to time deem appropriate, including
coverage for the Tenant Improvements constructed by Landlord pursuant to the
Work Letter (if any) attached hereto, and commercial general liability coverage.
Landlord shall not be required to carry insurance of any kind on Tenant's
Alterations or on Tenant's other property, including, without limitation,
Tenant's trade fixtures, furnishings, equipment, signs and all other items of
personal property, and Landlord shall not be obligated to repair or replace that
property should damage occur. All proceeds of insurance maintained by Landlord
upon the Building and/or Project 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, 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 Early
Occupancy Date from Tenant's use or occupancy of the Premises, the Building or
the Common Areas, including, without limitation, the use by Tenant, its agents,
employees, invitees or licensees of any recreational facilities within the
Common Areas, 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, the Building or the Common
Areas, or from any Event of 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. 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. Tenant's obligations under this Section
shall not apply in the event that the claim, liability, cost or expense is
caused by the active negligence or willful misconduct of Landlord, its
authorized agents, employees or contractors.
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 and knowingly assumes the risk of for loss of or damage to any
property, 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 Acts
of God, acts of civil disobedience or insurrection, acts or omissions of third
parties and/or of other tenants within the Project or their agents, employees,
contractors, guests or invitees, fire, explosion, falling plaster, steam, gas,
electricity, water or rain which may leak or flow from or into any part of the
Premises or from the breakage, leakage, obstruction or other defects of the
pipes, sprinklers, wires, appliances, plumbing, air conditioning, electrical
works, roof, windows or other fixtures in the Building, whether the damage or
injury results from conditions arising in the Premises or in other portions of
the Building. It is understood that any such condition may require the temporary
evacuation or closure of all or a portion of the Building. Landlord shall have
no liability (including without limitation consequential damages and lost profit
or opportunity costs) and, except as provided in Sections 11.1 and 12.1 below,
there shall be no abatement of rent, by reason of any injury to or interference
with Tenant's business 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. Should Tenant elect to receive
any service or products from a concessionaire, licensee or third party tenant of
Landlord, Landlord shall have no liability for any services or products so
provided or for any breach of contract by such third party provider. 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, the Building or the Project 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 that the waiving party is entitled to proceeds for such loss or
damage under any property insurance policies carried or required to be carried
by the provisions of this Lease; provided however, that the foregoing waiver
shall not apply to the extent of Tenant's obligations to pay deductibles under
any such policies and this Lease. 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 property insurance policies contemplated by this
Lease, even though such loss or damage might be occasioned by the negligence of
such party, its agents, employees, contractors, guests or invitees.
16
ARTICLE XI. DAMAGE OR DESTRUCTION
SECTION 11.1. RESTORATION.
(a) If the Premises or the Building or a part thereof are materially
damaged by any fire, flood, earthquake or other casualty, Landlord shall have
the right to terminate this Lease upon written notice to Tenant if: (i) Landlord
reasonably determines that proceeds necessary to pay the full cost of repair is
not available from Landlord's insurance, including without limitation earthquake
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 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 uncured Event of Default by Tenant has occurred; or (iv) the
material damage occurs during the final twelve (12) months of the Term. Landlord
shall notify Tenant in writing ("LANDLORD'S NOTICE") within sixty (60) days
after the damage occurs as to (A) whether Landlord is terminating this Lease as
a result of such material damage and (B) if Landlord is not terminating this
Lease, the number of days within which Landlord has estimated that the Premises,
with reasonable diligence, are likely to be fully repaired. In the event
Landlord elects to terminate this Lease, this Lease shall terminate as of the
date specified for termination by Landlord's Notice (which termination date
shall in no event be later than sixty (60) days following the date of the
damage, or, if no such date is specified, such termination shall be the date of
Landlord's Notice).
(b) If Landlord has the right to terminate this Lease pursuant to
Section 11.1(a) and does not elect to so terminate this Lease, and provided that
at the time of Landlord's Notice neither an Event of Default exists nor has
Landlord delivered Tenant a notice of any failure by Tenant to fulfill an
obligation under this Lease which, unless cured by Tenant within the applicable
grace period, would constitute an Event of Default, then within ten (10) days
following delivery of Landlord's Notice pursuant to Section 11.1(a), Tenant may
elect to terminate this Lease by written notice to Landlord, but only if (i)
Landlord's Notice specifies that Landlord has determined that the Premises
cannot be repaired, with reasonable diligence, within two hundred seventy (270)
days after the date of damage or (ii) the casualty has occurred within the final
twelve (12) months of the Term and such material damage has a materially adverse
impact on Tenant's continued use of the Premises. If Tenant fails to provide
such termination notice within such ten (10) day period, Tenant shall be deemed
to have waived any termination right under this Section 11.1(b) or any other
applicable law.
(c) In the event that neither Landlord nor Tenant terminates this Lease
pursuant to this Section 11.1 as a result of material damage to the Building or
Premises resulting from a casualty, Landlord shall repair all material damage to
the Premises or the Building as soon as reasonably possible and this Lease shall
continue in effect for the remainder of the Term. Subject to any provision to
the contrary in the Work Letter, such repair by Landlord shall include repair of
material damage to the Tenant Improvements constructed pursuant to the Work
Letter. Landlord shall have the right, but not the obligation, to repair or
replace any other leasehold improvements made by Tenant or any Alterations (as
deemed in Section 7.3) constructed by Tenant. If Landlord elects to repair or
replace such leasehold improvements and/or Alterations, all insurance proceeds
available for such repair or replacement shall be made available to Landlord.
Landlord shall have no liability to Tenant in the event that the Premises or the
Building has not been fully repaired within the time period specified by
Landlord in Landlord's Notice to Tenant as described in Section 11.1(a).
Notwithstanding the foregoing, the repair of damage to the Premises to the
extent such damage is not material shall be governed by Sections 7.1 and 7.2.
(d) Commencing on the date of such material 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 Premises that is rendered unusable by
the damage from time to time bears to the total Floor Area of the Premises, as
determined by Landlord, but only to the extent that Tenant is then carrying the
business interruption insurance required of Tenant pursuant to EXHIBIT D.
(e) Landlord shall not be required to repair or replace any
improvements or fixtures that Tenant is obligated to repair or replace pursuant
to Section 7.1 or any other provision of this Lease and Tenant shall continue to
be obligated to so repair or replace any such improvements or fixtures,
notwithstanding any provisions to the contrary in this Article XI.
(f) 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. Tenant agrees 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.
17
ARTICLE XII. EMINENT DOMAIN
SECTION 12.1. TOTAL OR PARTIAL TAKING. If all or a material portion of
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 Building or
Project, whether or not including a portion of the Premises, is taken or sold in
lieu of taking, and if Landlord elects to restore the Building 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 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 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 thirty (30)
days.
SECTION 12.3. TAKING OF PARKING AREA. In the event there shall be a
taking of the parking area such that Landlord can no longer provide sufficient
parking to comply with this Lease, Landlord may substitute reasonably equivalent
parking in a location reasonably close to the Building; provided that if
Landlord fails to make that substitution within thirty (30) days following the
taking and if the taking materially impairs Tenant's use and enjoyment of the
Premises, Tenant may, at its option, terminate this Lease by written notice to
Landlord. 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 or any lender of
Landlord's that obtains a security interest in the Building, 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 Building, and to all
renewals, modifications, consolidations, replacements and extensions thereof;
provided, that so long as no Event of Default exists under this Lease, Tenant's
rights and privileges under this Lease and its possession and quiet enjoyment of
the Premises shall not be disturbed and this Lease shall not terminate 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 this Lease has been subordinated
pursuant to this Section. Tenant shall execute and deliver any documents or
agreements requested by Landlord or such lessor or lender which provide Tenant
with the non-disturbance protections set forth in 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. Tenant agrees that any purchaser at a foreclosure sale or lender taking
title under a deed-in-lieu of foreclosure shall not be responsible for any act
or omission of a prior landlord, shall not be subject to any offsets or defenses
Tenant may have against a prior landlord, and shall not be liable for the return
of the security deposit to the extent it is not actually received by such
purchaser or bound by any rent paid for more than the current month in which the
foreclosure occurred.
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 or any purchaser or
encumbrancer may reasonably require. Tenant's statement may be relied upon by
any prospective purchaser or encumbrancer of all or any portion of the Building
or Project.
(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
Events of Default in Landlord's performance, and (iii) not more than one month's
rental has been paid in advance.
18
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 tax
returns and financial statements, certified true, accurate and complete by the
chief financial officer of Tenant, including a balance sheet and profit and loss
statement for the most recent prior year, or, in the event Tenant is a publicly
traded corporation on a nationally recognized stock exchange, Tenant's current
financial reports filed with the Securities and Exchange Commission
(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 of the Building or Project, and to
any encumbrancer of all or any portion of the Building or Project.
(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. 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. EVENTS OF DEFAULT AND REMEDIES
SECTION 14.1. TENANT'S DEFAULTS. In addition to any other breaches of
this Lease which are defined as Events of Default in this Lease, the
occurrence of any one or more of the following events shall constitute an
Event of Default by Tenant:
(a) The failure by Tenant to make any payment of Basic Rent or
additional rent required to be made by Tenant, as and when due, where the
failure continues for a period of three (3) 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 Events of
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) The assignment, sublease, encumbrance or other transfer of this
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 when consent is required by this Lease.
(c) The discovery by Landlord that any financial statement provided by
Tenant, or by any affiliate, successor or guarantor of Tenant, was materially
false.
(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 following at least five (5) business days written
notice to Tenant.
(e) The abandonment of the Premises by Tenant.
(f) 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 this Section 14.1, 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 have committed an Event of Default if Tenant
commences the cure within thirty (30) days, and thereafter diligently pursues
the cure to completion.
(g) (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; (v) Tenant's convening of a meeting of its
creditors for the purpose of effecting a moratorium upon or composition of its
debts or (vi) the failure of Tenant to pay its material obligations to creditors
as and when they become due and payable, other than as a result of a good faith
dispute by Tenant as to the amount due to such creditors. Landlord shall not be
deemed to have knowledge of any event described in this Section 14.1(g) 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 Section 14.1(g) is contrary to applicable law, the
provision shall be of no force or effect.
19
SECTION 14.2. LANDLORD'S REMEDIES.
(a) If an Event of Default by Tenant occurs, 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
Basic 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 Basic 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 Basic 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 Event of 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 the Lease shall be defined to mean the Basic Rent, Tenant's
Share of Operating Expenses and any other sums required to be paid by Tenant to
Landlord pursuant to the terms of this Lease, including, without limitation, any
sums that may be owing from Tenant pursuant to Section 4.3 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 the Event of 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 Sections 14.2(a)(i) (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 Section 14.2(a)(i)(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 provided by this Section 14.2(a)(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 Event of Default by Tenant unless and until the Event of
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 breach or Event
of Default by Tenant. The acceptance by Landlord of rent shall not be a (i)
waiver of any preceding breach or Event of 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 Event of
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 Event of
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 breach or Event of 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
20
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 this Lease or a
surrender of the Premises.
SECTION 14.3. LATE PAYMENTS.
(a) Any payment due to Landlord under this Lease, including without
limitation Basic Rent, Tenant's Share of Operating Expenses or any other payment
due to Landlord under this Lease, that is not received by Landlord within five
(5) days following the date 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 breach or Event of Default by Tenant under this Lease. In
addition, Tenant acknowledges that the late payment by Tenant to Landlord of
Basic Rent and Tenant's Share of Operating Expenses 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 Basic Rent or
Tenant's Share of Operating Expenses due from Tenant shall not be received by
Landlord or Landlord's designee within five (5) days following the date due,
then Tenant shall pay to Landlord, in addition to the interest provided above, a
late charge, which the Tenant agrees is reasonable, 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 breach or Event of Default with
respect to the overdue amount, nor shall it prevent Landlord from exercising any
of its other rights and remedies.
(b) 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. If any
check for any payment to Landlord hereunder is returned by the bank for any
reason, such payment shall not be deemed to have been received by Landlord and
Tenant shall be responsible for any applicable late charge, interest payment and
the charge to Landlord by its bank for such returned check. Nothing in this
Section shall be construed to compel Landlord to accept Basic Rent, Tenant's
Share of Operating Expenses or any other payment from Tenant if there exists an
Event of Default unless such payment fully cures any and all such Event of
Default. Any acceptance of any such payment shall not be deemed to waive any
other right of Landlord under this Lease. Any payment by Tenant to Landlord may
be applied by Landlord, in its sole and absolute discretion, in any order
determined by Landlord to any amounts then due to Landlord.
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 payable to
Landlord, 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 in addition to any other available remedies,
Landlord may, at its election make the payment or perform the other act on
Tenant's part and Tenant hereby grants Landlord the right to enter onto the
Premises in order to carry out such performance. 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 nor shall Landlord be responsible to Tenant
for any damage caused to Tenant as the result of such performance by Landlord.
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.
SECTION 14.5. DEFAULT BY LANDLORD. Landlord shall not be deemed to be
in default in the performance of any obligation under this Lease, and Tenant
shall have no rights to take any action against Landlord, unless and until
Landlord 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. In the event of Landlord's default under this Lease,
Tenant's sole remedies shall be to seek damages or specific performance from
Landlord, provided that any damages shall be limited to Tenant's actual
out-of-pocket expenses and shall in no event include any consequential damages,
lost profits or opportunity costs.
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 expiration or earlier termination
of this Lease, or any action related to a filing for bankruptcy or
reorganization by Tenant, 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 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 Section 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
21
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. FURTHERMORE, THIS WAIVER AND RELEASE OF
ALL RIGHTS TO A JURY TRIAL IS DEEMED TO BE INDEPENDENT OF EACH AND EVERY OTHER
PROVISION, COVENANT, AND/OR CONDITION SET FORTH IN THIS LEASE.
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 from the interest of Landlord in the Project 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 Project and no action for
any deficiency may be sought or obtained by Tenant.
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. Any period of time following the Expiration Date or earlier termination
of this Lease required for Tenant to remove its property or to place the
Premises in the condition required pursuant to Section 15.3 (or for Landlord to
do so if Tenant fails to do so) shall be deemed a holding over by Tenant. If
Tenant holds over for any period after the Expiration Date (or earlier
termination) of the Term without the prior written consent of Landlord, such
possession shall constitute a tenancy at sufferance only and an Event of Default
under this Lease; 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 and terminating thirty (30) days
following delivery of written notice of termination by either Landlord or Tenant
to the other. 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) one hundred fifty percent (150%) 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 Project. The acceptance by
Landlord of monthly holdover rental in a lesser amount shall not constitute a
waiver of Landlord's right to recover the full amount due for any holdover by
Tenant, unless otherwise agreed in writing by Landlord. 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. 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. Subject to
the provisions of 7.3 of this Lease, 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. 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.
ARTICLE XVI. PAYMENTS AND NOTICES
All sums payable by Tenant to Landlord shall be deemed to be rent under
this Lease and 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
Basic Rent and the Tenant's Share of Operating Costs pursuant to Sections 4.1
and 4.2, all payments shall be due and payable within twenty (20) days after
demand. All payments
22
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 party 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, or if to Tenant, at that address or, from and after the
Early Occupancy Date, at the Premises (whether or not Tenant has departed from,
abandoned or vacated the Premises). 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 seventy-two (72) 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
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, Building, Project and Common Areas.
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, guests 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 breach of 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 Tenant fails to take possession of the Premises or
if this Lease otherwise terminates prior to the Expiration Date as the result of
failure of performance 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.
ARTICLE XIX. TRANSFER OF LANDLORD'S INTEREST
In the event of any transfer of Landlord's interest in the Premises,
the transferor shall be automatically relieved of all further obligations on the
part of Landlord, and the transferor shall be relieved of any obligation to pay
any funds in which Tenant has an interest to the extent that such funds have
been turned over, subject to that interest, to the transferee and Tenant is
notified of the transfer as required by law . No beneficiary of a 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 beneficiary under 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 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.
23
SECTION 20.6. CONTROLLING LAW/VENUE. This Lease shall be governed by
and interpreted in accordance with the laws of the State of California. Any
litigation commenced concerning any matters whatsoever arising out of or in any
way connected to this Lease shall be initiated in the Superior Court of the
county in which the Project is located.
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, other than financial inability, 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, the Building, and the Project, 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 have
the right of quiet enjoyment and use of 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.
SECTION 20.13. INTERPRETATION. This Lease shall not be construed in
favor of or against either party, but shall be construed as if both parties
prepared this Lease.
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, LIMITED LIABILITY COMPANY AND PARTNERSHIP
AUTHORITY. If Tenant is a corporation, limited liability company or partnership,
each individual executing this Lease on behalf of the corporation, limited
liability company or partnership represents and warrants that he or she is duly
authorized to execute and deliver this Lease on behalf of the corporation,
limited liability company or partnership, and that this Lease is binding upon
the corporation, limited liability company or partnership in accordance with its
terms. Tenant shall, at Landlord's request, deliver a certified copy of its
board of directors' resolution, operating agreement 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.
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.
24
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 part of this Lease.
ARTICLE XXII. MISCELLANEOUS
SECTION 22.1. NONDISCLOSURE OF LEASE TERMS. Tenant acknowledges and
agrees that the terms of this Lease are confidential and constitute proprietary
information of Landlord. Disclosure of the terms could adversely affect the
ability of Landlord to negotiate other leases and impair Landlord's relationship
with other tenants. Accordingly, Tenant agrees that it, and its partners,
officers, directors, employees and attorneys, shall not intentionally and
voluntarily disclose, by public filings or otherwise, the terms and conditions
of this Lease ("Confidential Information") to any third party, either directly
or indirectly, except for filings with the Securities and Exchange Commission
without the prior written consent of Landlord, which consent may be given or
withheld in Landlord's sole and absolute discretion. The foregoing restriction
shall not apply if either: (i) Tenant is required to disclose the Confidential
Information in response to a subpoena or other regulatory, administrative or
court order, (ii) independent legal counsel to Tenant delivers a written opinion
to Landlord that Tenant is required to disclose the Confidential Information to,
or file a copy of this Lease with, any governmental agency or any stock
exchange; provided however, that in such event, Tenant shall, before making any
such disclosure (A) provide Landlord with prompt written notice of such required
disclosure, (B) at Tenant's sole cost, take all reasonable legally available
steps to resist or narrow such requirement, including without limitation
preparing and filing a request for confidential treatment of the Confidential
Information and (C) if disclosure of the Confidential Information is required by
subpoena or other regulatory, administrative or court order, Tenant shall
provide Landlord with as much advance notice of the possibility of such
disclosure as practical so that Landlord may attempt to stop such disclosure or
obtain an order concerning such disclosure. The form and content of a request by
Tenant for confidential treatment of the Confidential Information shall be
provided to Landlord at least five (5) business days before its submission to
the applicable governmental agency or stock exchange and is subject to the prior
written approval of Landlord. In addition, Tenant may disclose the terms of this
Lease to prospective assignees of this Lease and prospective subtenants under
this Lease with whom Tenant is actively negotiating such an assignment or
sublease.
SECTION 22.2. [Intentionally Deleted]
SECTION 22.3. CHANGES REQUESTED BY LENDER. If, in connection with
obtaining financing for the Project, 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 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 Building 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
Building 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 Building 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 a default exists under such beneficiary's deed of trust.
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.
25
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 or the Project. Tenant assumes
all responsibility for the protection of Tenant, its employees, 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 Project
or any part thereof, in which event the cost thereof shall be included within
the definition of Project Costs.
LANDLORD: TENANT:
THE IRVINE COMPANY TELENETICS CORPORATION
a California corporation
By: /S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /S/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------- --------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Senior Vice Name (Print): ▇▇▇▇▇ ▇. ▇▇▇▇▇
President, Leasing Operations Title (Print): CEO, President & CFO
By: /S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /S/ ▇▇▇▇ ▇▇▇▇▇
---------------------------------- --------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President Name: ▇▇▇▇ ▇▇▇▇▇
Operations, Office Properties Title: Secretary
26
[LOGO] THE IRVINE COMPANY
▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
[FLOOR PLAN DRAWING APPEARS HERE]
EXHIBIT A
27
EXHIBIT B
THE IRVINE COMPANY - INVESTMENT PROPERTIES GROUP
HAZARDOUS MATERIAL SURVEY FORM
The purpose of this form is to obtain information regarding the use of
hazardous substances on Investment Properties Group ("IPG") property.
Prospective tenants and contractors should answer the questions in light of
their proposed activities on the premises. Existing tenants and contractors
should answer the questions as they relate to ongoing activities on the premises
and should update any information previously submitted.
If additional space is needed to answer the questions, you may attach
separate sheets of paper to this form. When completed, the form should be sent
to the following address:
THE IRVINE COMPANY MANAGEMENT OFFICE
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Your cooperation in this matter is appreciated. If you have any
questions, please call your property manager at (▇▇▇) ▇▇▇-▇▇▇▇ for assistance.
1. GENERAL INFORMATION.
Name of Responding Company:____________________________________________
Check all that apply: Tenant ( ) Contractor ( )
Prospective ( ) Existing ( )
Mailing Address:_______________________________________________________
Contact person & Title:________________________________________________
Telephone Number: ( )___________________
CURRENT TIC TENANT(S):
----------------------
Address of Lease Premises:_____________________________________________
Length of Lease or Contract Term:______________________________________
PROSPECTIVE TIC TENANT(S):
--------------------------
Address of Leased Premises:____________________________________________
Address of Current Operations:_________________________________________
Describe the proposed operations to take place on the property,
including principal products manufactured or services to be conducted.
Existing tenants and contractors should describe any proposed changes
to ongoing operations.
2. HAZARDOUS MATERIALS. For the purposes of this Survey Form, the term
"hazardous material" means any raw material, product or agent
considered hazardous under any state or federal law. The term does not
include wastes which are intended to be discarded.
2.1 Will any hazardous materials be used or stored on site?
Chemical Products Yes ( ) No
Biological Hazards/
Infectious Wastes Yes ( ) No
Radioactive Materials Yes ( ) No
Petroleum Products Yes ( ) No
1
2.2 List any hazardous materials to be used or stored, the
quantities that will be on-site at any given time, and the
location and method of storage (e.g., bottles in storage
closet on the premises).
Location and Method
Hazardous Materials of Storage Quantity
------------------- ---------- --------
___________________ ___________________ ___________________
___________________ ___________________ ___________________
___________________ ___________________ ___________________
___________________ ___________________ ___________________
2.3 Is any underground storage of hazardous materials proposed or
currently conducted on the premises? Yes ( ) No ( )
If yes, describe the materials to be stored, and the size and
construction of the tank. Attach copies of any permits
obtained for the underground storage of such substances.
_____________________________________________________________
_____________________________________________________________
_____________________________________________________________
3. HAZARDOUS WASTE. For the purposes of this Survey Form, the term
"hazardous waste" means any waste (including biological, infectious or
radioactive waste) considered hazardous under any state or federal law,
and which is intended to be discarded.
3.1 List any hazardous waste generated or to be generated on the
premises, and indicate the quantity generated on a monthly
basis.
Location and Method
Hazardous Materials of Storage Quantity
------------------- ---------- --------
___________________ ___________________ ___________________
___________________ ___________________ ___________________
___________________ ___________________ ___________________
___________________ ___________________ ___________________
3.2 Describe the method(s) of disposal (including recycling) for
each waste. Indicate where and how often disposal will take
place.
Location and Method
Hazardous Materials of Storage Quantity
------------------- ---------- --------
___________________ ___________________ ___________________
___________________ ___________________ ___________________
___________________ ___________________ ___________________
___________________ ___________________ ___________________
3.3 Is any treatment or processing of hazardous, infectious or
radioactive wastes currently conducted or proposed to be
conducted on the premise? Yes ( ) No ( )
If yes, please describe any existing or proposed treatment
methods.
_____________________________________________________________
_____________________________________________________________
_____________________________________________________________
3.4 Attach copies of any hazardous waste permits or licenses
issued to your company with respect to its operations on the
premises.
2
4. SPILLS
4.1 During the past year, have any spills or releases of hazardous
materials occurred on the premises? Yes ( ) No ( )
If so, please describe the spill and attach the results of any
testing conducted to determine the extent of such spills.
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
4.2 Were any agencies notified in connection with such spills?
Yes ( ) No ( )
If so, attach copies of any spill reports or other
correspondence with regulatory agencies.
4.3 Were any clean-up actions undertaken in connection with the
spills? Yes ( ) No ( )
If so, briefly describe the actions taken. Attach copies of
any clearance letters obtained from any regulatory agencies involved
and the results of any final soil or groundwater sampling done upon
completion of the clean-up work.
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
5. WASTEWATER TREATMENT/DISCHARGE
5.1 Do you discharge industrial wastewater to:
_____storm drain? _____sewer?
_____surface water? _____no industrial discharge?
5.2 Is your industrial wastewater treated before discharge?
Yes ( ) No ( )
If yes, describe the type of treatment conducted.
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
5.3 Attach copies of any wastewater discharge permits issued to
your company with respect to its operations on the premises.
6. AIR DISCHARGES.
6.1 Do you have any air filtration systems or stacks that
discharge into the air? Yes ( ) No ( )
6.2 Do you operate any equipment that require air emissions
permits? Yes ( ) No ( )
6.3 Attach copies of any air discharge permits pertaining to these
operations.
7. HAZARDOUS MATERIALS DISCLOSURES.
7.1 Does your company handle an aggregate of at least 500 pounds,
55 gallons or 200 cubic feet of hazardous material at any
given time? Yes ( ) No ( )
7.2 Has your company prepared a Hazardous Materials Disclosure -
Chemical Inventory and Business Emergency Plan or similar
disclosure document pursuant to state or county requirements?
Yes ( ) No ( )
If so, attach a copy.
3
7.3 Are any of the chemicals used in your operations regulated
under Proposition 65?
If so, describe the procedures followed to comply with these
requirements.
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
7.4 Is your company subject to OSHA Hazard Communication Standard
Requirements? Yes ( ) No ( )
If so, describe the procedures followed to comply with these
requirements.
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
8. ANIMAL TESTING.
8.1 Does your company bring or intend to bring live animals onto
the premises for research or development purposes?
Yes ( ) No ( )
If so, describe the activity.
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
8.2 Does your company bring or intend to bring animal body parts
or bodily fluids onto the premises for research or development
purposes? Yes ( ) No ( )
If so, describe the activity.
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
9. ENFORCEMENT ACTIONS, COMPLAINTS.
9.1 Has your company ever been subject to any agency enforcement
actions, administrative orders, lawsuits, or consent orders
regarding environmental compliance or health and safety?
Yes ( ) No ( )
If so, describe the actions and any continuing obligations
imposed as a result of these actions.
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
9.2 Has your company ever received any request for information,
notice of violation or demand letter, complaint, or inquiry
regarding environmental compliance or health and safety?
Yes ( ) No ( )
9.3 Has an environmental audit ever been conducted which concerned
operations or activities on premises occupied by you?
Yes ( ) No ( )
4
9.4 If you answered "yes" to any questions in this section,
describe the environmental action or complaint and any
continuing compliance obligation imposed as a result of the
same.
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
__________________________________
__________________________________
By: __________________________________
Name:_____________________________
Title:____________________________
Date:_____________________________
5
EXHIBIT C
---------
LANDLORD'S DISCLOSURES
SPECTRUM
The capitalized terms used and not otherwise defined in this Exhibit
shall have the same definitions as set forth in the Lease. The provisions of
this Exhibit shall supersede any inconsistent or conflicting provisions of the
Lease.
1. Landlord has been informed that the El Toro Marine Corps Air Station
(MCAS) has been listed as a Federal Superfund site as a result of chemical
releases occurring over many years of occupancy. Various chemicals including jet
fuel, motor oil and solvents have been discharged in several areas throughout
the MCAS site. A regional study conducted by the Orange County Water District
has estimated that groundwaters beneath more than 2,900 acres have been impacted
by Trichloroethlene (TCE), an industrial solvent. There is a potential that this
substance may have migrated into the ground water underlying the Premises. The
U.S. Environmental Protection Agency, the Santa ▇▇▇ Region Quality Control
Board, and the Orange County Health Care Agency are overseeing the
investigation/cleanup of this contamination. To the Landlord's current actual
knowledge, the ground water in this area is used for irrigation purposes only,
and there is no practical impediment to the use or occupancy of the Premises due
to the El Toro discharges.
EXHIBIT D
---------
TENANT'S INSURANCE
The following requirements for Tenant's insurance shall be in effect at
the Building, and Tenant shall also cause any subtenant to comply with these
requirements. Landlord reserves the right to adopt reasonable nondiscriminatory
modifications and additions to these insurance requirements. Tenant agrees to
obtain and present evidence to Landlord that it has fully complied with the
insurance requirements.
1. Tenant shall, at its sole cost and expense, commencing on the date
Tenant is given access to the Premises for any purpose and during the entire
Term, procure, pay for and keep in full force and effect: (i) commercial general
liability insurance with respect to the Premises and the operations of or on
behalf of Tenant in, on or about the Premises, including but not limited to
coverage for personal injury, independent contractors, broad form property
damage, fire and water legal liability, products liability (if a product is sold
from the Premises), and liquor law liability (if alcoholic beverages are sold,
served or consumed within the Premises), which policy(ies) shall be written on
an "occurrence" basis and for not less than the amount set forth in Item 13 of
the Basic Lease Provisions, with a combined single limit (with a $50,000 minimum
limit on fire legal liability) per occurrence for bodily injury, death, and
property damage liability, or the current limit of liability carried by Tenant,
whichever is greater, and subject to such increases in amounts as Landlord may
determine from time to time; (ii) workers' compensation insurance coverage as
required by law, together with employers' liability insurance of at least One
Million Dollars ($1,000,000.00); (iii) with respect to Alterations and the like
required or permitted to be made by Tenant under this Lease, builder's risk
insurance, in an amount equal to the replacement cost of the work; (iv)
insurance against fire, vandalism, malicious mischief and such other additional
perils as may be included in a standard "special form" policy, insuring Tenant's
Alterations, trade fixtures, furnishings, equipment and items of personal
property of Tenant located in the Premises, in an amount equal to not less than
ninety percent (90%) of their actual replacement cost (with replacement cost
endorsement); and (v) business interruption insurance in amounts satisfactory to
cover one (1) year of loss. In no event shall the limits of any policy be
considered as limiting the liability of Tenant under this Lease.
2. In the event Landlord consents to Tenant's use, generation or
storage of Hazardous Materials on, under or about the Premises pursuant to
Section 5.3 of this Lease, Landlord shall have the continuing right to require
Tenant, at Tenant's sole cost and expense (provided the same is available for
purchase upon commercially reasonable terms), to purchase insurance specified
and approved by Landlord, with coverage not less than Five Million Dollars
($5,000,000.00), insuring (i) any Hazardous Materials shall be removed from the
Premises, (ii) the Premises shall be restored to a clean, healthy, safe and
sanitary condition, and (iii) any liability of Tenant, Landlord and Landlord's
officers, directors, shareholders, agents, employees and representatives,
arising from such Hazardous Materials.
3. All policies of insurance required to be carried by Tenant pursuant
to this EXHIBIT D containing a deductible exceeding Ten Thousand Dollars
($10,000.00) per occurrence must be approved in writing by Landlord prior to the
issuance of such policy. Tenant shall be solely responsible for the payment of
all deductibles.
4. All policies of insurance required to be carried by Tenant pursuant
to this EXHIBIT D shall be written by responsible insurance companies authorized
to do business in the State of California and with a general policyholder rating
of not less than "A-" and financial rating of not less than "VIII" in the most
current Best's Insurance Report. Any insurance required of Tenant may be
furnished by Tenant under any blanket policy carried by it or under a separate
policy. A true and exact copy of each paid up policy evidencing the insurance
(appropriately authenticated by the insurer) or a certificate of insurance,
certifying that the policy has been issued, provides the coverage required by
this EXHIBIT D and contains the required provisions, together with endorsements
acceptable to Landlord evidencing the waiver of subrogation and additional
insured provisions required below, shall be delivered to Landlord prior to the
date Tenant is given the right of possession of the Premises. Proper evidence of
the renewal of any insurance coverage shall also be delivered to Landlord not
less than thirty (30) days prior to the expiration
of the coverage. Landlord may at any time, and from time to time, inspect and/or
copy any and all insurance policies required by this Lease.
5. Each policy evidencing insurance required to be carried by Tenant
pursuant to this EXHIBIT D shall contain the following provisions and/or clauses
satisfactory to Landlord: (i) with respect to Tenant's commercial general
liability insurance, a provision that the policy and the coverage provided shall
be primary and that any coverage carried by Landlord shall be noncontributory
with respect to any policies carried by Tenant, together with a provision
including Landlord, the Additional Insureds identified in Item 11 of the Basic
Lease Provisions, and any other parties in interest designated by Landlord, as
additional insureds; (ii) except with respect to Tenant's commercial general
liability insurance, a waiver by the insurer of any right to subrogation against
Landlord, its agents, employees, contractors and representatives which arises or
might arise by reason of any payment under the policy or by reason of any act or
omission of Landlord, its agents, employees, contractors or representatives; and
(iii) a provision that the insurer will not cancel or change the coverage
provided by the policy without first giving Landlord thirty (30) days prior
written notice.
6. In the event that Tenant fails to procure, maintain and/or pay for,
at the times and for the durations specified in this EXHIBIT D, any insurance
required by this EXHIBIT D, or fails to carry insurance required by any
governmental authority, Landlord may at its election procure that insurance and
pay the premiums, in which event Tenant shall repay Landlord all sums paid by
Landlord, together with interest at the maximum rate permitted by law and any
related costs or expenses incurred by Landlord, within twenty (20) days
following Landlord's written demand to Tenant.
NOTICE TO TENANT: IN ACCORDANCE WITH THE TERMS OF THIS LEASE, TENANT
MUST PROVIDE EVIDENCE OF THE REQUIRED INSURANCE TO LANDLORD'S MANAGEMENT AGENT
PRIOR TO BEING AFFORDED ACCESS TO THE PREMISES.
EXHIBIT E
---------
RULES AND REGULATIONS
This Exhibit sets forth the rules and regulations governing Tenant's
use of the Premises leased to Tenant pursuant to the terms, covenants and
conditions of the Lease to which this Exhibit is attached and therein made part
thereof. In the event of any conflict or inconsistency between this Exhibit and
the Lease, the Lease shall control.
1. Tenant shall not place anything or allow anything to be placed near
the glass of any window, door, partition or wall, which may appear unsightly
from outside the Premises.
2. The walls, walkways, sidewalks, entrance passages, elevators,
stairwells, courts and vestibules shall not be obstructed or used for any
purpose other than ingress and egress of pedestrian travel to and from the
Premises, and shall not be used for smoking, loitering or gathering, or to
display, store or place any merchandise, equipment or devices, or for any other
purpose. The walkways, sidewalks, entrance passageways, courts, vestibules and
roof are not for the use of the general public and Landlord shall in all cases
retain the right to control and prevent access thereto by all persons whose
presence in the judgment of the Landlord shall be prejudicial to the safety,
character, reputation and interests of the Building and its tenants, provided
that nothing herein contained shall be construed to prevent such access to
persons with whom Tenant normally deals in the ordinary course of Tenant's
business unless such persons are engaged in illegal activities. Smoking is
permitted outside the building and within the project only in areas designated
by Landlord. No tenant or employee or invitee or agent of any tenant shall be
permitted upon the roof of the Building without prior written approval from
Landlord.
3. No awnings or other projection shall be attached to the outside
walls of the Building. No security bars or gates, curtains, blinds, shades or
screens shall be attached to or hung in, or used in connection with, any window
or door of the Premises without the prior written consent of Landlord. Neither
the interior nor exterior of any windows shall be coated or otherwise
sunscreened without the express written consent of Landlord.
4. Tenant shall not ▇▇▇▇, nail, paint, drill into, or in any way deface
any part of the Premises or the Building except to affix standard pictures or
other wall hangings on the interior walls of the premises so long as they are
not visible from the exterior of the building. Tenant shall not lay linoleum,
tile, carpet or other similar floor covering so that the same shall be affixed
to the floor of the Premises in any manner except as approved by Landlord in
writing. The expense of repairing any damage resulting from a violation of this
rule or removal of any floor covering shall be borne by Tenant.
5. The toilet rooms, urinals, wash bowls and other plumbing apparatus
shall not be used for any purpose other than that for which they were
constructed and no foreign substance of any kind whatsoever shall be thrown
therein. Any pipes or tubing used by Tenant to transmit water to an appliance or
device in the Premises must be made of copper or stainless steel, and in no
event shall plastic tubing be used for that purpose. The expense of any
breakage, stoppage or damage resulting from the violation of this rule shall be
borne by the tenant who, or whose employees or invitees, caused it.
6. Landlord shall direct electricians as to the manner and location of
any future telephone wiring. No boring or cutting for wires will be allowed
without the prior consent of Landlord. The locations of the telephones, call
boxes and other office equipment affixed to the Premises shall be subject to the
prior written approval of Landlord.
7. The Premises shall not be used for manufacturing or for the storage
of merchandise except as such storage may be incidental to the permitted use of
the Premises. No exterior storage shall be allowed at any time without the prior
written approval of Landlord. The Premises shall not be used for cooking
(excluding microwave oven, coffee maker, or other UL-listed appliance) or
washing clothes without the prior written consent of Landlord, or for lodging or
sleeping or for any immoral or illegal purposes.
8. Tenant shall not make, or permit to be made, any unseemly or
disturbing noises or disturb or interfere with occupants of this or neighboring
buildings or premises or those having business with them, whether by the use of
any musical instrument, radio, phonograph, noise, or otherwise. Tenant, shall
not use, keep or permit to be used, or kept, any foul or obnoxious gas or
substance in the Premises or permit or suffer the Premises to be used or
occupied in any manner offensive or objectionable to Landlord or other occupants
of this or neighboring buildings or premises by reason of any odors, fumes or
gases.
9. No animals, except for seeing eye dogs, shall be permitted at any
time within the Premises.
10. Tenant shall not use the name of the Building or the Project in
connection with or in promoting or advertising the business of Tenant, except as
Tenant's address, without the written consent of Landlord. Landlord shall have
the right to prohibit any advertising by any Tenant which, in Landlord's
reasonable opinion, tends to impair the reputation of the Project or its
desirability for its intended uses, and upon written notice from Landlord any
Tenant shall refrain from or discontinue such advertising.
11. Canvassing, soliciting, peddling, parading, picketing,
demonstrating or otherwise engaging in any conduct that unreasonably impairs the
value or use of the Premises or the Project are prohibited and each Tenant shall
cooperate to prevent the same. Landlord shall have full and absolute authority
to regulate or prohibit the entrance to the Premises of any vendor, supplier,
purveyor, petitioner, proselytizer or other similar person if, in the good faith
judgment of Landlord, such person will be involved in general solicitation
activities, or the proselytizing, e
petitioning, or disturbance of other tenants or their customers or invitees, or
engaged or likely to engage in conduct which may in Landlord's opinion distract
from the use of the Premises for its intended purpose. Notwithstanding the
foregoing, Landlord reserves the absolute right and discretion to limit or
prevent access to the Buildings by any food or beverage vendor, whether or not
invited by Tenant, and Landlord may condition such access upon the vendor's
execution of an entry permit agreement which may contain provisions for
insurance coverage and/or the payment of a fee to Landlord.
12. No equipment of any type shall be placed on the Premises which in
Landlord's opinion exceeds the load limits of the floor or otherwise threatens
the soundness of the structure or improvements of the Building.
13. Regular building hours of operation are from 6:00 AM to 6:00 PM
Monday through Friday and 9:00 AM to 1:00 PM on Saturday. No air conditioning
unit or other similar apparatus shall be installed or used by any Tenant without
the prior written consent of Landlord.
14. The entire Premises, including vestibules, entrances, parking
areas, doors, fixtures, windows and plate glass, shall at all times be
maintained in a safe, neat and clean condition by Tenant. All trash, refuse and
waste materials shall be regularly removed from the Premises by Tenant and
placed in the containers at the locations designated by Landlord for refuse
collection. All cardboard boxes must be "broken down" prior to being placed in
the trash container. All styrofoam chips must be bagged or otherwise contained
prior to placement in the trash container, so as not to constitute a nuisance.
Pallets must be immediately disposed of by tenant and may not be disposed of in
the Landlord provided trash container or enclosures. Pallets may be neatly
stacked in an exterior location on a temporary basis (no longer than 5 days) so
long as Landlord has provided prior written approval. The burning of trash,
refuse or waste materials is prohibited.
15. Tenant shall use at Tenant's cost such pest extermination
contractor as Landlord may direct and at such intervals as Landlord may require.
16. All keys for the Premises shall be provided to Tenant by Landlord
and Tenant shall return to Landlord any of such keys so provided upon the
termination of the Lease. Tenant shall not change locks or install other locks
on doors of the Premises, without the prior written consent of Landlord. In the
event of loss of any keys furnished by Landlord for Tenant, Tenant shall pay to
Landlord the costs thereof. Upon the termination of its tenancy, Tenant shall
deliver to Landlord all the keys to lobby(s), suite(s) and telephone &
electrical room(s) which have been furnished to Tenant or which Tenant shall
have had made.
17. No person shall enter or remain within the Project while
intoxicated or under the influence of liquor or drugs. Landlord shall have the
right to exclude or expel from the Project any person who, in the absolute
discretion of Landlord, is under the influence of liquor or drugs.
18. The moving of large or heavy objects shall occur only between those
hours as may be designated by, and only upon previous written notice to,
Landlord, and the persons employed to move those objects in or out of the
Building must be reasonably acceptable to Landlord. Without limiting the
generality of the foregoing, no freight, furniture or bulky matter of any
description shall be received into or moved out of the lobby of the Building or
carried in the elevator.
19. Tenant shall not install equipment, such as but not limited to
electronic tabulating or computer equipment, requiring electrical or air
conditioning service in excess of that to be provided by Landlord under the
Lease without prior written consent of Landlord.
20. Landlord may from time to time grant other tenants of the project
individual and temporary variances from these Rules, provided that any variance
does not have a material adverse effect on the use and enjoyment of the Premises
by Tenant.
21. Landlord reserves the right to amend or supplement the foregoing
Rules and Regulations and to adopt and promulgate additional reasonable rules
and regulations applicable to the Premises. Notice of such rules and regulations
and amendments and supplements thereto, if any, shall be given to the Tenant.
EXHIBIT X
---------
WORK LETTER
BUILD TO SUIT
The tenant improvement work (the "TENANT IMPROVEMENTS" and the "TENANT
IMPROVEMENTS WORK") shall consist of the work, including work in place as of the
date hereof, required to complete the improvements to the Premises as shown in
this certain "First Floor Pricing Plan" (DD2.1) and "Second Floor Pricing Plan"
(DD2.2) both dated May 4, 2004 (collectively, the "PLAN"), prepared by LPA
Associates. The Tenant Improvement Work shall be performed by a contractor
selected by Landlord and in accordance with the requirements and procedures set
forth below.
I. ARCHITECTURAL AND CONSTRUCTION PROCEDURES.
A. Landlord shall cause its contractor to construct the Tenant
Improvements shown on the Plan at Landlord's sole cost and expense. In addition,
Landlord shall pay up to the amount of the "Landlord's Contribution" (as defined
below) towards any additional cost resulting from a "Change" (as hereinafter
defined) requested by Tenant. Unless otherwise specified in the Plan or in any
Change approved by Landlord, all materials, specifications and finishes utilized
in constructing the Tenant Improvements shall be Landlord's building standard
tenant improvements, materials and specifications for the Project ("STANDARD
IMPROVEMENTS"). Should Landlord submit any additional plans, equipment
specification sheets, or other matters to Tenant for approval or completion in
connection with the Tenant Improvement Work, Tenant shall respond in writing, as
appropriate, within five (5) days unless a shorter period is provided herein.
Tenant shall not unreasonably withhold its approval of any matter, and any
disapproval shall be limited to items not previously approved by Tenant in the
Plan or otherwise.
B. Subject to Landlord's approval rights contained in Section I.C.
below, Tenant shall have the right to request a change ("CHANGE") to the Tenant
Improvements Work. Following Landlord's approval of a Change, Landlord shall
advise Tenant by written change order as soon as is practical of any increase in
the cost to complete the Tenant Improvement Work that such Change would cause.
Tenant shall approve or disapprove such change order in writing within five (5)
business days following Tenant's receipt of such change order. The cost of any
such approved Change shall be borne as between the parties as provided in
Section II.A. below.
C. Landlord shall not unreasonably withhold its consent for any Change
requested by Tenant, provided that any request for a Change from Landlord's
Standard Improvements ("NON-STANDARD IMPROVEMENTS") may be withheld in
Landlord's sole discretion. Landlord may in any event disapprove a Change if
Landlord determines that the requested improvements: (i) are of a lesser quality
than the corresponding improvements previously approved by Landlord, (ii) fail
to conform to applicable governmental requirements, (iii) would result in the
Premises requiring building services beyond the level normally provided to other
tenants, (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 in or serving the Building, or (v) would have an adverse
aesthetic impact to the Premises or cause additional expenses to Landlord in
reletting the Premises. Unless Landlord otherwise agrees in writing, in its sole
discretion: (a) the cost to complete any Non-Standard Improvements shall be
borne by Tenant, and (b) all Standard Improvements and Non-Standard Improvements
shall become the property of Landlord and shall be surrendered with the Premises
at the end of the Term; except that Landlord may, by notice to Tenant given
either prior to or following the expiration or termination of the Lease, require
Tenant either to remove all or any of the Non-Standard Improvements, to repair
any damage to the Premises or the Common Area arising from such removal, and to
replace such Non-Standard Improvements with the applicable Standard Improvement,
or to reimburse Landlord for the reasonable cost of such removal, repair and
replacement upon demand. Any such removals, repairs and replacements by Tenant
shall be completed by the Expiration Date, or sooner termination of this Lease,
or within ten (10) days following notice to Tenant if such notice is given
following the Expiration Date or sooner termination.
F. Tenant hereby designates__________________________________
("TENANT'S CONSTRUCTION REPRESENTATIVE"), Telephone No. (_____)________________,
as its representative, agent and attorney-in- fact for all matters related to
the Tenant Improvement Work, including but not by way of limitation, for
purposes of receiving notices, approving submittals and issuing requests for
Changes, and Landlord shall be entitled to rely upon authorizations and
directives of such person(s) as if given directly by Tenant. The foregoing
authorization is intended to provide assurance to Landlord that it may. rely
upon the directives and decision making of the Tenant's Construction
Representative with respect to the Tenant Improvement Work and is not intended
to limit or reduce Landlord's right to reasonably rely upon any decisions or
directives given by other officers or representatives of Tenant. Tenant may
amend the designation of its Tenant's Construction Representative(s) at any time
upon delivery of written notice to Landlord.
II. COST OF THE TENANT IMPROVEMENTS WORK
A. Landlord shall provide an allowance towards the cost of constructing
any Change(s) approved by the parties to the Tenant Improvement Work in the
amount of Eighteen Thousand Eight Hundred Twenty Eight Dollars ($18,828.00) (the
"LANDLORD'S CONTRIBUTION"), based on $1.00 per usable square foot of the
Premises, with any excess cost of the approved Change(s) to be borne solely by
Tenant It is further understood and agreed that Landlord's construction manager
shall be entitled to a supervision/administrative fee equal to five percent (5%)
of the cost of the approved Change(s), which fee shall be paid from the
Landlord's Contribution.
B. Tenant shall pay the amount by which aggregate cost of completing
the Change(s) approved by the parties for the Tenant Improvements Work shall
exceed the Landlord's Contribution. The amounts to be paid by Tenant for the
Tenant Improvements pursuant to this Section II.B. are sometimes cumulatively
referred to herein as the "TENANT'S CONTRIBUTION".
C. Tenant shall pay any portion of the Tenant's Contribution within ten
(10) days following notice from Landlord. If Tenant defaults in the payment of
any sums due under this Work Letter, Landlord shall (in addition to all other
remedies) have the same rights as in the case of Tenant's failure to pay rent
under the Lease, including, without limitation, the right to terminate this
Lease and recover damages from Tenant and/or to charge a late payment fee and to
collect interest on delinquent payments, and Landlord may (but shall not be
required to) suspend the Tenant Improvement Work following such default.
III. DISPUTE RESOLUTION
A. All claims or disputes between Landlord and Tenant arising out of,
or relating to, this Work Letter shall be decided by the JAMS/ENDISPUTE
("JAMS"), or its successor, with such arbitration to be held in Orange County,
California, unless the parties mutually agree otherwise. Within ten (10)
business days following submission to JAMS, JAMS shall designate three
arbitrators and each party may, within five (5) business days thereafter, veto
one of the three persons so designated. If two different designated arbitrators
have been vetoed, the third arbitrator shall hear and decide the matter. If less
than two (2) arbitrators are timely vetoed, JAMS shall select a single
arbitrator from the non-vetoed arbitrators originally designated by JAMS, who
shall hear and decide the matter. Any arbitration pursuant to this section shall
be decided within thirty (30) days of submission to JAMS. The decision of the
arbitrator shall be final and binding on the parties. All costs associated with
the arbitration shall be awarded to the prevailing party as determined by the
arbitrator.
B. Notice of the demand for arbitration by either party to the Work
Letter shall be filed in writing with the other party to the Work Letter and
with JAMS and shall be made within a reasonable time after the dispute has
arisen. 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 arising out of or relating to this Work Letter shall
include, by consolidation, joinder or in any other manner, any person or entity
not a party to the Work Letter unless (1) such person or entity is substantially
involved in a common question of fact or law, (2) the presence of such
person or entity is required if complete relief is to be accorded in the
arbitration, or (3) the interest or responsibility of such person or entity in
the matter is not insubstantial.
C. The agreement herein among the parties to arbitrate shall be
specifically enforceable under prevailing law. The agreement to arbitrate
hereunder shall apply only to disputes arising out of, or relating to, this Work
Letter, and shall not apply to other matters of dispute under the Lease except
as may be expressly provided in the Lease.
D. It is understood that all or a portion of the Tenant Improvements
may be done during Tenant's occupancy of the Premises. In this regard, Tenant
agrees to assume any risk of injury, loss or damage to Tenant to the extent not
the result of Landlord's negligence or willful misconduct. While Landlord agrees
to employ construction practices reasonably intended to minimize disruptions to
the operation of Tenant's business in the Premises, Tenant acknowledges and
agrees that some disruptions may occur during the course of construction of the
Tenant Improvements, and in no event shall rent ▇▇▇▇▇ as the result of the
construction of the Tenant Improvements. Tenant further agrees that no rental
abatement shall result while the Tenant Improvements are completed in the
Premises.