1
EXHIBIT 10.6
LIGHT INDUSTRIAL LEASE
between
Teachers Insurance and Annuity
Association of America
("Lessor")
and
Quintus, Inc.
("Lessee")
2
TABLE OF CONTENTS
Article Page
------- ----
1 BASIC LEASE TERMS 1
1.1 Commencement of Lease 1
1.2 Lease Term 1
1.3 Monthly Rent 1
1.4 Lessee's Pro Rata Share 1
1.5 Security Deposit 2
1.6 Use 2
2 PREMISES 2
2.1 Description 2
2.2 Possession 2
2.3 Early Entry 2
2.4 Condition of Premises 2
3 TERM 3
3.1 Term 3
3.2 Delay in Commencement 3
4 RENT 3
4.1 Monthly Rent 3
4.2 Mode of Payment 3
4.3 Late Charges 3
4.4 Security Deposit 4
5 TAXES 4
5.1 Real Property Taxes 4
5.2 Personal Property Taxes 5
6 INSURANCE 5
6.1 Property Rental Insurance - Premises 5
6.2 Property Insurance - Fixtures and Inventory 5
6.3 Lessor's Liability Insurance 5
6.4 Lessee's Liability Insurance 5
6.5 Waiver of Subrogation 5
6.6 Plate Glass Replacement 6
6.7 Workers' Compensation Insurance 6
(i)
3
Article Page
------- ----
7 MAINTENANCE 6
7.1 Maintenance - Premises 6
7.2 Maintenance - Building and Common Area 7
7.3 Common Area Expenses 7
7.4 Alterations, Changes and Additions by Lessee 9
7.5 Plumbing 10
7.6 Liens 10
8 UTILITIES 10
9 USE OF PREMISES 11
9.1 Use 11
9.2 Suitability 11
9.3 Uses Prohibited 11
10 DEFAULT PROVISIONS 12
10.1 Lessee's Default 12
10.2 Remedies 12
10.3 Default by Lessor 13
11 EXPIRATION OR TERMINATION 14
11.1 Surrender of Possession 14
11.2 Holding Over 14
11.3 Voluntary Surrender 14
12 CONDEMNATION OF PREMISES 14
12.1 Total Condemnation 14
12.2 Partial Condemnation 15
12.3 Award to Lessee 15
13 ENTRY BY LESSOR 15
14 INDEMNIFICATION 16
15 ASSIGNMENT AND SUBLETTING 16
16 DAMAGE OR DESTRUCTION 17
16.1 Right to Terminate on Destruction of Premises 17
16.2 Repairs by Lessor 18
16.3 Reduction of Rent During Repairs 18
(ii)
4
Article Page
------- ----
16.4 Arbitration 18
17 PARKING 18
18 COVENANTS, CONDITIONS AND RESTRICTIONS 18
19 HAZARDOUS MATERIALS 19
19.1 Definition 19
19.2 Use 19
19.3 Notice 19
19.4 Removal and Disposal 19
19.5 Indemnity 20
19.6 Right of Entry 20
19.7 Inspection 20
19.8 Surrender 20
19.9 Survival 21
19.10 Lessor's Covenant 21
20 BROKERS 21
20.1 Brokers 21
20.2 Commission 21
21 MISCELLANEOUS PROVISIONS 21
21.1 Waiver 21
21.2 Successors and Assigns 22
21.3 Notices 22
21.4 Partial Invalidity 22
21.5 Number and Gender 22
21.6 Descriptive Headings 22
21.7 Time is of the Essence 22
21.8 Entire Agreement 22
21.9 Memorandum of Lease 22
21.10 Applicable Law 22
21.11 Corporate Authority 23
21.12 Litigation Expense 23
21.13 Subordination of Leasehold 23
21.16 Lessee's Certificate 23
21.17 Attornment 24
(iii)
5
LIGHT INDUSTRIAL LEASE
This Light Industrial Lease ("Lease") is made and entered into this 6th
day of October, 1995, between Teachers Insurance and Annuity Association of
America, a New York corporation ("Lessor") and Quintus, Inc., a California
corporation ("Lessee").
ARTICLE I
BASIC LEASE TERMS
1.1 Commencement of Lease. The Term of this Lease shall commence on
October 15, 1995 (the "Commencement Date").
1.2 Lease Term. The Term of this Lease shall expire five (5) years and
two (2) months after the Commencement Date.
1.3 Monthly Rent. The base monthly rental shall be as follows:
Month of Term Base Monthly Rental
------------- -------------------
Oct 15, 1995 - Dec 14, 1995 $0.00/month
Dec 15, 1995 - Dec 14, 1997 $21,228.00/month
Dec 15, 1997 - Dec 14, 1998 $22,722.00/month
Dec 15, 1998 - Dec 14, 2000 $24,216.00/month
Notwithstanding anything to the contrary set forth above if Lessor terminates
this Lease because of Lessee's default, base monthly rental shall be deemed to
have been due and payable at the rate of Twenty-One Thousand Two Hundred
Twenty-Eight and no/100ths Dollars ($21,228.00) per month for the first two (2)
months of the Term.
Upon execution of this Lease by Lessor and Lessee, Lessee shall immediately
deliver to Lessor the Security Deposit set forth in Paragraph 1.5 and Twenty-One
Thousand Two Hundred Twenty-Eight and no/100ths Dollars ($21,228.00) as
prepayment of base monthly rental for the third (3rd) month of the Term.
As used in this paragraph, the first "rental month" shall mean the month
beginning on the Commencement Date and ending on the same day of the next
calendar month (the monthly "anniversary" of the Commencement Date), and each
succeeding rental month shall begin on the monthly "anniversary" of the
Commencement Date. If the Commencement Date does not fall on the first day of a
calendar month, then the rent payments payable for each partial calendar month
shall be prorated on a per diem basis, based on a 30 day month.
1.4 Lessee's Pro Rata Share. Lessee's pro rata share shall be sixty-nine
and 87/100ths percent (69.87%), the square footage of the Premises divided by
the square footage of the Building.
-1-
6
Lessee's pro rata share shall be adjusted appropriately if the amount of space
leased by Lessee in the Building increases.
1.5 Security Deposit. Seventy Thousand and no/100ths Dollars
($70,000.00).
1.6 Use. Software development, engineering, research & development,
sales and general office.
ARTICLE 2
PREMISES
2.1 Description. Lessor hereby leases to Lessee a portion of Building
105, consisting of approximately twenty-nine thousand eight hundred eighty-two
(29,882) square feet ("Premises"), and commonly known as ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, together with the right to use the
common areas of the parcel on which the Premises are located. EXHIBIT A further
describes the Premises being leased hereby, and the parcel of which the Premises
is a part ("Property"). Building 105 (the "Building") consists of a total area
of approximately forty-two thousand seven hundred sixty-eight (42,768) square
feet.
2.2 Possession. Lessor shall deliver possession of the Premises to
Lessee on the Commencement Date as hereinafter defined.
2.3 Early Entry. Lessee shall be permitted to enter the Premises prior
to the Commencement Date for the purpose of installing telephone and data
cabling, fixturing or any other purpose expressly permitted by Lessor. Such
early entry shall be subject to all the terms and provisions hereof, except for
the payment of base monthly rent which shall commence on the Commencement Date.
If, however, Lessee commences occupancy of the Premises prior to October 15,
1995, the Commencement Date and the schedule of base monthly rent set forth in
Paragraph 1.3 shall be revised to reflect such earlier date as the Commencement
Date of this Lease. Lessee shall coordinate such early entry with Lessor so as
minimize interference with any work that Lessor may be performing at the
Premises.
2.4 Condition of Premises. By taking possession of the Premises, Lessee
shall be deemed to have accepted the Premises and all improvements thereon in
their current "as is" condition, subject to all applicable laws, codes and
ordinances. Lessee acknowledges that neither Lessor nor its agents have made any
representations or warranties as to the suitability or fitness of the Premises
for the conduct of Lessee's business or for any other purpose, nor has Lessor
agreed to undertake any alterations or improvements to the Premises. Any
alterations or improvements to the Premises shall be constructed by Lessee, at
Lessee's sole expense, in accordance with the terms and conditions set forth in
Paragraph 7.4 below.
-2-
7
ARTICLE 3
TERM
3.1 Term. The Lease shall commence on the date determined pursuant to
Paragraph 1.1 (the "Commencement Date") and shall continue thereafter for the
term specified in Paragraph 1.2 unless sooner terminated pursuant to this Lease.
"Term" shall hereafter mean the term of this Lease.
3.2 Delay in Commencement. If for any reason Lessor cannot deliver
possession of the Premises to Lessee on the Commencement Date, such failure
shall not affect the validity of this Lease nor shall it extend the Term or
render Lessor liable to Lessee for any loss or damage resulting therefrom.
Notwithstanding any other provision of this Lease, if the Term of the Lease does
not commence on the scheduled Commencement Date because Lessor cannot deliver
possession of the Premises to Lessee, the Term of the Lease shall instead
commence on the date on which Lessor tenders possession of the Premises to
Lessee, and the Lease shall terminate sixty-two (62) months from the date on
which the Term of the Lease commences.
ARTICLE 4
RENT
4.1 Monthly Rent. Lessee shall pay to Lessor as base monthly rent for
the Premises in advance on the first day of each calendar month of the Term
without deduction, offset, prior notice or demand, in lawful money of the United
States, the sum specified in Paragraph 1.3. If the Commencement Date is not the
first day of a calendar month, the first monthly installment of base monthly
rent shall be applied on a per diem basis against payment of the base monthly
rent from the date base monthly rent is first payable until the first day of the
first succeeding calendar month. Any unused portion of said amount shall be
applied against payment of the base monthly rent for such first succeeding
calendar month, and the balance of the base monthly rent for that month shall be
due on the first day thereof. All additional amounts of rent or other charges
required to be paid by Lessee under this Lease shall be deemed additional rent.
4.2 Mode of Payment. Lessee shall pay all rent due hereunder to Lessor
c/o The ▇▇▇▇▇▇ Group, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, or any
such other place as Lessor may designate from time to time in writing.
4.3 Late Charges. Lessee hereby acknowledges that late payment by Lessee
to Lessor of rent and other sums due hereunder will cause Lessor 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, processing
and accounting charges, and late charges which may be imposed on the Lessor by
the terms of any mortgage or trust deed covering the Premises. Accordingly, if
any installment of rent or any other sum due from Lessee shall not be received
by Lessor or Lessor's designated agent within five (5) days after the date such
rent or other sum is due, Lessee shall pay to Lessor a late charge equal to five
percent (5%) of such overdue amount. The parties hereby agree that such late
charge represents a fair and reasonable estimate of the costs Lessor will incur
by reason of late payment by Lessee. Acceptance of such late charge by Lessor
shall in no event constitute a
-3-
8
waiver of lessee's default with respect to such overdue amount, nor prevent
Lessor from exercising any of the other rights and remedies granted hereunder.
4.4 Security Deposit. Concurrent with Lessee's execution of this Lease,
Lessee shall deposit with Lessor a security deposit ("Deposit") in the amount
specified in Paragraph 1.5. The Deposit shall be held for the faithful
performance by Lessee of all the terms, covenants and conditions of this Lease
to be kept and performed by Lessee. If Lessee defaults with respect to any
provisions of this Lease, including but not limited to the provisions relating
to the payment of rent and any of the monetary amounts due hereunder, Lessor may
(but shall not be required to) use, apply or retain any part or all of the
Deposit for the payment of any amount which Lessor may spend or become obligated
to spend by reason of Lessee's default or to compensate Lessor for any loss or
damage which Lessor may suffer by reason of Lessee's default. If any portion of
the Deposit is so used or applied, Lessee shall, within ten (10) days after
written demand therefor, deposit cash with Lessor in an amount sufficient to
restore the Deposit to its original amount. Lessee's failure to do so shall be a
material breach of this Lease. Lessor shall not be required to keep the Deposit
separate from its general funds, and Lessee shall not be entitled to any
interest on the Deposit. If Lessee fully and faithfully performs every provision
of this Lease to be performed by it, the Deposit, or balance thereof, shall be
returned to Lessee (or, at Lessor's option, to the last assignee of Lessee's
interest hereunder) at the expiration of the Term and after Lessee has vacated
the Premises. In the event of termination of Lessor's interest in this Lease,
Lessor shall transfer the Deposit to Lessor's successor in interest, whereupon
Lessee agrees to release Lessor from all liability for the return of such
deposit or the accounting therefor.
ARTICLE 5
TAXES
5.1 Real Property Taxes. Lessee shall pay all Real Property Taxes levied
against the Premises during the Term as provided in Paragraph 7.3 below. If the
Premises are not separately assessed, Lessee agrees to pay to Lessor its pro
rata share of all Real Property Taxes levied against the Property. As used
herein, "Real Property Taxes" shall include any form of assessment, license,
fee, levy, penalty or tax imposed by any authority having the direct or indirect
power to tax (excluding Lessor's income taxes), including any improvement
district, as against any legal or equitable interests of Lessor in the Property
or as against Lessor's business of renting the Property; provided, however, that
any so-called "rent tax" shall only be paid by Lessee if such rent tax is levied
in lieu of, and not in addition to, ad valorem real property taxes currently
levied against the Property. Lessee's share of Real Property Taxes shall be
equitably prorated to cover only the period of time within the fiscal tax year
during which this Lease is in effect. With respect to any assessments which may
be levied against or upon the Premises, and which may be paid in annual
installments, only the amount of such annual installments (with appropriate
proration for any partial year) and interest due thereon shall be included
within the compilation of the annual Real Property Taxes.
-4-
9
5.2 Personal Property Taxes. Lessee shall pay before delinquency all
taxes levied or assessed on Lessee's fixtures, improvements, furnishings,
merchandise, equipment and personal Property in and on the Premises, whether or
not affixed to the real property.
ARTICLE 6
INSURANCE
6.1 Property Rental Insurance - Premises. During the Term, Lessor shall
keep the Property insured against loss or damage by fire and those risks
normally covered by an "all risk" or " causes of loss - special form" policy of
property insurance for the full replacement cost thereof. Any recovery received
from said insurance policy shall be paid to Lessor.
6.2 Property Insurance - Fixtures and Inventory. During the Term, Lessee
shall, at its sole expense, maintain insurance with "all risk" or "causes of
loss - special form" coverage on any fixtures, leasehold improvements,
furnishings, merchandise, equipment or personal property in or on the Premises,
whether in place as of the date hereof or installed hereafter, for the full
replacement value thereof, and Lessee shall also have sole responsibility and
cost for maintaining any other types of insurance as Lessee elects to carry. Any
deductibles shall be paid by Lessee.
6.3 Lessor's Liability Insurance. During the Term, Lessor shall maintain
at its sole cost a policy or policies of commercial general liability insurance
insuring Lessor (and such others as designated by Lessor) against liability for
bodily injury, death and property damage on or about the Property, with combined
single limit coverage of not less than Two Million Dollars ($2,000,000).
6.4 Lessee's Liability Insurance. During the Term, Lessee shall, at its
sole expense, maintain for the mutual benefit of Lessor and Lessee, commercial
general liability and property damage insurance against claims for bodily
injury, death or property damage occurring in or about the Premises or arising
out of the use or occupancy of the Premises, with combined single limit coverage
of not less than Two Million Dollars ($2,000,000). The limits of such insurance
shall not limit the liability of Lessee. Lessee shall furnish to Lessor prior to
the Commencement Date, and at least thirty (30) days prior to the expiration
date of any policy, certificates indicating that the liability insurance
required of Lessee above is in full force and effect; that Lessor has been named
as an additional insured; and that all such policies will not be canceled
unless thirty (30) days' prior written notice of the proposed cancellation has
been given to Lessor. The insurance shall be with insurers reasonably approved
by Lessor and with policies in form reasonably satisfactory to Lessor. Said
policies shall provide that Lessor, although an additional insured, may recover
for any loss suffered by Lessor by reason of Lessee's negligence, and shall
include a broad form liability endorsement. Lessee's insurance shall be primary
and noncontributing with any other insurance available to Lessor.
6.5 Waiver of Subrogation. Lessor hereby releases Lessee, and Lessee
hereby releases Lessor, and their respective officers, agents, employees and
servants, from any and all claims or demands of damages, loss, expense or injury
to the Premises, or to the furnishings and fixtures and equipment, or inventory
or other property of either Lessor or Lessee in, about or upon the Premises,
-5-
10
which is caused by or results from perils, events or happenings which are the
subject of insurance carried by the respective parties and in force at the time
of any such loss; provided, however, that such waiver shall be effective only to
the extent permitted by the insurance covering such loss and to the extent such
insurance is not prejudiced thereby. Each party shall cause each insurance
policy obtained by it to provide that the insurance company waives all right of
recovery by way of subrogation against either party in connection with any
damage covered by any policy.
6.6 Plate Glass Replacement. Lessee shall replace, at its sole expense,
any and all plate glass and other glass in and about the Premises which is
damaged or broken by vandalism. If any plate glass or other glass in and about
the Premises is damaged or broken by causes other than vandalism, then Lessee
shall pay Lessor an amount equal to Lessor's cost of replacement, provided that
such amount shall not exceed the deductible then in effect on Lessor's insurance
policy, if any, covering the damaged glass. Nothing herein shall be construed to
require Lessor to carry plate glass insurance.
6.7 Workers' Compensation Insurance. Lessee shall, at its sole expense,
maintain and keep in force during the Term a policy or policies of Workers'
Compensation Insurance and any other employee benefit insurance sufficient to
comply with all applicable laws, statutes, ordinances and governmental rules,
regulations or requirements.
ARTICLE 7
MAINTENANCE
7.1 Maintenance - Premises. Throughout the Term, Lessee agrees to keep
and maintain the Premises and all improvements and appurtenances upon the
Premises, including all sewer connections, plumbing, heating and cooling
appliances, roof membrane, wiring and glass, in good order, condition and
repair, including the replacement of such improvements and appurtenances when
necessary, provided that Lessee shall not be responsible for insured damage to
the foregoing or damages to the foregoing caused by Lessor or its agents or by
other tenants. Lessee hereby expressly waives the provisions of any law
permitting repairs by a tenant at the expense of a landlord, including, without
limitation, all rights of Lessee under Section 1941 and 1942 of the California
Civil Code. Lessee agrees to keep the Premises clean and in sanitary condition
as required by the health, sanitary and police ordinances and regulation of any
political subdivision having jurisdiction, and provide, at its own expense,
trash removal and janitorial services. Lessee further agrees to keep the
interior of the Premises, such as the windows, floors, walls, doors, showcases
and fixtures clean and neat in appearance and to remove all trash and debris
which may be found in or around the Premises. If any repairs and/or maintenance
to be made by Lessee are necessary, Lessor shall have the right to cause such
repairs and/or maintenance to be made if Lessee fails to cause such repairs, or
commence to cause such repairs and diligently prosecute same to completion,
within fifteen (15) days after written notice from Lessor to Lessee. Lessee
agrees that upon demand, it shall pay to Lessor the cost of any such repairs,
together with accrued interest from the date of payment at the highest rate
allowable by law. Notwithstanding anything to the contrary above, Lessor may
elect to enter into one or more maintenance contracts with third parties for the
provision of all or a part of Lessee's maintenance obligations as set forth in
this paragraph, excluding
-6-
11
janitorial services. Upon such election, Lessee shall be relieved from its
obligations to perform only those maintenance obligations covered by such
maintenance contracts, and Lessee shall bear one hundred percent (100%) of the
cost of any such maintenance contracts to the extent applicable to the Premises.
All such costs shall be paid in advance on a monthly basis with Lessee's rent
payments. If Lessor elects to enter into one or more maintenance contracts with
third parties for the the provision of all or part of Lessee's maintenance
obligations, Lessor shall obtain competitive bids for such services and the
contracts entered into shall be at a fair market rate for the services provided.
7.2 Maintenance - Building and Common Area. Except for damage caused by
any negligent or intentional act or omission of Lessee, Lessee's employees,
suppliers, shippers, customers, or invitees (in which event Lessee shall repair
the damage) Lessor, at Lessor's expense, shall keep in good condition and repair
the foundations, exterior walls, the structural condition of interior bearing
walls, and the roof structure of the Building.
Lessor shall maintain the Common Areas of the Property in good working order and
condition, except that damage occasioned by the act of Lessee and not covered by
the insurance described in Article 6 shall be repaired by Lessor at Lessee's
expense. Lessee shall notify Lessor in writing of any repairs or maintenance to
the Common Areas which may be required and Lessor shall have a reasonable time
to make such repairs which shall not exceed thirty (30) days from the date of
Lessee's notice to Lessor unless such repairs and/or maintenance cannot
reasonably be completed within such 30-day period, in which event Lessor shall
have such additional time as may reasonably be required to complete such repairs
and/or maintenance. The Common Areas of the Property shall be comprised of all
non-leasable space including, but not limited to, sidewalks, parking areas,
private roadways within the Property, water amenities, exterior lighting and
landscaping.
7.3 Common Area Expenses.
(a) Common Area Expenses Defined. The term "Common Area
Expenses" shall mean all expenses, costs and disbursements of every kind and
nature which Lessor shall pay or become obligated to pay because of or in
connection with the ownership, management, maintenance, repair and operation of
the Building and Common Area and such additional Building or Common Area
facilities in subsequent years as may be determined by Lessor to be necessary,
including but not limited to, the following:
(i) wages and salaries of all employees engaged in the
operation, maintenance and security of the Building and Common Area, including
taxes, insurance and benefits relating thereto, and the rental cost of overhead
of any office and storage space used to provide such services;
(ii) cost of all supplies, materials and labor used in
the operation, repair, replacement and maintenance of the Building and Common
Area;
(iii) cost of all utilities, including surcharges, for
the Common Area, including the cost of water, sewer, gas, power, heating,
lighting, air conditioning and ventilating; and the cost of all license, permit
and inspections fees;
-7-
12
(iv) cost of all insurance which Lessor or Lessor's
lender deems necessary for the Building and Common Area such as the cost of
"All-Risk" property insurance, including, at Lessor's option, earthquake and
flood coverage, insurance against loss of rents on an "All-Risk" basis; and
casualty and liability insurance applicable to the Building and Lessor's
personal property used in connection therewith;
(v) cost of repairs and general maintenance of the
Building and Common Area (excluding repairs and general maintenance paid by
proceeds of insurance or by Lessee pursuant to Article 7, or other third
parties, and alterations attributable solely to lessees of the Building);
(vi) a reasonable management fee for the manager of the
Building consistent with management fees charged by owners of similar properties
in the market area of the Property;
(vii) the reasonable cost at market rates of any
additional services not provided to the Building and Common Area at the
Commencement Date, but thereafter provided by Lessor in its management of the
same;
(viii) the cost of any capital improvements made to the
Building after the Commencement Date that reduce other operating expenses or are
required under any governmental law or regulation that was not applicable to the
Building at the time it was constructed, such cost thereof to be amortized over
such reasonable period as Lessor shall determine consistent with applicable
governmental requirements; and
(ix) Real Property Taxes.
(b) Exclusions from Common Area Expenses. Common Area Expenses
shall not include: (i) the cost of any additional or extraordinary services
provided to other tenants of the Building; (ii) costs paid for directly by
Lessee. (iii) principal and interest payment on loans secured by deeds of trust
recorded against the Building; (iv) real estate sales or leasing brokerage
commissions; (v) legal and accounting fees; (vi) executive salaries of off-site
personnel employed by Lessor excepting the management fee referenced in
Paragraph 7.3(a)(vi) above; (vii) the cost of any repairs to the foundations,
exterior walls, the structural condition of interior bearing walls, or the roof
structure of the Building; or (viii) Hazardous Materials clean-up costs except
as otherwise provided in Article 19. Additionally, Common Area Expenses shall
not include all utilities and janitorial services which shall be contracted for
and paid for by Lessee, commencing on the Lease Commencement Date.
(c) Adjustment.
(i) Monthly Payments. Lessee shall pay to Lessor on the
first day of each calendar month of the Term, an amount estimated by Lessor to
be Lessee's pro rata share of the Common Area Expenses. The Common Area Expenses
may be adjusted by Lessor at the end of any calendar quarter on the basis of
Lessor's experience and reasonably anticipated costs. Any such
-8-
13
adjustment shall be effective as of the calendar month next succeeding receipt
by Lessee of written notice of such adjustment.
(ii) Accounting. Within one hundred twenty (120) days
following the end of each calendar year, Lessor shall furnish to Lessee a
statement of Lessee's pro rata share of the actual Common Area Expenses (the
"Actual Expenses") for the calendar year and the payments made by Lessee with
respect to such period. If the Common Area Expenses paid by Lessee for such
period are less than the amount of Actual Expenses, Lessee shall pay Lessor the
deficiency within ten (10) days after receipt of such statement. Any overpayment
made by Lessee shall be credited against the next monthly payment(s) of Common
Area Expenses due from Lessee.
(iii) Proration. Lessee's obligation to pay Common Area
Expenses shall be prorated on the basis of a 365-day year to account for any
fractional portion of a year included at the commencement or expiration of the
Term of this Lease.
(iv) Survival. Lessee's obligation to pay for any Common
Area Expenses pursuant to this paragraph shall survive any termination of this
Lease for a period of eighteen (18) months.
7.4 Alterations, Changes and Additions by Lessee. No changes,
alterations, or additions shall be made by Lessee to the Premises without the
prior written consent of Lessor which Lessor will not unreasonably withhold,
except that Lessor's consent shall not be required for minor, nonstructural
changes, alterations or additions to the Premises that do not affect the
Building systems, provided that the cost of such changes, alterations or
additions does not exceed $5,000.00 per work of improvement or $25,000.00 in the
aggregate over the term of the Lease. Lessor shall have the right, however, to
withhold its consent to structural or exterior changes at Lessor's sole and
absolute discretion. As used herein, alterations include utility installations
such as ducting, power panels, fluorescent fixtures, base heaters, conduit and
wiring. As a condition to giving such consent, Lessor may require that Lessee
agree to remove any such alterations, additions or improvements at the
expiration of the term and to restore the Premises to their prior condition and
that Lessee provide Lessor a payment and completion bond from a California
surety company at Lessee's expense. All changes, alterations or additions to be
made to the Premises shall be under the supervision of a competent architect and
made in accordance with plans and specifications which have been furnished to
and approved by Lessor prior to commencement of work. If the written consent of
Lessor to any proposed alterations by Lessee shall have been obtained, Lessee
agrees to advise Lessor in writing of the date upon which such alterations will
commence in order to permit Lessor to post a notice of nonresponsibility. All
such alterations, changes and additions shall be constructed in a good and
workmanlike manner in accordance with all ordinances and laws relating thereto.
With respect to any improvements which Lessee is entitled to make hereunder,
Lessee shall use only duly qualified, reputable and licensed contractors and
subcontractors for any work commenced after the Commencement Date. Lessee's
selection of contractors and subcontractors shall be subject to Lessor's prior
written approval, which shall not be unreasonably withheld. Lessee shall provide
to Lessor copies of all plans, specifications and drawings of all changes,
alterations and additions prior to the commencement of any work relating
thereto. All leasehold improvements made by Lessee
-9-
14
shall remain the property of Lessee during the Term and Lessee shall have the
night to depreciate or amortize the cost of the same and claim and collect
investment tax credits and all other tax benefits with respect to such
improvements. At the end of the Term, Lessee shall, at Lessor's sole discretion,
remove all leasehold improvements installed by it.
7.5 Plumbing. Lessee shall not use the plumbing facilities for any
purpose other than that for which they were constructed. The expense of any
breakage, stoppage or other damage relating to the plumbing and resulting from
the introduction by Lessee, its agents, employees or invitees of foreign or
harmful substances into the plumbing facilities shall be borne by Lessee.
7.6 Liens. Lessee shall keep the Premises and the Building free from any
liens arising out of work performed, materials furnished or obligations incurred
by Lessee and shall indemnify, hold harmless and defend Lessor from any liens
and encumbrances arising out of any work performed or materials furnished by or
at the direction of Lessee. In the event that Lessee shall not, within twenty
(20) days following the imposition of any such lien and notice of the same to
Lessee, cause such lien to be released of record by payment or posting of a
proper bond, Lessor shall have, in addition to all other remedies provided
herein and by law, the right, but not the obligation, to cause the same to be
released by such means as it shall deem proper, including payment of the claim
giving rise to such lien. All such sums paid by Lessor and all expenses incurred
by it in connection therewith including reasonable attorneys' fees and costs
shall be payable to Lessor by Lessee on demand with interest at the highest rate
allowable by law. Lessor shall have the right at all times to post and keep
posted on the Premises any notices permitted or required by law, or which are
proper, for the protection of Lessor and the Premises, and any other party
having an interest herein, from mechanics, and materialmen's liens, and Lessee
shall give to Lessor at least ten (10) business days' prior written notice of
the expected date of commencement of any work relating to changes, alterations
or additions to the Premises.
ARTICLE 8
UTILITIES
Lessee shall pay prior to delinquency throughout the Term the cost of water,
gas, heating, cooling, sewer, telephone, electricity, garbage, air conditioning
and ventilating, janitorial services, landscape maintenance (except Common Area
landscape maintenance) and all other materials and utilities supplied to the
Premises. If any such services are not separately metered to Lessee, Lessee
shall pay Lessee's pro rata share of all charges which are jointly metered,
unless Lessor reasonably determines that Lessee is utilizing more than Lessee's
pro rata share of any such utilities, in which event Lessee shall pay for its
actual usage of any such utilities as reasonably determined by Lessor, and in
either event payment shall be made by Lessee within fifteen (15) days of receipt
of the statement for such charges.
-10-
15
ARTICLE 9
USE OF PREMISES
9.1 Use. The Premises shall be used and occupied by Lessee for only the
purposes specified in Paragraph 1.6 and for no other purposes whatsoever without
obtaining the prior written consent of Lessor, which shall not be unreasonably
withheld.
9.2 Suitability. This Lease shall be subject to all applicable zoning
ordinances and to any municipal, county and state laws and regulations governing
and regulating the use of the Premises. Lessee acknowledges that neither Lessor
nor Lessor's agent has made any representation or warranty as to the suitability
of the Premises for the conduct of Lessee's business.
9.3 Uses Prohibited.
(a) Rate of Insurance. Lessee shall not do or permit anything to
be done in or about the Premises which will cause an increase in the existing
rate of insurance upon the Premises (unless Lessee shall pay an increased
premium as a result of such use or acts) or cause the cancellation of any
insurance policy covering the Premises or the Building of which the Premises may
be a part, nor shall Lessee sell or permit to be kept, used or sold in or about
such Premises any articles which may be prohibited by a standard form policy of
fire insurance.
(b) Interference With Other Tenants. Lessee shall not do or
permit anything to be done in or about the Premises which will in any way
obstruct or interfere with the rights of other tenants or occupants of the
Building or injure or annoy them or use or allow the Premises to be used for any
unlawful purpose, nor shall Lessee cause, maintain or permit any nuisance in, or
about the Premises. Lessee shall not commit or suffer to be committed any waste
in or upon the Premises.
(c) Applicable Laws. Lessee shall not conduct any auctions on
the Premises or use the Premises or permit anything to be done in or about the
Premises which will in any way conflict with any law, statute, zoning
restriction, ordinance, governmental rule, regulation or requirements of duly
constituted public authorities whether now in force or which may hereafter be
enacted or promulgated. Lessee shall at its sole cost and expense promptly
comply with all laws, statutes, ordinances and governmental rules, regulations
or requirements now in force or which may hereafter be in force (including the
Americans With Disabilities Act as it applies to the Premises and to any portion
of the Property affected by Lessee's use of the Premises) and with the
requirements of any board of fire underwriters or other similar body now or
hereafter constituted relating to Lessee's use or occupancy of the Premises. The
judgment of any court of competent jurisdiction and exhaustion of any appeals
periods, or the admission of Lessee in any action against Lessee whether Lessor
be a party thereto or not, that Lessee has violated any law. statute, ordinance
or government rule, regulation or requirement, shall be conclusive of that fact
as between Lessor and Lessee.
(d) Signs. Lessee shall not place any sign upon the Premises
without Lessor's prior written consent, which consent shall not be unreasonably
withheld. Lessee shall have the right to install, at Lessee's sole expense, one
sign on the Building exterior, subject to Lessor's consent as to the exact
location, size, style and color of the sign, the CC&Rs (defined in Article 18)
and all
-11-
16
applicable governmental regulations. Upon the expiration or sooner termination
of this Lease, Lessee shall remove its signage from the Building and shall
repair any damage to the Building caused by the installation and/or removal of
Tenant's signage.
ARTICLE 10
DEFAULT PROVISIONS
10.1 Lessee's Default. A default under this Lease by Lessee shall exist
if any of the following occurs:
(a) If Lessee fails to pay base monthly rent or any other sum
required to be paid hereunder when due and Lessee fails to cure such breach
within five (5) days after written notice from Lessor; provided, however, that
such notice shall be in lieu of, and not in addition to, any notice required
under Section 1161 of the California Code of Civil Procedure;
(b) If Lessee fails to perform any term, covenant or condition
of this Lease except those requiring the payment of money, and Lessee fails to
cure such breach within twenty (20) days after written notice from Lessor where
such breach could reasonably be cured within such twenty (20) day period;
provided, however, that where such failure could not reasonably be cured within
the twenty (20) day period, that Lessee shall not be in default if it commences
such performance within the twenty (20) day period and diligently thereafter
prosecutes the same to completion;
(c) If Lessee assigns its assets for the benefit of its
creditors;
(d) If the sequestration or attachment of or execution on any
material part of Lessee's property essential to the conduct of Lessee's business
occurs, and Lessee fails to obtain a return or release of such property within
thirty (30) days thereafter, or prior to sale pursuant to such sequestration,
attachment or levy, whichever is earlier;
(e) If Lessee abandons or vacates the Premises and ceases to pay
rent; or
(f) If a court makes or enters any decree or order other than
under the bankruptcy laws of the United States adjudging Lessee to be insolvent;
or approving as properly filed a petition seeking reorganization of Lessee; or
directing the winding up or liquidation of Lessee and such decree or order shall
have continued for a period of thirty (30) days.
10.2 Remedies. Upon a default, Lessor shall have the following remedies,
in addition to all other rights and remedies provided by law or otherwise
provided in this Lease, to which Lessor may resort cumulatively or in the
alternative:
(a) Lessor may continue this Lease in full force and effect, and
this Lease shall continue in full force and effect as long as Lessor does not
terminate this Lease, and Lessor shall have the right to collect base monthly
rent and other charges due hereunder when due.
-12-
17
(b) Lessor may terminate Lessee's night to possession of the
Premises at any time by giving written notice to that effect, and relet the
Premises or any part thereof. Lessee shall be liable immediately to Lessor for
all costs Lessor incurs in reletting the Premises or any part thereof,
including, without limitation, broker's commissions, expenses of cleaning and
restoring the Premises required by the reletting, and like costs. Reletting may
be for a period shorter or longer than the remaining term of this Lease. No act
by Lessor other than giving written notice to Lessee shall terminate this Lease.
Acts of maintenance, efforts to relet the Premises or the appointment of a
receiver on Lessor's initiative to protect Lessor's interest under this Lease
shall not constitute a termination of Lessee's right to possession. On
termination, Landlord has the right to remove all Lessee's property and store
same at Lessee's cost and to recover from Lessee as damages:
(i) The worth at the time of award of unpaid rent and
other sums due and payable which had been earned at the time of termination;
plus
(ii) The worth at the time of award of the amount by
which the unpaid rent and other sums due and payable which would have been
payable after termination until the time of award exceeds the amount of such
rent loss that Lessee proves could have been reasonably avoided; plus
(iii) The worth at the time of award of the amount by
which the unpaid rent and other sums due and payable for the balance of the Term
after the time of award exceeds the amount of such Rent loss that Lessee proves
could be reasonably avoided; plus
(iv) Any other amount necessary to compensate Lessor for
all the detriment proximately caused by Lessee's failure to perform Lessee's
obligations under this Lease, or which, in the ordinary course of things, would
be likely to result therefrom; plus
(v) At Lessor's election, such other amounts in addition
to or in lieu of the foregoing as may be permitted from time to time by the laws
of the State of California.
The "worth at the time of award" of the amounts referred to in
Paragraphs 10.2(b)(i) and 10.2(b)(ii) is computed by allowing interest at the
maximum rate permitted by law on the unpaid rent and other sums due and payable
from the termination date through the date of award. The "worth at the time of
award" of the amount referred to in Paragraph 10.2(b)(iii) is computed by
discounting such amount at the discount rate of the Federal Reserve Bank of San
Francisco at the time of award plus one percent (1%).
(c) Lessor may, with or without terminating this Lease, 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 Lessee. No reentry or taking possession of the
Premises by Lessor pursuant to this paragraph shall be construed as an election
to terminate this Lease unless a written notice of such intention is given to
Lessee.
10.3 Default by Lessor. Lessor will be in default if Lessor fails to
perform any obligation required of Lessor (other than a delay in delivery of
possession as provided for in Paragraph 3.2)
-13-
18
within thirty (30) days after written notice by Lessee, specifying wherein
Lessor has failed to perform such obligation; provided that if the nature of
Lessor's obligation is such that more than thirty (30) days are required for
performance, then Lessor shall not be in default if Lessor promptly commences
performance within such thirty (30) day period and thereafter diligently
prosecutes the same to completion.
ARTICLE II
EXPIRATION OR TERMINATION
11.1 Surrender of Possession. Lessee agrees to deliver up and surrender
to Lessor possession of the Premises and all improvements thereon, subject to
the terms of Paragraph 7.4, in as good order and condition as when possession
was taken by Lessee, excepting only ordinary wear and tear and elements of age
and any insured casualty. Upon termination of this Lease, Lessor may re-enter
the Premises and remove all persons and property therefrom. If Lessee shall fail
to remove any effects which it is entitled to remove from the Premises upon the
termination of this Lease, for any cause whatsoever, Lessor, at its option, may
remove the same and store or dispose of them, and Lessee agrees to pay to Lessor
on demand any and all expenses incurred in such removal and in making the
Premises free from all dirt, litter, debris and obstruction, including all
storage and insurance charges. If the Premises are not surrendered at the end of
the Term, Lessee shall defend, indemnify and hold Lessor harmless from all loss
or liability resulting from delay by Lessee in so surrendering the Premises,
including, without limitation, any claims made by any succeeding lessee founded
on such delay.
11.2 Holding Over. If Lessee remains in possession of the Premises after
expiration of the term and if Lessor and Lessee have not executed an express
written agreement as to such holding over, then such occupancy shall be a
tenancy from month to month at a monthly rental equivalent of 125% of the
monthly rental in effect immediately prior to such expiration, such payments to
be made as herein provided. In the event of such holding over all of the terms
of this Lease including the payment of all charges owing hereunder other than
rent shall remain in force and effect on said month to month basis.
11.3 Voluntary Surrender. The voluntary or other surrender of this Lease
by Lessee, or a mutual cancellation thereof, shall not work a merger, but shall,
at the option of Lessor, terminate all or any existing subleases or
subtenancies, or operate as an assignment to Lessor of any or all such subleases
or subtenancies.
ARTICLE 12
CONDEMNATION OF PREMISES
12.1 Total Condemnation. If the entire Premises, whether by exercise of
governmental power or the sale or transfer by Lessor to any condemnor under
threat of condemnation or while proceedings for condemnation are pending, at any
time during the Term, or such portion of the entire Premises, shall be taken by
condemnation such that there does not remain a portion suitable for
-14-
19
occupation, this Lease shall then terminate as of the date transfer of
possession required. Upon such condemnation, all rent shall be paid up to the
date transfer of possession is required, and Lessee shall have no claim against
Lessor for the value of the unexpired term of this Lease.
12.2 Partial Condemnation. If any portion of the Premises is taken by
condemnation during the Term, whether by exercise of governmental power or the
sale or transfer by Lessor to any condemnor under threat of condemnation or
while proceedings for condemnation are pending, this Lease shall remain in full
force and effect; except that in the event a partial taking leaves the Premises
unfit for normal and proper conduct of the business of Lessee, then Lessee shall
have the right to terminate this lease effective on the date transfer of
possession is required. Lessee may elect to exercise its right to terminate this
Lease pursuant to this paragraph by serving written notice to Lessor within
thirty (30) days of Lessee's receipt of notice of condemnation. All rent shall
be paid up to the date of termination; and Lessee shall have no claim against
Lessor for the value of any unexpired term of this Lease. If this Lease shall
not be canceled, the rent after such partial taking shall be that percentage of
the adjusted base rent specified herein, equal to the percentage which the
square footage of the untaken part of the Premises immediately after the taking
bears to the square footage of the entire Premises immediately before the
taking. If Lessee's continued use of the Premises requires alterations and
repairs by reason of a partial taking, Lessor shall make and pay for such
alterations and repairs, but only to the extent of proceeds received by Lessor
for the condemning authority relating to the improvements to be altered and
repaired, and Lessee shall pay the balance of such alterations and repairs. If
Lessee is not willing to pay the balance of such alterations and repairs, Lessor
shall have the right to terminate this Lease as of the date of taking.
12.3 Award to Lessee. In the event of any condemnation, whether total or
partial, Lessee shall have the night to claim and recover from the condemning
authority such compensation as may be separately awarded or recoverable by
Lessee for all losses of Lessee, including loss of business, fixtures or
equipment belonging to Lessee immediately prior to the condemnation. The balance
of any condemnation award shall belong to Lessor, and Lessee shall have no
further right to recover from Lessor or the condemning authority for any
additional claims arising out of such taking.
Notwithstanding the foregoing, any other award made as a result of a total or
partial taking shall belong to and be paid to Lessor, except that Lessee shall
receive from such award the following: (a) a sum attributable to improvements or
alterations made to the Premises by Lessee which Lessee has the right to remove
but elects not to remove and which increase the value of the Premises; and (b)
any part of the award made directly to Lessee for the taking of personal
property or trade fixtures belonging to Lessee, for the interruption of Lessee's
business or for its moving costs, or for loss of Lessee's good will.
ARTICLE 13
ENTRY BY LESSOR
Provided that Lessor gives Lessee prior written notice, Lessee shall permit
Lessor and its agents to enter the Premises at all reasonable times for any of
the following purposes: to inspect the Premises; to maintain the Building; to
make such repairs to the Premises as Lessor is obligated or may elect
-15-
20
to make; to make repairs, alterations or additions to any other portion of the
Building; to show the Premises and post "To Lease" signs for the purposes of
reletting during the last ninety (90) days of the Term; to show the Premises as
part of a prospective sale by Lessor or to post notices of nonresponsibility.
Lessor shall have such right of entry without any rebate of rent to Lessee for
any loss of occupancy or quiet enjoyment of the Premises thereby occasioned.
In case of emergency, Lessor may enter the Premises without providing notice to
Lessee. In making any entry into the Premises, Lessor shall not unreasonably
interfere with Lessee's business. Lessor shall comply with Lessee's reasonable
security regulations.
ARTICLE 14
INDEMNIFICATION
Lessee agrees not to hold Lessor liable for any injury or damage, either
proximate or remote, occurring through or caused by any repairs or alterations
to the Premises unless such injury or damage arises from the willful misconduct
or negligence of Lessor or its agents. Lessee agrees that Lessor shall not be
liable for any injury or damage occasioned by defective electric wiring, or the
breaking, bursting, stoppage or leaking of any part of the plumbing, air
conditioning, heating, fire control sprinkler systems or gas, sewer or steam
pipes, unless such injury or damage arises from the willful misconduct or
negligence of Lessor or its agents. Lessee will defend, indemnify, save and hold
harmless Lessor from all claims, actions, liability, loss, expense (including
reasonable attorneys' fees and costs), damage or injury to persons or property
arising from or occurring by reason of Lessee's occupation or use of the
Premises unless such losses or injuries are proximately caused by any willful
misconduct or negligence of Lessor or its agents. Lessor shall not be liable for
any damage to or loss of property of Lessee or other persons located on the
Premises, and Lessee shall defend, indemnify, save and hold Lessor harmless from
any claims and losses arising out of damage to the same, unless such loss or
damage is proximately caused by the willful misconduct or negligence of Lessor
or its agents.
Lessor will defend, indemnify, save and hold harmless Lessee from all claims,
actions, liability, loss, expense (including reasonable attorneys' fees and
costs), damage or injury to persons or property arising from or occurring by
reason of the willful misconduct or negligence of Lessor or its agents.
ARTICLE 15
ASSIGNMENT AND SUBLETTING
Lessee shall not assign this Lease in whole or in part, or sublet the Premises
or any part thereof, or license the use of all or any portion of the Premises or
business conducted thereon, or encumber or hypothecate this Lease, without first
obtaining the written consent of Lessor, which consent will not be unreasonably
withheld. Lessee shall submit in writing to Lessor: (a) the name and legal
composition of the proposed sublessee; (b) the nature of the proposed
sublessee's business to be carried on in the Premises; (c) the terms and
provisions of the proposed sublease, and (d) such financial and other reasonable
information as Lessor may request concerning the proposed sublessee.
-16-
21
Lessor shall give its consent or give notice that it does not consent,
specifying the reasons therefor, within seven (7) business days after receiving
all the information set forth in the preceding sentence. Any assignment,
subletting, licensing, encumbering, or hypothecating of this Lease without such
prior written consent shall, at the option of Lessor, constitute grounds for
termination of this Lease. Lessor's consent to any assignment or sublease shall
not constitute a waiver of the necessity for such consent to any subsequent
assignment or sublease. This prohibition against assignment and subletting shall
be construed to include a prohibition against assignment or subletting by
operation of law. Notwithstanding any assignment or subletting with Lessor's
consent, Lessee shall remain fully liable on this Lease and shall not be
released from its obligations hereunder. In the event Lessor shall consent to a
sublease or assignment under this paragraph, Lessee shall pay Lessor's
reasonable attorneys' fees incurred in connection with giving such consent. In
addition, Lessee shall pay to Lessor with its regularly scheduled rent payments
fifty percent (50%) of all rent or other charges in lieu of rent collected by
Lessee from a sublessee or assignee which are in excess of the rent then owing
pursuant to Article 4.
Notwithstanding the foregoing, Lessee shall be free to assign or sublet without
Lessor's consent (a) to a company that controls, is controlled by, or is under
common control with Lessee, (b) to the surviving entity in connection with a
merger, consolidation or other reorganization of Lessee, and (c) to the
purchaser in connection with the sale of substantially all of the assets of the
business being conducted at the Premises, provided that Lessee notifies Lessor
of Lessee's intent to make such assignment or sublet prior to the date of actual
assignment, or sublet and, in the event of any assignment of this Lease, the
assignee executes an agreement whereby the assignee assumes the obligations of
Lessee under this Lease.
ARTICLE 16
DAMAGE OR DESTRUCTION
16.1 Right to Terminate on Destruction of Premises.
(a) If the Premises are damaged by a peril not covered by
insurance, Lessor may terminate the Lease if the cost to restore exceeds twenty
percent (20%) of the replacement cost of the Premises and Lessee does not agree
in writing to pay such excess within ten (10) days of receipt of Lessor's
written election to terminate.
(b) Either Lessor or Lessee shall have the option to terminate
the Lease if the Premises are materially damaged during the Term and such option
is exercised in writing no later than ten (10) calendar days after the
occurrence of the damage. As used herein, materially damaged shall mean that the
cost of repair is equal to or greater than thirty-three percent (33%) of the
replacement cost of the Premises. If, however, the insurance proceeds available
to Lessor, plus the funds, if any, which Lessee is willing to contribute to
repair or rebuild the Premises, are sufficient to repair or rebuild the
Premises, Lessee shall have the right to elect to continue this Lease and Lessor
shall, as soon as possible, commence the repair of the Premises and diligently
prosecute the construction of the Premises to completion. Lessee shall exercise
such right on or before ten (10) calendar days after Lessor notifies Lessee of
the approximate cost of repair and the amount of
-17-
22
insurance proceeds available; and Lessee's failure to timely exercise such fight
shall be deemed a waiver of such right.
16.2 Repairs by Lessor. If neither Lessor nor Lessee elects to terminate
this Lease pursuant to Paragraph 16.1, Lessor shall, immediately upon receipt
of insurance proceeds paid in connection with such casualty, proceed to repair
or rebuild the Premises, on the same plan and design as existed immediately
before such damage or destruction occurred, subject to such delays as may be
reasonably attributable to governmental restrictions or failure to obtain
materials or labor, or other causes beyond the control of Lessor. Lessee shall
be liable for the repair and replacement of all fixtures, leasehold
improvements, furnishings, merchandise, equipment and personal property not
covered by the property insurance described in Paragraphs 6.1 and 6.2.
16.3 Reduction of Rent During Repairs. If Lessee is able to continue to
conduct its business during the making of repairs, the rent then prevailing will
be equitably reduced in the proportion that the unusable part of the Premises
bears to the whole thereof for the period that repairs are being made. No rent
shall be payable while the Premises are wholly unusable due to casualty damage.
16.4 Arbitration. Any controversy or claim arising out of or relating to
this article shall be settled by arbitration in accordance with California Code
of Civil Procedure, Sections 1280 et seq. The expenses of arbitration shall be
borne by the parties as allocated by the arbitrators. The party desiring
arbitration shall serve notice upon the other party, together with designation
of the first party's arbitrator.
ARTICLE 17
PARKING
Lessee shall have the nonexclusive right to use one hundred nineteen (119)
parking spaces in the parking area, provided that under no circumstances shall
Lessor be required to police or monitor the parking rights of Lessee or any
other tenant.
ARTICLE 18
COVENANTS, CONDITIONS AND RESTRICTIONS
This Lease is subject to the terms and conditions of (a) the Declaration of
Covenants, Conditions and Restrictions of Mission Falls Business Park ("CC&Rs")
imposing certain covenants, conditions and restrictions on the use and
management of the Property, (b) the Bylaws ("Bylaws") of Mission Falls Business
Park Owners Association ("Association"), a California nonprofit mutual benefit
corporation charged with the responsibility of managing Mission Falls Business
Park in accordance with the CC&Rs and the Articles of Incorporation of the
Association ("Articles"), and (c) the rules ("Rules") adopted from time to time
by the Association in accordance with the CC&Rs providing for restrictions on
the use of Mission Falls Business Park. Collectively, the CC&Rs, Articles,
Bylaws and Rules are referred to herein as the "Governing Documents." Lessor
has delivered to
-18-
23
Lessee copies of the CC&Rs recorded September 6, 1984 as Instrument No.
84-181476, and the First Amendment to the CC&Rs recorded April 19, 1985 as
Instrument No. 85-076494, and the Articles and the Bylaws, respectively filed in
connection therewith. Lessee agrees to comply with all provisions of the
Governing Documents applicable to its occupancy, interest, use and utilization
of the Premises subject to this Lease. Any failure to comply with the Governing
Documents shall be a default under the terms of this Lease.
ARTICLE 19
HAZARDOUS MATERIALS
19.1 Definition. "Hazardous Material" shall mean any substance or
material which has been designated hazardous or toxic by any federal, state,
county, municipal or other governmental agency or authority or determined by
such agency or authority to be capable of endangering or posing a risk of injury
to, or adverse effect on, the health or safety of persons, the environment or
property.
19.2 Use. Lessee shall not store, use, generate, release or dispose of
any Hazardous Materials in, on or adjacent to the Premises or the Property, or
ship any Hazardous Materials therefrom, except in compliance with all laws,
ordinances, regulations, rules, and policies, including any obligation to notify
Lessor of same. Lessee shall submit to Lessor copies of all permits, licenses,
filings, reports or other documentation submitted to any governmental agency or
authority, at the same time such documents are submitted to the governmental
agency or authority.
19.3 Notice. Lessee shall immediately notify Lessor as soon as possible
of any inquiry, test, investigation, or enforcement proceeding by or against
Lessee or the Premises or the Property concerning a Hazardous Material in, on,
under or within 2,000 feet of the Premises and the Property. Lessee acknowledges
that Lessor, as the owner of the Premises, shall have the right, at its
election, in its own name or as Lessee's agent, to negotiate, defend, approve,
and appeal, at Lessee's expense, any action taken or order issued by an
applicable governmental authority with regard to Lessee's failure to comply with
the provisions of this Article 19. Notwithstanding the foregoing, Lessee shall
not be responsible for the cost of complying with any action taken or order
issued by an applicable governmental authority with regard to any Hazardous
Materials found in, on or under any real property within 2,000 feet of the
Premises or the Property if their presence was not caused by Lessee, its agents,
employees, contractors, invitees or subtenants. Lessee shall submit to Lessor
copies of all such inquiries, tests, investigations and enforcement proceedings
and copies of all reports and responses thereto prepared by Lessee. Lessee shall
submit same to Lessor within five (5) days after receipt of same by Lessee,
whether such receipt is from a governmental authority or nongovernmental entity.
19.4 Removal and Disposal. In addition, Lessee shall immediately remove
all Hazardous Materials which Lessee, its agents, employees, contractors,
invitees or subtenants have caused to be released or disposed of in, on, under
or adjacent to, the Premises or the Property. Lessee shall dispose of all
Hazardous Material removed from the Premises or the Property in lawful disposal
sites
-19-
24
and otherwise in compliance with all applicable laws, ordinances. regulations.
rules and policies, and in all removals of Hazardous Materials, Lessee shall
list itself as the shipper.
19.5 Indemnity. Lessee shall indemnify, defend and hold Lessor harmless
from and against any claims, suits, causes of action, costs, fees, including
attorneys' fees and costs, arising out of or in connection with any Hazardous
Materials stored, used, generated, released or disposed of by Lessee or its
agents, employees, contractors, invitees or subtenants in, on, under or adjacent
to the Premises or the Property, or any Hazardous Materials shipped by Lessee
therefrom, including any clean-up work, inquiry or enforcement proceeding
resulting therefrom.
19.6 Right of Entry. Notwithstanding any other right of entry granted to
Lessor under this Lease, Lessor shall have the right to enter the Premises or to
have consultants enter the Premises throughout the term of this Lease for the
purpose of determining: (i) whether the Premises are in conformity with federal,
state and local laws, ordinances, regulations, rules and policies including
those pertaining to the environmental condition of the Premises and the
Property, (ii) whether Lessee has complied with this Article 19, and (iii) the
corrective measures, if any, required of Lessee to ensure the safe storage,
use, generation, release, shipment and disposal of Hazardous Materials, or to
remove Hazardous Materials. Such entry shall comply with the provisions of
Article 13. Lessee agrees to provide access and reasonable assistance for such
inspections. Such inspections may include, but are not limited to, entering the
Premises or the Property with drill rigs or other machinery for the purpose of
obtaining soil, water or other samples. Lessor shall not be limited in the
number of such inspections during the term of this Lease.
19.7 Ispection. If Lessee does store, use, generate, release, or dispose
of any Hazardous Materials in, on, under or adjacent to the Premises or the
Property, or ship any Hazardous Materials therefrom, Lessee shall pay for the
reasonable cost of any inspection reasonably determined to be necessary by
Lessor. If Lessee does not store, use, generate, release or dispose of any
Hazardous Materials in, on, under or adjacent to the Premises or the Property,
or ship any Hazardous Material therefrom, Lessor shall pay the cost of such
inspection, however, if such inspection, together with any other evidence, shows
that Lessee caused the presence of any Hazardous Materials, Lessee shall pay for
the reasonable cost of such inspection and all subsequent inspections until the
Hazardous Materials are eliminated. If such consultants determine that the
Premises or the Property, or both, are contaminated with Hazardous Materials
caused to be present by Lessee, Lessee shall, in a timely manner, at its
expense, remove such Hazardous Materials or otherwise comply with the
recommendations of such consultants to the reasonable satisfaction of Lessor and
any applicable governmental agencies and reimburse Lessor for the cost of such
inspections within ten (10) days of receipt of a written statement therefor. The
right granted to Lessor herein to inspect the Premises or the Property shall not
create a duty on Lessor's part to inspect the Premises or the Property, or any
liability of Lessor for Lessee's use, storage, release or disposal of Hazardous
Materials, it being understood that Lessee shall be solely responsible for all
liability in connection therewith.
19.8 Surrender. Lessee shall surrender the Premises to Lessor upon the
expiration or earlier termination of this Lease free of all Hazardous Materials
which Lessee, its agents, employees, contractors, invitees or subtenants have
caused to be released or disposed of in, on, under or adjacent to the Premises
or the Property, and in a condition which complies with all governmental
-20-
25
laws, ordinances, regulations, rules and policies, reasonable recommendations of
consultants hired by Lessor, and such other reasonable requirements as may be
imposed by Lessor.
19.9 Survival. Lessee's and Lessor's obligations under this Article 19
shall survive termination of this Lease.
19.10 Lessor's Covenant. Lessor represents and covenants that it has no
knowledge of the existence of any Hazardous Materials located on or beneath the
Premises prior to Lessee's occupancy of the Premises.
ARTICLE 20
BROKERS
20.1 Brokers. Lessee warrants and represents that it has had no dealings
with any real estate broker or agent in connection with the negotiation of this
Lease, except for ▇▇▇▇▇▇ ▇▇▇▇ and R&D Commercial Properties and that it knows of
no other real estate broker or agent who is or might be entitled to a commission
in connection with this Lease. Lessee agrees to indemnify, defend and hold
Lessor and its agents harmless from and against any and all liabilities or
expenses, including attorneys' fees and costs, arising out of or in connection
with claims made by any other broker or individual for commissions or fees
resulting from Lessee's execution of this Lease.
20.2 Commission. Lessor shall pay the commission due to ▇▇▇▇▇▇ Hawk in
connection with this Lease in four installments of Fifteen Thousand Eight
Hundred Twenty-Four and 19/100ths Dollars ($15,824.19) each on the following
terms and conditions. Lessor shall pay the first installment to ▇▇▇▇▇▇ ▇▇▇▇ on
execution of this Lease by Lessor and Lessee. Lessor shall pay the second
installment or before the first day of the thirteenth (13th) month of the Term,
the third installment on or before the first day of the twenty-fifth (25th)
month of the Term, and the fourth and final installment on or before the first
day of the thirty-seventh (37th) month of Term; provided, however, that the
second, third and fourth installments of the commission, as applicable, shall be
paid to ▇▇▇▇▇▇ Hawk only if Lessee has not been in default of any material
provision of this Lease during the previous twelve (12) month period.
ARTICLE 21
MISCELLANEOUS PROVISIONS
21.1 Waiver. No waiver of any default of any of the covenants or
conditions of this Lease shall be construed to be a waiver of any other default
or to be a consent to any further or succeeding default of the same or other
covenant or condition. The subsequent acceptance of rent hereunder by Lessor
shall not be deemed to be a waiver of any preceding default by Lessee of any
term, covenant or condition of this Lease, other than the failure of Lessee to
pay the particular rent so accepted, regardless of Lessor's knowledge of such
preceding default at the time of acceptance of such rent.
-21-
26
21. 2 Successors and Assigns. Except as otherwise provided herein, the
provisions hereof shall be binding upon and shall inure to the benefit of the
heirs, personal representatives, successors and assigns of the parties.
21.3 Notices. All notices, requests, demands and other communications
required or permitted to be given hereunder shall be in writing and either
personally delivered or sent by certified mail, return receipt requested,
postage prepaid, properly addressed to Lessor c/o The ▇▇▇▇▇▇ Group, at ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, and to Lessee at the Premises, or
at such other address as may from time to time be designated in like manner by
one party to the other. Any such notice shall be deemed given when personally
delivered or on the date indicated on the Postal Service's certified mail
receipt.
21.4 Partial Invalidity. If for any reason any provision of this Lease
shall be determined to be invalid or inoperative, the validity and effect of the
other provisions hereof shall not be affected thereby.
21.5 Number and Gender. All terms in this Lease shall be construed to
mean either the singular or the plural, masculine, feminine or neuter, as the
situation may demand.
21.6 Descriptive Headings. The headings used herein and in any of the
documents attached hereto as schedules, lists or exhibits are descriptive only
and for the convenience of identifying provisions, and are not determinative of
the meaning or effect of any such provisions.
21.7 Time is of the Essence. In all matters time is of the essence in
the performance of all obligations under this Lease.
21.8 Entire Agreement. This Lease and the documents attached hereto as
schedules, lists or exhibits, constitute the entire agreement and understanding
between the parties with respect to the subject matters herein and therein, and
supersede and replace any prior agreements and understandings, whether oral or
written, between and among them with respect to the lease of the Premises,
rental therefor, use thereof and all other such matters. The provisions of this
Lease may be waived, altered, amended or repealed in whole or in part only upon
the written consent of Lessor and Lessee.
21.9 Memorandum of Lease. Lessor and Lessee mutually agree that they
will not file or record a copy of this Lease, but that in the event Lessor
requests a recording, Lessor and Lessee shall execute and acknowledge a
memorandum of this Lease in a form approved by the parties setting forth in said
memorandum the description of the Premises, the date of the Lease, the
Commencement Date and the date of termination. Said memorandum of Lease may be
recorded in the Recorder's Office of the County in which the Premises are
located.
21.10 Applicable Law. This Lease shall be construed and interpreted in
accordance with the laws of the State of California, without giving effect to
any doctrine of renvoi or other doctrine of conflicts of law.
-22-
27
2.11 Corporate Authority. Each individual executing this Lease on behalf
of a corporation represents and warrants that he is duly authorized to execute
and deliver this Lease on behalf of the corporation in accordance with a duly
adopted resolution of the Board of Directors of the corporation, and that this
Lease is binding upon said corporation in accordance with its terms.
21.12 Litigation Expense. If any party shall bring an action against any
other party hereto by reason of the breach of any covenant, warranty,
representation or condition hereof, or otherwise arising out of this Lease or
any schedule, list or exhibit hereto, whether for declaratory or other relief,
the prevailing party in such suit shall be entitled to such party's costs of
suit and reasonable attorneys' fees, which shall be payable whether or not such
action is prosecuted to judgment.
21.13 Subordination of Leasehold. Lessee agrees that this Lease is and
shall be, at all times, subject and subordinate to the lien of any mortgage or
other encumbrances which Lessor may create against the Premises or the Property,
or both, including all renewals, replacements and extensions thereof, provided,
however, that regardless of any default under any such mortgage or encumbrance
or any sale of the Premises under such mortgage, so long as Lessee performs all
covenants and conditions of this Lease and continues to make all payments
hereunder, this Lease and Lessee's possession and rights hereunder shall not be
disturbed by the mortgagee or anyone claiming under or through such mortgagee.
Lessee agrees to execute any and all instruments in writing which may be
required by Lessor to subordinate Lessee's rights to the lien of such mortgage.
Lessee's subordination is only effective in favor of a future lender so long as
such lender, on behalf of itself and any purchaser at a foreclosure sale, agrees
in writing to recognize all rights of Lessee under the Lease.
21.14 Lessee's Remedy. If, as a consequence of a default by Lessor under
this Lease, Lessee recovers a money judgment against Lessor, such judgment shall
be satisfied only out of the proceeds of sale received upon execution of such
judgment and levied thereon against the right, title and interest of Lessor in
the Building and out of rent or other income from such property received by
Lessor, or out of consideration received by Lessor from the sale or other
disposition of all or any part of Lessor's right, title or interest in the
Building, and neither Lessor nor its agents shall be liable for any deficiency.
21.15 Unrelated Business Income. Lessor shall have the right at any
time, and from time to time to unilaterally amend the provisions of this Lease
if Lessor is advised by its counsel that all or any portion of the monies paid
by Lessee to Lessor hereunder are, or may be deemed to be, unrelated business
income within the meaning of the United States Internal Revenue Code or
regulations issued thereunder, and Lessee agrees that it will execute all
documents or instruments necessary to effect such amendment or amendments,
provided that no such amendment shall result in Lessee having to pay in the
aggregate more money on account of its occupancy of the Premises or materially
increase Lessee's obligations under the terms of this Lease as so amended and
provided further, that no such amendment or amendments shall result in Lessee
receiving under the provisions of this Lease less services than it is entitled
to receive, nor services of a lesser quality.
21.16 Lessee's Certificate. Within fifteen (15 )days following Lessor's
request, Lessee shall complete, execute and deliver to Lessor a Lessee's
Certificate setting forth the information requested
-23-
28
therein relating to this Lease and Lessor's and Lessee's obligations thereunder.
Failure of Lessee to deliver such certificate within said fifteen (15) days
shall be deemed to be an acknowledgment that Lessor is not in default under the
Lease, and that the terms of the Lease have not been modified or supplemented in
any way. It is intended that such certificate may be relied upon by any
prospective purchaser, lender, or assignee of any lender of the Premises.
21.17 Attornment. Lessee shall, in the event of any sale of the Premises
or if proceedings are brought for the foreclosure of, or in the event of
exercise of the power of sale under, any mortgage, installment land contract or
deed of trust made by Lessor covering the Premises, attorn to the mortgagee or
the purchaser upon any such foreclosure or sale and recognize such mortgagee or
purchaser as Lessor under this Lease.
LESSOR LESSEE
Teachers Insurance and Annuity Quintus, Inc., a California corporation
Association of America, a New York
corporation By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------
By /s/ [SIGNATURE ILLEGIBLE] its PRESIDENT, CEO
-------------------------------- -------------------------------------
its ASST. SECRETARY
-------------------------------
-24-
29
[MAP]
EXHIBIT A