Lease between
South San ▇▇▇▇ Interests, a California Limited Partnership
and
Ahead Technology, Inc., a Delaware Corporation
Section Page No.
------- --------
Parties ............................................................... 3
Premises .............................................................. 3
Use ................................................................... 3
Term and Rental ....................................................... 3
Security Deposit ...................................................... 4
Late Charges .......................................................... 4
Construction and Possession ........................................... 5
Acceptance of Possession and Covenants to Surrender ................... 5
Uses Prohibited ....................................................... 6
Alterations and Additions ............................................. 6
Maintenance of Premises ............................................... 7
Hazard Insurance ...................................................... 8
Tenant's Use ........................................................ 8
Landlord's Insurance ................................................ 8
Tenant's Insurance .................................................. 8
Waiver .............................................................. 8
Taxes ................................................................. 9
Utilities ............................................................. 9
Abandonment ........................................................... 9
Free From Liens ....................................................... 9
Compliance With Governmental Regulations .............................. 10
Toxic Waste and Environmental Damage .................................. 10
Tenant's Responsibility ............................................. 10
Tenant's Indemnity Regarding Hazardous Materials .................... 10
Landlord's Indemnity Regarding Hazardous Materials .................. 11
Actual Release by Tenant ............................................ 11
Environmental Monitoring ............................................ 12
Indemnity ............................................................. 12
Advertisements and Signs .............................................. 13
Attorney's Fees ....................................................... 13
Tenant's Default ...................................................... 13
Remedies ............................................................ 14
Right to Re-enter ................................................... 15
Abandonment ......................................................... 15
No Termination ...................................................... 15
Surrender of Lease .................................................... 15
Habitual Default ...................................................... 16
Landlord's Default .................................................... 16
Notices ............................................................... 16
Section Page No.
------- --------
Entry by Landlord .................................................... 16
Destruction of Premises .............................................. 17
Destruction by an Insured Casualty ................................. 17
Destruction by an Uninsured Casualty ............................... 18
Assignment or Sublease ............................................... 18
Consent by Landlord ................................................ 18
Assignment or Subletting Consideration ............................. 19
No Release ......................................................... 19
Effect of Default .................................................. 19
Condemnation ......................................................... 20
Effects of Conveyance ................................................ 20
Subordination ........................................................ 21
Waiver ............................................................... 21
Holding Over ......................................................... 22
Successors and Assigns ............................................... 22
Estoppel Certificates ................................................ 22
Option to Extend the Lease Term ...................................... 22
Grant and Exercise of Option ....................................... 22
Determination of Fair Market Rental ................................ 23
Resolution of a Disagreement over the Fair Market Rental ........... 24
Options .............................................................. 24
Quiet Enjoyment ...................................................... 24
Brokers .............................................................. 25
Landlord's Liability ................................................. 25
Authority of Parties ................................................. 25
Transportation Demand Management Programs ............................ 25
Dispute Resolution ................................................... 25
Lease Guaranty ....................................................... 26
Miscellaneous Provisions ............................................. 26
Rent ............................................................... 26
Performance by Landlord ............................................ 26
Interest ........................................................... 26
Rights and Remedies ................................................ 26
Survival of Indemnities ............................................ 26
Severability ....................................................... 26
Choice of Law ...................................................... 26
Time ............................................................... 26
Entire Agreement ................................................... 26
Representations .................................................... 27
Headings ........................................................... 27
Exhibits ........................................................... 27
Exhibit "A" - Premises ............................................... 28
Exhibit "B" - Tenant Improvements .................................... 29
Exhibit "C" - Lease Guaranty ......................................... 30
Exhibit "D" - Permitted Chemicals .................................... 35
Page ii
1. PARTIES: THIS LEASE, is entered into on this ____ day of July, 1995,
between South San ▇▇▇▇ Interests, a California Limited Partnership, whose
address is ▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ and
Ahead Technology, Inc., a Delaware Corporation, whose address is ▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇, hereinafter called respectively Landlord and
Tenant.
2. PREMISES: Landlord hereby leases to Tenant, and Tenant hires from
Landlord those certain Premises with the appurtenances, situated in the City of
San ▇▇▇▇, County of Santa ▇▇▇▇▇, State of California, and more particularly
described as follows, to-wit:
That certain real property identified as APN ▇▇▇-▇▇-▇▇▇, commonly known and
designated as 6410 Via Del Oro, consisting of 32,000 rentable square feet
("Building"), and the adjacent lot identified as APN ▇▇▇-▇▇-▇▇▇, as outlined in
red on Exhibit "A".
3. USE: Tenant shall use the Premises only for the following purposes and
shall not change the use of the Premises without the prior written consent of
Landlord: Office, research and development, marketing, light manufacturing,
storage and other incidental uses. Landlord makes no representation or warranty
that any specific use of the Premises desired by Tenant is permitted pursuant
to any Laws.
4. TERM AND RENTAL: The term ("Lease Term") shall be for sixty (60)
months, commencing, as adjusted pursuant to paragraph 7, on the 1st day of
September, 1995 ("Commencement Date"), and ending on the 31st day of August,
2000, ("Expiration Date"). In addition to all other sums payable by Tenant under
this Lease, Tenant shall pay as base monthly rent ("Base Monthly Rent") for the
Premises the following amounts:
Months 01-10 $13,200.00 per month
Months 11-30 $17,600.00 per month
Months 31-60 $20,160.00 per month
Base Monthly Rent shall be due on or before the first day of each calendar
month during Lease Term. All sums payable by Tenant under this Lease shall be
paid in lawful monthy of the United States of America, without offset or
deduction, and shall be paid to Landlord at the address specified in paragraph 1
of this Lease or at such place or places as may be designated from time to time
by Landlord. Base Monthly Rent for any period less than a calendar month shall
be a pro rata portion of the monthly installment.
Concurrently with Tenant's execution of this Lease, Tenant shall pay to Landlord
the sum of Thirteen Thousand Two Hundred Dollars ($13,200.00) as prepaid rent
for the first month of the Lease.
5. SECURITY DEPOSIT: Concurrently with Tenant's execution of this Lease,
Tenant has deposited with Landlord the sum of Twenty Thousand and No/100 Dollars
($20,000.00) as a security deposit. If Tenant defaults with respect to any
provisions of this Lease, including but not limited to the provisions relating
to payment of Base Monthly Rent or other charges, Landlord may, to the extent
reasonably necessary to remedy Tenant's default, use all or any part of said
deposit for the payment of Base Monthly Rent or other charges in default or the
payment of any other payment of any other amount which Landlord may spend or
become obligated to spend by reason of Tenant's default or to compensate
Landlord for any other loss or damage which Landlord may suffer by reason of
Tenant's default. If any portion of said deposit is so used or applied, Tenant
shall, within ten (10) days after written demand therefor, deposit cash with
Landlord in an amount sufficient to restore said deposit to the full amount
hereinabove stated and shall pay to Landlord such other sums as shall be
necessary to reimburse Landlord for any sums paid by Landlord. If Tenant shall
default more than four (4) times in any twelve (12) month period, irrespective
of whether or not such default is cured, then the security deposit shall, within
ten (10) days after demand by Landlord be increased by Tenant to an amount equal
to two (2) times the aforesaid amount.
Said deposit shall be returned to Tenant within thirty (30) days after the
Expiration Date and surrender of the Premises to Landlord, less any amount
deducted in accordance with this paragraph, together with Landlord's written
notice itemizing the amounts and purposes for such retention. In the event of
termination of Landlord's interest in this Lease, Landlord shall transfer said
deposit to Landlord's successor in interest.
6. LATE CHARGES: Tenant hereby acknowledges that late payment by Tenant to
Landlord of Base Monthly Rent and other sums due hereunder will cause Landlord
to incur costs not contemplated by this Lease, the exact amount of which will be
extremely difficult to ascertain. Such costs include, but are not limited to,
administrative, processing, accounting charges, and late charges, which may be
imposed on Landlord by the terms of any contract, revolving credit, mortgage or
trust deed covering the Premises. Accordingly, if any installment of Base
Monthly Rent or any other sum due from Tenant shall not be received by Landlord
or Landlord's designee when due, Tenant shall pay to Landlord a late charge
equal to five (5%) percent of such overdue amount which late charge shall be due
and payable on the same date that the overdue amount in question was due.
Landlord agrees to waive said late charge in the event all amounts set forth in
any notice served upon Tenant by Landlord to pay rent or quit, or any delinquent
rent due in connection with the overdue amount are paid in full within five
business (5) days after Landlord's written notice to Tenant of non-payment or
within five business (5) days after Landlord's service upon Tenant of such
notice to quit or pay rent. The parties hereby agree that such late charge
represents a fair and reasonable estimate of the costs Landlord will incur by
reason of late payment by Tenant. Acceptance of such late charge
Page 4
by Landlord shall in no event constitute a waiver of Tenant's default with
respect to such overdue amount, nor prevent Landlord from exercising any of the
other rights and remedies granted hereunder. In the event that a late charge has
not been waived hereunder for three (3) consecutive installments of Base Monthly
Rent, then subject to written notice from Landlord within sixty (60) days
following the occurrence, rent shall automatically become due and payable
quarterly in advance, rather than monthly, notwithstanding any provision of
this Lease to the contrary.
7. CONSTRUCTION AND POSSESSION: As a material part of this Lease, Tenant
agrees to make improvements to the interior of the Premises ("Tenant
Improvements") as generally shown on the preliminary space plan, attached as
Exhibit "B". The Tenant Improvements shall be constructed in accordance with all
existing applicable municipal, local, state and federal laws, statutes, rules,
regulations and ordinances. Tenant shall be responsible and pay all costs
associated with the construction of the Tenant Improvements with the exception
of costs necessary to bring the Premises, in their current condition, (i) into
compliance with all required existing applicable municipal, local, state and
federal laws, statutes, rules, regulations and ordinances, including, but not
limited to, ADA and Title 24; and (ii) into good working order and repair,
including HVAC, plumbing and electrical systems and the parking lot, roof
membrane and landscaping. The aforementioned costs (i) and (ii) shall be borne
by Landlord.
Landlord shall have the right to approve Tenant's selection of the architect
and contractors associated with design and construction of Tenant Improvements,
which approval shall not be unreasonably withheld.
If Landlord, for any reason whatsoever, cannot deliver possession of the said
Premises to Tenant by the Commencement Date, this Lease shall not be void or
voidable, nor shall Landlord be liable to Tenant for any loss or damage
resulting therefrom; but in that event the Commencement Date and Expiration
Date of the Lease and all other dates affected thereby shall be revised to
conform to the date of Landlord's delivery of possession. Notwithstanding the
foregoing, if Landlord cannot deliver possession of the said Premises to Tenant
on or before October 1, 1995, Tenant, upon written notice to Landlord, shall be
entitled to terminate this Lease without further liability to Landlord or
Tenant. The delay in the commencement of rent and/or the termination of the
Lease provided herein shall be the sole and exclusive remedy of Tenant with
respect by the failure by Landlord to deliver possession of the Premises.
8. ACCEPTANCE OF POSSESSION AND COVENANTS TO SURRENDER: On the
Commencement Date, Tenant shall accept the Premises as being in good and
sanitary order, condition and repair and accepts the Premises and the other
improvements in their present condition. Tenant further agrees on Expiration
Date, or on the sooner termination of this Lease, to surrender the Premises to
Landlord in good condition and repair, reasonable wear and tear excepted.
"Good condition" shall mean that the interior walls, floors, suspended ceilings,
and carpeting within the Premises will be cleaned to the same condition as
existed at the commencement
Page 5
of the Lease, normal wear and tear excepted. Tenant agrees, at its sole cost, to
remove all of Tenant's phone and data cabling from the suspended ceiling and
repair or replace broken ceiling tiles, and relevel the ceiling if required.
Tenant on or before the Expiration Date or sooner termination of this Lease,
shall remove all its personal property and trade fixtures from the Premises, and
all property and fixtures not so removed shall be deemed to be abandoned by
Tenant. If Landlord shall so desire and has notified Tenant pursuant to Lease
paragraph 10 below, then Tenant shall remove such Alterations as Landlord may
require and shall repair and restore said Premises or such part or parts thereof
before the Expiration Date at Tenant's sole cost and expense. Such repair and
restoration shall include causing the Premises to be brought into compliance
with all applicable building codes and laws in effect at the time of the removal
to extent such compliance is necessitated by the repair and restoration work. If
the Premises are not surrendered at the Expiration Date or sooner termination
of this Lease in the condition required by this paragraph, Tenant shall
indemnify, defend, and hold harmless Landlord against loss or liability
resulting from delay by Tenant in so surrendering the Premises including,
without limitation, any claims made by any succeeding tenant founded on such
delay.
9. USES PROHIBITED: Tenant shall not commit, or suffer to be committed, any
waste upon the said Premises, or any nuisance, or other act or thing which may
disturb the quiet enjoyment of any other tenant in or around the Premises or
allow any sale by auction upon the Premises, or allow the Premises to be used
for any unlawful or objectionable purpose, or place any loads upon the floor,
walls, or ceiling which endanger the structure, or use any machinery or
apparatus which will in any manner vibrate or shake the Premises causing damage
to the structure of the Premises, or place any harmful liquids, waste materials,
or hazardous materials in the drainage system of, or upon or in the soils
surrounding the Building. No materials, supplies, equipment, finished products
or semi-finished products, raw materials or articles of any nature or any waste
materials, refuse, scrap or debris shall be stored upon or permitted to remain
on any portion of the Premises outside of the Building proper without Landlord's
prior approval, which approval may be withheld in its sole discretion.
10. ALTERATIONS AND ADDITIONS: Tenant shall not make, or suffer to be made,
any alteration or addition to the said Premises ("Alterations") other than the
Tenant Improvements, or any part thereof, without (i) the written consent of
Landlord first had and obtained, which consent shall not be unreasonably
withheld, and (ii) delivering to Landlord the proposed architectural and
structural plans for all such Alterations. Landlord shall indicate to Tenant in
writing within ten (10) business days following receipt of Tenant's request,
whether or not Landlord will require Tenant to remove such Alteration at the
Expiration Date. After having obtained Landlord's consent, Tenant agrees that it
shall not proceed to make such Alterations until (i) Tenant has obtained all
required governmental approvals and permits, and (ii) Tenant has provided
Landlord reasonable security, in form reasonably approved by Landlord, to
protect Landlord against mechanics' lien claims. Tenant further agrees to
provide Landlord (i) written notice of the anticipated start date and actual
start date of the work, and (ii) a complete set of half-size (15" X 21") vellum
as-built drawings. All Alterations
Page 6
shall be constructed in compliance with applicable buildings codes and laws. Any
Alterations, except movable furniture and trade fixtures, shall become at once
a part of the realty and belong to Landlord, but shall nevertheless be subject
to removal by Tenant as provided in paragraph 8 above. Alterations which are not
to be deemed as trade fixtures shall include heating, lighting, electrical
systems, air conditioning, partitioning, carpeting, or any other installation
which has become an integral part of the Premises. All Alterations shall be
maintained, replaced or repaired by Tenant at Tenant's sole cost and expense.
11. MAINTENANCE OF PREMISES: Landlord at its sole cost and expense, shall
maintain in good condition, order, and repair, and replace as and when
necessary, the foundation, exterior load bearing walls and roof structure of the
Building. Tenant shall, at its sole cost, keep and maintain, repair and replace,
said Premises and appurtenances and every part hereof, including but not limited
to, roof membrane, glazing, sidewalks, parking areas, telephone, plumbing,
electrical and air conditioning and heating equipment ("HVAC") systems, and all
the Tenant Improvements in good and sanitary order, condition, and repair.
Tenant shall provide Landlord with a copy of a service contract between Tenant
and a licensed HVAC contractor which contract shall provide for quarterly
maintenance of all HVAC equipment at the Premises. Tenant shall pay the cost of
all HVAC repairs or replacements which are either excluded from such service
contract or any existing equipment warranties. All wall surfaces and floor tile
are to be maintained in an as good a condition as when Tenant took possession
free of holes, gouges, or defacements.
Tenant shall also be responsible, at its sole cost and expense for the
preventive maintenance of the membrane of the roof, which responsibility shall
be deemed properly discharged if (i) Tenant contracts with a licensed roof
contractor who is reasonably satisfactory to both Tenant and Landlord, at
Tenant's sole cost, to inspect the roof membrane at least every six (6) months,
with the first inspection due the 6th month after the Commencement Date, and
(ii) Tenant performs, at Tenant's sole cost, all reasonable preventive
maintenance recommendations made by such contractor within a reasonable time
after such recommendations are made. Such preventive maintenance might include
acts such as clearing storm gutters and drains, removing debris from the roof
membrane, trimming trees overhanging the roof membrane, applying coating
materials to seal roof penetrations, repairing blisters, and other routine
measures. Tenant shall provide to Landlord a copy of such preventive maintenance
contract and paid invoices for the recommended work. Tenant agrees, at its
expense, to water, maintain and replace, when reasonably necessary, any
shubbery and landscaping.
Notwithstanding the foregoing, in the event Tenant's maintenance or repair
obligations hereunder would require Tenant to pay for a capital repair or
replacement costing in excess of Five Thousand and No/100 Dollars ($5,000.00),
Tenant shall only be required to pay (i) the initial $5,000.00; and (ii) that
portion of the cost over the initial $5,000.00 equal to the product of such
total cost multiplied by a fraction, the numerator of which is the number of
years remaining in the Lease Term, the denominator of which is the useful life
(in years) of the replacement.
Page 7
12. HAZARD INSURANCE:
A. Tenant's Use: Tenant shall not use, or permit said Premises, or any
part thereof, to be used, for any purpose other than that for which the
said Premises are hereby leased without Landlord's prior written approval;
and no use shall be made or permitted to be made of the said Premises, nor
acts done, which will cause an increase in premiums (unless prior approval
is obtained from Landlord) or a cancellation of any insurance policy
covering said Premises, or any part thereof, nor shall Tenant sell or
permit to be kept, used or sold, in or about said Premises, any article
which may cause an increase in premiums or cancellation of any insurance
policy covering said Premises, without Landlord's prior written approval.
Tenant shall, at its sole cost and expense, comply with any and all
requirements, pertaining to said Premises, of any insurance organization or
company, necessary for the maintenance of reasonable fire and public
liability insurance, covering said Premises and appurtenances.
B. Landlord's Insurance: Landlord agrees to purchase and keep in force
fire, extended coverage, owner's liability, and 12 month rental loss
insurance. The amount of the said insurance shall not exceed the
replacement cost of the Building (not including any Tenant Improvements or
Alterations paid for by Tenant) as determined by Landlord's insurance
company's appraisers. The Tenant agrees to pay to the Landlord as
additional rent, on demand, the full cost of said insurance, to the extent
said cost applies to insurance provided during the Lease Term, as evidenced
by insurance ▇▇▇▇▇▇▇▇ to the Landlord, and in the event of damage covered
by said insurance, the amount of any deductible under such policy. Payment
shall be due to Landlord within ten (10) days after written invoice to
Tenant. It is understood and agreed that Tenant's obligation under this
paragraph will be prorated to reflect the commencement and termination
dates of this Lease.
C. Tenant's Insurance: Tenant, at its sole cost, agrees to insure its
personal property, Tenant Improvements paid for by Tenant, and Alterations
for their full replacement value (without depreciation) and to obtain
worker's compensation and public liability and property damage insurance
for occurrences within the Premises with combined limits for bodily injury
and property damage of not less than $1,000,000.00 per occurrence and a
general aggregate limit of not less than $5,000,000.00. Tenant shall name
Landlord and Landlord's lender as an additional insured, shall deliver a
copy of the policies and renewal certificates to Landlord. All such
policies shall provide for thirty (30) days' prior written notice to
Landlord of any cancellation, termination, or reduction in coverage.
D. Waiver: Landlord and Tenant hereby waive any and all rights each
may have against the other on account of any loss or damage occasioned to
the Landlord or the Tenant as the case may be, or to the Premises or its
contents, and which may arise from any risk covered by their respective
insurance policies (or which would have been covered had such insurance
policies been maintained in accordance with this Lease), as set forth
above. The parties shall use their reasonable efforts to obtain from their
respective insurance companies a waiver of any right of subrogation which
said insurance company may have against the Landlord or the Tenant, as the
case may be.
Page 8
13. TAXES: Tenant shall be liable for, and shall pay prior to delinquency,
all taxes and assessments levied against personal property and trade or business
fixtures, and agrees to pay, as additional rental, all real estate taxes and
assessment installments (special or general) or other impositions or charges
which may be levied on the Premises, upon the occupancy of the Premises and
including any substitute or additional charges which may be imposed during, or
applicable to the Lease Term including real estate tax increases due to a sale
or transfer of the Premises, as they appear on the City and County tax bills
during the Lease Term, and as they become due. It is understood and agreed that
Tenant's obligation under this paragraph will be prorated to reflect the
Commencement and Expiration Dates. If, at any time during the Lease Term a tax,
excise on rents, business license tax, or any other tax, however described, is
levied or assessed against Landlord, as a subsutitute or addition in whole or in
part for taxes assessed or imposed on land or Buildings, Tenant shall pay and
discharge his pro rata share of such tax or excise on rents or other tax before
it becomes delinquent, except that this provision is not intended to cover net
income taxes, inheritance, gift or estate tax imposed upon the Landlord. In the
event that a tax is placed, levied, or assessed against Landlord and the taxing
authority takes the position that the Tenant cannot pay and discharge his pro
rata share of such tax on behalf of the Landlord, then at the sole election of
the Landlord, the Landlord may increase the rental charged hereunder by the
exact amount of such tax and Tenant shall pay such increase as additional rent
hereunder. If by virtue of any application or proceeding brought by or on behalf
of Landlord, there results a reduction in the assessed value of the Building
during the Lease Term, Tenant agrees to reimburse Landlord its reasonable out of
pocket costs incurred by Landlord in connection with such application or
proceeding.
14. UTILITIES: Tenant shall pay directly to the providing utility all
water, gas, heat, light, power, telephone and other utilities supplied to the
Premises. Landlord shall not be liable for a loss of or injury to property,
however occurring, through or in connection with or incidental to furnishing or
failure to furnish any utilities to the Premises and Tenant shall not be
entitled to abatement or reduction of any portion of the Base Monthly Rent so
long as any failure to provide and furnish the utilities to the Premises is due
to a cause beyond the Landlord's reasonable control.
15. ABANDONMENT: Tenant shall not abandon the Premises at any time during
the Lease Term; and if Tenant shall abandon or surrender said Premises, or be
dispossessed by process of law, or otherwise, any personal property belonging to
Tenant and left on the Premises shall be deemed to be abandoned, at the option
of Landlord, except such property as may be mortgaged to Landlord.
16. FREE FROM LIENS: Tenant shall keep the Premises free from any liens
arising out of any work performed, materials furnished, or obligations incurred
by Tenant or claimed to have been performed for Tenant. In the event Tenant
fails to discharge, stay or bond any such lien within thirty (30) days after
receiving notice of the filing, Landlord shall be entitled to discharge such
lien at Tenant's expense and all resulting costs incurred by Landlord, including
attorney's fees shall be due from Tenant as additional rent.
Page 9
17. COMPLIANCE WITH GOVERNMENTAL REGULATIONS: Tenant shall, at its sole
cost and expense, comply with all of the requirements of all Municipal, State
and Federal authorities now in force, or which may hereafter be in force,
pertaining to the said Premises, and shall faithfully observe in the use of the
Premises all Municipal ordinances and State and Federal statutes now in force or
which may hereafter be in force. The judgment of any court of competent
jurisdiction, or the admission of Tenant in any action or proceeding against
Tenant, whether Landlord by a party thereto or not, that Tenant has violated any
such ordinance or statute in the use of the Premises, shall be conclusive of
that fact as between Landlord and Tenant.
18. TOXIC WASTE AND ENVIRONMENTAL DAMAGE:
A. Tenant's Responsibility: Without the prior written consent of
Landlord, Tenant shall not bring, use, or permit upon the Premises (other
than those which shall be allowed in reasonable necessary quantities to
conduct Tenant's business as described on Exhibit "D"), or generate,
create, release, emit, or dispose (nor permit any of the same) from the
Premises any chemicals, toxic or hazardous gaseous, liquid or solid
materials or waste, including without limitation, material or substance
having characteristics of ignitability, corrosivity, reactivity, or
toxicity or substances or materials which are listed on any of the
Environmental Protection Agency's lists of hazardous wastes or which are
identified in Sections 66680 through 66685 of Title 22 of the California
Administrative Code as the same may be amended from time to time
("Hazardous Materials"). In order to obtain consent, Tenant shall deliver
to Landlord its written proposal describing the toxic material to be
brought onto the Premises, measures to be taken for storage and disposal
thereof, safety measures to be employed to prevent pollution of the air,
ground, surface and ground water. Landlord's approval may be withheld in
its reasonable judgment. In the event Landlord consents to Tenant's use of
Hazardous Materials on the Premises, Tenant represents and warrants that
Tenant will (i) adhere to all reporting and inspection requirements imposed
by Federal, State, County or Municipal laws, ordinances or regulations and
will provide Landlord a copy of any such reports or agency inspections,
(ii) obtain and provide Landlord copies of all necessary permits required
for the use and handling Hazardous Materials on the Premises, (iii) enforce
Hazardous Materials handling and disposal practices consistent with
industry standards, (iv) surrender the Premises free from any Hazardous
Materials arising from Tenant's bringing, using, permitting, generating,
emitting or disposing of Hazardous Materials, and (v) properly close the
facility with regard to Hazardous Materials including the removal or
decontamination of any process piping, mechanical ducting, storage tanks,
containers, or trenches which have come into contact with Hazardous
Materials and obtain a closure certificate from the local administering
agency prior to the Expiration Date.
B. Tenant's Indemnity Regarding Hazardous Materials: Tenant shall
comply, at its sole cost, with all laws pertaining to, and shall indemnify
and hold Landlord harmless from any claims, liabilities, costs or expenses
incurred or suffered by Landlord arising from such bringing, using,
permitting, generating, emitting or disposing of Hazardous Materials.
Tenant's
Page 10
indemnification and hold harmless obligations include, without limitation,
(i) claims, liability, costs or expenses resulting from or based upon
administrative, judicial (civil or criminal) or other action, legal or
equitable, brought by any private or public person under common law or
under the Comprehensive Environmental Response, Compensation and Liability
Act of 1980 ("CERCLA"), the Resource Conservation and Recovery Act of 1980
("RCRA") or any other Federal, State, County or Municipal law, ordinance or
regulation, (ii) claims, liabilities, costs or expenses pertaining to the
identification, monitoring, cleanup, containment, or removal of Hazardous
Materials from soils, riverbeds or aquifers including the provision of an
alternative public drinking water source, and (iii) all costs of defending
such claims.
C. Landlord's Indemnity Regarding Hazardous Materials: Landlord shall
indemnify and hold Tenant harmless from any claims, liabilities, costs or
expenses incurred or suffered by Tenant related to the removal,
investigation, monitoring or remediation of Hazardous Materials which are
present or which come to be present on the Premises except to the extent
the presence of such Hazardous Materials is caused by Tenant or by Tenant's
failure to prevent a third party from dumping Hazardous Materials through
the surface of the Premises. Landlord's indemnification and hold harmless
obligations include, without limitation, (i) claims, liability, costs or
expenses resulting from or based upon administrative, judicial (civil or
criminal) or other action, legal or equitable, brought by any private or
public person under common law or under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 ("CERCLA"), the Resource
Conservation and Recovery Act of 1980 ("RCRA") or any other Federal, State,
County or Municipal law, ordinance or regulation, (ii) claims, liabilities,
costs or expenses pertaining to the identification, monitoring, cleanup,
containment, or removal of Hazardous Materials from soils, riverbeds or
aquifers including the provision of an alternative public drinking water
source, and (iii) all costs of defending such claims. In no event shall
Landlord be liable for any consequential damages suffered or incurred by
Tenant as a result of any such contamination.
The forgoing indemnity by Landlord to Tenant shall not apply to any
mortgagee or its assignee which takes title to the Premises pursuant to a
deed in lieu of foreclosure, foreclosure or otherwise.
D. Actual Release by Tenant: Tenant agrees to notify Landlord of any
lawsuits which relate to, or orders which relate to the remedying of, the
actual release of Hazardous Materials on or into the soils or groundwater
at or under the Premises. Tenant shall also provide to Landlord all notices
required by Section 25359.7(b) of the Health and Safety Code and all other
notices required by law to be given to Landlord in connection with
Hazardous Materials. Without limiting the foregoing, Tenant shall also
deliver to Landlord, within twenty (20) days after receipt thereof, any
written notices from any governmental agency alleging a material violation
of, or material failure to comply with, any federal, state or local laws,
regulations, ordinances or orders, the violation of which of failure to
comply with, poses a foreseeable and material risk of contamination of the
groundwater or injury to humans (other than injury solely to Tenant, its
agents and employees within the Improvements on the Property).
Page 11
In the event of any release on or into the Premises or into the soil
or groundwater under the Premises of any Hazardous Materials used, treated,
stored or disposed of by Tenant, Tenant agrees to comply, at its sole cost
and expense, with all laws, regulations, ordinances and orders of and
federal, state or local agency relating to the monitoring or remediation of
such Hazardous Materials. In the event of any such release of Hazardous
Materials, Tenant agrees to meet and confer with Landlord and its Lender to
attempt to eliminate and mitigate any financial exposure to such Lender and
resultant exposure to Landlord under California Code of Civil Procedure
section 736(b) as a result of such release and promptly to take reasonable
monitoring, cleanup and remedial steps given, inter alia, the historical
uses to which the Property has and continues to be used, the risks to
public health posed by the release, the then available technology and the
costs of remediation, cleanup and monitoring, consistent with all
applicable laws. Nothing in the preceding sentence shall eliminate, modify
or reduce the obligation of Tenant under paragraph 20.B of this Lease to
indemnify and hold Landlord harmless from any claims liabilities, costs or
expenses incurred or suffered by Landlord as provided in paragraph 20.B of
this Lease. Tenant shall provide Landlord prompt written notice of Tenant's
monitoring, cleanup and remedial steps.
In the absence of an order of any federal, state or local governmental
or quasi-governmental agency relating to the cleanup, remediation or other
response action required by applicable law, any dispute arising between
Landlord and Tenant concerning Tenant's obligation to Landlord under this
Paragraph concerning the Level, method, and manner of cleanup, remediation
or response action required in connection with such a release of Hazardous
Materials shall be resolved by mediation and/or arbitration pursuant to the
provisions of paragraph 44 of this Lease.
E. Environmental Monitoring: Landlord and its agents shall have the
right, at Landlord's sole cost and expense, to inspect, investigate, sample
and/or monitor the Premises, including any air, soil, water, groundwater or
other sampling or any other testing, digging, drilling or analysis to
determine whether Tenant is complying with the terms of this paragraph 18.
Landlord shall give Tenant no less than five (5) days advance written
notice of the proposed time for environmental monitoring and shall provide
reasonable opportunity for Tenant to observe the monitoring and take splits
of any samples taken by Landlord. Such monitoring shall be done in a time
and manner minimizing any interference with Tenant's beneficial use of the
Premises. If Landlord discovers that Tenant is not in compliance with the
terms of this paragraph 18, any such costs incurred by Landlord, including
attorneys' and consultants' fees shall be due and payable by Tenant to
Landlord within five days following Landlord's written demand therefore.
19. INDEMNITY: As a material part of the consideration to be rendered to
Landlord, Tenant hereby waives all claims against Landlord for damages to
goods, wares and merchandise, and all other personal property in, upon or about
said Premises and for injuries to persons in or about said Premises, from any
cause arising at any time to the fullest extent permitted by law, and Tenant
shall indemnify and hold Landlord exempt and harmless from any damage or injury
to any
Page 12
person, or to the goods, wares and merchandise and all other personal property
of any person, arising from the use of the Premises and/or Building by Tenant,
its employees, contractors, agents and invitees or from the failure of Tenant to
keep the Premises in good condition and repair, as herein provided, except to
the extent due to the active negligence or willful misconduct of Landlord.
Further, in the event Landlord is made party to any litigation due to the acts
or omission of Tenant, its employees, contractors, agents and invitees, Tenant
will indemnify and hold Landlord harmless from any such claim or liability
including Landlord's costs and expenses and reasonable attorney's fees incurred
in defending such claims.
Notwithstanding anything to the contrary in the Lease, (i) Tenant shall neither
release Landlord from, nor indemnify Landlord with respect to the negligence or
willful misconduct of Landlord, or its agents, employees, contractors or
invitees, and (ii) Landlord shall indemnify and hold harmless Tenant from all
damages, liabilities, judgments, actions, attorneys' fees, consultants' fees,
cost and expenses arising from the negligence or willful misconduct of Landlord
and its employees, agents, contractors or invitees.
20. ADVERTISEMENTS AND SIGNS: Tenant will not place or permit to be placed,
in, upon or about the said Premises any unusual or extraordinary signs, or any
signs not approved by the city or other governing authority. The Tenant will not
place, or permit to be placed, upon the Premises, any signs, advertisements or
notices without the written consent of the Landlord as to type, size, design,
lettering, coloring and location, and such consent will not be unreasonably
withheld. Any sign so placed on the Premises shall be removed by Tenant, at its
expense, prior to the Expiration Date or promptly following the earlier
termination of the lease and Tenant shall repair, at its sole cost and expense,
any damage or injury to the Premises caused thereby, and if not so removed by
Tenant then Landlord may have same so removed at Tenant's expense.
21. ATTORNEY'S FEES: In case a suit or alternative form of dispute
resolution should be brought for the possession of the Premises, for the
recovery of any sum due hereunder, or because of the breach of any other
covenant herein, the losing party shall pay to the prevailing party a reasonable
attorney's fee including the expense of expert witnesses, depositions and court
testimony as part of its costs which shall be deemed to have accrued on the
commencement of such action. In addition, the prevailing party shall be entitled
to recover all costs and costs and expenses including reasonable attorney's fees
incurred by the prevailing party in enforcing any judgment or award against the
other party. The foregoing provision relating to post-judgment costs is intended
to be severable from all other provisions of this Lease.
22. TENANT'S DEFAULT: The occurrence of any of the following shall
constitute a material default and breach of this Lease by Tenant: a) Any
failure by Tenant to pay any rent under this Lease, where such failure
continues after applicable notice and cure periods; b) The abandonment of the
Premises by Tenant; (c) A failure by Tenant to observe and perform any other
provision of this Lease to be observed or performed by Tenant, where such
failure continues for
Page 13
thirty (30) days after written notice thereof by Landlord to Tenant; provided,
however, that if the nature of such default is such that the same cannot
reasonably be cured within such thirty (30) day period Tenant shall not be
deemed to be in default if Tenant shall within such period commence such cure
and thereafter diligently prosecute the same to completion; d) The making by
Tenant of any general assignment for the benefit of creditors; the filing by or
against Tenant of a petition to have Tenant adjudged a bankrupt or of a petition
for reorganization or arrangement under any law relating to bankruptcy (unless,
in the case of a petition filed against Tenant, the same is dismissed after the
filing); the appointment of a trustee or receiver to take possession of
substantially all of Tenant's assets located at the Premises or of Tenant's
interest in this Lease, where possession is not restored to Tenant within thirty
(30) days; or the attachment, execution or other judicial seizure of
substantially all of Tenant's assets located at the Premises or of Tenant's
interest in this Lease, where such seizure is not discharged, stayed or bonded
against within thirty (30) days. The notice requirements set forth herein are in
lieu of and not in addition to the notices required by California Code of Civil
Procedure Section 1161. Any notice given by Landlord to Tenant pursuant to
California Code of Civil Procedure Section 1161 with respect to any failure by
Tenant to pay rent under this Lease on or before the date the rent is due shall
provide Tenant with a period of no less than ten (10) days to pay such rent or
quit.
A. Remedies: In the event of any such default by Tenant, then in
addition to any other remedies available to Landlord at law or in equity,
Landlord shall have the immediate option to terminate this Lease and all
rights of Tenant hereunder by giving written notice of such intention to
terminate. In the event that Landlord shall elect to so terminate this
lease then Landlord may recover from Tenant: a) the worth at the time of
award of any unpaid rent which had been earned at the time of such
termination; plus b) the worth at the time of award of the amount by which
the unpaid rent which would have been earned after termination until the
time of award exceeds the amount of such rental loss for the same period
that Tenant proves could have been reasonably avoided; plus c) the worth at
the time of award of the amount by which the unpaid rent for the balance of
the Lease Term after the time of award exceeds that amount of such rental
loss that Tenant proves could be reasonably avoided; plus d) any other
amount necessary to compensate Landlord for all the detriment proximately
caused by Tenant's failure to perform its obligations under this Lease or
which in the ordinary course of things would be likely to result therefrom,
and e) at Landlord's election, such other amounts in addition to or in lieu
of the foregoing as may be permitted from time to time by applicable
California law. The term "rent", as used herein, shall be deemed to be and
to mean the minimum monthly installments of Base Monthly Rent and all other
sums required to be paid by Tenant pursuant to the terms of this Lease, all
other such sums being deemed to be additional rent due hereunder. As used
in (a) and (b) above, the "worth at the time of award" is to be computed by
allowing interest at the rate of the discount rate of the Federal Reserve
Bank of San Francisco plus five (5%) percent per annum. As used in (c)
above, the "worth at the time of award" is to be computed by discounting
such amount at the discount rate of the Federal Reserve Bank of San
Francisco at the time of award plus one (1%) percent.
Page 14
B. Right to Re-enter: In the event of any such default by Tenant,
Landlord shall also have the right, with or without terminating this Lease,
to re-enter the Premises and remove all persons and property from the
Premises; such property may be removed and stored in a public warehouse or
elsewhere at the cost of and for the account of Tenant and disposed of by
Landlord in any manner permitted by law.
C. Abandonment: In the event of the abandonment of the Premises by
Tenant or in the event that Landlord shall elect to re-enter as provided in
paragraph 22.B above or shall take possession of the Premises pursuant to
legal proceeding or pursuant to any notice provided by law, then if
Landlord does not elect to terminate this Lease as provided in paragraph
22.A above, then the provisions of California Civil Code Section 1951.4,
(Landlord may continue the lease in effect after Tenant's breach and
abandonment and recover rent as it becomes due, if Tenant has a right to
sublet and assign, subject only to reasonable limitations) as amended from
time to time, shall apply and Landlord may from time to time, without
terminating this Lease, either recover all rental as it becomes due or
relet the Premises or any part thereof for such term or terms and at such
rental or rentals and upon such other terms and conditions as Landlord in
its sole discretion may deem advisable with the right to make alterations
and repairs to the Premises. In the event that Landlord shall elect to so
relet, then rentals received by Landlord from such reletting shall be
applied; first, to the payment of any indebtedness other than Base Monthly
Rent due hereunder from Tenant to Landlord; second, to the payment of any
cost of such reletting; third, to the payment of the cost of any
alterations and repairs to the Premises; fourth, to the payment of Base
Monthly Rent due and unpaid hereunder; and the residue, if any, shall be
held by Landlord and applied in payment of future Base Monthly Rent as the
same may become due and payable hereunder. Landlord shall have no
obligation to relet the Premises following a default if Landlord has other
available space within the Building. Should that portion of such rentals
received from such reletting during any month, which is applied by the
payment of rent hereunder, be less than the rent payable during that month
by Tenant hereunder, then Tenant shall pay such deficiency to Landlord
immediately upon demand therefor by Landlord. Such deficiency shall be
calculated and paid monthly. Tenant shall also pay to Landlord, as soon as
ascertained, any costs and expenses incurred by Landlord in such reletting
or in making such alterations and repairs not covered by the rentals
received from such reletting.
D. No Termination: No re-entry or taking possession of the Premises by
Landlord pursuant to 22.B or 2.2C of this Article 22 shall be construed as
an election to terminate this Lease unless a written notice of such
intention be given to Tenant or unless the termination thereof be decreed
by a court of competent jurisdiction. Notwithstanding any reletting without
termination by Landlord because of any default by Tenant, Landlord may at
any time after such reletting elect to terminate this Lease for any such
default.
23. SURRENDER OF LEASE: The voluntary or other surrender of this Lease by
Tenant, or a mutual cancellation thereof, shall not automatically effect a
merger of the Lease with Landlord's ownership of the Premises. Instead, at the
option of Landlord, Tenant's surrender may terminate all
Page 15
or any existing sublease or subtenancies, or may operate as an assignment to
Landlord of any or all such subleases or subtenancies, thereby creating a direct
Landlord-Tenant relationship between Landlord and any subtenants.
24. HABITUAL DEFAULT: Notwithstanding anything to the contrary contained in
paragraph 22, the parties hereto agree that if the Tenant shall have defaulted
in the performance of any (but not necessarily the same) term or condition of
this Lease for three or more times during any twelve month period during the
Lease Term hereof, then such conduct shall, at the election of the Landlord,
represent a separate event of default which cannot be cured by the Tenant.
Tenant acknowledges that the purpose of this provision is to prevent repetitive
defaults by the Tenant under the Lease, which work a hardship upon the Landlord,
and deprive the Landlord of the timely performance by the Tenant hereunder.
25. LANDLORD'S DEFAULT: In the event of Landlord's failure to perform any
of its covenants or agreements under this Lease, Tenant shall give Landlord
written notice of such failure and shall give Landlord thirty (30) days or such
other reasonable opportunity to cure or to commence to cure such failure prior
to any claim for breach or for damages resulting from such failure. In addition,
upon any such failure by Landlord, Tenant shall give notice by registered or
certified mail to any person or entity with a security interest in the Premises
("Mortgagee") that has provided Tenant with notice of its interest in the
Premises, and shall provide such Mortgagee a reasonable opportunity to cure such
failure, including such time to obtain possession of the Premises by power of
sale or judicial foreclosure, if such should prove necessary to effectuate a
cure. Tenant agrees that each of the Mortgagees to whom this Lease has been
assigned is an expressed third party beneficiary hereof. Tenant shall not make
any prepayment of rent more than one (1) month in advance without the prior
written consent of such Mortgagee. Tenant waives any right under California
Civil Code Section 1950.7 or any other present or future law to the collection
of any payment or deposit from such Mortgagee or any purchaser at a foreclosure
sale of such Mortgagee's interest unless such Mortgagee or such purchaser shall
have actually received and not refunded the applicable payment or deposit.
26. NOTICES: All notices, demands, requests, or consents required to be
given under this Lease shall be sent in writing by U.S. certified mail, return
receipt requested, or by personal delivery addressed to the party to be notified
at the address for such party specified in paragraph 1 of this Lease, or to such
other place as the party to be notified may from time to time designate by at
least fifteen (15) days prior to notice to the notifying party.
27. ENTRY BY LANDLORD: Tenant shall permit Landlord and his agents to enter
into and upon said Premises at all reasonable times and with reasonable notice,
subject to any security regulations of Tenant for the purposes of (i) inspecting
the same, (ii) maintaining the Premises, (iii) making repairs, alterations or
additions to the Premises which Landlord is otherwise entitled to make under
this Lease, or (iv) performing any obligations of the Landlord under the Lease
including
Page 16
remediation of hazardous materials if determined to be the responsibility of
Landlord, without any abatement or reduction of rent or without any liability to
Tenant for any loss of occupation or quiet enjoyment of the Premises thereby
occasioned; except to the extent that Landlord's occupancy on the Premises
materially affects Tenant's orderly, reasonable use of the Premises, then Tenant
shall be entitled to a proportionate reduction of Base Monthly Rent, such
proportionate reduction to be based upon the extent to which Landlord's entry
and presence shall interfere with the business carried on by Tenant in the
Premises, in the reasonable judgment of Landlord and Tenant. Tenant shall permit
Landlord and his agents, at any time within one hundred eighty (180) days prior
to the Expiration Date (or at any time during the Lease if Tenant is in default
hereunder), to place upon the Premises "For Lease" signs and exhibit the
Premises to real estate brokers and prospective tenants at reasonable hours.
Notwithstanding the foregoing, Landlord (i) shall not enter the Premises
without first giving twenty-four (24) hours notice to Tenant of such entry
except in the case of emergency, (ii) shall be accompanied by an employee of
Tenant at all times while in the Premises, (iii) shall comply with Tenant's
security procedures applicable to the Premises, and (iv) shall not unreasonably
interfere with Tenant's use of the Premises.
28. DESTRUCTION OF PREMISES:
A. Destruction by an Insured Casualty: In the event of a partial
destruction of the Premises by a casualty for which Landlord has received
insurance proceeds sufficient to repair the damage or destruction during
the Lease Term from any cause, Landlord shall forthwith repair the same to
substantially the same condition as immediately before the casualty, to the
extent of such proceeds, provided such repairs can be made within one
hundred eighty (180) days from the date of casualty, and such partial
destruction shall in no way annul or void this Lease, except that Tenant
shall be entitled to a proportionate reduction of Base Monthly Rent while
such repairs are being made, such proportionate reduction to be based upon
the extent to which the making of such repairs shall interfere with the
business carried on by Tenant in the Premises, in the reasonable judgment
of Landlord and Tenant. For purposes of this paragraph "partial
destruction" shall mean destruction of no greater than one-third (1/3) of
the replacement cost of the Premises, including the replacement cost of the
Tenant Improvements paid for by Landlord. In the event the Premises (i) are
more than partially destroyed, or (ii) the repairs cannot be made in 180
days form the date of casualty, Landlord or Tenant may elect to terminate
this Lease by providing written notice to the other within thirty (30) days
of the casualty. Landlord shall not be required to restore Alterations or
replace Tenant's fixtures or personal property. In respect to any partial
destruction which Landlord is obligated to repair or may elect to repair
under the terms of this paragraph, the provision of Section 1932,
Subdivision 2, and of Section 1933, Subdivision 4, of the Civil Code of the
State of California and any other similarly enacted statute are waived by
Tenant and the provisions of this paragraph 28 shall govern in the case of
such destruction.
Page 17
B. Destruction by an Uninsured Casualty: In the event of a total or
partial destruction of the Premises by a casualty for which Landlord has
not, through no fault of Landlord, received insurance proceeds sufficient
to repair the damage or destruction during the Lease Term, the Lease shall
automatically terminate unless (i) Landlord elects to rebuild and provides
written notification to Tenant of such election within thirty (30) days of
the destruction, and (ii) the damage can be repaired within one hundred
eighty (180) days from the date of destruction. In the event Landlord
elects to rebuild, Tenant shall be entitled to a proportionate reduction of
Base Monthly Rent while repairs are being made, such proportionate
reduction to be based upon the extent to which the making of such repairs
shall interfere with the business carried on by Tenant in the Premises, in
the reasonable judgment of Landlord and Tenant.
29. ASSIGNMENT OF SUBLEASE:
A. Consent by Landlord: In the event Tenant desires to assign this
Lease or any interest therein including, without limitation, a pledge,
mortgage or other hypothecation, or sublet the Premises or any part therof,
Tenant shall deliver to Landlord executed counterparts of any such
agreement and of all ancillary agreements with the proposed assignee or
subtenant, financial statements, and any additional information as
reasonably required by Landlord to determine whether it will consent to the
proposed assignment or sublease. The notice shall give the name and current
address of the proposed assignee/subtenant, proposed use of the Premises,
rental rate and current financial statement; and upon request to Tenant,
Landlord shall be given additional information as reasonably required by
Landlord to determine whether it will consent to the proposed assignment or
sublease. Landlord shall then have a period of thirty (30) days following
receipt of the foregoing agreement, statements and additional information
within which to notify Tenant in writing that Landlord elects (i) to permit
Tenant to assign or sublet such space to the named assignee/subtenant on
the terms and conditions set forth in the notice, or (ii) to refuse
consent. If Landlord should fail to notify Tenant in writing of such
election within said thirty (30) day period, Landlord shall be deemed to
have elected option (i) above. If Landlord exercises its option to
terminate this Lease in part in the event Tenant desires to sublet or
assign part of the Premises, then (i) this Lease shall end and expire, with
respect to such part of the Premises, on the date upon which the proposed
sublease was to commence, and (ii) from and after such date, the Base
Monthly Rent and Tenant's allocable share of all other costs and charges
shall be adjusted, based upon the proportion that the rentable area of the
Premises remaining bears to the total rentable area of the Premises. If
Landlord does not exercise its option to terminate this Lease, Landlord's
consent (which must be in writing and in form reasonably satisfactory to
Landlord) to the proposed assignment or sublease shall not be unreasonably
withheld, provided and upon condition that: (i) the proposed assignee or
subtenant is engaged in a business that is limited to the use expressly
permitted under the Lease; (ii) the proposed assignee or subtenant is a
company with sufficient financial worth and management ability to undertake
the financial obligation of this Lease, and Landlord has been furnished
with reasonable proof thereof; (iii) the proposed assignment or sublease
shall be in form reasonably satisfactory to Landlord; (iv) Tenant shall
reimburse Landlord
Page 18
on demand for any costs that may be incurred by Landlord in connection with said
assignment or sublease, including the costs of making investigations as to the
acceptability of the proposed assignee or subtenant and legal costs incurred in
connection with the granting of any requested consent; and (v) Tenant shall not
have advertised or publicized in any way the availability of the Premises
without prior notice to, and approval by Landlord, which approval shall not be
unreasonably withheld. In the event all or any one of the foregoing conditions
are not satisfied, Landlord may, in its sole discretion, withhold its consent to
the proposed assignment of sublease.
B. Assignment or Subletting Consideration: Any rent or other economic
consideration realized by Tenant under any such sublease and assignment in
excess of the rent payable hereunder, after the net unamortized cost of the
Tenant Improvements for which Tenant has itself paid, and reasonable
subletting and assignment costs, shall be divided and paid fifty percent
(50%) to Landlord and fifty percent (50%) to Tenant. Tenant's obligation to
pay over Landlord's portion of the consideration shall constitute an
obligation for additional rent hereunder. The above provisions relating to
Landlord's right to terminate the Lease and relating to the allocation of
bonus rent are independently negotiated terms of the Lease, constitute a
material inducement for the Landlord to enter into the Lease, and are
agreed as between the parties to be commercially reasonable. No assignment
or subletting by Tenant shall relieve Tenant of any obligation under this
Lease. Any assignment or subletting which conflicts with the provisions
hereof shall be void.
C. No Release: Any assignment or sublease shall be made only if and
shall not be effective until the assignee or subtenant shall execute,
acknowledge and deliver to Landlord an agreement, in form and substance
satisfactory to Landlord, whereby the assignee or subtenant shall assume
all of the obligations of this Lease on the part of Tenant to be performed
or observed and shall be subject to all of the covenants, agreements,
terms, provisions and conditions contained in this Lease. Notwithstanding
any such sublease or assignment and the acceptance of rent by Landlord from
any subtenant or assignee, Tenant and any guarantor shall and will remain
fully liable for the payment of the rent and additional rent due, and to
become due hereunder, for the performance of all of the covenants,
agreements, terms, provisions and conditions contained in this Lease on the
part of Tenant to be performed and for all acts and omissions of any
license, subtenant, assignee or any other person claiming under or through
any subtenant or assignee that shall be in violation of any of the terms
and conditions of this Lease, and any such violation shall be deemed to be
a violation by Tenant. Tenant shall further indemnify, defend and hold
Landlord harmless from and against any and all losses, liabilities,
damages, costs and expenses (including reasonable attorney fees) resulting
from any claims that may be made against Landlord by the proposed assignee
or subtenant or by any real estate brokers or other persons claiming a
commission or similar compensation in connection with the proposed
assignment or sublease.
D. Effect of Default: In the event of Tenant's default, Tenant hereby
assigns all rents due from any assignment or subletting to Landlord as
security for performance of its obligations under this Lease and Landlord
may collect such rents as Tenant's Attorney-in-Fact, except that
Page 19
Tenant may collect such rents unless a default occurs as described in paragraph
22 and 24 above. The termination of this Lease due to Tenant's default shall not
automatically terminate any assignment or sublease then in existence; at the
election of Landlord, such assignment or sublease shall survive the termination
of this Lease and, upon such election, the assignee or subtenant shall attorn to
Landlord and Landlord shall undertake the obligations of the Tenant under the
sublease or assignment; provided the Landlord shall not be liable for prepaid
rent, security deposits or other defaults of the Tenant to the subtenant or
assignee, or any acts or omissions of Tenant, its agents, employees, contractors
or invitees.
30. CONDEMNATION: If any part of the Premises shall be taken for any public
or quasi-public use, under any statute or by right of eminent domain or private
purchase in lieu thereof, and only a part thereof remains which is susceptible
of occupation hereunder, this Lease shall as to the part so taken, terminate as
of the day before title shall vest in the condemnor or purchaser ("Vesting
Date"), and the Base Monthly Rent payable hereunder shall be adjusted so that
the Tenant shall be required to pay for the remainder of the Lease Term only
such portion of such Base Monthly Rent as the value of the part remaining after
such taking bears to the value of the entire Premises prior to such taking; but
in such event Landlord shall have the option to terminate this Lease as of the
Vesting Date. If all of the premises, or such part thereof be taken so that
there does not remain a portion susceptible for occupation hereunder, this Lease
shall thereupon terminate on the Vesting Date. If as a result of any taking or
sale in lieu thereof, the Premises are no longer reasonably suitable for
Tenant's intended use, Tenant, upon written notice to Landlord, shall be
entitled to terminate this Lease within thirty (30) days of the date that notice
of such condemnation is received by Tenant. If a part or all of the Premises be
taken, all compensation awarded upon such taking shall go to the Landlord and
the Tenant shall have no claim thereto but Landlord shall cooperate with Tenant,
without cost to Landlord, to recover compensation for damage to or taking of any
Alterations or for Tenant's moving costs. Tenant hereby waives the provisions of
California Code of Civil Procedures Section 1265.130 and any other similarly
enacted statute are waived by Tenant and the provisions of this Paragraph 30
shall govern in the case of such destruction.
Notwithstanding the foregoing, Tenant shall be entitled to receive by a separate
award condemnation proceeds, the value of the condemned improvements which
Tenant has a right to remove from the Premises and Tenant's moving costs.
31. EFFECTS OF CONVEYANCE: The term "Landlord" as used in this Lease, means
only the owner for the time being of the Premises so that, in the event of any
sale or other conveyance of the Premises, or in the event of a master lease of
the Premises, the Landlord shall be and hereby is entirely freed and relieved
of all covenants and obligations of the "Landlord" hereunder to be performed
thereafter, and it shall be deemed and construed, without further agreement
between the parties and the purchaser at any such sale, or the master tenant of
the Premises, that the purchaser or master tenant of the Premises has assumed
and agreed to carry out any and all covenants and obligations of the Landlord
hereunder to be performed thereafter. Such transferor shall transfer and
Page 20
deliver Tenant's security deposit to the purchaser at any such sale or the
master tenant of the Premises, and thereupon such transferor shall be discharged
from any further liability in reference thereto. Notwithstanding the foregoing,
this provision shall not apply to environmental liabilities arising during the
time of ownership of any party acting as Landlord.
32. SUBORDINATION: In the event Landlord notifies Tenant in writing, this
Lease shall be subordinate to any ground Lease, deed of trust, or other
hypothecation for security now or hereafter placed upon the real property of
which the Premises are a part and to any and all advances made on the security
thereof and to renewals, modifications, replacements and extensions thereof.
Tenant agrees to promptly execute and deliver any documents which may be
required to effectuate such subordination. Notwithstanding such subordination
but subject to the terms and provisions of this Lease, Tenant's right to quiet
possession of the Premises shall not be disturbed so long as Tenant is not in
default and shall pay the rent and observe and perform all of the provisions of
this Lease. At the request of any lender, Tenant agrees to execute and deliver
any reasonable modifications of this Lease which do not materially adversely
affect Tenant's rights hereunder.
Landlord shall cause the existing lender, Principal Mutual Life Insurance
Company, to furnish to Tenant, within thirty (30) days of the date of both
parties' execution of this Lease, with a written agreement providing for (i)
recognition by the lender of all of the terms and conditions of this Lease; and
(ii) continuation of this lease upon foreclosure of existing lender's security
interest in the Premises. In the event that Landlord is unable to provide such
agreement, Tenant's sole remedy shall be termination of the Lease, which
election shall be made within fourteen (14) days following the expiration of
such 30-day period.
33. WAIVER: The waiver by Landlord of any breach of any term, covenant or
condition, herein contained shall not be deemed to be a waiver of such term,
covenant or condition or any subsequent breach of the same or any other term,
covenant or condition herein contained. The subsequent acceptance of rent
hereunder by Landlord shall not be deemed to be a waiver of any preceding breach
by Tenant of any term, covenant or condition of this Lease, other than the
failure of Tenant to pay the particular rental so accepted, regardless of
Landlord's knowledge of such preceding breach at the time of acceptance of such
rent. No payment by Tenant or receipt by Landlord of a lesser amount than any
installment of rent due shall be deemed to be other than payment on account of
the amount due. No delay or omission in the exercise of any right or remedy by
Landlord shall impair such right or remedy or be construed as a waiver thereof
by Landlord. No act or conduct of Landlord, including, without limitation, the
acceptance of keys to the Premises, shall constitute acceptance of the surrender
of the Premises by Tenant before the Expiration Date (only written notice from
Landlord to Tenant of acceptance shall constitute such acceptance of surrender
of the Premises). Landlord's consent to or approval of any act by Tenant which
require Landlord's consent or approvals shall not be deemed to waive or render
unnecessary Landlord's consent to or approval of any subsequent act by Tenant.
Page 21
34. HOLDING OVER: Any holding over after the termination or Expiration
Date, shall be construed to be a tenancy from month to month, terminable on
thirty (30) days written notice from either party, and Tenant shall pay Base
Monthly Rent to Landlord at a rate equal to the greater of (i) one hundred fifty
percent (150%) of the Base Monthly Rent due in the month preceding the
termination or Expiration Date or (ii) one hundred fifty percent (150%) of the
Fair Market Rental (as defined in paragraph 37) plus all other amounts payable
by Tenant under this Lease. Any holding over shall otherwise be on the terms and
conditions herein specified, except those provisions relating to the Lease Term
and any options to extend or renew, which provisions shall be of no further
force and effect following the expiration of the applicable exercise period.
Tenant shall indemnify, defend, and hold Landlord harmless from all loss or
liability (including, without limitation, any loss or liability resulted from
any claim against Landlord made by any succeeding tenant) founded on or
resulting from Tenant's failure to timely surrender the Premises to Landlord and
losses to Landlord due to lost opportunities to lease the Premises to succeeding
tenants.
35. SUCCESSORS AND ASSIGNS: The covenants and conditions herein contained
shall, subject to the provisions of paragraph 29, apply to and bind the heirs,
successors, executors, administrators and assigns of all the parties hereto; and
all of the parties hereto shall be jointly and severally liable hereunder.
36. ESTOPPEL CERTIFICATES: Tenant shall at any time during the Lease Term,
within ten (10) days following written notice from Landlord, execute and deliver
to Landlord a statement in writing certifying (i) that this Lease is unmodified
and in full force and effect (or, if modified, stating the nature of such
modification); (ii) the date to which the rent and other charges are paid in
advance, if any; (iii) acknowledging that there are not, to Tenant's knowledge,
any uncured defaults on the part of Landlord hereunder or specifying such
defaults if they are claimed; and (iv) such other information as Landlord may
reasonably request. Any such statement may be conclusively relied upon by any
prospective purchaser or encumbrancer of the Premises. Tenant's failure to
deliver such statement within such time shall be conclusive upon the Tenant
that: (i) this Lease is in full force and effect, without modification except as
may be represented by Landlord; (ii) there are not uncured defaults in
Landlord's performance. Tenant also agrees to provide the most current three (3)
years of audited financial statements within five (5) days of a request by
Landlord for Landlord's use in financing the Premises with commercial lenders.
37. OPTION TO EXTEND THE LEASE TERM:
▇. ▇▇▇▇▇ and Exercise of Option: Landlord hereby grants to Tenant,
upon and subject to the terms and conditions set forth in this paragraph,
two (2) options (the "Options") to extend the Lease Term for an additional
term (the "Option Term"), each Option Term shall be for a period of
thirty-six (36) months. Each such Option shall be exercised, if at all, by
written notice to Landlord no earlier than the date that is fifteen (15)
months prior to the Expiration Date (which as used in this Paragraph 37.A
in connection with the second Option, shall mean the date of Expiration of
the first
Page 22
Option Term), but no later than the date that is nine (9) months prior to the
Expiration Date. If Tenant exercises the Option, each of the terms, covenants
and conditions of this Lease except this paragraph shall apply during the Option
Term as though the expiration date of the Option Term was the date originally
set forth herein as the Expiration Date, provided that the Base Monthly Rent to
be paid by Tenant during the Option Term shall be the greater of (i) the Base
Monthly Rent applicable to the period immediately prior to the commencement of
the Option Term, or (ii) 95% of the then Fair Market Rental, as hereinafter
defined, for the Premises for the Option Term. Anything contained herein to the
contrary notwithstanding, if Tenant is in monetary or material non-monetary
default under any of the terms, covenants or conditions of this Lease either at
the time Tenant exercises the Option or at any time thereafter prior to the
commencement date of the Option Term, Landlord shall have, in addition to all of
Landlord's other rights and remedies provided in this Lease, the right to
terminate the Option upon notice to Tenant, in which event the expiration date
of this Lease shall be and remain the Expiration Date. As used herein, the term
"Fair Market Rental" for the Premises shall mean the rental and all other
monetary payments including any escalations and adjustments thereto (including
without limitation Consumer Price Indexing) then being obtained for new leases
of space comparable in age and quality to the Premises in the locality of the
Building that Landlord could obtain during the Option Term from a third party
desiring to lease the Premises for the Option Term based upon the current use
and other potential uses of the Premises. Fair Market Rental shall further take
into account (i) that Tenant is in occupancy of the Premises and making
functional use of the space in its then existing condition, and (ii) that no
brokerage commission is payable.
B. Determination of Fair Market Rental: If Tenant exercises the
Option, Landlord shall send to Tenant a notice setting forth the Fair
Market Rental for the Premises for the Option Term, on or before the date
that is twelve (12) months prior to the Expiration Date. If Tenant disputes
Landlord's determination of the Fair Market Rental for the Option Term,
Tenant shall, within (30) days after the date of Landlord's notice setting
forth the Fair Market Rental for the Option Term, send to Landlord a notice
stating that Tenant either (i) elects to terminate its exercise of the
Option, in which event the Option shall lapse and this Lease shall
terminate on the Expiration Date, or (ii) disagrees with Landlord's
determination of Fair Market Rental for the Option Term and elects to
resolve the disagreement as provided in paragraph 37.C below. If Tenant
does not send to Landlord a notice as provided herein, Landlord's
determination of the Fair Market Rental shall be the basis for determining
the Base Monthly Rent to be paid by Tenant hereunder during the Option
Term. If Tenant elects to resolve the disagreement as provided in paragraph
37.C below and such procedures shall not have been concluded prior to the
commencement date of the Option Term, Tenant shall pay as Base Monthly Rent
to Landlord the Fair Market Rental as determined by Landlord in the manner
provided above. If the amount of Fair Market Rental as finally determined
pursuant to paragraph 37.C below is greater than Landlord's determination,
Tenant shall pay to Landlord the difference between the amount paid by
Tenant and the Fair Market Rental as so determined in paragraph 37.C below
within 30 days after the determination. If the Fair Market Rental as
finally determined in paragraph 37.C below is less than Landlord's
determination, the
Page 23
difference between the amount paid by Tenant and the Fair Market Rental as so
determined in paragraph 37.C below shall be credited against the next
installments of rent due from Tenant to Landlord hereunder.
C. Resolution of a Disagreement over the Fair Market Rental: Any
disagreement regarding the Fair Market Rental shall be resolved as follows:
1. Within thirty (30) days after Tenant's response to Landlord's
notice to Tenant of the Fair Market Rental, Landlord and Tenant shall
meet no less than two (2) times, at a mutually agreeable time and
place, to attempt to resolve any such disagreement.
2. If within the thirty (30) day period referred to in (1) above,
Landlord and Tenant can not reach agreement as to the Fair Market
Rental, they shall each select one appraiser to determine the Fair
Market Rental. Each such appraiser shall arrive at a determination of
the Fair Market Rental and submit their conclusions to Landlord and
Tenant within thirty (30) days after the expiration of the thirty (30)
day consultation period described in (1) above.
3. If only one appraisal is submitted within the requisite time
period, it shall be deemed to be the Fair Market Rental. If both
appraisals are submitted within such time period, and if the two
appraisals so submitted differ by less than ten percent (10%) of the
higher of the two, the average of the two shall be the Fair Market
Rental. If the two appraisals differ by more than ten percent (10%) of
the higher of the two, then the two appraisers shall immediately
select a third appraiser who shall within thirty (30) days after his
or her selection make a determination of the Fair Market Rental and
submit such determination to Landlord and Tenant. This third appraisal
will then be averaged with the closer of the two previous appraisals
and the result shall be the Fair Market Rental.
4. All appraisers specified pursuant to this paragraph shall be
members of the American Institute of Real Estate Appraisers with not
less than ten (10) years experience appraising office and industrial
properties in the Santa ▇▇▇▇▇ Valley. Each party shall pay the cost of
the appraiser selected by such party and one-half of the cost of the
third appraiser.
38. OPTIONS: All Options provided Tenant in this Lease are personal and
granted to Tenant and are not exercisable by any third party should Tenant
assign or sublet all or a portion of its rights under this Lease, unless
Landlord consents to permit exercise of any option by any assignee or subtenant,
in Landlord's sole discretion. In the event that Tenant hereunder has any
multiple options to extend this Lease, a later option to extend the Lease cannot
be exercised unless the prior option has been so exercised.
39. QUIET ENJOYMENT: Upon Tenant's faithful and timely performance of all
the terms and covenants of the Lease and except as otherwise provided in this
Lease, Tenant shall quietly have
Page 24
and hold the Premises for the Lease Term and any extentions thereof.
40. BROKERS: Tenant represents it has not utilized or contacted a real
estate broker or finder with respect to this Lease other than CPS Commercial
Property Services and Tenant agrees to indemnify and hold Landlord harmless
against any claim, cost, liability or cause of action asserted by any other
broker or finder claiming through Tenant.
41. LANDLORD'S LIABILITY: If Tenant should recover a money judgment against
Landlord arising in connection with this Lease, the judgment for any item other
than Landlord's Indemnity Obligation shall be satisfied only out of the greater
of (i) Landlord's interest in the Premises including the improvements and real
property, or (ii) Four Hundred Thousand Dollars ($400,000.00). Neither Landlord
or any of its partners, officers, directors, agents, trustees, shareholders or
employees shall be liable personally for any deficiency. Further, Tenant
expressly waives any and all rights to proceed against the individual partners
or the officers, directors or shareholders of any corporate partner, except to
the extent of their interest in said limited partnership.
42. AUTHORITY OF PARTIES: Tenant represents and warrants that it is duly
formed and in good standing and is duly authorized to execute and deliver this
Lease on behalf of said corporation, in accordance with a duly adopted
resolution of the Board of Directors of said corporation or in accordance with
the by-laws of said corporation, and that this Lease is binding upon said
corporation in accordance with its terms. At Landlord's request, Tenant shall
provide Landlord with corporate resolutions or other proof in a form acceptable
to Landlord, authorizing the execution of the Lease.
43. TRANSPORTATION DEMAND MANAGEMENT PROGRAMS: Should a government agency
or municipality require Landlord to institute TDM (Transportation Demand
Management) facilities and/or program, Tenant hereby agrees that the cost of TDM
imposed facilities required on the Premises, including but not limited to
employee showers, lockers, cafeteria, or lunchroom facilities, shall be included
as Tenant Improvement Costs and any ongoing costs or expenses associated with a
TDM program, such as an on-site TDM coordinator, which are required for the
Premises and not provided by Tenant shall be provided by Landlord with such
costs being included as additional rent and reimbursed to Landlord by Tenant.
44. DISPUTE RESOLUTION: Except for the failure by Tenant to timely pay Base
Monthly Rent, any controversy, dispute, or claim of whatever nature arising out
of, in connection with, or in relation to the interpretation, performance or
breach of this Lease, including any claim based on contract, tort, or statute,
shall be resolved at the request of any party to this Lease through a two-step
dispute resolution process administered by JAMS or another judicial and
mediation service mutually acceptable to the parties involving first mediation,
followed, if necessary, by final and binding arbitration administered by and in
accordance with the then existing rules and practice of the judicial
Page 25
and mediation service selected, and judgment upon any award rendered by the
arbitrator(s) may be entered by any State or Federal Court having jurisdiction
thereof.
45. LEASE GUARANTY: A material provision of the Lease and a material
inducement of Landlord to enter into this Lease is the guaranty of this Lease by
Precision Echo, Inc., a Delaware Corporation, ("Guarantor") which is attached
hereto as Exhibit "C" and made a part thereof.
46. MISCELLANEOUS PROVISIONS:
A. Rent: All monetary sums due from Tenant to Landlord under this
Lease, including, without limitation those referred to as "additional rent",
shall be deemed to be rent.
B. Performance by Landlord: If Tenant fails to perform any obligation
required under this Lease or by laws or governmental regulation, Landlord in its
sole discretion may, without notice and without releasing Tenant from its
obligations hereunder or waiving any rights or remedies, perform such
obligation, in which event Tenant shall pay Landlord as additional rent all sums
paid by Landlord in connection with such substitute performance including
interest as provided in paragraph 46.D below within 10 days following Landlord's
written notice for payment.
C. Interest: All rent due hereunder, if not paid when due, shall bear
interest at the maximum rate permitted under California law accruing from the
date due until the date paid to Landlord.
D. Rights and Remedies: All rights and remedies hereunder are
cumulative and not alternative to the extent permitted by law and are in
addition to all other rights and remedies in law and in equity.
E. Survival of Indemnities: All indemnification, defense, and hold
harmless obligations of Landlord and Tenant under this Lease shall survive the
expiration or sooner termination of the Lease.
F. Severability: If any term or provision of this Lease is held
unenforceable or invalid by a court of competent jurisdiction, the remainder of
the Lease shall not be invalidated thereby but shall be enforceable in
accordance with its terms, omitting the invalid or unenforceable term.
G. Choice of Law: This Lease shall be governed by and construed in
accordance with California law. Venue shall be Santa ▇▇▇▇▇ County.
H. Time: Time is of the essence hereunder.
I. Entire Agreement: This instrument contains all of the agreements
and conditions
Page 26
made between the parties hereto and may not be modified orally or in any other
manner other than by an agreement in writing signed by all of the parties hereto
or their respective successors in interest.
J. Representations: Tenant acknowledges that neither Landlord nor any
of its employees or agents have made any agreements, representations,
warranties or promises with respect to the demised Premises or with respect to
present or future rents, expenses, operations, tenancies or any other matter.
Except as herein expressly set forth herein, Tenant relied on no statement of
Landlord or its employees or agents for that purpose.
K. Headings: The headings or titles to the paragraphs of this Lease
are not a part of this Lease and shall have no effect upon the construction or
interpretation of any part thereof.
L. Exhibits: All exhibits referred to are attached to this Lease and
incorporated by reference.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease on the day
and year first above written.
Landlord: South San ▇▇▇▇ Interests, Tenant: Ahead Technology, Inc.
a California Limited Partnership a Delaware Corporation
By:________________________________ By:________________________________
Its:_______________________________ Its:_______________________________
Page 27
EXHIBIT "A" - Premises
Page 28
EXHIBIT "B" - Tenant Improvements
Page 29
EXHIBIT "C" - Lease Guaranty
This Guaranty of Lease ("Guaranty") is made as of the ___________ day of July by
Precision Echo, Inc., a Delaware Corporation ("Guarantor") in favor of Landlord,
and recites as follows:
WHEREAS, as an inducement for Landlord to enter into the Lease, Guarantor
desires to guarantee the full performance of all obligations of Tenant under the
Lease upon the terms set forth below.
NOW THEREFORE, in consideration of the execution of the Lease by Landlord,
Guarantor unconditionally guarantee and agree as follows:
1. Guaranty. Guarantor, continually, directly and unconditionally hereby
guarantee the full performance by Tenant of each and every term, covenant,
condition and obligation of the Lease to be performed by Tenant (the foregoing
obligations are hereinafter sometimes collectively referred to as the
"Guaranteed Obligations"). The Guaranteed Obligations shall include, without
limitation, the payment of Base Rent, Additional Rent and all other sums
becoming due under the Lease and the compliance with all the provisions of the
Lease which relate to Hazardous Materials.
2. Continuing Guaranty. This Guaranty is a continuing one and shall
terminate only upon the full and complete performance by Tenant of all of the
Guaranteed Obligations. Guarantor's liability under this Guaranty with respect
to the full and unconditional performance of the Guaranteed Obligations shall
continue following the termination of the Lease Term to the extent any of the
Guaranteed Obligations have not otherwise been performed. Guarantor may not
revoke the continuing nature of this Guaranty. In the event that Landlord should
seek to enforce any of its rights provided in this Guaranty, and demand payment
or performance from Guarantor, such demand and compliance thereto shall not
release, extinguish, exonerate or, in any way, affect or diminish Guarantor's
continuing obligations hereunder.
3. Lease Modifications. This Guaranty shall continue in full force and
effect as to any and all renewals, modifications, amendments or extensions of
the Lease, whether or not Guarantor shall have received any notice of or
consented to such renewals, modifications, amendments or extensions. No renewal,
modification, amendment or extension of the Lease shall in any manner release,
discharge or diminish the obligations of Guarantor hereunder. This paragraph
modifies the provision of California Civil Code Section 2819.
4. Assignment by Landlord. Landlord may, without notice, assign, transfer,
hypothecate, encumber or otherwise dispose of, in whole or in part, any of
Landlord's rights, claims or interests in the Lease, the Premises or this
Guaranty. No assignment, hypothecation, encumbrance, disposition or other
transfer of the Lease, the Premises or this Guaranty shall operate to extinguish
or diminish in any way, the obligations of Guarantor hereunder.
Page 30
5. Assignment by Tenant. This Guaranty shall continue and remain
unconditionally unaffected by an assignment of the Lease by Tenant, any sublet
by Tenant of the Premises, or any change in the entity comprising Tenant. Upon
any assignment of the Lease or any sublet, the Guarantor shall continue to
remain liable and obligated for the full performance by Tenant's successor of
the Guaranteed Obligations. "Tenant" as used in this Guaranty shall include all
successors and assigns of Tenant.
6. Addition or Release of Security. This Guaranty shall remain in full
force and effect notwithstanding the receipt by Landlord of any additional
security, whether from Guarantor, Tenant or a third party, securing the
performance of the Guaranteed Obligations. The release by Landlord of any
security held for the performance of any of the Guaranteed Obligations shall not
release, extinguish or, in any way, affect or diminish the obligations of
Guarantor hereunder.
7. Losses Due to Lease Default. Landlord may terminate the Lease upon
default by Tenant of any term, covenant or condition of the Lease. Such
termination, however shall not extinguish, release or, in any way, affect or
diminish the obligations of Guarantor hereunder. In no event shall Landlord be
obligated to lease the Premises to Guarantor after such termination. Upon
termination of the Lease, as a result of Tenant's default thereunder, this
Guaranty shall extend to the payment to Landlord of all damages payable by
Tenant.
Landlord shall permit Guarantor to use the Premises during the Lease Term,
provided (i) Tenant has abandoned the Premises and is in default under the
Lease, (ii) Guarantor has cured Tenant's default, (iii) Guarantor abides by all
the terms and conditions of the Lease, and (iv) such use by Guarantor is does
not conflict with the Tenant's rights under the Lease.
8. Actions of Landlord. This Guaranty shall not be released, extinguished,
modified or, in any way, affected or diminished by failure, on the part of
Landlord, to enforce any or all of the rights or remedies of Landlord under the
Lease, or by Landlord's grant of any indulgences or extensions of time to Tenant
of the performance of any of the Guaranteed Obligations. This Guaranty shall
remain in full force and effect notwithstanding the failure of Landlord to
insist, in any one or more instances, upon a strict performance or observance of
the Guaranteed Obligations or upon the exercise of any of Landlord's rights
under the Lease. Receipt by Landlord of Base Rent or other performance from
Tenant, after breach by Tenant, with knowledge of such breach, shall not be
deemed a waiver of such breach. Any reference herein to any liability of Tenant
shall, at the same time, refer to obligations of Guarantor hereunder.
9. Ability to Proceed Directly Against Guarantor. Landlord may, at
Landlord's option, proceed immediately and directly against Guarantor, jointly
or severally, in order to enforce the performance of the Guaranteed Obligations
under the Lease. Landlord shall not be required, in order to enforce its rights
hereunder upon the default of Tenant, to first institute suit, proceedings, or
otherwise exhaust its legal remedies against Tenant. With respect to defaults by
Tenant for which
Page 31
Landlord elects to proceed against Guarantor, Landlord shall provide Guarantor
with written notice of such default prior to proceeding against Guarantor
hereunder.
10. Guarantor's Additional Covenants. Until all of the Guaranteed
obligations are fully performed and observed, Guarantor covenant that they: (i)
shall have no right of subrogation against Tenant by reason of any payments or
acts of performance by Guarantor in compliance with the obligations of Guarantor
hereunder; (ii) shall have no right to enforce any remedy which Guarantor now or
hereafter shall have against Tenant by reason of any one or more payments or
acts of performance by Guarantor in compliance with the obligations of Guarantor
hereunder; and (iii) shall subordinate any liability or indebtedness of Tenant,
now or hereafter held by Guarantor, to the obligations of Tenant to Landlord
under the Lease, during the period that Tenant is in default under the Lease.
11. Guarantor's Waivers. Guarantor hereby waive: (i) all statues of
limitations as a defense to any action brought against any or all Guarantor, by
Landlord, to enforce this Guaranty with respect to Tenant's obligations to pay
Base Rent, Additional Rent and other sums becoming due under the Lease to the
fullest extent permitted by law; (ii) all defenses based upon any legal
disability of Tenant or any discharge or limitation of liability of Tenant, to
Landlord, whether consensual or arising by operation of law or any bankruptcy,
insolvency or debtor-relief proceeding or from any other cause; and (iii) all
rights to be exonerated hereunder pursuant to the provisions of California Civil
Code Section 2819 and/or 2845 and/or 2850 and pursuant to any other statute or
rule of law of similar import.
12. Status of Tenant. Guarantor represent and warrant that as of the date
of execution and delivery of this Lease Guaranty, (i) Tenant is under no
disability in connection with the execution and delivery of the Lease and (ii)
there are no defenses to Tenant's full performance and payment of the
obligations required by the Lease.
13. Guarantor Remain Liable to Landlord. Tenant, or any persons or entities
comprising Tenant, may be released from Tenant's obligations under the Lease,
with notice to Guarantor and Guarantor's consent, which consent shall be deemed
given unless Guarantor objects within ten (10) business days of receipt of
notice, and Guarantor shall nevertheless remain liable to Landlord under this
Guaranty.
14. Enforcement of Guaranty Upon Default. The enforcement of this Guaranty
upon the default of Tenant shall not constitute an assignment to Guarantor, by
Landlord, of any rights or claims which Landlord may have against Tenant. the
provisions of paragraph 10 above notwithstanding, provided Tenant's default has
been cured by Guarantor and Guarantor continues to perform its obligations to
Landlord under this Lease Guaranty, Landlord shall not restrict Guarantor's
right to seek damages from Tenant.
Page 32
unconditional and independent of those of Tenant under the Lease. Guarantor
shall punctually perform their obligations hereunder upon demand by Landlord.
This Guaranty shall be binding upon the Guarantor, their respective successors
and assigns.
16. Other Guarantor. This Guaranty shall remain in full force and effect,
notwithstanding that other guarantors from time to time may guarantee or
otherwise become responsible for the performance of any of the terms, covenants
and conditions of the Lease.
17. Right of Set-Off. In enforcing this Guaranty, Landlord reserves the
right to set-off any claims or rights Guarantor may have against Landlord,
whether or not such claims or rights arise out of Lease or otherwise. Failure of
Landlord to so set-off shall not constitute a waiver of any future rights of
set-off that Landlord may exercise.
18. Rights Cumulative. All rights of Landlord under this Guaranty are
cumulative and are in addition to any other rights which Landlord may otherwise
have.
19. Provisions Severable. The provisions of this Guaranty are severable,
and if any provision herein in invalid, the balance of this Guaranty shall
remain in force and effect to the fullest extent permitted by law.
20. Condemnation. In the event that the Premises, for any reason, are
condemned by a public entity, Guarantor shall have rights or claims to any
condemnation awards recovered by Landlord or Tenant therefrom.
21. Estoppel Certificate. Upon reasonable request and notice from Landlord,
Guarantor shall deliver to Landlord and to any prospective purchaser, mortgagee
and/or beneficiary under a deed of trust, or other lender designated by
Landlord, an estopped certificate, executed and acknowledged by Guarantor, to
the effect that this Guaranty is in full force and effect and has not been
amended or terminated. Guarantor shall also certify such other matters relating
to the Lease, the Premises or this Guaranty as may be reasonably requested by a
lender making a loan to Landlord or a purchase of the Premises from Landlord.
22. Bankruptcy of Tenant. This Guaranty shall remain and continue in full
force and effect, notwithstanding: (i) the commencement or continuation of any
case, action, or proceeding by, against or concerning Tenant, under any federal
or state bankruptcy, insolvency, or other debtor's relief law, including,
without limitation: (x) a case under Title 11 of the United States Code
concerning Tenant, whether under Chapter 7, 11 or 13 of such Title or under any
other Chapter, or (y) a case, action or proceeding seeking Tenant's financial
reorganization or an arrangement with any of Tenant's creditors; (ii) the
voluntary appointment of a receiver, trustee, keeper or other person who takes
possession of substantially all of Tenant's assets or on any asset used in
Tenant's business on the Premises, regardless of whether such appointment occurs
as result of
Page 33
insolvency or other cause; or (iii) the execution of an assignment for the
benefit of creditors of substantially all assets of Tenant available by law for
the satisfaction of judgment creditors.
23. No Condition Precedent. This Guaranty shall not be subject to any
condition precedent to the effectiveness hereof.
24. Attorney's Fees. In the event any action or proceeding should be
commenced by Landlord against Guarantor to enforce any of the terms, covenants
or conditions of this Guaranty, Landlord shall be entitled to recover from
Guarantor hereunder, in any such action or proceeding in which it shall prevail,
all reasonable attorneys' fees, costs and expenses.
25. Notice Provision. Any notice to be delivered hereunder shall be in
writing and shall be deemed delivered upon personal service or upon seventy-two
(72) hours after deposited in the U.S. Postal Service, postage prepaid,
registered or certified, return receipt requested, addressed as follows:
Precision Echo, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
26. Modifications in Writing. This Guaranty may not be changed, waived,
discharged or terminated orally or by course of conduct, but rather only by an
instrument in writing signed by the party against whom enforcement of the
charge, waiver, discharge or termination in sought.
27. Choice of Law. The parties agree that the terms of the Lease and this
Guaranty of Lease were negotiated in the County of Santa ▇▇▇▇▇, State of
California. This Guaranty of Lease shall be governed by and construed in
accordance with the laws of the State of California. Guarantor hereby submits to
the legal jurisdiction of the State of California and to the service of process
of any court of the State of California. The parties agree that all disputes
shall be determined by resort to the courts of California of competent
jurisdiction, with venue in Santa ▇▇▇▇▇ County.
28. Descriptive Headings. Descriptive headings are for reference purposes
only and shall not affect any meaning, construction or interpretation of this
Guaranty.
IN WITNESS WHEREOF, the undersigned Guarantor has executed this agreement as of
7/28/95, 1995.
GUARANTOR: Precision Echo, Inc.
(sig) VP Finance
By:_____________________________ Its:_____________________________
Page 34
EXHIBIT "D"-Permitted Chemicals
To include the list
submitted to Sobrato
SKC
Page 35