1
EXHIBIT 10.5
LEASE
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
For a part of Building 4 of Mission Corporate Center
LANDLORD: MISSION COURT PROPERTIES, INC.,
a California corporation
TENANT: SMARTFLEX SYSTEMS, INCORPORATED,
a Delaware corporation
2
LEASE
SUMMARY OF BASIC TERMS
A. REFERENCE DATE: March 21, 1999
B. LANDLORD: Mission Court Properties, Inc., a California
corporation
C. TENANT: Smartflex Systems, Incorporated, a Delaware
corporation
D. TRADE NAME (if any): None.
E. GUARANTOR (if any): None.
F. PREMISES (Section 1.1, Exhibit A): Approximately forty one thousand
nine hundred two (41,902) square feet of Rentable Area, comprising of a
part of the Rentable Area in Building 4 (the Building ) of Mission
Corporate Center, known as ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, located in the city of
Fremont, County of Alameda, State of California, more particularly
described in Exhibit A hereto.
Project: The Building, other buildings, landscaping, parking spaces,
roadways and walkways on the land commonly known as Mission Corporate
Center, Fremont, California. A general site plan of the Project is set
forth in Exhibit B hereto.
G. PARKING SPACES (Section 1.3): Unreserved use of 168 Parking Spaces.
H. TERM (Section 2.1): Approximately Five (5) years, One and one-half
(1.5) months
Projected Commencement Date: March 21, 1999
Rent Commencement Date: The sooner of the date of Substantial Completion of
Phase 1 of the Tenant Improvements or April 21,
1999
Expiration Date: April 30, 2004
I. BASE ANNUAL RENT (Section 3.1):
Advance Rent payable upon Tenant's execution: $37,292.78
Base Annual Rent: Four Hundred Forty Seven Thousand Five Hundred
Thirteen and 36/100 Dollars ($447,513.36).
Monthly Installments: $37,292.78
Adjustment Dates: May 1, 2000; May 1, 2001; May 1, 2002; May 1, 2003
J. PERMITTED USE (Section 4.1): Subject to the requirements regarding
Hazardous Material and other limitations and provisions of Article 4:
The Premises shall be used only for the purpose of manufacturing of
electronics and electro mechanical products, general warehousing and
related office uses.
K. ADDRESS FOR NOTICES (Article 23):
To Landlord: With Copies To:
Mission Court Properties, Inc. ▇▇▇▇▇▇▇ ▇▇▇▇▇
5020 Brandin Court Pacific Resources Asset Development, Inc.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
To Tenant:
With a copy to:
Smartflex Systems, Incorporated Smartflex Systems, Incorporated
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇.▇. ▇▇▇ ▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇. ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
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L. TAXES AND OPERATING COSTS (Section 3.4):
Tenant's Building Share:51.29 %
Tenant's Project Share: 13.04 %
M. SECURITY DEPOSIT (Article 24): Forty Two Thousand Seven Hundred Ninety
Four and 32/100 Dollars ($42,794.32).
N. BROKER(S) (Article 25):
▇▇▇▇▇ ▇▇▇▇
BT Commercial Real Estate
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
License No.: 00825241
--------
COOPERATING BROKERS:
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇
Colliers International
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
License No.: 00490878
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O. ADJUSTMENTS IN RENT AND TERM: The figures set forth in Paragraph I (Base
Annual Rent) above are subject to increase pursuant to Section 3.3 and
Article 27 hereto, and the length of term set forth in Paragraph H
(Term) above is subject to extension pursuant to Article 27 hereto.
The General Lease Provisions identified above in parentheses are those
provisions making reference to above-described Basic Terms. Each such reference
in the General Lease Provisions shall incorporate the applicable Basic Terms.
The Summary of Basic Terms and the General Lease Provisions each comprise a part
of this Lease, and in the event of any conflict between the Summary of Basic
Terms and the General Lease Provisions, the latter shall control.
TENANT: LANDLORD:
SMARTFLEX SYSTEMS INCORPORATED, a Delaware MISSION COURT PROPERTIES, INC., a California
corporation corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ ▇▇▇ ▇▇▇
----------------------------------- --------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇ ▇▇▇
----------------------------------- --------------------------------------
Print Name: Print Name:
Its: VP & GM, EMS Business Unit Its: VP of Finance
----------------------------------- --------------------------------------
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ By:
----------------------------------- --------------------------------------
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
----------------------------------- --------------------------------------
Print Name: Print Name:
Its: Director of Logistics Its:
----------------------------------- --------------------------------------
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TABLE OF CONTENTS
Page
----
SUMMARY OF BASIC TERMS.........................................................i
TABLE OF CONTENTS..............................................................iii
ARTICLE 1 - PREMISES/COMMON AREAS/PARKING......................................1
Section 1.1 - Premises.........................................................1
Section 1.2 - Common Areas.....................................................1
Section 1.3 - Parking..........................................................1
ARTICLE 2 - TERM/CONSTRUCTION OF PREMISES......................................2
Section 2.1 - Term.............................................................2
Section 2.2 - Construction of Premises.........................................2
Section 2.3 - Acceptance by Tenant.............................................2
ARTICLE 3 - RENT: BASE ANNUAL RENT: TAXES. BUILDING COSTS
AND PROJECT COSTS..............................................................3
Section 3.1 - Rent.............................................................3
Section 3.2 - Base Annual Rent.................................................3
Section 3.3 - Adjustments to Base Annual Rent..................................3
Section 3.4 - Taxes, Building Costs and Project Costs..........................3
Section 3.5 - Additional Taxes.................................................6
Section 3.6 - Late Payments: Charges: Interest: Default Rate...................6
Section 3.7 - Consideration....................................................6
Section 3.8 - Time and Manner of Payment in General............................6
ARTICLE 4 - USE AND OCCUPANCY..................................................7
Section 4.1 - Permitted Use....................................................7
Section 4.2 - Compliance with Law..............................................7
Section 4.3 - Compliance with Insurance Requirements...........................7
Section 4.4 - Certificates of Occupancy........................................7
Section 4.5 - Life-Safety Systems..............................................8
Section 4.6 - Prohibited Uses..................................................8
Section 4.7 - Definition of Hazardous Material.................................8
Section 4.8 - Tenant's Obligation..............................................8
Section 4.9 - Landlord's Exculpation...........................................10
Section 4.10 - Right of Contribution...........................................10
Section 4.11 - Monitoring......................................................10
Section 4.12 - Abatement Activities............................................11
Section 4.13 - Effect on Proposed Assignments and Sublets......................11
ARTICLE 5 - ASSIGNMENT/SUBLETTING/MORTGAGE.....................................11
Section 5.1 - Prohibition: Definitions.........................................11
Section 5.2 - Assignments or Subleases Subject to Landlord's
Prior Written Consent ...........................................12
Section 5.3 - Share of Proceeds of Assignment or Sublease......................13
Section 5.4 - Landlord Options to Terminate Lease..............................13
ARTICLE 6 - ALTERATIONS........................................................13
Section 6.1 - Alterations......................................................13
Section 6.2 - Mechanics' Liens.................................................14
Section 6.3 - Alterations as Landlord's Property...............................14
Section 6.4 - Indemnification..................................................14
Section 6.5 - Survival.........................................................15
ARTICLE 7 - REPAIRS............................................................15
Section 7.1 - Tenant's Obligations/Procedures..................................15
Section 7.2 - Landlord's Obligations and Rights................................15
Section 7.3 - Statutory Waivers................................................16
Section 7.4 - No Liability of Landlord.........................................16
ARTICLE 8 - SUBORDINATION/PROTECTION OF LENDERS................................16
Section 8.1 - Subordination and Attornment.....................................16
Section 8.2 - Superiority of Lease and Attornment..............................17
Section 8.3 - Lender's Right to Cure...........................................17
Section 8.4 - Tenant's Financial Statements....................................17
Section 8.5 - Lease Modifications..............................................17
ARTICLE 9 - LIABILITY/INDEMNIFICATION..........................................18
Section 9.1 - Landlords Exculpation and Limitation of Liability................18
Section 9.2 - Tenant's Liability. Indemnification and Hold Harmless............18
Section 9.3 - Survival and Conflicts with other Indemnity Provisions...........18
ARTICLE 10 - DAMAGE/DESTRUCTION................................................18
iii
5
Section 10.1 - Destruction and Repair..........................................18
Section 10.2 - 180 Day and 60 Day Repair Criteria..............................19
Section 10.3 - Lack of Insurance Proceeds......................................19
Section 10.4 - No Release of Liability.........................................19
Section 10.5 - Tenant's Negligence.............................................19
Section 10.6 - Express Agreement Re Damage and Destruction.....................20
ARTICLE 11 - EMINENT DOMAIN....................................................20
Section 11.1 - Partial or Total Taking.........................................20
Section 11.2 - Award...........................................................20
Section 11.3 - Sale to Condemning Authority....................................20
Section 11.4 - Proration/Abatement of Base Annual Rent.........................20
Section 11.5 - Temporary Taking................................................20
ARTICLE 12 - UTILITIES.........................................................20
Section 12.1 - Utilities.......................................................20
ARTICLE 13 - LANDLORD'S RIGHT OF ENTRY.........................................21
ARTICLE 14 - TENANT'S INSURANCE................................................21
Section 14.1 - Tenant's Insurance..............................................21
Section 14.2 - General Requirements of Tenant's Insurance......................21
Section 14.3 - Waiver of Subrogation...........................................22
Section 14.4 - Landlord's Insurance............................................22
ARTICLE 15 - INSOLVENCY OR BANKRUPTCY..........................................23
Section 15.1 - Insolvency or Bankruptcy........................................23
Section 15.2 - Measure of Damages..............................................23
Section 15.3 - Provision of Services and Assumption of Lease...................23
ARTICLE 16 - DEFAULT/REMEDIES..................................................23
Section 16.1 - Events of Default...............................................23
Section 16.2 - Termination of the Right to Possession..........................24
Section 16.3 - Rights Upon Termination.........................................24
Section 16.4 - Continuance of Lease............................................25
Section 16.5 - Other Remedies..................................................25
Section 16.6 - Waiver of Rights of Redemption and Time for Service of Notice...25
Section l6.7 - Procedural Matters..............................................25
ARTICLE 17 - LANDLORD'S RIGHT TO PERFORM.......................................26
ARTICLE 18 - END OF TERM.......................................................26
Section 18.1 - Condition of Premises...........................................26
Section 18.2 - Holding Over....................................................26
Section 18.3 - Conditions of Termination.......................................26
ARTICLE 19 - QUIET POSSESSION..................................................26
ARTICLE 20 - RULES AND REGULATIONS.............................................27
ARTICLE 21 - NO WAIVER/ENTIRE AGREEMENT/MODIFICATION...........................27
ARTICLE 22 - LANDLORD'S DEFAULT/LIABILITY......................................27
Section 22.1 - Force Majeure...................................................27
Section 22.2 - Notice/Right to Cure............................................27
Section 22.3 - Limitation of Landlord's Liability..............................28
Section 22.4 - Sale by Landlord................................................28
ARTICLE 23 - NOTICES...........................................................28
Section 23.1 - Notices To Tenant...............................................28
Section 23.2 - Notices to Landlord.............................................28
Section 23.3 - Notices Generally...............................................28
ARTICLE 24 - SECURITY DEPOSIT..................................................28
ARTICLE 25 - BROKERAGE.........................................................29
ARTICLE 26 - MISCELLANEOUS.....................................................29
Section 26.1 - Capitals and Construction.......................................29
Section 26.2 - Definitions.....................................................29
6
Section 26.3 - Successors and Assigns..........................................29
Section 26.4 - Landlord's Approval.............................................29
Section 26.5 - Joint and Several Liability.....................................29
Section 26.6 - Governing Law...................................................29
Section 26.7 - Severability....................................................29
Section 26.8 - Security Systems................................................30
iv
Section 26.9 - Time of the Essence.............................................30
Section 26.10 - Recordation....................................................30
Section 26.11 - Change of Name.................................................30
Section 26.12 - Estoppel Certificates..........................................30
Section 26.13 - Authority......................................................30
Section 26.14 - Attorneys' Fees................................................30
Section 26.15 - Waiver of Trial By Jury; Venue; Jurisdiction...................31
Section 26.16 - Substitution of Premises.......................................31
Section 26.17 - Binding Effect.................................................31
Section 26.18 - Signs..........................................................31
Section 26.19 - No Merger......................................................31
Section 26.20 - Acknowledgment of Waivers and Limitations......................31
Section 26.21 - Exhibits: Riders: Addenda......................................31
ARTICLE 27 - OPTION TO EXTEND..................................................31
Section 27.1 - Grant of Options................................................31
Section 27.2 - General Provisions..............................................31
Section 27.3 - Exercise........................................................32
Section 27.4 - Effect of Default or Occupancy..................................32
Section 27.5 - Option Term Rent................................................32
Section 27.6 - Options Personal................................................32
Section 27.7 - Time of Essence.................................................32
Article 28 - RIGHT OF FIRST OFFER..............................................32
LIST OF EXHIBITS
EXHIBIT A - Premises
EXHIBIT B - Project Description
EXHIBIT C - Confirmation of Lease Term
EXHIBIT D - Work Letter Agreement
EXHIBIT E - Rules and Regulations
EXHIBIT F - Sign Program
v
7
GENERAL LEASE PROVISIONS
ARTICLE 1 - PREMISES/COMMON AREAS/PARKING
Section 1.1 - Premises
Upon and subject to the terms, covenants and conditions hereinafter set
forth, Landlord hereby leases to Tenant and Tenant hereby hires from Landlord
the Premises comprising the area described in Paragraph F of the Summary of
Basic Terms, substantially as outlined on the floor plan(s) that have been
signed by Landlord and Tenant and comprise Exhibit A hereto. The plan(s) set
forth in Exhibit A are used solely for the purpose of identifying or designating
the Premises under the terms of this Lease and any markings, measurements,
dimensions, footages or notes of any kind contained thereon have no bearing upon
any of the terms, covenants, conditions, provisions or agreements of this Lease
and are not to be considered a part thereof.
Section 1.2 - Common Areas
1.2.1 Tenant shall have the right to the nonexclusive use of all areas
and facilities outside the Premises that are provided and designated by Landlord
from time to time for the general nonexclusive use of tenants at the Project,
and which are located (a) within the Building (herein called "Building Common
Areas"), and (b) outside the Building and outside other buildings designed for
occupancy by tenants (and constructed from time to time by Landlord), but within
the exterior boundary lines of the Project, including, without limitation,
parking areas, loading and unloading areas, roadways, walkways and landscaped
area (herein called "Project Common Areas"). The Building Common Areas (if any)
and the Project Common Areas collectively are sometimes herein called the
"Common Areas." Landlord shall at all times have the right to use such Common
Areas.
1.2.2 Landlord shall maintain the Common Areas in a manner comparable to
the manner other first-class properties similar in size, character and location
are maintained and operated. The manner in which the Common Areas are operated
and the expenditures therefor shall be at the sole discretion of Landlord. The
use of Common Areas shall be subject to the Rules and Regulations (as defined in
Article 20) and the provisions of any covenants, conditions and restrictions
affecting the Project, as Landlord shall make from time to time, as further
provided in Section 1.2.4 and Article 20.
1.2.3 Exhibit A and Exhibit B show the approximate location of the
Premises, Common Areas and Project and are not meant to constitute an agreement
as to the specific location of the Premises, Common Areas or the elements
thereof or of the means of access to the Premises, Building or the Project.
Landlord hereby reserves the right, at any time and from time to time, as long
as reasonable access to the Premises and Building remains available, to (a) use
the Common Areas while engaged in making alterations in or additions or repairs
to the Project, and (b) close temporarily any of the Common Areas for
maintenance purposes. Tenant agrees that no diminution of light, air, or view by
any structure that may be erected in, about or outside the Project after the
date hereof shall entitle Tenant to any reduction of Base Annual Rent or any
other Rent (as defined below) or result in any liability of Landlord to Tenant.
1.2.4 Landlord reserves the right, from time to time, to grant such
easements, rights and dedications as Landlord deems necessary or desirable, and
to cause the recordation of parcel maps and covenants, conditions and
restrictions in addition to the covenants, conditions and restrictions existing
as of the Reference Date affecting the Project. Unless required by governmental
authorities, Landlord shall not exercise its rights under this Section 1.2.4 if
such easements, rights, dedications, maps and covenants, conditions and
restrictions unreasonably interfere with Tenant's use of the Premises. At
Landlord's request, Tenant shall promptly join in the execution of any of the
aforementioned documents. The Building and the Project may be known by any name
that Landlord may choose, which name may be changed from time to time in
Landlord's sole discretion.
1.2.5 The rights of Tenant hereunder in and to the Common Areas shall at
all times be subject to the rights of Landlord specified under this Lease.
Tenant shall not use the Common Areas for its day-to-day business other than
using appropriately designated areas of the Common Areas for ingress and egress,
parking, or loading and unloading. Without limiting the generality of the
foregoing, storage, either permanent or temporary, of any materials, supplies,
equipment or refuse in the Common Areas is strictly prohibited. Should Tenant
violate this provision of the Lease, such violation shall be considered a
material violation of this Lease and Landlord may, at its option after
reasonable written advance notice to Tenant, remove said materials, supplies or
equipment from the Common Areas and place such items in storage, the cost
thereof to be paid by Tenant to Landlord as additional Rent under thus Lease
within ten (10) days after Landlord gives Tenant a statement therefor. All
subsequent costs in connection with the storage of said items shall be paid to
Landlord by Tenant as accrued. Tenant agrees that receiving and shipping goods
and merchandise and all removal of refuse shall be made only by way of the
designated loading areas immediately adjacent to and serving the Premises. If,
in the opinion of Landlord, unauthorized persons are using the Common Areas by
reason of the presence of Tenant in the Premises, Tenant, upon demand of
Landlord, shall correct such situation by appropriate action or proceedings
against all such unauthorized persons. Nothing herein shall affect the right of
Landlord at any time to remove any such unauthorized persons from said areas or
to prevent the use of any of said areas by unauthorized persons.
Section 1.3 - Parking
Tenant shall have the right for the benefit of Tenant and its employees,
customers and invitees to use of the number of "Parking Spaces" set forth in
Paragraph G of the Summary of Basic Terms on an unassigned, unreserved basis for
parking by vehicles no larger than full-sized passenger automobiles or pick-up
trucks on, and only on, those portions of the Project Common Areas provided and
designated by Landlord from time to time for parking.
8
Tenant shall also be permitted to park vans and trucks on an overnight basis on
the ramp adjacent to the receiving dock area, subject to compliance with all
laws and conditions of approval for the Project. Tenant shall not at any time
park or
1
permit the parking of motor vehicles, belonging to it or to others, so
as to interfere with the walkways, roadways, or loading areas, or in any portion
of the parking areas not designated by Landlord for such use by Tenant.
ARTICLE 2 - TERM/CONSTRUCTION OF PREMISES
Section 2.1 - Term
2.1.1 The term of this Lease (the "Term") shall commence upon the date
of Substantial Completion (as defined below) of the Landlord-Provided
Improvements (as defined in the Work Letter described below), advanced for any
Tenant Delay as provided below (the "Commencement Date"), which the parties
estimate will occur on the Projected Commencement Date and, except as otherwise
provided herein or in any exhibit or addendum hereto, shall continue in full
force to and including the Expiration Date. Should the Commencement Date be a
date other than the Projected Commencement Date, Landlord and Tenant shall
promptly execute a Confirmation of Lease Term in the form set forth as Exhibit C
hereto, but the failure of either or both to do so shall not affect the
establishment of the Commencement Date, the Rent Commencement Date, and the
dates on which all adjustments of Base Annual Rent are to occur pursuant to
Paragraph I of the Summary of Basic Terms.
2.1.2 "Substantial Completion" shall mean, and each phase of the work to
be done by Landlord under the Work Letter in the Premises shall be deemed
"Substantially Complete", when the governmental entity responsible for issuing
certificates of occupancy or equivalent occupancy approvals has issued the same
or has provided Landlord with all documents or occupancy approvals (written or
oral) which are customarily given prior to the actual delivery of a certificate
of occupancy, whichever first occurs, including without limitation, a temporary
certificate of occupancy if so permitted hereunder or under the terms of the
Work Letter. Substantial Completion shall be deemed to have occurred
notwithstanding a requirement to complete "punchlist" or similar minor
corrective work. For purposes of establishing the commencement of Tenant's
obligations under this Lease which have not previously commenced, such date
shall be advanced to before the date of Substantial Completion by one day for
each day of Tenant Delay (as defined in the Work Letter and Construction
Agreement by and between Landlord and Tenant dated of even date herewith, a form
of which is set forth as Exhibit D hereto (the "Work Letter")).
Section 2.2 - Construction of Premises
2.2.1 Landlord shall perform the work and make the installations in the
Premises substantially as set forth in the Work Letter (the "Landlord's Work").
Landlord's Work shall be performed by Landlord's general contractor. Other than
Landlord's Work as described in the Work Letter or as specifically described
elsewhere in this Lease, Landlord has no obligation to improve, alter, repair or
remodel the Premises. All such installations shall immediately become and remain
the property of Landlord except as otherwise expressly stated herein or in the
Work Letter.
2.2.2 If Landlord shall be unable to give possession of the Premises on
the Rent Commencement Date by reason of the fact that Phase 1 of the Tenant
Improvements (as defined in the Work Letter) is not Substantially Complete, or
for any other reason, any such delay resulting therefrom shall be deemed excused
and Landlord shall not be subject to any liability for the failure to give
possession on said date. Except as expressly provided below, no such failure to
give possession on the Rent Commencement Date shall in any way affect or impair
the validity of this Lease or the obligations of Tenant hereunder, nor shall the
same be construed in any way to extend the Expiration Date. In the event that
Landlord has been unable to Substantially Complete the Tenant Improvements and
deliver possession of the Premises to Tenant on or before July 1, 1999, unless
such inability results from Tenant Delay (as defined in Work Letter) or is
otherwise caused by activities of Tenant, its agents, its representatives or its
contractors at the Project, Tenant shall have the option, exercisable in its
sole discretion, to terminate this Lease, by delivery to Landlord of written
notice of such election, effective upon delivery, at any time after July 1, 1999
and prior to Substantial Completion of the Tenant Improvements and delivery of
possession of the Premises. In the event of termination, Tenant shall
immediately surrender possession of the Premises to Landlord and Landlord shall
return all prepaid, unearned rent to Tenant and the Expiration Date shall be
deemed to the date of delivery of Tenant's notice of termination given pursuant
hereto.
2.2.3 Tenant shall have the right to enter into possession of and occupy
all or any portion of the Premises after the Commencement Date but prior to the
Rent Commencement Date solely for the purposes set forth immediately below,
provided that Tenant first requests Landlord's permission adequately in advance
of the proposed entry and provided that Tenant's entry in Landlord's opinion
will not (i) interfere with or cause any delay in Landlord's Work; (ii) violate
any applicable laws or regulations; or (iii) jeopardize any insurance maintained
in connection with the Premises or Project or increase the premiums with respect
thereto. If Tenant enters into the possession of and occupies all or any portion
of the Premises prior to the Rent Commencement Date, such occupancy shall be
deemed to be under all the terms, covenants, conditions, provisions and
agreements of this Lease, excluding Tenant's obligation to pay Base Annual Rent
and Tenant's Building Share of Building Costs and Tenant's Project Share of
Taxes and Project Costs until the Rent Commencement Date. Such early occupancy
shall be only for Tenant's installation in the Premises of its trade fixtures,
cabling or furniture, and shall be installed in a manner designated not to
interfere with the completion of Landlord's Work.
Section 2.3 - Acceptance by Tenant
9
Neither Landlord nor Landlord's representatives have made any
representations or promises with respect to the Project, Building or the
Premises except as herein expressly set forth. Tenant acknowledges and agrees:
(a) that Tenant has been afforded ample opportunity to inspect the Premises and
the Building, and has investigated their condition to the extent Tenant desires
to do so, including their environmental condition, and (b) that Landlord has no
obligation to remodel or to make any repairs, alterations or improvements to the
Premises or the Building or remediate any condition therein, except as expressly
provided in the Lease. The taking of possession of the Premises by Tenant shall
be conclusive evidence, as against Tenant, that Tenant accepts same in its then
"AS-IS" condition
2
and that the Premises, the Building and the Project were in good and
satisfactory condition at the time such possession was so taken subject to: (i)
the delivery of all building systems, including without limitation, HVAC,
mechanical, plumbing, electrical, roof structure and membrane and structural
integrity of the Building, in good working order and condition as of the
Commencement Date and (ii) the repair of the any water damage to the floors of
the Premises; provided, however, that any defect, repair or damage to the
building systems, roof and the floor be reported to Landlord in writing prior to
the date thirty (30) days after the Tenant Improvements are completed, including
all punchlist items. As Tenant's sole right and remedy, and as Landlord's sole
obligation, with respect to such defects, Landlord shall, with reasonable
diligence, cause such items to be repaired at its own expense; Landlord shall
have no responsibility, liability, duty to indemnify, defend or hold Tenant
harmless from any damages, 1osses, claims, liabilities, awards or actions
related, directly or indirectly, to such items.
ARTICLE 3 - RENT: BASE ANNUAL RENT: TAXES. BUILDING COSTS AND PROJECT COSTS
Section 3.1 - Rent
Notwithstanding anything to the contrary, no Rent (as defined below)
shall be payable until the Rent Commencement Date set forth in Paragraph I of
the Summary of Basic Terms. The Rent Commencement Date shall be memorialized
when appropriate by execution of a Confirmation of Commencement of Rent in the
form attached as Exhibit C hereto by Landlord and Tenant, but failure to so
memorialize such date shall not affect its establishment pursuant to the terms
hereof. "Rent" as used herein shall refer to the Base Annual Rent (as defined in
Section 3.2, below), as it may be adjusted as hereinafter provided in this
Lease, plus all other sums and monetary obligations of Tenant payable to
Landlord under this Lease including, but not limited to the following:
(a) Any late charges or interest due pursuant to Sections 3.6.1 and
3.6.2;
(b) Tenant's Building Share of Building Costs due pursuant to this
Article 3;
(c) Tenant's Project Share of Taxes and Project Costs due pursuant to
this Article 3; and
(d) Any consideration received by Tenant which is due to Landlord
pursuant to Article 5.
Section 3.2 - Base Annual Rent
Tenant shall pay to Landlord commencing on the Commencement Date and
thereafter during the Term the Base Annual Rent set forth in the Summary of
Basic Terms, which sum shall be payable by Tenant in consecutive monthly
installments on or before the first day of each month ("Monthly
Installment(s)"), in advance, in the manner described more particularly in
Section 3.8.1, provided, however, that Tenant shall pay the amount of Advance
Rent set forth in Paragraph I of the Summary of Basic Terms concurrently with
Tenant's execution of this Lease, which shall be a credit against the first
Monthly Installments as they become due. If the Commencement Date should occur
on a day other than the first day of a calendar month, or the Expiration Date
should occur on a day other than the last day of a calendar month, then the
Monthly Installment for such fractional month shall be prorated on a daily basis
based upon a thirty (30) day calendar month. In addition to the Base Annual
Rent, Tenant shall pay the amount of any Rent, Rent increase or adjustment, and
additional payments when and as hereinafter provided in this Lease.
Section 3.3 - Adjustments to Base Annual Rent
3.3.1 On each of the Adjustment Dates specified in Paragraph I of the
Summary of Basic Terms, the Monthly Installments of Base Annual Rent payable by
Tenant under Section 3.2 shall be increased to an amount determined by
multiplying the then current Monthly Installment of Base Annual Rent which falls
due hereunder by One and 35/100 (1.035).
Section 3.4 - Taxes, Building Costs and Project Costs
3.4.1 Definitions. The following terms shall be defined as set forth
below:
(a) "Computation Year" shall mean the calendar year, provided that
Landlord, upon notice to Tenant, may change the Computation Year from time to
time to any other twelve (12) consecutive month period and, in the event of any
such change, Tenant's Building Share of Building Costs and Tenant's Project
Share of Taxes and Project Costs shall be equitably adjusted for the Computation
Years involved in any such change.
(b) "Tenant's Building Share" shall be Fifty One and 29/100 percent
(51.29 %) and has been computed by dividing the Rentable Area of the Premises by
the total Rentable Area of the Building. Rentable Area of the Premises shall be
41,902 square feet and Rentable Area of the Building shall be 81,702 square
feet.
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(c) "Tenant's Project Share" shall be Thirteen and 04/100 percent
(13.04 %) and has been computed by dividing the Rentable Area of the Premises by
the total Rentable Area of the Project. Rentable Area of the Project shall be
321,377 square feet. Tenant acknowledges that it has been given an opportunity
to verify the accuracy of the square footage figures set forth in the foregoing
Section 3.4.1(b) and this Section 3.4.1(c). Whether or not Tenant has taken the
opportunity to verify the foregoing figures, Tenant agrees to accept such square
footage figures as being accurate. Landlord reserves the right to increase or
decrease the size of the Project or the buildings therein designed for occupancy
by tenants, and to recalculate the Rentable Area contained therein, and in the
event of any such increase, decrease or recalculation, Landlord shall recompute
Tenant's Project Share.
(d) "Taxes" shall mean all taxes and assessments, general or special,
ordinary or extraordinary, unforeseen as well as foreseen, of any kind levied
upon or with respect to all or any portion of the Project and the areas used in
connection with the operation of the Project, on the Landlord with respect to
all or any portion of the Project or
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areas used in connection with the operation of the Project, the Rent, and the
personal property contained in the Project and used in connection with the
management and maintenance of the Project imposed by federal, state or local
governments, governmental assessment districts, political subdivisions, public
corporations, or other political or public entity, authority or instrumentality.
Taxes shall not include Landlord's income, franchise, capital stock, estate or
inheritance taxes. Taxes shall include, without limitation, all general real
property taxes, general and special assessments, gross receipts taxes, annual or
periodic license or use fees, excise, transit charges, housing fund and child
care assessments, charges imposed for social services, police, fire, or
environmental protection, other business taxes and the cost of contesting by
appropriate proceedings any of the aforementioned Taxes (with respect either to
validity or amount). If, because of any change in the method of taxation of real
estate, any tax or assessment is imposed upon Landlord or upon the owner of the
land and/or the Building and/or the Project or any part thereof and/or the areas
used in connection with the operation of the Building and/or the Project or the
rents or income therefrom, in substitution for or in lieu of any tax or
assessment which would otherwise be a real estate tax or assessment, or with
respect to any subject matter which was during the fiscal year 1977 - 1978 the
subject of real estate tax or assessment, such other tax or assessment shall be
deemed to be included in Taxes. If any Taxes are specially assessed by reason of
the occupancy or activities of one or more tenants and not the occupancy or
activities of the tenants as a whole, such taxes shall be allocated by Landlord
to the tenant or tenants whose occupancy or activities brought about such
assessment and Tenant shall pay any such taxes so allocated to Tenant.
(e) "Building Costs" shall mean the aggregate amount of all Operating
Costs (defined below) to the extent the same are incurred with respect to the
Building, as distinguished from the portion of Operating Costs incurred solely
with respect to the Project Common Areas or solely with respect to the Project
generally.
(f) "Project Costs" shall mean the aggregate amount of (i) Insurance
Costs (defined below) plus (ii) Operating Costs, but for purposes of this
Section 3.4.1(f) shall exclude Building Costs from Operating Costs.
(g) "Insurance Costs" shall mean, with respect to all or any portion of
the Project, including, without limitation, the Building, other buildings and
improvements in the Project, Project Common Areas and the areas used in
connection with the Project, the aggregate amount of all costs, expenses and
expenditures paid or incurred by Landlord or Landlord's authorized
representatives of fire, extended coverage, all-risk, property damage, boiler,
sprinkler, rent, public liability or commercial general liability, earthquake or
other insurance and the deductible portion of any insured loss otherwise covered
by such insurance.
(h) No Double Counting. In no event shall any portion of Building Costs,
Project Costs or Insurance costs be assessed or counted against Tenant more than
once.
(i) "Operating Costs" shall mean, with respect to the Building or to
all or any portion of the Project and the areas used in connection therewith, as
the case may be, the aggregate amount of all costs, expenses and expenditures
paid or incurred, by Landlord or Landlord's authorized representatives of: (i)
wage and labor costs and expenses applicable to persons engaged in the
management, operation, maintenance, overhaul or repair, whether they be employed
by Landlord or as independent contractors (including, without limitation, the
cost effect of any increase or decrease in the hours of employment or the number
of paid holidays or vacation days, social security taxes, unemployment insurance
taxes and the cost (if any) of providing disability, hospitalization, medical,
welfare, pension, retirement, or other benefits applicable with respect to such
employees); (ii) utilities, utilities surcharges, water and sewer charges, fuel,
building supplies and materials, other supplies and materials, equipment, tools,
service contracts, security, or any costs levied, assessed or imposed by, or at
the direction of, or resulting from statutes or regulations or interpretations
thereof, promulgated by any federal, state, regional, municipal or local
government authority in connection with the use or occupancy of the Building or
the Common Areas or the Project, including, without limitation, the parking
facilities serving the Project; (iii) a management fee and costs incurred in or
associated with the management of the Project not to exceed four percent (4%) of
gross revenues generated by the Project (determined upon the greater of actual
occupancy or eighty five percent (85%) occupancy of the Project); (iv) the
repair, replacement and maintenance of the nonstructural portions of the Project
or any portion thereof, (including, without limitation, the plumbing, heating,
ventilating, air-conditioning, elevator, electrical, security, fire and
life-safety systems installed or furnished by Landlord and the nonstructural
portions of the roof of the Building); (v) costs incurred in or associated with
providing, operating, maintaining, repairing and replacing the Common Areas and
facilities therein; (vi) gardening and landscaping, maintenance of signs and
tenant directories, repairs, repainting, maintenance, resurfacing, painting,
lighting, cleaning, janitorial services, refuse removal or similar items; (vii)
appropriate reserves as determined by Landlord, association fees, assessments or
maintenance charges if the Landlord is obligated to pay such charges; (viii)
capital expenditures together with all costs, and interest thereon at an annual
rate equal to the reference rate of interest announced publicly from time to
time by Bank of America N.T. & S.A. (or any successor bank) at its San Francisco
Headquarters, or any successor rate of interest thereto (the "Reference Rate")
plus two (2) percentage points, but in no event in excess of the
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maximum rate of interest permitted to be contracted by law, all amortized over
their actual useful life; (ix) rental of personal property used in connection
with any to the foregoing; (x) the costs and expenses paid or incurred by
Landlord or Landlord's authorized representatives of legal, accounting and
consulting fees and to permits, certificates and licenses required in connection
with the Project or any portion thereof; (xi) amortized cost of personal
property used exclusively for the management or operation of the Project (or a
reasonable and equitable pro rata share of such amortized cost if such personal
property is not so exclusively used); (xii) any and all assessments levied
against or charged to the Project pursuant to any covenants, conditions and
restrictions, easements, or access and maintenance agreements now or hereafter
of record; and (xiii) such other items as are now or hereafter customarily
included in the cost and expense of managing, operating, maintaining,
overhauling and repairing all or any portion of the Project and areas used in
connection with the operation thereof. All such costs, expenses and expenditures
shall be determined (to the extent so covered) in accordance with generally
accepted accounting principles which shall be consistently applied (with
accruals appropriate to Landlord's business). Landlord agrees that in any event
the replacement to the following items at the Building shall be amortized over
their useful life with interest thereon at an annual rate equal to the Reference
Rate plus two (2) percentage points: (i) entire or the major portion of the roof
membrane (but not the patching of lesser portions of the roof membrane from time
to time), (ii) condenser, compressor, cooling coils
4
and blower which are part of the heating, ventilating and air conditioning
system, and (iii) ceiling or wall mounted space heaters. Operating Costs shall
not include "Operating Costs Exclusions" defined below.
(j) "Operating Costs Exclusions" shall mean (i) the initial
construction cost of the Project, the cost of Tenant Improvements to be paid
pursuant to this Lease or any other lease, and depreciation of such costs; (ii)
debt service (including, without limitation, interest, principal and any impound
payments) required to be made on any mortgage or deed of trust recorded with
respect to all or any part of the Project other than debt service and financing
charges imposed pursuant to Section 3.4.1(i)(viii); (iii) any rent payable under
any ground lease now or hereafter affecting the Project; (iv) leasing
commissions and other costs and expenses incurred in connection with
negotiations or disputes with prospective or present tenants in the Project; (v)
expenditures relating to the repair of the structural components of each of the
following: foundations, exterior walls, roof and any interior load bearing walls
of the Building (but with respect to the roof these provisions do not exclude
and Tenant shall, subject to Section 7.2, bear all other roof costs) or the
Premises; (vi) expenditures allocable to the first twelve (12) months of the
Term of this Lease for necessary repairs of the window glazing, roof membrane
and expenditures for repair of the heating, ventilating and air conditioning
system of the Building which exceed the cost of the contract for maintenance of
the heating, ventilating and air conditioning system; (vii) capital expenditures
relating to repairs, alterations or improvements to the Building required by
governmental authorities to comply with building code provisions existing as of
the Reference Date, including, without limitation, compliance with the Americans
With Disabilities Act of 1990, as amended; (viii) costs, expenses and
expenditures to the extent incurred with respect to other buildings designed for
occupancy by tenants in the Project, as distinguished from costs, expenses and
expenditures incurred solely with respect to Project Common Areas or solely with
respect to the Project generally; (ix) specific costs which, pursuant to other
provisions of this Lease, Tenant is obligated to pay in full, including without
limitation costs of Tenant's performance of obligations to be performed by
Tenant under this Lease and payments which Tenant is obligated to make directly
to any party, including, without limitation, providers of goods, services,
utilities or labor; and (x) costs of Landlord's compliance with any governmental
regulations applicable on or before the Reference Date relating to the Remedial
Work (as defined in Section 4.8.3 hereof) of Hazardous Materials (as defined in
Section 4.7 hereof) existing at, on or about the Project of which Landlord has
knowledge of on or before the Reference Date by reason of other than Tenant's
acts or occupancy of the Premises.
3.4.2 Tenant shall pay in advance on the first day of each month to
Landlord as additional Rent one twelfth (1/12) of each of (a) Tenant's Building
Share of Building Costs for each Computation Year and (b) Tenant's Project Share
of Taxes and Project Costs for each Computation Year, in an amount estimated by
Landlord and billed by Landlord to Tenant. Landlord shall have the right to
revise such estimate from time to time. Any assessments which are included as
Taxes shall be payable over the maximum allowable term that the same can be paid
without penalty or additional cost. With reasonable promptness after Landlord
has received the tax bills and support for Operating Costs for a Computation
Year, but not more than two hundred seventy (270) days after the close of such
year, Landlord shall furnish Tenant with a statement (herein called "Landlord's
Statement") showing a comparison of estimated Building Costs, Taxes and Project
Costs to the actual costs of the same for such Computation Year, and Tenant's
Building Share and Tenant's Project Share of those estimated and actual amounts.
If Tenant's Building Share of actual Building Costs and Tenant's Project Share
of actual Taxes and Project Costs for such Computation Year exceeds Tenant's
payments of the estimated amounts of such categories for such Computation Year,
Tenant shall pay to Landlord the difference within thirty (30) days after
Landlord's Statement is given to Tenant, and if the total amount of Building
Costs, Taxes and Project Costs respectively paid by Tenant for any such
Computation Year shall exceed Tenant's Building Share of actual Building Costs
and Tenant's Project Share of actual Taxes and Project Costs for such
Computation Year, such excess shall be credited against the next installments of
Tenant's Building Share of Building Costs and Tenant's Project Share of Taxes
and Project Costs due from Tenant to Landlord hereunder (or paid to Tenant if
after the Expiration Date and Tenant has surrendered the Premises). If there is
an increase in Taxes (by reason of an increase in assessed valuation or
otherwise) affecting prior Computation Year(s) at any time after rendition of
Landlord's Statement for such year(s), Tenant shall pay to Landlord the Tenant's
Project Share of such increase in Taxes attributable to such year(s) within
thirty (30) days after Landlord's Statement is given to Tenant. If there is a
reduction of the assessed valuation for any tax year which affects the Taxes in
any Computation Year for which Tenant shall have paid Tenant's Project Share of
Taxes, the amount of Tenant's Project Share of Taxes for the affected
Computation Year shall be recalculated on basis of the revised assessed
valuation and Landlord, after receiving a refund or after the delinquency date
of its next tax ▇▇▇▇ in the event Landlord is given a credit, will credit
against the amount of Tenant's Project Share of Taxes next becoming due from
Tenant such sums as may be due to Tenant by reason of the recalculation, less
the expenses incurred in effecting such reduction.
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In no event shall the amount of any such credit be in excess of the amount of
the Tenant's Project Share of Taxes actually paid to Landlord by Tenant for the
period covered by such credit.
3.4.3 If the Term shall commence or the Lease shall terminate on a date
other than the first or last day of a Computation Year, Tenant's Building Share
of Building Costs and Tenant's Project Share of Taxes and Project Costs for such
partial Computation Year shall be appropriately adjusted by Landlord. To the
extent such Building Costs, Taxes and Project Costs are not affected by Tenant's
occupancy of the Premises or by this Lease, Tenant's Building Share and Tenant's
Project Share of those items shall be in the proportion that the number of days
of the Term included in such partial Computation Year bears to 365. During such
partial Computation Year(s) Tenant shall pay Tenant's Building Share of Building
Costs and Tenant's Project Share of Taxes and Project Costs in the same time and
manner provided in Section 3.4.2 with the following exceptions that (i) if the
Commencement Date is not the first day of a Computation Year, on or before the
first day of the Term, or as soon thereafter as practicable, Landlord may ▇▇▇▇
Tenant, and Tenant shall pay, an amount payable per month for the remainder of
the Computation Year which in the aggregate shall equal Tenant's Building Share
of estimated Building Costs and Tenant's Project Share of estimated Taxes and
Project Costs for the partial Computation Year; and (ii) if the Lease terminates
before the end of a Computation Year and if Landlord's Statement shows that (a)
Tenant has overpaid, Landlord shall remit the amount of such overpayment to
Tenant within fifteen (15) days after issuance of Landlord's Statement or (b)
Tenant has underpaid, Tenant shall pay Landlord the amount of such underpayment
to Landlord within fifteen (15) days after issuance of Landlord's Statement.
5
3.4.4 For purposes of calculating estimated and actual Taxes, Building
Costs and Project Costs for any period during which the Building or Project is
less than one hundred percent (100%) occupied there shall be added those
amounts of Taxes, Building Costs and Project Costs which Landlord determines, in
good faith, it would have incurred had the Project been one hundred percent
(100%) occupied during any such period.
Section 3.5 - Additional Taxes
In addition to the Base Annual Rent and other Rent to be paid by Tenant
hereunder, as additional Rent hereunder, Tenant shall reimburse Landlord, within
fifteen (15) days after demand, for any and all taxes payable by Landlord (other
than net income taxes) whether or not now customary or within the contemplation
of the parties hereto: (a) by reason of the manner of occupancy or activities of
Tenant; or (b) upon or with respect to the possession, leasing, operation,
management, maintenance, alteration, repair, use or occupancy by Tenant of the
Premises, the Building, the Project, or any portion thereof; or (c) upon the
value of Tenant's personal property located in the Premises or in any storeroom,
garage or another place in the Premises or the Building or the Project, or the
areas used in connection with the operation of the Building or Project, it being
the intention of Landlord and Tenant that, to the extent possible, such personal
property taxes shall be billed to and paid directly by Tenant; or (d) resulting
from overstandard tenant improvements to the Premises whether title thereto is
in Landlord or Tenant; or (e) upon this transaction; or (f) upon, allocable to,
or measured by the Rent payable hereunder, including without limitation, any
gross receipts tax or excise tax levied by any governmental or taxing body with
respect to the receipt of such Rent. The taxes described in this Section 3.5 may
be referred to as Additional Taxes". "Additional Taxes" paid by Tenant pursuant
to this Section 3.5 shall not be included in any computation pursuant to Section
3.4.
Section 3.6 - Late Payments: Charges: Interest: Default Rate
3.6.1 Tenant acknowledges that the late payment of Rent or any other sum
due from Tenant will cause Landlord to incur costs not contemplated by this
Lease, the exact amount of such costs being extremely difficult and impractical
to fix. Such costs include, without limitation, processing and accounting
charges, late charges that may be imposed on Landlord by the terms of any
encumbrance, or notes secured by any encumbrance, covering the Premises and the
cost of money used by Landlord in place of such Rent or other sum. Therefore, if
any installment of Rent or other sum due from Tenant is not received by Landlord
within five (5) days after the date the same is due, Tenant shall pay to
Landlord as additional Rent, without necessity of prior notice or demand, an
additional sum of five percent (5%) of said installment of Rent or other amount
as a late charge. The parties agree that this late charge represents a fair and
reasonable estimate of the costs that Landlord will incur by reason of late
payment by Tenant. Acceptance of any late charges shall not constitute a waiver
of Tenant's default with respect to the overdue amount, or prevent Landlord from
exercising any of the rights and remedies available to Landlord under this Lease
or under law or equity.
3.6.2 Notwithstanding any other provisions of this Lease, any Rent or
other sums due to Landlord hereunder not paid to Landlord when due hereunder
shall bear interest from the date such payment is due until the same have been
fully paid, at a rate (the "Default Rate") that is equal to the lesser of (i)
two (2) percentage points above the Reference Rate (defined in Section 3.4.1)
adjusted monthly on the first day of each month, and (ii) the highest rate
permitted to be contracted for by law. The payment of such interest shall not
constitute a waiver by Landlord of any default by Tenant hereunder.
Section 3.7 - Consideration
The Base Annual Rent has been established in contemplation that (i)
Tenant will occupy the Premises for the entire Term and (ii) in the event of any
Assignment or Sublet of this Lease or all or any portion of the leasehold estate
created hereby, Landlord and Tenant have agreed that Landlord shall have the
rights and options provided in Article 5, including, without limitation, the
right to terminate this Lease. Tenant expressly acknowledges and agrees that
this Section 3.7 was a material inducement to Landlord in establishing the Base
Annual Rent in the amount herein provided and that Landlord has relied on this
covenant and agreement in executing this Lease.
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Section 3.8 - Time and Manner of Payment in General
3.8.1 All Rent shall be payable in lawful money of the United States of
America at the address specified for Landlord in the Summary of Basic Terms, or
at such other place as Landlord shall designate, without any prior demand
therefor and without any abatement (except as otherwise expressly provided for
in this Lease), deduction or setoff whatsoever.
3.8.2 Except where a longer or shorter period is specifically provided
for in this Lease with respect to a particular expenditure, Tenant shall pay to
Landlord, within fifteen (15) days after notice by Landlord to Tenant of bills
or statements therefor: (a) any sum due hereunder for which a specific due date
is not otherwise provided; (b) sums equal to all expenditures made and monetary
obligations incurred by Landlord in connection with the remedying by Landlord of
Tenant's default, including, without limitation, expenditures made and
obligations incurred for reasonable legal counsel fees; (c) sums equal to all
losses, costs, liabilities, damages and expenses referred to in Article 9; and
(d) sums equal to all expenditures made and monetary obligations incurred by
Landlord collecting or attempting to collect the Base Annual Rent, or any other
Rent or sum of money accruing under this Lease or in enforcing or attempting to
enforce any rights of Landlord under this Lease or pursuant to law, including,
without limitation, expenditures made and obligations incurred for reasonable
legal counsel fees. Tenant's obligations under this Article 3 shall survive the
termination of this Lease.
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ARTICLE 4 - USE AND OCCUPANCY
Section 4.1 - Permitted Use
Tenant shall use and occupy the Premises only for the specific purposes
set forth in Paragraph J of the Summary of Basic Terms, and for no other
purpose. The character of the occupancy of the Premises, as restricted by this
Article 4 and as further restricted by Article 5, and any of the Rules and
Regulations attached to this Lease or hereafter adopted, is an additional
consideration and inducement to Landlord for the granting of this Lease.
Section 4.2 - Compliance with Law
4.2.1 Tenant, at Tenant's expense, shall comply with all laws, rules,
orders, ordinances, directions, regulations and requirements of federal, state,
county and municipal authorities pertaining to Tenant's use or occupancy of the
Premises, the Building and the Project and with the recorded covenants,
conditions and restrictions, regardless of when they become effective,
including, without limitation, all applicable federal, state and local laws,
regulations or ordinances pertaining to air and water quality, Hazardous
Materials, and waste disposal, air emissions and other environmental matters,
all zoning and other land use matters, and utility availability and with any
direction of any public officer or officers, pursuant to law, which shall impose
any duty upon Landlord or Tenant with respect to the use or occupancy of the
Premises. Without limiting the generality of the foregoing, Tenant shall at
Tenant's sole cost and expense take all proper and necessary action to cause the
Premises to be kept, maintained, used and occupied during the Term in compliance
with the Americans With Disabilities Act of 1990, as amended from time to time.
Notwithstanding the foregoing, Tenant shall have no obligation to make capital
expenditures relating to repairs, alterations or improvements to the Premises
required by governmental authorities to comply with building code provisions
existing as of the Reference Date, but to the extent required under the
Americans with Disabilities Act of 1990, as amended ("ADA"), as a result of the
Tenant Improvements, Landlord shall make such improvements as are required by
the ADA as described in the Work Letter Agreement as part of the Tenant
Improvements, and shall bear the expense of such improvements as follows
(separate and apart from and not included in Landlord's Maximum Contribution)
(1) all costs up to a maximum reimbursement of Ten Thousand and No/100 Dollars
($10,000.00) for such compliance on the first floor of the Premises and (2)
fifty percent (50%) of all costs up to a maximum reimbursement of Four Thousand
and No/100 Dollars ($4,000.00) on the second floor of the Premises. All costs in
excess of such costs for ADA compliance shall be borne by Tenant and shall be
paid to Landlord at the same time and in the same manner as the Tenant
Improvement Costs (other than Landlord's Maximum Contribution) are borne by
Tenant under the Work Letter Agreement. Additionally, in no event shall Tenant
be required to install or pay for the installation of an elevator at the
Premises for access from the first floor to the second floor.
4.2.2 Without limiting its obligations under Section 4.2.1, Tenant
covenants and agrees to comply with all laws, rules, regulations and guidelines
now or hereafter made applicable to the Premises by government or other public
authorities respecting the disposal of waste, trash, garbage and other matter
(liquid or solid), generated by Tenant, its employees, agents, contractors,
invitees, licensees, guests and visitors, the disposal of which is not otherwise
the express obligation of Landlord under this Lease, including, but not limited
to, laws, rules, regulations and guidelines respecting recycling and other forms
of reclamation (all of which are herein collectively referred to as "Waste
Management Requirements"). Tenant covenants and agrees to comply with all
non-discriminatory rules and regulations established by Landlord to enable
Landlord from time to time to comply with Waste Management Requirements
applicable to Landlord (i) as owner of the Premises and (ii) in performing
Landlord's obligations under this Lease, if any.
Section 4.3 - Compliance with Insurance Requirements
Tenant shall not do or permit to be done any act or thing in or upon the
Premises which will invalidate or be in conflict with any insurance policy
covering the Building or Project or any of the areas used in connection with the
operation thereof or its fixtures, appurtenances or equipment or the property
located therein, and shall not do, or permit anything to be done, in or upon the
Premises, or bring or keep anything therein, which shall increase the rates
14
of any insurance on the Building or Project or any of the areas used in
connection with the operation thereof of its fixtures, appurtenances or
equipment or on property located therein. If by reason of the failure of Tenant
to comply with the provisions of this Article 4 any insurance premium shall at
any time be higher than it otherwise would be, then, without Landlord's waiving
any rights it has against Tenant hereunder as a result of such failure, Tenant
shall reimburse Landlord for that part of all such premiums thereafter paid by
Landlord which shall have been charged because of such violations by Tenant, and
shall make such reimbursement upon the first day of the month following such
expenditure by Landlord.
Section 4.4 - Certificates of Occupancy
Tenant shall not at any time use or occupy the Premises in violation of
the certificates of occupancy issued for the Premises, Building or Project. In
the event that any department of the city or county of the state in which the
Project is located shall hereafter at any time contend or declare that the
Premises are used for a purpose which is in violation of such certificate or
certificates of occupancy, Tenant shall immediately discontinue such use of the
Premises. Failure by Tenant to discontinue such use after such notice shall be
considered a default under this Lease and Landlord shall have the right to
exercise any and all rights and privileges and remedies given to Landlord by and
pursuant to the provisions of Article 16 hereof. Any statement in this Lease of
the nature of the business to be conducted by Tenant in the Premises shall not
be deemed or construed to constitute a representation or guaranty by Landlord
that such business is lawful or permissible or will continue to be lawful or
permissible under any certificate of occupancy issued for the Premises, Building
or Project or otherwise permitted by law.
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Section 4.5 - Life-Safety Systems
It there now is or shall be installed in the Building or Project a
sprinkler system, heat or smoke detection system or any other so-called
life-safety system and (i) any such system or any of its appliances shall be
damaged or injured or not in proper working order by reason of any act or
omission of Tenant or Tenant's agents, servants, employees, contractors,
visitors or licensees, Tenant shall forthwith restore the same to good working
condition; and (ii) if the Insurance Services Office or any similar body or any
bureau, department or official of the state, county or city government, or any
governmental authority having jurisdiction over the Premises, shall require or
recommend that any changes, modifications, alterations additional equipment be
made or supplied in or to any such system by reason of Tenant's specific
business, or the location of partitions, trade fixtures, or other contents of
the Premises, Tenant shall, at Tenant's expense, promptly make and supply such
changes, modifications, alterations, or additional equipment.
Section 4.6 - Prohibited Uses
4.6.1 Tenant shall not occupy or permit any portion of the Premises to
be occupied for a use which would be prohibited by any other portion of this
Lease (including but not limited to any Rules and Regulations then in effect) or
in violation of law. Nothing in this Section 4.6.1 shall expand the permitted
use of the Premises as set forth in Section 4.1.
4.6.2 Tenant shall not do or permit to be done any act or thing upon the
Premises which shall or might subject Landlord to any liability or
responsibility for injury to any person or persons or to any property by reason
of any business or operation being carried on upon the Premises or for any other
reason, and Tenant hereby indemnifies and agrees to protect, defend and hold
harmless Landlord against any such liability or responsibility. Business
machines and mechanical equipment shall be placed and maintained by Tenant at
Tenant's expense in settings sufficient to absorb and prevent vibration. Tenant
shall not install any machine or equipment which may adversely affect the
structure of the Building without obtaining Landlord's prior written consent,
which consent may be conditioned on such terms as Landlord may reasonably
require. Tenant shall not place a load upon any floor of the Premises exceeding
the floor load per square foot area which such floor was designed to carry and
which is allowed by law.
Section 4.7 - Definition of Hazardous Material
As used herein, the terms "Hazardous Material" or "Hazardous Materials"
shall mean any hazardous or toxic substance, material or waste which is or
becomes regulated by any local governmental authority, the State of California
or the United States Government and include, without limitation, any material or
substance which is (i) defined as "extremely hazardous waste" under Section
25115, "hazardous waste" under Section 25117, "restricted hazardous waste" under
Section 25122.7, or listed pursuant to Section 25140, of the California Health
and Safety Code, Division 20, Chapter 6.5 (Hazardous Waste Control Law), (ii)
defined as a "hazardous substance" under Section 25316 of the California Health
and Safety Code, Division 20, Chapter 6.8 (▇▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇-▇▇▇▇▇▇ Hazardous
Substance Account Act), (iii) defined as a "hazardous material", "hazardous
substance", or "hazardous waste" under Section 25501 of the California Health
and Safety Code, Division 20, Chapter 6.95 (Hazardous Materials Release Response
Plans and Inventory), (iv) defined as a "hazardous substance" under Section
25281 of the California Health and Safety Code, Division 20, Chapter 6.7
(Underground Storage of Hazardous Substances), (v) petroleum, natural gas,
synthetic gas or any form or combination of any of the foregoing (vi) asbestos,
(vii) listed under Article 9 or defined as hazardous or extremely hazardous
pursuant to Article 11 of Title 22 of the California Administrative Code,
Division 4, Chapter 20, (viii) designated as a "hazardous substance" pursuant to
Section 1317 of the Federal Water Pollution Control Act (33 U.S.C. Section 1251
et seq.), (ix) defined as a "hazardous waste" pursuant to Section 6903 of the
Federal Resource Conservation and Recovery Act, (42 U.S.C. Section 6901 et
seq.), (x) defined as "hazardous substances" pursuant to Section 9601 of the
Comprehensive Environmental Response, Compensation and Liability Act, (42 U.S.C.
Section 9601 et seq.) or (xi) identified in Sections 66680 through 66685 of
Title 22 of the California Administrative Code, Division 4, Chapter 30, as all
of the foregoing may be amended from time to time.
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Section 4.8 - Tenant's Obligation
4.8.1 Tenant shall not use, generate, handle, manufacture, produce,
store, release, discharge or dispose of, on, under, in or about the Project or
Premises, or transport to or from the Project or Premises, any Hazardous
Material or allow its employees, agents, contractors, invitees or any other
person or entity to do so. Without in any way limiting, affecting or derogating
from the foregoing prohibition, Tenant shall be bound by, observe and perform
the conditions, covenants and provisions set forth in this Article 4 with
respect to Hazardous Materials. The foregoing prohibition of Hazardous Materials
shall not apply to any ordinary use and incidental storage of small and
insignificant amounts of substances in the regular and ordinary use of common
office business machines or in the ordinary course of Tenant's business in the
Premises provided the same do not constitute, give rise to, or create any
substantial risk of any occurrence, condition, or event as a consequence of
which pursuant to any Environmental Law: (i) Tenant, Landlord, or any owner,
occupant, or person having any interest in the Premises shall be liable, or (ii)
the Premises shall be subject to any legal restriction on use, ownership or
transferability, or (iii) any Remedial Work shall be required. Additionally,
Tenant shall provide Landlord with copies of all submissions, reports,
correspondence and other written information given to and received from all
governmental or regulatory agencies in connection with Tenant's use or storage
of Hazardous Materials on or about the Premises.
4.8.2 Tenant, at its sole cost, shall comply with all Environmental Laws
(defined below) relating to Hazardous Materials used in Tenant's operations on,
under or about the Project, Premises or Building, including the responsibility
to obtain and maintain current all permits required for its operations in
connection with Hazardous Materials. Any and all federal, state or local laws,
ordinances, rules or regulations, or requirements of governmental agencies or
instrumentalities, pertaining to Hazardous Materials or to health, industrial
hygiene or environmental conditions on, under, in or about the Premises,
Building or Project (collectively "Environmental Laws"), including,
8
without limitation, the following (as amended from time to time): the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amended, 42 U.S.C. Section 9601 et seq., ("CERCLA"); the Resource
Conservation and Recovery Act of 1976, 42 U.S.C. Section 6901 et seq. ("RCRA");
the Clean Air Act, 42 U.S.C. Section 7401 et seq., the ▇▇▇▇▇▇ Cologne Water
Quality Control Act, California Water Code Section 13000 et seq.; California
Hazardous Waste Control Act, Health and Safety Code Section 25100 et seq.,
▇▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇-▇▇▇▇▇▇ Hazardous Substance Account Act, California Health and
Safety Code Section 25300 et seq., and those laws described in Section 4.7
hereof.
4.8.3 Tenant shall be responsible for and Tenant hereby indemnifies and
agrees to protect, defend and hold Landlord and the holders of any Superior
Interest or Subordinated Interest (as both terms are defined in Article 8
below), and the constituent shareholders, partners, members or other owners
thereof, and all of their employees, officers, directors, agents, contractors
and licensees (for purposes of this Article 4 collectively referred to as the
"Landlord Indemnitees") against and save Landlord Indemnitees harmless from and
against all claims, cost, expense, damage (consequential or otherwise), fines,
judgments, penalties, loss and liability, including, without limitation, (i)
diminution in value of the Premises, Building or Project, (ii) damages for the
loss or restriction on use of rentable or usable space or of any amenity on the
Premises, Building or Project, (iii) loss of rental income, (iv) cost of any
Remedial Work, (v) damages arising from any adverse impact on marketing of space
in the Building or Project, (vi) costs of the preparation and implementation of
any closure, remedial or other required plans, (vii) damage to natural resources
or to property other than the Premises, Building or Project or harm to any
person or animal, and (viii) sums paid in settlement of claims, attorneys' fees,
consultant fees and expert fees, arising (directly or indirectly) in any way
whatsoever out of or attributable to the use, generation, handling, manufacture,
production, storage, release, threatened release, discharge, disposal or
transportation of Hazardous Materials on, under, in or about the Project,
Premises or Building by Tenant or by any of its Agents (defined below)
(collectively, a "Release" or "Releases"). For purposes of this Article 4,
"Remedial Work" shall mean any or all investigation, monitoring, removal,
restoration, abatement, repair, clean-up, detoxification or other ameliorative
work of any kind or nature which is required by Landlord in order to restore the
Premises, Building and the Project to the condition existing prior to any
Release or in order to remediate the effects of any Release, or which is
required by Environmental Laws, Landlord Indemnitees, or by any private party.
For purposes of this Article 4, "Agents" shall mean any or all of the employees,
agents, contractors, assigns, subtenants, licensees, invitees, customers or
visitors of Tenant, or any person or entity claiming through or under Tenant
4.8.4 In the event of the occurrence of a Release, Tenant shall, at its
sole expense and within thirty (30) days after demand by Landlord (or such
shorter period of time as may be required under applicable laws, including,
without limitation, Environmental Laws, or by any governmental agencies or
instrumentalities) commence to perform and thereafter diligently prosecute to
completion the Remedial Work. All Remedial Work shall be performed in accordance
with the commercially reasonable requirements of Landlord, all requirements of
Landlord's lenders on the Project, and all applicable laws including, without
limitation, Environmental Laws, and with the requirements of governmental
agencies or instrumentalities. All Remedial Work shall be performed by one or
more contractors approved in advance in writing by Landlord, under the
supervision of a consulting engineer approved in advance in writing by Landlord,
and otherwise in accordance with the terms and conditions of this Lease. All
costs and expenses of such Remedial Work shall be paid by Tenant including,
without limitation, the charges of such contractor(s) and/or the consulting
engineer, and Landlord's reasonable attorneys' fees and costs incurred in
connection with monitoring or review of such Remedial Work. In the event Tenant
shall fail to timely commence, or cause to be commenced, or fail to diligently
prosecute to completion such Remedial Work, Landlord may, but shall not be
required to, cause such Remedial Work to be performed and all costs and expenses
thereof, or incurred in connection therewith, shall become immediately due and
payable.
4.8.5 Intentionally deleted.
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4.8.6 Upon the expiration or earlier termination of this Lease, Tenant
shall remove from the Premises, Building and Project all Hazardous Materials
placed or Released on, under, in or about the Premises, Building and Project by
Tenant or any of its Agents, and all trade fixtures, furnishings and/or
equipment associated with the use, storage or disposal of Hazardous Materials
brought on, under, in or about the Premises, Building or Project by Tenant or
any of its Agents and perform all Remedial Work. Removal and disposal of any and
all such Hazardous Materials, equipment or fixtures, and performance of all
related Remedial Work, shall be performed in accordance with the commercially
reasonable requirements of Landlord, all requirements of Landlord's lenders on
the Project, and all applicable laws, regulations and requirements of any
governmental entity or instrumentality, including, without limitation,
Environmental Laws.
4.8.7 In any matter covered by this Section 4.8 the Landlord Indemnitees
shall have the right to employ its or their own counsel at the expense of
Tenant. The Landlord Indemnitees shall have the right, but not the obligation,
at the expense of Tenant, to settle, adjust or compromise any claim, suit or
judgment against the Landlord Indemnitees arising out of the matters covered
herein.
4.8.8 Tenant shall give immediate written notice to Landlord of:
(a) Any action, proceeding or inquiry by any governmental authority
(including, without limitation, the California State Department of Health
Services, the State or any Regional Water Quality Control Board, the Bay Area
Air Quality Management District or any local governmental entity) with respect
to the presence or release or suspected presence or release of any Hazardous
Material on the Project, Premises or Building or the migration thereof from or
to other property;
(b) All demands or claims made or threatened by any third party against
Tenant or the Project, Premises or Building relating to any loss or injury
resulting from any Hazardous Materials; and
9
(c) Any spill, release, discharge or nonroutine disposal of Hazardous
Materials that occurs with respect to the Project, Premises or Building or
Tenant's operations, including, without limitation, those that would constitute
a violation of Health and Safety Code Section 25249.5 or any other Environmental
Law;
(d) All matters of which Tenant is required to give notice pursuant to
Section 25359.7 of the California Health and Safety Code; and
(e) Tenant's discovery of any occurrence or condition on, under, in or
about the Project, Premises or Building or any real property adjoining or in the
vicinity of the Project, Premises or Building which may cause the Premises,
Building or Project or any part thereof to be subject to any restrictions on the
ownership, occupancy, transferability or use under any Environmental Law
including without limitation, Tenant's discovery of any occurrence or condition
on, under or in any real property adjoining or in the vicinity of the Project,
Premises or Building that could cause the Project, Premises or Building or any
part thereof to be classified as "border-zone property" under the provisions of
California Health and Safety Code Sections 25220 et seq. or any regulation
adopted in accordance therewith, or to be otherwise subject to any restrictions
on the ownership, occupancy, transferability or use of the Project, Premises or
Building under any Environmental Law.
4.8.9 Tenant's obligations under this Article 4 shall survive the
termination of this Lease.
Section 4.9 - Landlord's Exculpation
4.9.1 Landlord and Tenant acknowledge that Landlord may become legally
liable for the costs of complying with Environmental Laws relating to Hazardous
Materials which are not the responsibility of Landlord or Tenant, including,
without limitation, the following: (i) Hazardous Materials present in the soil
or ground water on, under or in the Premises, Building or Project of which
Landlord has no actual knowledge as of the Reference Date; (ii) a change in
Environmental Laws which make Hazardous Materials which are present on, under or
in the Premises, Building or Project as of the Reference Date, whether known or
unknown to Landlord, a violation of such new Environmental Laws; (iii) Hazardous
Materials that migrate, flow, percolate, diffuse or in any way move to or under
the Premises, Building or Project; or (iv) Hazardous Materials present on,
under, or in the Premises, Building or Project as a result of any discharge,
dumping or spilling (whether accidental or otherwise) by prior lessees or
occupants of the Premises, Building or Project, or by other lessees or occupants
of the Building or Project, or by the employees, agents, contractors or invitees
of either, or by others.
4.9.2 In the event any of the circumstances described in Section 4.9.1
materialize, Landlord and Tenant agree that under such circumstances (i)
Landlord shall have no liability to Tenant for and no obligation to indemnify,
defend, protect and hold Tenant harmless from any damages, claims, penalties,
judgments, fines, costs, liabilities or losses (including, without limitation,
diminution in value of the Premises, Building or Project, damages for the loss
or restriction on use of rentable or usable space or of any amenity on or in the
Premises, Building or Project, loss of business, damages for harm to natural
resources or to property other than the Premises, Building or Project or injury
to persons or animals, and sums paid in settlement of claims, attorneys' fees,
consultant and expert fees) which Tenant may incur during or after the Term as a
result of such contamination, and (ii) the provisions of Article 10 shall apply
in the event there is any restriction on Tenant's use of the Premises.
Section 4.10 - Right of Contribution
Except if and as expressly provided in this Article 4 to the contrary,
neither Landlord nor Tenant shall be deemed to have waived any rights of
contribution which either party may have against the other party at law in
17
connection with costs, claims, damages or liabilities arising out of or
resulting from the use, presence, release, disposal or clean-up of Hazardous
Materials in the Premises, Building or Project.
Section 4.11 - Monitoring
4.11.1 Entry for Inspection and Testing. Tenant expressly agrees that
Landlord shall have the right to enter the Premises to inspect the Premises
and/or to perform an environmental investigation and assessment of the Premises
(an "Environmental Assessment") upon reasonable notice to Tenant (which shall be
deemed to be twenty four (24) hours prior notice except in the event of an
emergency), and that this right of entry shall include, without limitation, the
right to test for any release, threatened release, discharge or disposal of any
Hazardous Material. Landlord's entry shall be carried out in a manner so as not
unreasonably to interrupt or interfere with Tenant's business operations. An
Environmental Assessment may include, without limitation, the review of any
documents, materials, inventory, financial data or notices or correspondence to
or from private parties or governmental authorities, the review of any storage,
use and disposal facilities and procedures associated with the storage, use and
disposal of Hazardous Materials, and the testing of the soils and groundwater at
or under the Premises. Tenant shall pay for the cost of such Environmental
Assessments if in the reasonable judgment of Landlord or its environmental
consultant, a release, threatened release, discharge or disposal to any
Hazardous Material caused by Tenant has occurred or in the event of a default by
Tenant in any of its obligations under Section 4.7 through Section 4.13. In all
other cases, the cost of such Environmental Assessments shall be borne by
Landlord. If Landlord so requires, Tenant shall comply, at its sole cost and
expense, with all recommendations contained in any Environmental Assessment,
including any recommendation with respect to the precautions which should be
taken with respect to activities of Tenant or any of its Agents on, under, in or
about the Premises, Building or Project or any recommendations for additional
testing and studies to detect the presence of Hazardous Materials Released or
brought on, under, in or about the Premises, Building or Project by Tenant or
any of its Agents.
4.11.2 Monitoring ▇▇▇▇▇ Generally. Landlord and Tenant acknowledge and
agree that Landlord has previously installed on the Project a number of
permanent monitoring ▇▇▇▇▇ for the purpose of enabling Landlord to have tests
performed to detect the presence of Hazardous Materials and that Landlord may,
if it deems necessary, cause additional permanent monitoring ▇▇▇▇▇ to be
installed on the Project. To the best of Landlord's knowledge, the
10
five (5) monitoring ▇▇▇▇▇ currently existing on or about the Project should not
materially adversely affect or disrupt the conduct of Tenant's business
operations on or about the Premises. The cost of installing and constructing
such ▇▇▇▇▇ shall be borne by Landlord, unless such tests reveal the presence of
Hazardous Materials attributable to use generation, handling, manufacture,
production, storage or transportation of Hazardous Materials by Tenant or any of
its Agents on, under, in or about the Premises, Building or Project or any other
real estate, in which event such costs shall be borne entirely by Tenant.
Landlord may, if it deems necessary, cause tests to be made to detect the
presence of Hazardous Material at least once every twelve (12) months during the
Term by the use of such ▇▇▇▇▇ as are then customarily used for such purposes.
The cost of such tests and of the maintenance and repair of such ▇▇▇▇▇,
including, without limitation, any additional ▇▇▇▇▇ installed after the
execution of this Lease shall be borne by Landlord, unless such tests reveal the
presence of Hazardous Materials attributable to the use, generation, handling,
manufacture, production, storage or transportation of Hazardous Materials by
Tenant or any of its Agents on, under, in or about the Premises, Building or
Project or any other real estate, in which event such costs shall be borne
entirely by Tenant. Tenant shall have no right to install ▇▇▇▇▇ or perform any
other tests relating to the presence of Hazardous Materials in the Project.
Section 4.12 - Abatement Activities
To the extent that any investigation, testing or monitoring demonstrates
that significant levels of contamination by Hazardous Materials at the Project
exist or are increasing, Landlord shall have the right but not the obligation to
identify the source of the contamination and seek to have it abated by the
responsible parties. Landlord may undertake, or cause to be undertaken,
voluntary Remedial Work to ameliorate or stabilize any Hazardous Materials in
the Project. The determination whether to undertake any Remedial Work shall be
made by Landlord in its sole and absolute discretion based upon its consultant's
or expert's recommendations and Landlord's determination of the feasibility of
the proposed activities, their cost, their projected efficiency, and the levels
of contamination of the Hazardous Materials in the Project in comparison with
the levels of contamination in other properties in the vicinity of the Project.
Tenant agrees to cooperate fully with Landlord and with any parties designated
by Landlord to perform testing, monitoring or Remedial Work in the Project
provided that, absent governmental or regulatory compulsion to perform testing,
monitoring or Remedial Work in a particular manner, Tenant shall not be required
to cooperate if such cooperation would materially and adversely affect its
business operations at the Premises.
Section 4.13 - Effect on Proposed Assignments and Sublets
Without in any way limiting or affecting Landlord's right to withhold
its consent for other reasons, it shall not be unreasonable for Landlord to
withhold its consent to any proposed transfer, assignment or sublease if (i) the
proposed transferee's anticipated use of the Premises or Project involves the
use, generation, handling, manufacture, production, storage, testing, treatment,
discharge or disposal of Hazardous Materials not commonly used by tenants with
operations similar to Tenant's or other occupants' within the Project; (ii) the
proposed transferee has been required by any prior Landlord, lender or
governmental authority to take remedial action in connection with Hazardous
Material contaminating a property if the contamination resulted from such
transferee's actions or use of the property in question; or (iii) the proposed
transferee is subject to an enforcement order issued by any governmental
authority in connection with the use, disposal or storage of Hazardous
Materials.
ARTICLE 5 - ASSIGNMENT/SUBLETTING/MORTGAGE
18
Section 5.1 - Prohibition: Definitions
5.1.1 Subject only to the exceptions provided in Section 5.2 below,
neither Tenant nor Tenant's legal representatives, successors or assigns shall
assign this Lease ("Assign" or "Assignment"), or transfer, sublet, license or
permit the Premises or any part thereof to be used or occupied by others
(collectively, "Sublet" or "Sublease"); furthermore, in no event shall Tenant or
Tenant's legal representatives or assigns pledge, hypothecate, mortgage or
otherwise encumber this Lease (collectively, "Mortgage"). Any such Assignment,
Sublease or Mortgage, whether direct or indirect, voluntary or involuntary, by
operation of law or otherwise, shall be voidable at the option of Landlord, and
shall constitute a material breach of this Lease. No interest of Tenant in this
Lease or the Premises shall be assignable or assigned by operation of law and
Tenant shall not suffer or permit either such an assignment or any involuntary
assignment of any nature whatsoever. By way of example and not limitation it
shall be deemed an Assignment under this Lease and shall be subject to all the
provisions of this Article 5, if either (a) Tenant consists of more than one
party and there is a purported assignment from one such party to any other or
others of such parties constituting Tenant, or (b) there is any transfer of
control of Tenant, whether by transfer of shares of stock or partnership
interests, or by consolidation, merger, acquisition, reorganization or otherwise
or (c) there is a sale or transfer of a major portion of Tenant's assets but not
an assignment and assumption of this Lease in accordance with Section 5.2. As
used in the immediately preceding sentence, the term Tenant shall also mean any
entity that has guaranteed Tenant's obligations under this Lease. As used in
this Article and in Section 27.6 of this Lease, the term "control" or "controls"
or "controlled" shall mean either the possession, directly or indirectly,
through one or more intermediaries, of the power to direct or cause the
direction of the management and policies of the controlled Person (as defined
below) or the ownership, directly or indirectly, of fifty percent (50%) of the
voting power of, or the equity interests in, the controlled Person (as defined
below). The term Person shall mean individuals, groups, partnerships, firms,
associations, corporations, trusts or any other form of business or legal
entity. The Person who is the actual assignee, sublessee, licensee, occupant,
transferee or any other recipient of an Assignment or Sublease is herein
referred to as "Transferee."
5.1.2 If there is an Assignment or Sublet, whether in violation of or in
compliance with this Article, then (a) Landlord may collect rent from the
Transferee and apply the net amount collected to the rent herein reserved, but
no such collection shall be deemed either a waiver of the covenants and
conditions of this Article 5, or the acceptance of the Transferee as Tenant, or
a release of Tenant from the further performance by Tenant of the obligations on
the part of Tenant herein contained or an alteration of Tenant's primary
liability for such obligations; or (b) in the event of default by any
Transferee, or any other successor of Tenant, in the performance or observance
of any of the terms of
11
this Lease or any Sublease or Assignment agreement, Landlord may proceed
directly against Tenant without the necessity of exhausting remedies against
such Transferee or successor.
Section 5.2 - Assignments or Subleases Subject to Landlord's Prior Written
Consent
Notwithstanding any contrary provision of Article 5.1.1, Tenant may
Assign or Sublet only upon the following express conditions which are agreed to
be reasonable:
5.2.1 The proposed Assignment or Sublease shall be subject to and
conditioned on the prior written consent of Landlord, which consent will not be
unreasonably withheld or conditioned and, without limiting the generality of the
foregoing, it shall be deemed reasonable for Landlord to withhold, condition or
revoke such consent if among other things the following conditions are not
satisfied:
5.2.1.1 the use to be made of the Premises by the proposed Transferee is
the expressly permitted use under Section 4.1 and would not be prohibited by any
other portion of this Lease (including but not limited to any Rules and
Regulations then in effect) and would not create materially greater demands upon
the Facilities, systems or services of the Premises, the Building or Project or
any part thereof than the demands created by Tenant;
5.2.1.2 the character, business stability, reputation, history of timely
lease performance and financial responsibility of the proposed Transferee are
both (a) of high quality and (b) satisfactory to Landlord in the good faith
exercise of its business judgment, and in any event the proposed Transferee
demonstrates, by virtue of its net worth, ratio of assets to liabilities, net
income and cash flow, among other things, the ability to perform (i) all
obligations of Tenant in the case of an Assignment and (ii) the obligations of
Tenant allocable to the Sublease space in the case of a Sublease;
5.2.1.3 the proposed Transferee is then neither a prospective tenant of
the Project with whom Landlord is in negotiation for rental of space in the
Project nor a tenant of the Project;
5.2.1.4 Intentionally deleted;
5.2.1.5 any proposal for alterations to the Premises requested by the
proposed Transferee satisfies the covenants and conditions of Article 6; and
5.2.1.6 all of the conditions set forth below are satisfied.
5.2.2 Tenant shall pay to Landlord Landlord's then standard processing
fee (currently Seven Hundred Fifty Dollars ($750)) and any taxes or other
charges imposed upon Landlord or the Project as a result of such Assignment or
Sublease, and shall reimburse Landlord for all costs, including the reasonable
fees of attorneys, architects, engineers or other consultants incurred by
Landlord in connection with such Assignment or Sublease, whether or not such
proposed Assignment or Sublease is consented to by Landlord.
19
5.2.3 Tenant shall deliver to Landlord with its request for Landlord's
consent the proposed Assignment or Sublease and current financial statements of
the proposed Transferee, prepared by an independent certified public accountant,
and promptly upon Landlord's request for same, any additional documents or
information reasonably related to the proposed transaction or Transferee.
5.2.4 Tenant shall deliver to Landlord an executed original counterpart
of the Assignment or Sublease, which by its terms shall be binding on Tenant and
the Transferee subject only to Landlord's consent being obtained and the
execution by Tenant, the proposed Transferee and Landlord of Landlord's consent.
Every Assignment or Sublease shall provide, among other things, that: (a) it is
and shall be subject and subordinate to the provisions of this Lease, (b) the
termination of this Lease shall, at Landlord's sole election, constitute
termination of every such assignment or sublease, and (c) the covenants and
conditions of this Lease shall be covenants and conditions of the Assignment or
Sublease, and the proposed Transferee shall assume for the benefit of Landlord,
and shall perform faithfully and shall be bound by, all of the covenants and
conditions to this Lease from and after the effective date of the Assignment or
Sublease, limited, in the case of a Sublease, to the extent they apply to the
space in question.
5.2.5 The consent by Landlord to an Assignment or Sublease shall not in
any way be construed to relieve Tenant or the assignee or sublessee from
obtaining the express consent in writing of Landlord with respect to any
subsequent Assignment or Sublease. Landlord may, but shall not be obligated to,
consent to subsequent Assignments or Subletting of this Lease or amendments or
modifications to this Lease with Transferees or other successors of Tenant,
without notifying Tenant, and without obtaining its consent thereto and such
action shall not relieve Tenant of liability under this Lease.
5.2.6 Tenant shall not be released from Tenant's obligations under this
Lease nor shall Tenant's primary liability to pay Rent and to perform all other
obligations to be performed by Tenant under this Lease be altered by (a) any
Assignment or Sublease, regardless of Landlord's consent, or (b) any failure by
Landlord after any Assignment or Sublease, regardless of Landlord's consent, to
give Tenant notice of default under or in respect of any of the terms,
covenants, conditions, provisions or agreements of this Lease.
Section 5.3 - Share of Proceeds of Assignment or Sublease
Fifty percent (50%) of that portion of rent and all other consideration
payable to or for the benefit of Tenant in connection with any Assignment or
Sublease which is in excess of the Rent (which for purposes of this Section 5.3
shall mean the Base Annual Rent plus those Building Costs, Project Costs and
Taxes payable by Tenant pursuant to Section 3.4) which Tenant is obligated to
pay Landlord under this Lease (in the event of a Sublease or Assignment of less
than the entire Premises, prorated to reflect obligations allocable to that
portion of the Premises that is the subject
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of the Sublease or Assignment), after deduction for brokerage commissions and
tenant improvement costs incurred by Tenant, and in the case of a Sublease,
allocated equitably over the term of or portion of the Premises covered by such
Sublease, shall be payable to Landlord as additional Rent under this Lease
without affecting or reducing any other obligation of Tenant under this Lease.
Such excess shall be payable to Landlord at the same time as such rent or other
consideration is actually paid to Tenant, provided, however, that fifty percent
(50%) of the cash equivalent of any non-cash consideration payable to or for the
benefit of Tenant at any time in connection with an Assignment or Sublease shall
be paid by Tenant to Landlord at the time Landlord gives its consent.
Section 5.4 - Landlord Options to Terminate Lease
With respect to any Assignment or Sublet except any made in accordance
with Landlord's prior written consent, it is expressly agreed and understood
that in addition to Landlord's other rights set forth in this Article 5,
Landlord shall have the following options, exercisable in Landlord's sole
discretion: (a) in the event of a Sublease or Assignment of substantially all
the Premises, to terminate this Lease as of the date proposed by Tenant for the
commencement of the term of the proposed Sublease or Assignment; and (b) without
regard to the size of the portion of the Premises to be affected by the proposed
Sublease or Assignment, to declare this Lease to be so modified so as to exclude
therefrom, and to be terminated as to, the space subject to the proposed
Sublease or Assignment, such modification to become effective on the date
proposed by Tenant for the commencement of the term of the Sublease or
Assignment, with the Base Annual Rent, and amounts payable by Tenant pursuant to
Section 3.4 for Building Costs, Taxes and Project Costs, to be adjusted in
proportion to the reduction in Rentable Area of the Premises. If Landlord
exercises either of its options to terminate under this Section 5.4, the
provisions of this Lease applicable to Tenant's obligations on expiration or
termination shall apply to the space as to which the termination applies.
ARTICLE 6 - ALTERATIONS
Section 6.1 - Alterations
Tenant shall not make any alterations, additions or improvements
including, but not limited to, the initial tenant improvements in or to the
Premises or parking space configuration in the Project Common Areas
(collectively, "Alterations") without first meeting the following requirements:
(a) Prior to the commencement of any Alterations, Tenant shall submit
plans and specifications prepared by an architect and/or structural engineer
licensed by the state where Project is located for Landlord's approval, which
approval shall not be unreasonably withheld, and obtain any necessary
governmental permits and deliver a copy thereof to Landlord:
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(b) The Alterations shall be made at Tenant's sole cost and expense and
by a contractor or mechanic designated by Landlord or a contractor or mechanic
chosen by Tenant and approved by Landlord, which approval shall not be
unreasonably withheld;
(c) Tenant shall provide satisfactory evidence of contractor's
comprehensive general liability insurance covering Landlord, builder's risk
insurance, and workmen's compensation insurance all in form and substance
satisfactory to Landlord;
(d) Tenant shall provide a performance and payment bond satisfactory in
form and substance to Landlord for all Alterations which in Landlord's
reasonable judgment will cost more than Twenty Five Thousand Dollars ($25,000)
to complete, or such other security as Landlord may reasonably require to insure
payment for the completion of all Alterations free and clear of liens;
(e) Tenant shall give Landlord at least ten (10) business days' notice
before commencing any proposed Alterations so that Landlord can post and record
a notice of nonresponsibility and any other notice as may be permitted by law,
to protect Landlord from having its interest in Premises made subject to a
mechanic's or materialmen's lien;
(f) All Alterations shall be made in full compliance with all laws,
rules, orders, ordinances, directions, regulations and requirements of all
governmental agencies, offices, departments, bureaus and boards having
jurisdiction;
(g) All of Tenant's contractors, subcontractors, employees, servants and
agents must work in harmony with and shall not interfere with any labor employed
by Landlord, or Landlord's contractors;
(h) Tenant shall be fully responsible if any shutdown of plumbing,
electrical or air conditioning equipment jeopardizes or invalidates any
warranties covering the Building;
(i) Landlord expressly reserves the right to revoke its consent upon
notice to Tenant in the event of the breach of any of the terms or conditions
hereof, in which case all work on the Alterations shall immediately cease to the
extent directed by Landlord in such notice until the breach in question is cured
to Landlord's satisfaction;
(j) Tenant shall reimburse Landlord for any and all costs or expenses
reasonably incurred by Landlord in connection with the Alterations. including
without limitation architectural or engineers' fees and attorneys' fees; and
(k) Tenant shall provide Landlord with a cost and expense breakdown of
the Alterations.
6.1.1 Notwithstanding any provision of Section 6.1(a) to the contrary,
Tenant may make Alterations in or to the Premises which cost less than Five
Thousand Dollars ($5,000) in the aggregate per year, without obtaining
Landlord's prior written consent provided (i) such Alterations do not adversely
affect the foundations, structural
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components, exterior walls, roof or roof membrane, or the heating, ventilating
and air conditioning systems of the Building, or its exterior appearance, (ii)
such Alterations do not impair the use of the Building or materially reduce the
value or marketability of the Premises and/or Building, and (iii) Tenant
complies with all other provisions of Section 6.1. Tenant shall have no right to
make any Alterations to the structure of the Building or the roof under this
Lease.
6.1.2 At the same time Tenant submits detailed specifications, floor
plans and necessary permits to Landlord for review for the purpose of obtaining
Landlord's consent to any proposed Alteration, Tenant may request Landlord to
indicate whether or not such proposed Alteration or addition is to be removed
from the Premises upon the expiration of the Term of this Lease and whether
Tenant is to perform all restoration made necessary by the removal of any such
Alteration. In the event Tenant does not request Landlord to make such
indication, or when Tenant does not obtain Landlord's prior consent to any
Alteration or addition pursuant to Section 6.1.1, Landlord shall have the right
to require Tenant to remove any such Alteration or addition upon expiration of
the Term of this Lease and to perform all restoration made necessary by such
removal. As to future Alterations made to the Premises by Tenant, Tenant shall
only be obligated to remove such Alterations if Landlord, at the time Landlord
grants its consent therefor, states in writing that they must be removed upon
expiration or earlier termination of the Lease. For Alterations for which
Landlord's consent is not required by the terms of the Lease, Landlord may
require Tenant to remove such Alterations upon expiration or earlier termination
of the Lease; provided, however, Tenant may at any time ask for a written
statement from Landlord stating whether or not such Alterations must be removed
upon expiration or earlier termination of the Lease and Tenant shall not be
required to remove such Alterations for which Landlord states in such written
notice that removal will not be required. All Alterations not removed by Tenant
upon expiration or earlier termination of the Lease shall become Landlord's
property.
Section 6.2 - Mechanics' Liens
Any mechanics' or materialmens' lien filed against the Premises,
Building or Project for work done or claimed to have been done by or materials
claimed to have been furnished to Tenant or its agents shall be discharged by
Tenant at its expense within ten (10) days thereafter by the filing of the bond
required by law, by payment, by satisfaction or otherwise. Failure to so
discharge any such lien shall constitute a default hereunder. If Tenant has not
caused the lien to be so released within such 10-day period, Landlord, in
addition to all other remedies provided in this Lease and by law, shall have the
right, but shall not be obligated, to cause the lien to be released by such
means
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as Landlord deems proper, including payment of the claim giving rise to the
lien. All payments made and expenses incurred by Landlord in connection with the
lien shall be considered additional Rent pursuant to Section 3.1 above.
Section 6.3 - Alterations as Landlord's Property
All Alterations, whether made and/or paid for by Tenant or Landlord,
shall immediately become a part of the realty and shall be and remain Landlord's
property, and shall not be removed without the written consent of Landlord.
Notwithstanding the foregoing, all goods, effects, personal property, cubicles,
partitions, local area network cabling, detachable walls, business and trade
fixtures, machinery and equipment owned by Tenant or installed at Tenant's
expense in the Premises shall remain the personal property of Tenant and may be
removed by Tenant at any time, and from time to time, during the Term of this
Lease provided Tenant shall, in removing any such property, repair all damage to
the Premises and the Project caused by such removal and shall restore the
Premises and the Project to their condition prior to the making of the
Alterations, ordinary wear excepted, or, at Landlord's option, Tenant shall pay
to Landlord the cost of such repair and restoration.
Section 6.4 - Indemnification
Tenant's indemnity obligations under Article 9 of this Lease shall
include any matter arising out of or connected with (i) the making, maintenance,
repair, installation, removal or existence of any Alterations (including, but
not limited to, claims or liability for breach of warranty, worker's
compensation, personal injury or property damages) and (ii) Tenant's performance
and observance of, or failure to timely perform and observe, its obligations
under this Article 6. Notwithstanding the previous sentence, Landlord shall have
no right to settle mechanics' or materialmen's liens within the ten (10) day
period described in Section 6.2 or any liens which are bonded over.
Section 6.5 - Survival
Tenant's obligations under this Article 6 shall survive the expiration
or earlier termination of this Lease.
ARTICLE 7 - REPAIRS
Section 7.1 - Tenant's Obligations/Procedures
7.1.1 Subject to the provisions of Section 7.1.2, Section 7.2, Article
10 and Article 11, Tenant shall operate maintain, keep clean, provide janitorial
services for, and take good care of the Premises and the fixtures therein
(including, without limitation, the floor and window coverings), and provide for
the disposal of trash, garbage, and waste arising in connection with Tenant's
use or occupancy, all at Tenant's sole cost and expense and, further subject to
the provisions of Article 6 hereof, shall make all repairs and replacements, at
its sole cost and expense as and when Landlord deems reasonably necessary to
preserve in good working order and condition the Premises and every part
thereof, including, without limitation, all plumbing, electrical and lighting
facilities and equipment, fixtures, interior walls, interior surfaces of
exterior walls, ceilings, roof, doors, windows, plate glass, skylights, glazing
for windows, plate glass and skylights and the heating, ventilating and air
conditioning systems located within the Premises or serving the Premises and
located within or on the Building, except if and to the extent any of such
Building systems are located within the premises of any other tenant of the
Building and to such extent, after reasonable written notice to Landlord,
Landlord shall cause such work to be performed at Tenant's sole cost and
expense. Tenant shall maintain, repair and operate the Premises, the fixtures
therein and such Building systems serving the Premises in a
14
good condition comparable to the manner other buildings in first-class projects
similar in size, character and location are maintained and operated. All repairs
and replacements shall be in quality and class equal to the original work. Upon
the expiration or other termination of the Term of this Lease, Tenant shall
surrender the Premises to Landlord in as good order, condition and repair as
they were received by Tenant, ordinary wear excepted. All repairs and
replacements made by Tenant pursuant to this Section 7.1 shall be subject to the
conditions set forth in Article 6. Notwithstanding the foregoing, Tenant shall
only be responsible for its pro rata share of the cost of any repair or
replacement which under generally accepted accounting practices would be
classified as a capital improvement for the period that such capital
improvement's useful life, as reasonably determined by Landlord, falls within
the Term of this Lease. Landlord shall reimburse Tenant for Landlord's share of
such cost within thirty (30) days of receipt of reasonable written evidence
therefor, upon the same conditions as payment of the Tenant Improvement
Allowance hereunder.
7.1.2 At Landlord's option exercisable from time to time, either
Landlord or Tenant shall procure and maintain, at Tenant's expense (payable by
Tenant directly to the provider of such service), a heating, ventilating and air
conditioning system maintenance contract to provide for inspection, maintenance
and repair of such systems. If Landlord elects to have Tenant obtain such
contract, the form and substance of the contract and the qualifications of the
service provider shall be satisfactory to Landlord. Without limiting the
generality of the foregoing, such contract shall name Landlord as an express
third party beneficiary of the contract, shall be assignable to Landlord, shall
be terminable upon thirty (30) days advance written notice, shall provide for
inspections, repairs and maintenance to be performed at a minimum frequency of
once every three (3) months, shall provide for a written report to Landlord of
each such occasion of inspection, maintenance or repair, and an original of such
contract shall be delivered to Landlord. If Landlord elects to procure and
maintain such maintenance contract, Tenant shall pay to Landlord from time to
time, within fifteen (15) days after delivery of a statement therefor, the cost
of such contract.
7.1.3 Supplementing the provisions of Sections 7.1.1 and 7.1.2 and not
in limitation or derogation thereof, Tenant shall be obligated to pay directly
to the parties entitled thereto all direct and indirect fees, costs and
expenses, in connection with performance of Tenant's obligations set forth in
Sections 7.1.1 and 7.1.2, including, without limitation, the following: (i) all
wage and labor costs and expenses paid or incurred by Tenant or Tenant's
authorized
22
representative and applicable to the persons engaged in the operation,
maintenance, overhaul or repair of all or any portion of the Premises or
fixtures therein, whether they be employed by Tenant or as independent
contractors (including, without limitation, the cost effect of any increase or
decrease in the hours of employment or the number of paid holidays or vacation
days, social security taxes, unemployment insurance taxes and the cost (if any)
of providing disability, hospitalization, medical, welfare, pension, retirement,
or other benefits applicable with respect to such persons); (ii) the cost and
expense of utilities, utility surcharges, water and sewer charges, fuel,
building supplies and materials, services contracts, janitorial services, or any
costs levied, assessed or imposed by, or at the direction of, or resulting from
statutes or regulations or interpretations thereof, promulgated by any federal,
state, regional, municipal or local government authority in connection with the
use or occupancy of the Premises.
Section 7.2 - Landlord's Obligations and Rights
Landlord, subject to reimbursement pursuant to Article 3 and further
subject to the provisions of Article 10 and Article 11, shall keep in good
condition and repair the following: (a) the foundations, exterior walls,
structural condition of interior bearing walls and roof and all roof components,
including the roof membrane, of the Premises; (b) the Common Areas, including,
without limitation, the parking lots, loading areas, utilities installations,
roadways, walkways, landscaping, fences and Project signs; and (c) only during
the first twelve (12) months of the Term of the Lease, the window glazing and
the heating, ventilating and air conditioning system of the Building.
Additionally, to the extent and only to the extent that any of the eight (8)
HVAC units serving the Premises as of the Commencement Date require replacement
during the term of this Lease, Landlord shall replace up to three (3) HVAC units
in any consecutive twelve (12) month period. If Tenant desires to replace any
additional HVAC units during any such twelve (12) month period, Landlord shall
do so at Tenant's written request and at Tenant's sole cost and expense, payable
within fifteen (15) days after demand therefor. Notwithstanding the foregoing,
(i) Landlord shall not be responsible for any such maintenance, upkeep, repair
or replacement to the extent that the same may be made necessary by or arise
from placement or servicing of, or other activities in relation to the location
of, equipment on the roof of the Premises or the Building, or penetration of the
roof by such equipment, regardless of Tenant's having obtained, prior to the
placement of any such equipment, the written approval of Landlord, unless and
until Tenant pays Landlord therefor, including at Landlord's option advance
payment on an estimated basis, the full cost of any such maintenance, upkeep,
repair or replacement; (ii) Landlord shall not, unless and except as otherwise
expressly provided in the Work Letter, if any, be obligated to paint the
exterior or interior surface of exterior walls, nor shall Landlord be required
to maintain, repair or replace doors, windows or plate glass of the Premises;
and (iii) Landlord shall have no obligation to repair, but without obligation to
do so may elect to repair, at the expense of Tenant, all damage or injury to the
Premises, or to the Building or Project and its fixtures, appurtenances or
equipment or to any of the areas used in connection with the operation of the
Building or Project, caused or done by Tenant or Tenant's agents, servants,
employees, contractors, visitors or licensees or caused by moving property of
Tenant in or out of the Building or the Project, or by the installation or
removal to furniture or other property, or resulting from fire, heating,
ventilating or air conditioning unit or system, short circuits, overflow or
leakage of water, steam, gas, sewage or odors, or by frost or by bursting or
leaking of pipes or plumbing works, or gas, or from any other source, due to the
carelessness, negligence, or improper conduct of Tenant or Tenant's agents,
servants, employees, contractors, visitors or licensees. If any component of or
system serving the Premises is covered by a third party warranty, Landlord
shall, at the written request of Tenant, make a claim against such warranty for
repair work so covered and use reasonable efforts to enforce its warranty rights
for the benefit of Tenant. Landlord shall, if so requested by Tenant, deliver to
Tenant copies of all such written warranties in Landlord's possession
15
Section 7.3 - Statutory Waivers
Tenant hereby waives all rights under the provisions of Sections
1932(1), 1941 and 1942 of the California Civil Code, and all rights under any
law in existence during the Term authorizing a tenant to make repairs at the
expense of a Landlord or to terminate the lease.
Section 7.4 - No Liability of Landlord
Unless and except to the extent caused by Landlord's gross negligence or
willful misconduct, or that of its employees, agents or contractors, and except
as provided in Article 10 hereof, there shall be no allowance to Tenant for
diminution of rental value, and no liability on the part of Landlord by reason
of inconvenience, annoyance or injury to business arising from the making of, or
the failure to make, any repairs, alterations, decorations, additions or
improvements in or to any portion of the Premises, Building or the Project (or
any of the areas used in connection with the operation thereof or in or to any
fixtures, appurtenances or equipment), or by reason of the active or passive
negligence of Tenant or any other tenant or occupant of the Building or Project.
In no event shall Landlord be responsible for any consequential damages arising
or alleged to have arisen from any of the foregoing matters. Notwithstanding the
foregoing, if Landlord receives, as the result of any interruption in services
or as a result of the making of or failure to make any of the above-mentioned
repairs, alterations, decorations, additions or improvements, when any of the
foregoing prevented Tenant's use of the Premises, rental insurance proceeds,
then to the extent of such proceeds received, Tenant's Rent shall be abated.
ARTICLE 8 - SUBORDINATION/PROTECTION OF LENDERS
Section 8.1 - Subordination and Attornment
8.1.1 This Lease shall be subject and subordinate to all ground or
underlying leases, mortgages and deeds of trust which now or hereafter encumber
or otherwise affect the real property of which the Premises forms a part or
encumber or affect the ground or underlying leases and all renewals,
modifications, consolidations, replacements
23
and extensions of any of the foregoing (any of the foregoing being a "Superior
Interest"), without the necessity of executing any instrument to effectuate such
subordination; provided, however, upon Landlord's request, Tenant, or Tenant's
successors-in-interest, shall execute and deliver any and all instruments
desired by Landlord evidencing such subordination in the manner requested by
Landlord, provided that Tenant shall receive customary non-disturbance covenants
from the holder of such Superior Interest for the benefit of Tenant. Tenant
acknowledges that it has received and executed a subordination instrument with
the current holder of a Superior Interest in a form satisfactory to Tenant.
8.1.2 Tenant agrees that, at the option of the lessor under any ground
or underlying lease which is a Superior Interest, Tenant shall attorn to said
lessor in the event of the termination or cancellation of such ground or
underlying lease and, if requested by said lessor, shall enter into a new lease
with said lessor (or a successor ground lessee designated by said lessor) for
the balance of the Term then remaining hereunder upon the same terms and
conditions as those herein provided.
8.1.3 In the event of foreclosure or exercise of power of sale under any
mortgage or deed of trust which is a Superior Interest, the holder of any such
Superior Interest or purchaser at any sale pursuant thereto (any of the
foregoing referred to herein as a "Purchaser") shall have the option (a) to
require Tenant to attorn to such Purchaser, and to enter into a new lease with
such Purchaser (as Landlord) for the balance of the term then remaining
hereunder upon the same terms and conditions as those herein provided, or (b)
notwithstanding the foregoing provisions, to make the election and proceed
pursuant to Section 8.2.
Section 8.2 - Superiority of Lease and Attornment
Notwithstanding the foregoing, the holder of a Superior Interest may at
any time elect to subordinate its Superior Interest to this Lease (any such
encumbrance subordinated to this Lease being a "Subordinated Interest") and upon
giving notice of such election to Tenant, this Lease shall be superior to any
such Subordinated Interest, without the necessity of any further documentation.
If the interest of Landlord in the Project or any portion thereof is transferred
to a Purchaser pursuant to or in lieu of proceedings for enforcement of any
Subordinated Interest, Tenant shall immediately and automatically attorn to the
Purchaser, without execution of any further instruments, and in such event, for
the remaining Term, this Lease shall continue in full force and effect as a
direct lease between the Purchaser and Tenant on the terms and conditions set
forth herein which are applicable to such remaining Term. Notwithstanding the
foregoing, Tenant shall, upon request of Landlord or the holder to any
Subordinated Interest, execute and deliver to Landlord a document evidencing
either or both of the subordination of the Subordinated interest to this Lease
or Tenant's attornment to the Purchaser.
Section 8.3 - Lender's Right to Cure
If Landlord is in default, Tenant will accept cure of any default by any
holder (a "Holder") of a Superior interest or of a Subordinated Interest whose
name and address shall have been furnished to Tenant in writing. Tenant may not
terminate this Lease for Landlord's default unless Tenant gives notice of such
intent to terminate to each such Holder and the default is not cured within
thirty (30) days after the time period given to Landlord to cure any such
default in this Lease or within such greater time as may be reasonably necessary
to cure such default. A default which cannot reasonably be cured within said
thirty (30) day period shall be deemed cured within said period if work
necessary to cure the default is commenced within such time and the Holder
proceeds diligently thereafter with such work until the default is cured.
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Section 8.4 - Tenant's Financial Statements
8.4.1 Tenant agrees that Landlord is hereby authorized to request a
credit report on Tenant at any time and from time to time subsequent to the
Reference Date from any third party, but in the absence of a proposed transfer
or refinancing of the Building or the Project, no more often than once each
calendar year.
8.4.2 Upon default under this Lease by Tenant, or upon any request by
Tenant for Landlord's approval of an Assignment or Sublease pursuant to Article
5 above, or upon request of Landlord made not more than once during any
Computation Year for any reason whatsoever, Tenant agrees to promptly provide
Landlord with a full, true and correct current audited annual financial
statement (certified by Tenant's regular certified public accountant) or, if a
current annual audited financial statement should not be available, a full, true
and correct current unaudited annual financial statement (certified by the chief
financial officer of Tenant), covering the financial condition of Tenant, the
same to be accompanied by all financial statements of any kind issued by Tenant
to any bank or other financial institution or credit reporting service at any
time during the twelve (12) months next immediately preceding the date of said
current financial statement.
8.4.3 Within ten (10) days after Landlord's written request, Tenant
shall deliver to Landlord, or to any actual or prospective Holder that Landlord
designates, the most recent quarterly financial statements as are available to
verify the financial condition of Tenant, or any Transferee or guarantor of
Tenant, to facilitate the financing or refinancing of the Building or Project,
or the creation, extension or renewal of any underlying or ground lease
affecting the Project.
8.4.4 Tenant represents and warrants to Landlord and such Holder that
each financial statement delivered by Tenant is or shall be, as the case may be,
accurate in all material respects to the best of Tenant's knowledge as of the
date of such statement.
Section 8.5 - Lease Modifications
24
If at any time or times Landlord desires to obtain financing for the
Building or any part thereof, if any lender which intends to take, or is
holding, a mortgage or deed of trust encumbering the Building or any part
thereof, should require, as a condition to such financing, either execution by
Tenant of an agreement requiring Tenant to send such lender written notice of
any default by Landlord under this Lease, giving such lender the right to cure
such default until such lender has completed foreclosure, and preventing Tenant
from terminating this Lease unless such default remains uncured after
foreclosure has been completed, or any modification of the agreements,
covenants, conditions or provisions of this Lease, or both of them, then Tenant
agrees to execute and deliver such agreement and to modify this Lease as
required by such lender; provided, however, that no such modification shall
affect the length of term hereof, increase the rent payable by Tenant hereunder
or otherwise materially and adversely affect the use of or the conduct of
Tenant's operations in the Premises as otherwise permitted herein. Tenant
acknowledges and agrees that its failure to execute any such agreement or
modification required by such lender may cause Landlord serious financial damage
by causing the failure of a financing transaction and giving Landlord all of its
rights and remedies under Article 16 hereof, including its right to damages
caused by the loss of said financing. In addition to such rights and remedies,
if Tenant shall fail or refuse to execute any such agreement or modification
within ten (10) days after receipt thereof, Landlord, at its option, may, upon
written notice to Tenant, terminate this Lease and, upon giving such termination
notice, Landlord shall refund to Tenant any unearned rent and/or security
deposit held by Landlord in excess of amounts which Tenant then owes to
Landlord, and this Lease shall terminate.
ARTICLE 9 - LIABILITY/INDEMNIFICATION
Section 9.1 - Landlord's Exculpation and Limitation of Liability
Landlord, its employees, its agents, and the holders of any Superior
Interest or Subordinated Interest shall not be liable to Tenant and Tenant
hereby waives all claims against such parties for any injury to or death of any
person or for loss of use of or damage to or destruction of property in or about
the Premises or the Project from any cause whatsoever, including without
limitation, that occasioned by or through the acts or omissions of persons
occupying any part of the Project, or occasioned by burst, stopped or leaking
pipes or apparatus for the distribution or collection of water, wastewater, gas
or steam, or by leakage from the roof, walls or subsurface, or by falling
plaster or ceiling panels, or by electrical wiring. The foregoing waiver shall
not apply to the extent caused by the gross negligence or willful misconduct of
Landlord, its employees or agents, provided, however, the foregoing shall not
diminish or affect the waivers by Tenant and Landlord pursuant to Section 14.3
and in no event shall Landlord, its employees and agents, and the holders of any
Superior Interest or Subordinated Interest be liable for any loss of profits or
damages from business interruptions or any other consequential damages. Landlord
shall defend (with counsel reasonably acceptable to Tenant), indemnify and hold
harmless Tenant and its officers, directors, shareholders, subsidiaries,
employees, agents and representatives from and against any and all claims,
actions, lawsuits (including, but not limited to, claims, actions and lawsuits
brought by the government or third parties), losses, costs (including, but
limited to, court costs, costs of appeal, and cleanup, removal and remediation
costs associated with any Hazardous Materials), liabilities, contribution
claims, damages and expenses including, but not limited to, attorneys' fees and
court costs, arising, whether before or after the expiration or earlier
termination of the Lease, out of or in connection with (i) the gross negligence
or willful misconduct of Landlord or Landlord's employees, agents or
contractors, (ii) any breach of the Lease by Landlord, and (iii) the presence,
release, discharge, spill, removal, remediation, use, storage, disposal,
transportation or existence of any Hazardous Materials to, from, on, under or
about any part of the Project existing or arising solely and directly as a
result of the activities of Landlord or Landlord's employees, agents or
contractors on or about the Project. Landlord's indemnity obligations set forth
herein shall survive the expiration or earlier termination of the Lease.
17
Section 9.2 - Tenant's Liability, Indemnification and Hold Harmless
Tenant hereby indemnifies and agrees to protect, save, defend and hold
Landlord and the holders of any Superior Interest or Subordinated Interest, and
the constituent shareholders, partners or other owners thereof, and all of their
employees, officers, directors, agents, contractors and licensees (hereinafter
collectively referred to as the "Indemnitees") against and save Indemnitees
harmless from any and all loss, cost, liability, damage, expense and claims,
including, without limitation, penalties, tines and reasonable attorneys' fees
and costs incurred, and any claims by any persons by reason of injury to or
death of any person or for loss of use of or damage to or destruction of
property, in connection with or arising from: (a) any matter expressly
referenced elsewhere as being included within Tenant's indemnity obligation
under this Article 9, or (b) any failure of Tenant timely to perform or observe
any obligation, condition, covenant or representation of this Lease on Tenant's
part to be performed or observed, or (c) the use or occupancy or manner of use
or occupancy of the Premises by Tenant or any person or entity claiming through
or under Tenant, or (d) any acts, omissions or negligence of Tenant, or the
employees, agents, contractors, subtenants, assigns, licensees, invitees or
visitors of Tenant, or of any person or entity claiming through or under Tenant,
in, on or about the Premises or the Project, either prior to the commencement
of, during, or after the expiration of the Term, including, without limitation,
any acts, omissions or negligence in the making or performing of any
alterations, construction or installation of Tenant's fixtures, equipment or
other personal property. Provided, however, Tenant shall not be obligated to
protect, defend, indemnify and save harmless Indemnitees as set forth above to
the extent that any such loss, cost, liability, damage, expense or claim has
been caused by the gross negligence or willful misconduct of Landlord, its
employees, contractors or its agents. In the event any action or proceeding is
brought or threatened against any of the Indemnitees for any claim against which
Tenant is obligated to indemnify Indemnitees hereunder, Tenant upon notice from
Landlord shall defend such action or proceeding pursuant to this Article 9 by
counsel (i) previously approved in writing by Landlord in its reasonable
discretion, and (ii) willing to cooperate with counsel of Landlord's choice in
connection with such defense. Landlord reserves the right to settle, compromise
or dispose of any and all claims, actions or proceedings related to the
foregoing indemnities in its sole discretion and the exercise of said right
shall not reduce Tenant's obligations hereunder.
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Section 9.3 - Survival and Conflicts with other Indemnity Provisions
The foregoing provisions of this Article 9 shall not diminish either
party's rights and obligations set forth in Article 4 and Section 6.4 hereof, as
applicable. The provisions of this Article 9 shall survive the expiration or
other termination of this Lease. Any waiver of claims against any party, release
of any party and/or indemnification of any party pursuant to the terms of this
Lease, including without limitation the terms of this Article 9, shall in no
event be deemed to apply to such party's fraud, willful injury to the person or
property of another, or violation of any law, whether willful or negligent, to
the extent such waiver or indemnity would violate California Civil Code Section
1668.
ARTICLE 10 - DAMAGE/DESTRUCTION
Section 10.1 - Destruction and Repair
If the Premises shall be damaged by fire or other casualty, and if
Tenant shall give prompt notice to Landlord of such damage, Landlord, at
Landlord's expense, shall repair such damage and restore the Premises to
substantially the condition it was in prior to such fire or casualty; provided,
however, that Landlord shall have no obligation to repair any damage to or to
replace Tenant's personal property, trade fixtures or equipment, Alterations or
any other property or effects of Tenant. Notwithstanding the foregoing, Landlord
shall have no obligation to repair such damage and restore the Premises to
substantially the condition it was in prior to such fire or casualty: (i) to the
extent there are governmental restrictions which preclude Landlord from
repairing and restoring the Premises or the Building to substantially the
condition it was in prior to such fire or other casualty; or (ii) if Tenant is
in default under this Lease. Except as otherwise provided in this Article 10, if
the entire Premises shall be rendered untenantable by reason of any such damage,
the Base Annual Rent and Tenant's Building Share of Building Costs and Tenant's
Project Share of Taxes and Project Costs shall ▇▇▇▇▇ for the period from the
date of such damage to the date when such damage to the Premises shall have been
repaired, and if only a part of the Premises shall be rendered untenantable, the
Base Annual Rent and Tenant's Building Share of Building Costs and Tenant's
Project Share of Taxes and Project Costs shall ▇▇▇▇▇ for such period in the
proportion that the area of the part of the Premises so rendered untenantable
bears to the total area of the Premises; provided, however, if, prior to the
date when all of such damage shall have been repaired, any part of the Premises
so damaged shall be rendered tenantable or shall be used or occupied by Tenant
or any person or persons claiming through or under Tenant, then the amount by
which Base Annual Rent and Tenant's Building Share of Building Costs and
Tenant's Project Share of Taxes and Project Costs shall ▇▇▇▇▇ shall be equitably
apportioned for the period from the date of any such use or occupancy to the
date when all such damage shall have been repaired.
Section 10.2 - 180 Day and 60 Day Repair Criteria
10.2.1 Notwithstanding the provisions of Section 10.1, if prior to or
during the Term, the Premises or the Building (whether or not the Premises has
been damaged or rendered untenantable) shall be so damaged by fire or other
casualty that, in Landlord's architect's or contractor's opinion determined in
its reasonable discretion, it will take longer than one hundred eighty (180)
days from the date of the casualty to substantially complete the repair and
restoration of the Premises or Building, then Landlord shall give to Tenant as
soon as possible but in no event later than sixty (60) days after the casualty,
notice of such opinion ("the 180 Day Notice"). If such repairs and restoration
cannot in Landlord's architect's or contractor's opinion be substantially
completed within one hundred eighty (180) days after the date of the casualty,
Landlord and Tenant shall each have the right to terminate this Lease by giving
written notice to the other within thirty (30) days after Tenant's receipt of
the 180 Day Notice.
10.2.2 Notwithstanding any provision herein to the contrary, Landlord
and Tenant shall each have the right to terminate this Lease in the event the
Premises is damaged by a fire or other casualty during the last year of the
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Term of this Lease if in Landlord's architect's or contractor's opinion
determined in its reasonable discretion it will take longer than sixty (60) days
to substantially complete the repair and restoration of the Premises. Landlord
shall give notice of such opinion (the "60 Day Notice") as soon as possible, but
in no event later than thirty (30) days after such casualty. In the event either
party elects to terminate this Lease pursuant to this Section 10.2.2 such party
shall give written notice to the other, which must be received by the other
party no later than ten (10) days after Tenant's receipt of the 60 Day Notice.
10.2.3 In the event Landlord or Tenant delivers such a written
termination notice pursuant to Section 10.2.1 or Section 10.2.2, this Lease and
the Term shall terminate thirty (30) days thereafter with the same effect as if
the expiration of such thirty (30) day period was the Expiration Date, and Rent
shall be apportioned as of such date. In the event that this Lease is not so
terminated and the actual time to substantially complete the repair and
restoration of the Premises takes longer than one hundred eighty (180) days (or
sixty (60) days in the event Landlord gives a 60 Day Notice), Tenant shall have
no claim or remedy of any kind whatsoever against Landlord for any costs,
damages, losses, liabilities or penalties it incurs, provided Landlord
diligently prosecutes the repair and restoration of the Premises to substantial
completion. No such delay not caused by Tenant shall affect Tenant's right to
abatement of Base Annual Rent and Tenant's Building Share of Building Costs and
Tenant's Project Share of Taxes and Project Costs under Section 10.1.
Section 10.3 - Lack of Insurance Proceeds
Notwithstanding anything contained in this Article 10 to the contrary,
in no event shall Landlord be required to spend for any repair, replacement or
reconstruction of the Premises an amount greater than the insurance proceeds
actually received by Landlord (plus the amount of reimbursement of deductibles
actually received from
26
Tenant (and other tenants) as Building Costs or Project Costs) as a result of
the fire or other casualty causing such loss, damage or destruction. If Landlord
can not repair and restore the Premises to the condition otherwise required
under this Article 10 with the proceeds actually received by Landlord and elects
not to so repair and restore the Premises, this Lease shall terminate upon such
written election made by Landlord and delivered to Tenant within fifteen (15)
days of receipt of such insufficient proceeds.
Section 10.4 - No Release of Liability
Except to the extent expressly provided otherwise in this Lease, nothing
contained in this Lease shall relieve Tenant of any liability to Landlord or to
its insurance carriers that Tenant may have under law or under the provisions of
this Lease in connection with any damage to the Premises or the Project by fire
or other casualty.
Section 10.5 - Tenant's Negligence
Notwithstanding the provisions of Section 10.1, if any such damage is
due to the fault or neglect of Tenant, any person claiming through or under
Tenant, or any of their employees, suppliers, shippers, customers or invitees,
then there shall be no abatement of Base Annual Rent and Tenant's Building Share
of Building Costs and Tenant's Project Share of Taxes and Project Costs by
reason of such damage, unless Landlord is reimbursed for such abatement of Base
Annual Rent and Tenant's Building Share of Building Costs and Tenant's Project
Share of Taxes and Project Costs pursuant to any rental insurance policies that
Landlord may, in its sole discretion, elect to carry.
Section 10.6 - Express Agreement Re Damage and Destruction
The provisions of this Lease, including this Article 10, constitute an
express agreement between Landlord and Tenant with respect to any and all damage
to, or destruction of, all or any part of the Premises, the Building or any
other portion of the Project, and it is agreed that any statute or regulation of
the State of California, including, without limitation, Sections 1932(2) and
1933(4) of the California Civil Code, with respect to any rights or obligations
concerning damage or destruction in the absence of an express agreement between
the parties, and any similar statute or regulation, now or hereafter in effect,
shall have no application to this Lease or to any damage to or destruction of
all or any part of the Premises, the Building or any other portion of the
Project.
ARTICLE 11 - EMINENT DOMAIN
Section 11.1 - Partial or Total Taking
If all or substantially all of the Premises or Building is condemned or
taken in any manner for public or quasi-public use, including, but not limited
to, a conveyance or assignment in lieu of a condemnation or taking, this Lease
shall automatically terminate as of the earlier of the date of the vesting of
title or the date of dispossession of Tenant as a result of such condemnation or
other taking. If less than all or substantially all of the Premises or Building
is so condemned or taken, this Lease shall automatically terminate only as to
the portion of the Premises so taken as of the earlier of the date of the
vesting of title or the date of dispossession of Tenant as a result of such
condemnation or taking. If such portion of the Premises or Building is condemned
or otherwise taken so as to require, in the reasonable opinion of Landlord, a
substantial alteration or reconstruction of the remaining portions thereof, this
Lease may be terminated by Landlord, as of the earlier of the date of the
vesting of title or the date of dispossession of Tenant as a result of such
condemnation or taking, by written notice to Tenant given within sixty (60) days
following notice to Landlord of the date on which said vesting or dispossession
will occur. Tenant hereby waives any right which it may have during the Lease
Term under California Code of Civil Procedure Sections 1265.110 through
1265.140, and any similar law now or hereafter in effect, including, without
limitation, the right to petition a court to terminate this Lease in the event
of a partial taking of the Premises.
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Section 11.2 - Award
Landlord shall be entitled to the entire award in any condemnation
proceeding or other proceeding for taking for public or quasi-public use,
including, without limitation, any award made for the value of the leasehold
estate created by this Lease and Alterations which are the property of Landlord.
No award for any partial or entire taking shall be apportioned, and Tenant
hereby assigns to Landlord any award that may be made in such condemnation or
other taking, together with any and all rights of Tenant now or hereafter
arising in or to same or any part thereof; provided, however, that nothing
contained herein shall be deemed to give Landlord any interest in, or to require
Tenant to assign to Landlord, any award made to Tenant specifically for its
relocation expenses, the taking of personal property and trade fixtures
belonging to Tenant, or the interruption of or damage to Tenant's business, or
for a temporary taking during the Term of this Lease, if such award is made
separately to Tenant and not as part of the damages recoverable by Landlord.
Section 11.3 - Sale to Condemning Authority
Landlord may, without any obligation to Tenant and without obtaining
Tenant's consent, agree to sell and/or convey to the condemnor the Premises,
Building or Project or any portion thereof sought by the condemner, without
first requiring that any action or proceeding be instituted or, if instituted,
pursued to a judgment.
Section 11.4 - Proration/Abatement of Base Annual Rent
In the event of an automatic or elective termination of this Lease
pursuant to Section 11.1 or of sale pursuant to Section 11.3, the Rent shall be
equitably prorated as of the date of termination of this Lease. In the event
27
of a partial condemnation or taking that is permanent, but does not result in a
termination of this Lease as to the entire Premises pursuant to Section 11.1,
the Rent shall ▇▇▇▇▇ in proportion to the portion of the Premises taken by such
condemnation or other taking.
Section 11.5 - Temporary Taking
If all or any portion of the Premises is condemned or otherwise taken
for public or quasi-public use for a limited or temporary period of time, this
Lease shall remain in full force and effect and Tenant shall continue to perform
all terms, conditions and covenants of this Lease. The apportionment of any
award shall be governed by the provisions of Section 11.2.
ARTICLE 12 - UTILITIES
Section 12.1 - Utilities
12.1.1 Tenant shall pay directly to the providers of all services for
separately metered or directly billed water, gas, heat, light, power, telephone
and other utilities and services supplied to the Premises, all fees, costs and
expenses of such services, together with any Taxes thereon. Landlord makes no
representation with respect to the adequacy or fitness of the heating,
ventilating or air conditioning equipment in the Project to maintain
temperatures that may be required for, or because of, any equipment of Tenant,
and Landlord shall have no liability for loss or damage in connection therewith.
12.1.2 In the event any governmental entity promulgates or revises any
statute, ordinance or building, fire or other code or imposes mandatory or
voluntary controls or guidelines on Landlord, the Project or any part thereof,
relating to the use or conservation of energy, water, gas, light or electricity
or the reduction of automobile or other emissions or the provision of any other
utility or service provided with respect to this Lease, or in the event Landlord
is required or elects to make alterations to the Project or any other part
thereof in order to comply with such mandatory or voluntary controls or
guidelines, Landlord may, in its sole discretion, require Tenant to comply with
such mandatory or voluntary controls or guidelines or Landlord may, in its sole
discretion, make such alterations to the Project or any other part thereof. All
costs incurred by Landlord in connection with such laws, ordinances, guidelines
or controls, including alterations to the Project shall be included in Operating
Costs and assessed to Tenant pursuant to Section 3.4, except to the extent that
such costs are to be entirely the responsibility of Tenant pursuant to this
Lease, in which latter case such costs shall be entirely assessed to Tenant.
Neither such compliance nor the making of such alterations shall in any event
entitle Tenant to any damages, relieve Tenant of the obligation to pay the full
Rent reserved hereunder or constitute or be construed as a constructive or other
eviction of Tenant.
ARTICLE 13 - LANDLORD'S RIGHT OF ENTRY
Landlord and Landlord's agents shall have the right to enter the
Premises at all times, to examine the same and to make such repairs or
alterations, decorations, additions or improvements as Landlord may reasonably
deem necessary or desirable, including without limitation the use and
maintenance of pipes and conduits in and through the Premises, and Landlord and
Landlord's agents shall be allowed to take all material into and upon the
Premises that may be required therefor without the same constituting an eviction
of Tenant in whole or in part, and subject to the provisions of Article 10, the
Base Annual Rent reserved shall in no way ▇▇▇▇▇ while said repairs, alterations,
decorations, additions or improvements are being made, by reason of
inconvenience, annoyance or injury to the business of Tenant because of the
prosecution of any such work, or otherwise. Landlord and Landlord's agents are
expressly granted permission to inspect the Premises at any reasonable time and
to show the Premises at any reasonable time to prospective tenants, mortgagees,
purchasers, lessees of the Building or Project and other persons with a business
interest therein. If Tenant shall not be personally present to open and permit
Landlord's entry into the Premises, at any time, when for any reason entry
therein shall be necessary or permissible hereunder, Landlord or Landlord's
agents may enter the same by a master key, or may forcibly enter the same,
without rendering Landlord or such agents liable therefor (if during such entry
Landlord or Landlord's agents shall observe all applicable laws and requirements
under this Lease and accord reasonable care to Tenant's property), and without
in any manner affecting
20
the obligations, terms, covenants, conditions, provisions or agreements of this
Lease. Nothing herein contained, however, shall be deemed or construed to impose
upon Landlord any obligation, responsibility or liability whatsoever, for the
care, supervision or repair of the Project or the Building or any part thereof,
other than as otherwise provided in this Lease. Notwithstanding any provision in
this Article 13 to the contrary, Landlord agrees to provide Tenant with at least
24 hours prior notice (except when Landlord reasonably determines that an
emergency situation exists) and Tenant shall have the right to accompany
Landlord or Landlord's employees, agents, contractors and representatives when
Landlord enters the Premises. Landlord shall use reasonable efforts to
accommodate Tenant's desire to have all entry into the Premises during normal
business hours.
ARTICLE 14 - TENANT'S INSURANCE
Section 14.1 - Tenant's Insurance
Tenant shall carry at its expense and maintain in force during the Term
and during such periods, if any, as Tenant shall have possession or conduct
activities in, on or about the Premises prior to or after the Term hereof, the
following insurance:
(a) Commercial Liability Insurance with a Broad Form Liability
Endorsement (including protective liability coverage on operations of
independent contractors engaged in construction and also blanket contractual
28
liability insurance) on an "occurrence" basis against claims for "personal
injury" liability, including without limitation bodily injury, death or property
damage liability with a limit of not less than Two Million Dollars ($2,000,000)
in the event of "personal injury " to any number of persons or of damages to
property arising out of any one " occurrence "; such insurance shall cover
Tenant's indemnity obligations hereunder (excluding the indemnity obligations
relating to Hazardous Materials, so long as such indemnity obligations are not
generally insured for by tenants in the vicinity of the Project) and may be
furnished under a "primary" policy and an "umbrella" policy, provided that it is
primary insurance and not excess over or contributory with any insurance in
force for Landlord;
(b) insurance against loss or damage by fire and such other risks and
hazards as are insurable under present and future standard forms of fire and
extended coverage insurance policies, to the personal property, furniture,
furnishings and fixtures belonging to Tenant located in the Premises for not
less than 100% of the actual replacement value thereof;
(c) Worker's Compensation and Employee's Liability Insurance (as
required by state law); and
(d) such other insurance as is generally required by owners or lenders
on buildings similar in size, character, age and location as the Building, as
may change from time to time.
Section 14.2 - General Requirements of Tenant's Insurance
14.2.1 All such insurance shall name Landlord, any mortgagee and/or
ground or underlying lessor as additional insureds and shall provide that
Landlord and any additional insureds shall receive thirty (30) days' (or ten
(10) days' in case of nonpayment of premium) written notice from the insurer
prior to any cancellation or change of coverage, and shall contain a cross
liability or severability clause.
14.2.2 All insurance required to be carried by Tenant hereunder shall be
written only as primary insurance and non-contributing and shall be effected
with only such companies as are licensed to do business in the State of
California and as Landlord shall approve, but in any event not with any company
of less repute than those having a general policy rating of A and a financial
rating of XV as rated in the most current available "Best's Insurance Reports".
In the event "Best's Insurance Reports" is not currently published, such minimum
standard shall be that published by any other nationally recognized publisher of
such information. Landlord's approval shall be deemed to have been given unless
Landlord in writing disapproves such company (i) not later than one month after
submission of a policy or certificate to Landlord or (ii) at any time due to
claims experience. Any insurance carried by Landlord shall not be contributory.
14.2.3 Tenant shall deliver original certificates of the policies of
insurance required hereunder to Landlord at least ten (10) days before the
Commencement Date, and thereafter at least thirty (30) days before the
expiration dates of expiring policies.
14.2.4 In the event Tenant shall fail to procure such insurance, or to
deliver such policies or certificates, Landlord may, at its option, without
waiving any rights or remedies which Landlord may have for Tenant's default
hereunder, procure such insurance for the account of Tenant, and the cost
thereof shall be paid to Landlord within fifteen (15) days after delivery to
Tenant of bills therefor. Nothing contained in this Article 14 shall be
construed as a limitation of Tenant's liability hereunder.
Section 14.3 - Waiver of Subrogation
(a) Subject to the rights of Landlord under Article 3 to collect,
utilize and replenish Building Costs and Project Costs for the purposes therein
set forth, Landlord waives any and all rights of recovery against Tenant for or
arising out of damage to or destruction of the Premises, the Building or the
Project, or any part thereof, from causes then included under standard "all
risk" coverage owner's property insurance policies or endorsements whether or
not such policies are in effect covering Landlord or Tenant and whether or not
such damage or destruction shall have been caused by the negligence of Tenant,
its agents, employees, contractors, visitors or licensees, but only to the
extent that Landlord's insurance policies then in force permit such waiver.
Tenant waives any and all rights of recovery against Landlord for or arising out
of damage to or destruction of any property of Tenant, from causes then included
under standard "all risk" coverage property insurance policies or endorsements
whether or not such policies are then in effect covering Landlord or Tenant and
whether or not caused by the negligence of Landlord, its agents,
21
employees, contractors, visitors or licensees, but only to the extent that
Tenant's insurance policies then in force permit such waiver. Landlord and
Tenant represent that their present insurance policies now in force permit such
waiver. Landlord and Tenant agree to seek and procure policies of insurance with
full mutual waivers of subrogation to the extent available at commercially
reasonable rates.
(b) If at any time during the Term of this Lease either party shall give
no less than five (5) days prior notice to the other certifying that any
insurance carrier which has issued any such policy covering any of the property
above mentioned has refused to consent to the aforesaid waiver of subrogation,
or such carrier revokes a consent previously given or cancels or threatens to
cancel any policy previously issued and then in force and effect because of such
waiver of subrogation, then, in any of such events, the waiver in this Article
14 shall thereupon be of no further force and effect as to the loss, damage or
destruction covered by such policy and such party shall immediately pursue an
insurance carrier who will consent to such waiver; provided, however, that if at
any time thereafter such consent shall be obtained therefor from any existing or
substitute insurance company, the waiver hereinabove provided for shall again
become effective. The cost of obtaining any such waiver shall be deemed a cost
of such policy.
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Section 14.4 - Landlord's Insurance
Landlord shall procure, at Tenant's cost and expense as an Operating
Cost under Article 3, the following insurance:
(a) Commercial Liability Insurance (including protective liability
coverage on operations of independent contractors engaged in construction and
also blanket contractual liability insurance) in commercially reasonable amounts
on an "occurrence" basis for the benefit of Landlord as named insured against
claims for "personal injury" liability, including, without limitation, bodily
injury, death or property damage liability;
(b) Insurance in commercially reasonable amounts against loss or damage
by fire and such other risks and hazards as are insurable under present and
future standard forms of fire and extended coverage insurance policies, covering
the real property improvements which make up the Premises; and
(c) Landlord may, but is not obligated to carry such other insurance
(including, without limitation, insurance against loss of rents and/or
earthquake insurance) with respect to the Landlord or the Premises, Building
and/or Project, as is generally carried by owners of, or required by lenders on,
buildings or projects similar in size, character and location as the Building or
Project.
Tenant shall be entitled to obtain at its own cost and expense any
additional insurance Tenant reasonably desires to protect itself as a result of
Tenant agreeing to the exculpatory language in Articles 6 and 9 or otherwise.
ARTICLE 15 - INSOLVENCY OR BANKRUPTCY
Section 15.1 - Insolvency or Bankruptcy
15.1.1 In addition to the occurrences set forth in Section 16.1
hereinafter, the following events shall constitute a default under this Lease:
(i) Tenant admits in writing its inability to pay its debts as they mature; (ii)
Tenant makes an assignment for the benefit of creditors or takes any other
similar action for the protection or benefit of creditors; (iii) Tenant gives
notice to any governmental body of insolvency or pending insolvency, or
suspension or pending suspension of operations; (iv) Tenant files a voluntary
petition in bankruptcy or has an involuntary petition filed against him, her or
it and such petition has not been dismissed within sixty (60) days; (v) Tenant
files any petition or answer seeking any reorganization, arrangement,
composition, readjustment, liquidation, dissolution or other similar relief
under any present or future bankruptcy statute, regulation or law; (vi) a court
of competent jurisdiction enters an order, judgment or decree approving a
petition filed against Tenant seeking any relief described in the preceding
subparagraph (v) and such order, judgment or decree shall remain unvacated and
unstayed for an aggregate of sixty (60) days from the date of entry thereof;
(vii) a trustee, receiver, conservator or liquidator of Tenant or of all or any
substantial part of its property or its interest in the Premises is employed or
appointed and such receivership remains undissolved for sixty (60) days; or
(viii) this Lease or any estate of Tenant hereunder is levied upon under any
writ of attachment or execution, and such writ shall remain unvacated and
unstayed for ten (10) days.
15.1.2 Upon the filing of a petition by or against Tenant under the
United States Bankruptcy Code, Tenant, as debtor in possession, and any trustee
who may be appointed agree to:
(a) perform each and every obligation of Tenant under this Lease until
such time as this Lease is either rejected or assumed by order of the United
States Bankruptcy Court;
(b) pay in the manner and at the time provided hereunder as reasonable
compensation for use and occupancy of the Premises;
(c) reject or assume this Lease within sixty (60) days of the filing of
such petition under any Chapter of the Bankruptcy Code;
(d) give Landlord at least forty-five (45) days prior written notice of
any abandonment of the Premises; any such abandonment to be deemed a rejection
of this Lease; and
(e) do all other things of benefit to Landlord otherwise required under
the Bankruptcy Code.
Tenant, as debtor in possession, and any such trustee shall be deemed to
have rejected this Lease in the event of the failure to comply with any of the
above requirements and to have consented to the entry of an order by an
22
appropriate Bankruptcy Court requiring compliance with any of the above
requirements, waiving all rights to notice of the entry of such order.
Section 15.2 - Measure of Damages
In the event of the termination of this Lease pursuant to Section 15.1,
Landlord shall be entitled to the same rights and remedies as those set forth in
Sections 16.3 and 16.5 and in Article 18 of this Lease.
30
Section 15.3 - Provision of Services and Assumption of Lease
In the event of the occurrence of any of those events specified in
Section 15.1, if Landlord shall not choose to exercise, or by law shall not be
able to exercise, its rights hereunder to terminate this Lease upon the
occurrence of such events, then, in addition to any other rights of Landlord
hereunder or by law, (i) Landlord shall not be obligated to provide Tenant with
any of the services specified in Article 12, unless Landlord has received
compensation in advance for such services, and the parties agree that Landlord's
estimate of the compensation required with respect to such services shall
control, and (ii) neither Tenant, as debtor-in-possession, nor any trustee or
other person (hereinafter collectively called the "Assuming Tenant") shall be
entitled to assume this Lease unless, on or before the date of such assumption,
the Assuming Tenant (x) cures, or provides adequate assurance that the latter
will promptly cure, any existing default under this Lease, (y) compensates, or
provides adequate assurance that the Assuming Tenant will promptly compensate,
Landlord for any pecuniary loss (including, without limitation, attorneys' fees
and disbursements) resulting from such default, and provides adequate assurance
of future performance under this Lease, it being covenanted and agreed by the
parties that, for such purposes, any cure or compensation shall be effected by
the immediate payment of any monetary default or any required compensation, or
the immediate correction or bonding of any nonmonetary default; any "adequate
assurance" of such cure or compensation shall be effected by the establishment
of an escrow fund for the amount at issue or by bonding and "adequate assurance"
of future performance shall be effected by the establishment of an escrow fund
for the amount at issue or by bonding, it being covenanted and agreed by
Landlord and Tenant that the foregoing provision was a material part of the
consideration for this Lease.
ARTICLE 16 - DEFAULT/REMEDIES
Section 16.1 - Events of Default
It shall be deemed conclusively a material breach of this Lease, and the
occurrence of any of the following shall constitute a default by Tenant:
(a) Tenant fails to make any payment of Rent pursuant to this Lease when
due provided, however, that Landlord agrees to provide Tenant no more than once
during any consecutive twelve (12) month period of the Term a written courtesy
notice of Tenant's failure to pay rent when due hereunder, by which Tenant shall
have five (5) days after receipt of such notice to pay such overdue rent before
delivery of any statutorily required notice is given by Landlord seeking
forfeiture of the Lease; or
(b) Tenant fails timely to perform or observe any obligation, covenant,
condition or representation required to be performed or made by Tenant under
this Lease (other than those described above in Section 16.1(a) and except as
otherwise provided below in Sections 16.1 (c) through 16.1 (h)) and shall fail,
for a period of fifteen (15) days after written notice from Landlord specifying
such failure ("Landlord's Nonmonetary Default Notice"), to cure said failure,
unless such failure cannot be cured within said fifteen (15) days, in which case
it shall be deemed an event of default under this Lease if Tenant either (i)
fails to commence to cure the applicable default within such fifteen (15) day
period, and (ii) fails, after commencing to cure within such fifteen (15) day
period, to use due diligence to cure the applicable default within such period
of time as may be reasonably necessary; or
(c) Tenant abandons the Premises or Tenant vacates the Premises and/or
removes substantially all of Tenant's furniture or other property therefrom for
a period of thirty (30) days, and Tenant fails to (i) give Landlord fifteen (15)
days prior written notice of such intent to vacate and (ii) keep in place all
signage it has erected or constructed in the Common Areas, Premises, Building or
Project; or
(d) [Intentionally omitted]
(e) [Intentionally omitted]
(f) Any of the events described in Section 15.1.1 shall occur; or
(g) Tenant Assigns, Sublets or transfers, by operation of law or
otherwise, or enters into an agreement to Assign, Sublet or transfer any or all
of its interests under this Lease without obtaining Landlord's prior written
consent (other than as expressly permitted under Article 5 hereof) or permits,
commits, suffers or maintains any unlawful act, nuisance or waste on or about
the Premises, the Building or the Project or areas used in connection therewith
which remains unrectified after fifteen (15) days written notice of such
occurrence or event; or
(h) Tenant fails to pay, or deposit with Landlord, timely any amount of
money due to Landlord pursuant to Exhibit D or Tenant Delay under Exhibit D
exceeds thirty (30) days; or
(i) Tenant fails to move into or take possession of the Premises within
fifteen (15) days after the Rent Commencement Date (subject to the issuance of
an appropriate certificate of occupancy).
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Section 16.2 - Termination of the Right to Possession
In the event that Tenant is in default as specified in Section 16.1
hereof, Landlord may elect to terminate this Lease by giving notice of such
election to Tenant. Said notice may consist of a three (3) days' notice to pay
rent or quit pursuant to California Code of Civil Procedure Section 1161, in
which event, at the expiration of said three (3) day period (unless Tenant cures
the default within said three (3) day period) Tenant's right to possession shall
be terminated (including, without limitation, for purposes of California Civil
Code Section 1951.2) and this Lease shall
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thereby terminate and Tenant shall vacate and deliver possession of the Premises
to Landlord, but Tenant shall remain liable as hereinafter provided.
Section 16.3 - Rights Upon Termination
In the event of Landlord's termination of this Lease as a result of
Tenant's default under this Lease, Landlord shall have:
(a) The right, subject to applicable law, to re-enter the Premises and
dispossess Tenant and the legal representatives of Tenant and all other
occupants of the Premises by unlawful detainer or other summary proceedings, or
otherwise as permitted by law, and remove their property and regain possession
of the Premises (but Landlord shall not be obligated to effect such removal) and
said property may, at Landlord's option, be stored or otherwise dealt with as
provided within this Lease or as applicable law may then provide or permit,
including but not limited to the right of Landlord to sell or otherwise dispose
of the same or to store the same, or any part thereof, in a warehouse or
elsewhere at the expense and risk of and for the account of Tenant.
(b) The rights and remedies provided by California Civil Code Section
1951.2 to recover from Tenant upon termination of the Lease:
(i) the worth at the time of award of the unpaid Rent and other
charges which had been earned at the time of termination;
(ii) the worth at the time of award of the amount by which the
unpaid rent and other charges which would have been earned after
termination until the time of award exceeds the amount of such rental
loss that Tenant proves could have been reasonably avoided;
(iii) subject to Subdivision (c) of the California Civil Code
Section 1951.2, the worth at the time of award of the amount by which
the unpaid rent and other charges for the balance of the Term after the
time of award exceeds the amount of such rental loss that Tenant proves
could be reasonably avoided; and
(iv) 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.
The "worth at the time of award" of the amounts referred to in
clauses (i) and (ii) of this Section 16.3 shall be computed by allowing
interest at the Default Rate. The "worth at the time of the award" of
the amount referred to in clause (3) of this Section 16.3 shall be
computed by discounting such amount at the discount rate of the Federal
Reserve Bank of San Francisco at the time of award plus 1%.
(c) The right to enforce, to the extent permitted by the laws of the
State of California then in force and effect, any other rights or remedies set
forth in this Lease or otherwise applicable hereto by operation of law or
contract.
Section 16.4 - Continuance of Lease
In the event of any breach or default under this Lease by Tenant (and
regardless of whether or not Tenant has abandoned the Premises), this Lease
shall not terminate unless Landlord, at Landlord's option, elects at any time
when Tenant is in breach of this Lease to terminate Tenant's right to possession
as provided in Subsection 16.2 of this Article 16 or, at Landlord's further
option, by the giving of any notice (including but not limited to any notice
preliminary or prerequisite to the bringing to legal proceedings in unlawful
detainer) terminating Tenant's right to possession. For so long as this Lease
continues in effect, Landlord shall have the rights and remedies provided by
California Civil Code Section 1951.4 and Landlord may enforce all of Landlord's
rights and remedies under this Lease, including the right to recover all Rent as
it becomes due hereunder. For the purpose of this Section 16.4, the following
shall not constitute termination of Tenant's right to possession: (i) acts of
maintenance or preservation or efforts to relet the Premises, or (ii) the
appointment of a receiver upon initiative of Landlord to protect Landlord's
interest under this Lease.
Section 16.5 - Other Remedies
In the event of a breach or default by Tenant under any of the terms,
covenants, conditions, provisions or agreements of this Lease, or threat
thereof, Landlord shall additionally have the right of injunction if available
under law. Provision in this Lease of any particular remedy shall not preclude
Landlord from any other remedy, at law or in equity.
Section 16.6 - Waiver of Rights of Redemption and Time for Service of Notice
To the extent and only to the extent permitted by law, Tenant hereby
expressly waives any and all rights (i) to require that Landlord serve a notice
of default for unpaid rent within one year after such rent becomes due, as
provided in California Code of Civil Procedure Section 1161, subsection 2, and
(ii) to relief from forfeiture,
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redemption or reinstatement granted by or under any present or future law
(including, without limitation, California Code of Civil Procedure Sections 1174
and 1179) in the event of Tenant's being evicted or dispossessed for any cause,
or in the event of Landlord's obtaining the right to possession of the Premises,
by reason of the violation by Tenant of any of the terms, covenants, conditions,
provisions or agreements of this Lease, or otherwise.
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Section l6.7 - Procedural Matters
(a) Tenant hereby waives the requirement that any notice of default
served pursuant to this Article 16 or under the California unlawful detainer
statutes shall be required to be served on any subtenant in possession or actual
occupation of the Premises. Tenant also waives its right to require under
California Civil Code Section 1164 that any subtenant in actual occupation of
the Premises when the complaint and unlawful detainer be filed need be made a
party defendant.
(b) Exercise by Landlord of any one or more remedies granted herein or
otherwise available shall not be deemed to be an acceptance of surrender of the
Premises by Tenant, whether by agreement or by operation of law, it being
understood that such surrender can be effected only by the written agreement of
Landlord and Tenant.
(c) The voluntary or other surrender or termination of this Lease, or a
mutual termination or cancellation thereof, shall not work a merger and shall,
at the option of Landlord, either (i) terminate all or any existing assignments,
subleases or subtenancies, or (ii) operate as an assignment to Landlord of any
or all of such assignments, subleases or subtenancies.
(d) Notwithstanding any other provision of this Lease, a notice to
Tenant given under this Article 16 or pursuant to California Code of Civil
Procedure Section 1161 or Article 23 of this Lease and any notice served by mail
shall be deemed served, and the requisite waiting period deemed to begin under
said Code of Civil Procedure Section upon mailing, without any additional
waiting requirement under Code of Civil Procedure Section 1011 et seq. or by
other law. For purposes of Code of Civil Procedure Section 1162, Tenant's "place
of residence", "usual place of business", "the property" and "the place where
the property is situated" shall mean and be the Premises, whether or not Tenant
has vacated same at the time of service.
ARTICLE 17 - LANDLORD'S RIGHT TO PERFORM
If Tenant shall default in the timely performance of any obligation on
Tenant's part to be performed under this Lease, Landlord may immediately, or at
any time thereafter, with notice to Tenant, perform the same for the account of
Tenant. If Landlord at any time is compelled to pay or elects to pay any sum of
money or do any act which will require the payment of any sum of money
(including but not limited to employment of attorneys or incurring of costs) by
reason of the failure of Tenant to comply with any term, covenant, condition,
provision or agreement hereof, the sum or sums so paid or incurred by Landlord
with interest at the Default Rate shall be due from Tenant to Landlord promptly
upon demand by Landlord, as additional rent.
ARTICLE 18 - END OF TERM
Section 18.1 - Condition of Premises
Upon the expiration or other termination of the Term, Tenant shall quit
and surrender the Premises to Landlord, broom clean, in as good order, condition
and repair as it now is or may hereafter be placed, ordinary wear excepted.
Tenant shall remove all property of Tenant, as required by this Lease.
Additionally, as provided in Section 3 of the Work Letter Agreement, Tenant may
remove the conductive floor tile installed by Tenant in the Premises. Subject to
Section 6.1.2, at Landlord's option, Landlord may require Tenant to remove any
Alterations installed on Tenant's behalf in the Premises. If Tenant shall remove
any such property or Alterations permitted or required to be removed from the
Premises, Tenant shall repair all damage to the Premises and the Project caused
by such removal and shall restore the Premises and the Project to their
condition prior to installation of such personal property or trade fixtures,
ordinary wear excepted, or, at Landlord's option, Tenant shall pay to Landlord
the cost of such repair or restoration. Any property left on the Premises at the
expiration or other termination of this Lease, or after expiration of any cure
periods without cure for any events of default set forth in Article 16, may, at
the option of Landlord, either be deemed abandoned or be placed in storage at a
public warehouse in the name of and for the account of and at expense and risk
of Tenant or otherwise disposed of by Landlord in the manner provided by law.
Tenant expressly releases Landlord of and from any claims and liability for
damage to or destruction or loss of property left by Tenant upon the Premises at
the expiration or other termination of the Lease and Tenant hereby indemnifies
Landlord against any and all claims and liability with respect thereto.
Section 18.2 - Holding Over
If Tenant holds over after the Term with the express written consent of
Landlord, such tenancy shall be from month to month only and shall not be a
renewal hereof, and Tenant shall pay as Rent to Landlord for the use and
occupancy of the Premises for each month Tenant holds over an amount agreed to
be one and one-half (1.5) times the Rent which is due on the last month of the
Term, and Tenant shall also comply with all of the terms, covenants, conditions,
provisions and agreements of this Lease for the time during which Tenant holds
over. If without the express written consent of Landlord, Tenant shall fail to
vacate the Premises after the expiration of the Term or sooner termination of
this Lease for any cause or after Tenant's right to occupy the Premises ceases,
thereafter, and notwithstanding anything to the contrary contained elsewhere in
this Lease, Tenant's continued possession shall be on the basis of a tenancy at
sufferance and Tenant shall otherwise comply with all of the terms, covenants,
conditions, provisions and agreements of this Lease for the time during which
Tenant holds over, except that Tenant shall pay as Rent to Landlord for the use
and occupancy of the Premises for each month Tenant holds over an amount agreed
to be (i) one and one-half (1.5) times the Rent which is due on the last month
of the term for the first two (2) months of such holdover period and (ii) two
(2) times the Rent which is due on the last month of the Term after such first
two
25
(2) month period. If the Premises are not surrendered at the end of the Term
or of a
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permitted hold over period, Tenant hereby indemnifies and agrees to hold
Landlord harmless from and against all claims, liability, loss, damages, costs
or expenses, including reasonable attorney's fees and costs of defending same,
incurred by Landlord and arising directly or indirectly from Tenant's failure to
timely surrender the Premises, including without limitation, (i) any rent
payable by, or any loss, cost, or damages, including without limitation lost
profits, claimed by, any prospective tenant of the Premises or any portion
thereof, and (ii) Landlord's damages as a result of such prospective tenant
rescinding or refusing to enter into the prospective lease of the Premises or
any portion thereof by reason of such failure to timely surrender the Premises.
Tenant's obligation to observe or perform all of the terms, covenants,
conditions, provisions and agreements of this Article shall survive termination
of this Lease.
Section 18.3 - Conditions of Termination
In the event that this Lease terminates for any reason prior to the
Expiration Date, including but not limited to termination by Landlord, such
termination will terminate any and all agreements for the extension of this
Lease, whether expressed in an option, exercised or not, or in a collateral
document or otherwise. Any right herein contained on the part of Landlord to
terminate this Lease shall continue during any extension hereof. Any option on
the part of Tenant herein contained for an extension hereof shall not be deemed
to give Tenant any option for a further extension beyond the first extended
term. No act or thing done by Landlord or Landlord's agents during the Term
shall be deemed an acceptance of a surrender of the Premises, and no agreement
to accept such surrender shall be valid unless in writing signed by Landlord. No
employee of Landlord or Landlord's agents shall have any power to accept the
keys of the Premises prior to the termination of this Lease.
ARTICLE 19 - QUIET POSSESSION
Landlord hereby expressly covenants and agrees with Tenant, in lieu of
any implied covenant of quiet possession, that upon Tenant's paying Rent and all
other charges and observing and performing all the terms, covenants, conditions,
provisions and agreements of this Lease on Tenant's part to be observed or
performed, Tenant shall have quiet possession of the Premises for the Term as to
anyone claiming by, through or under Landlord, subject, however, to the terms of
this Lease and of any ground leases, underlying leases, mortgages, deeds of
trust, and covenants, conditions and restrictions affecting all or any portion
of the Project or any of the areas used in connection with the operation of the
Project.
ARTICLE 20 - RULES AND REGULATIONS
Tenant and Tenant's agents, employees, contractors, visitors and
licensees shall observe faithfully and comply with the Rules and Regulations set
forth as Exhibit E hereto, and such other and further reasonable Rules and
Regulations as Landlord or Landlord's representatives may from time to time
adopt. Any addition or change in the Rules and Regulations shall become
effective within five (5) days after written notice thereof given by Landlord or
its representatives. Landlord shall not be responsible for the performance of,
and shall not be liable to Tenant for violation of, any of said Rules and
Regulations, or the breach of any term, covenant, condition, provision or
agreement in any lease or in any covenants, conditions and restrictions
affecting the Project, by any other tenant in the Project or other Person.
ARTICLE 21 - NO WAIVER/ENTIRE AGREEMENT/MODIFICATION
The failure of Landlord to seek redress for violation of, or to insist
upon the strict performance of any term, covenant, condition, provision or
agreement of this Lease, or any of the Rules and Regulations attached to this
Lease or hereafter adopted by Landlord, shall not prevent a subsequent act,
which would have originally constituted a violation, from having all the force
and effect of any original violation. No provision of this Lease shall be deemed
to have been waived by Landlord, unless such waiver be in writing signed by
Landlord. The acceptance by Landlord of Rent with knowledge of the breach of any
term, covenant, condition, provision or agreement of this Lease shall not be
deemed a waiver of such breach. No payment by Tenant or receipt by Landlord of a
lesser amount than the Monthly Installment shall be deemed to be other than on
account of the earliest stipulated Rent, nor shall any endorsement or statement
on any check or any letter accompanying any check or payment as Rent be deemed
an accord and satisfaction, and Landlord may accept such check or payment
without prejudice to Landlord's right to recover the balance of such Rent or
pursue any other remedy in this Lease provided. This Lease contains the entire
agreement between the parties, and recites the entire consideration given and
accepted by the parties. There are no oral agreements between Landlord and
Tenant affecting this Lease, and this Lease supersedes and cancels any and all
prior negotiations, arrangements, correspondence, communications, brochures,
agreements and understandings, if any, whether oral or written, between Landlord
and Tenant or displayed by Landlord to Tenant with respect to the subject matter
of this Lease. There are no representations between Landlord and Tenant other
than those contained in this Lease and all reliance with respect to any
representations is based solely upon the terms of this Lease. Any agreement
hereafter made shall be ineffective to change, modify, waive or discharge any
provision of this Lease in whole or in part unless such agreement is in writing
and signed by the party against whom enforcement of the change, modification,
waiver or discharge is sought. This Lease may be executed in one or more
duplicates or counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
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ARTICLE 22 - LANDLORD'S DEFAULT/LIABILITY
Section 22.1 - Force Majeure
This Lease and the obligation of Tenant to pay Rent and all other sums
due hereunder to keep, observe and perform all of the other terms, covenants,
conditions, provisions and agreements of this Lease on the part of Tenant as
well as Landlord's obligations under this Lease to be kept, observed or
performed shall in no way be affected, impaired or excused because Landlord or
Tenant, respectively, is unable to fulfill any of its obligations under this
Lease, or is delayed or curtailed in any way from doing so, by reason of any
cause beyond Landlord's or Tenant's,
26
respectively, reasonable control, including, but not limited to, acts of God,
strike or labor troubles, fuel or energy shortages, governmental preemption or
curtailment in connection with a national emergency or in connection with any
rule, order, guideline or regulation of any department or governmental agency or
by reason of the conditions of supply and demand which have been or are affected
by a war or other emergency. Any such prevention, delay or curtailment shall be
deemed excused on a day for day basis equivalent to each day of force majeure
delay and neither Landlord nor Tenant shall be subject to any liability
resulting therefrom. Tenant waives and releases its right to terminate this
Lease under Section 1932(1) of the California Civil Code or under any similar
law or statute now or hereafter in effect. Notwithstanding any contrary
implications herein, Tenant's inability to perform any monetary obligations to
Landlord hereunder shall never be subject to or excused by a force majeuere
delay claimed by Tenant.
Section 22.2 - Notice/Right to Cure
Landlord shall not be deemed to be in default in the performance of any
obligation required to be performed by it hereunder unless and until it has
failed to perform such obligation within thirty (30) days after written notice
by Tenant to Landlord specifying the nature of Landlord's failure to perform
such obligation; provided, however, that if the nature of Landlord's obligation
is such that more than thirty (30) days are required for its performance, then
Landlord shall not be deemed to be in default if it shall commence such
performance within such thirty (30) day period and thereafter shall diligently
prosecute the same to completion. All rights to cure provided to Landlord under
this Section 22.2 shall also be accorded to any mortgagee, ground lessor or
beneficiary under a deed of trust encumbering the Building or the Project. No
default by Landlord shall permit Tenant to terminate this Lease except in the
sole event that Tenant is unable either to access or to use the Premises and
exercise all of Tenant's rights and privileges granted hereunder as permitted in
this Lease by reason of Landlord's actions or by reason of the illegality of
such use under the then existing circumstances.
Section 22.3 - Limitation of Landlord's Liability
The liability of Landlord hereunder or in connection with the Premises,
Building or Project shall be limited to its interest in the Project, and in no
event shall any other assets of Landlord be subject to any claim arising out of
or in connection with the Lease, Premises, Building or Project, and neither
Landlord nor its partners, joint venturers or shareholders shall have personal
liability with respect to any obligations or payments due or which may become
due from Landlord hereunder.
Section 22.4 - Sale by Landlord
In the event that the original Landlord hereunder, or any successor to
the Landlord's interest in the Building, shall sell, convey, transfer or assign
the Landlord's interest in the Building, all liabilities and obligations on the
part of the original Landlord, or such successor, under this Lease shall
thereupon and thereby be released, and thereupon all such liabilities and
obligations shall be binding upon the new owner and Tenant shall look solely to
such new owner for the performance of any of Landlord's obligations hereunder.
This Lease and Tenant's rights and obligations hereunder shall not otherwise be
affected by any such sale, conveyance, transfer or assignment and Tenant agrees
to attorn to such new owner, and such transferee agrees to recognize Tenant
under this Lease as if transferee were the original landlord party hereto.
ARTICLE 23 - NOTICES
Section 23.1 - Notices To Tenant
Except as otherwise in this Lease provided, a ▇▇▇▇, demand, statement,
consent, notice or communication which Landlord may desire or be required to
give to Tenant shall be deemed sufficiently given or rendered if in writing,
delivered personally to Tenant or sent by certified, registered or express
United States mail, return receipt requested and postage prepaid, or sent
prepaid by overnight or same day carrier or courier service which maintains
records of delivery, attempts at delivery and receipts in a manner similar to
those records kept by the U.S. Postal Service for its certified mail, return
receipt requested service, with such return receipt service requested from such
carrier or courier, addressed to Tenant at the address set forth in Paragraph K
of the Summary of Basic Terms, or at such other address as Tenant shall
designate by notice given as herein provided.
Section 23.2 - Notices to Landlord
Any notice, request, demand or communication by Tenant to Landlord must
be in writing and delivered personally to Landlord or sent by certified,
registered or express United States mail, return receipt requested and postage
prepaid or sent prepaid by overnight or same day carrier or courier service
which maintains records of delivery, attempts at delivery and receipts in a
manner similar to those records kept by the U.S. Postal Service for its
certified mail, return receipt requested service, with such return receipt
service requested from such carrier or courier, addressed to Landlord, at the
address set forth in Paragraph K of the Summary of Basic Terms, or at such
35
other address as Landlord shall designate by notice given as herein provided. If
Tenant is notified of the identity and address of Landlord's mortgagee or
beneficiary under a deed of trust, or ground or underlying lessor, Tenant shall
give such party notice of any default by Landlord hereunder in the same manner
Tenant is to give Landlord notice hereunder, and if an opportunity to cure such
default is provided hereunder, such party shall have a reasonable opportunity to
cure such default before Tenant's exercising any remedy available to it.
Notwithstanding, Tenant may pursue a cause of action for recovery of damages
from Landlord at any time.
Section 23.3 - Notices Generally
Rejection or refusal to accept a notice, request, demand or
communication given in the manner required by this Article, or the inability to
deliver same because of a changed address of which no notice was given, shall be
27
deemed to be a receipt of the notice, request or demand sent. Notwithstanding
any provision to the contrary contained in this Lease, no provision in this
Lease shall preclude service of notices in accordance with any state or local
law.
ARTICLE 24 - SECURITY DEPOSIT
Tenant shall deposit in cash with Landlord the sums specified in this
Article as security for the faithful performance by Tenant of all the terms,
covenants and conditions of this Lease (the "Security Deposit"). Paragraph M of
the Summary of Basic Terms sets forth the initial amount of Tenant's Security
Deposit, which Tenant shall deposit with Landlord upon Tenant's execution of
this Lease. Tenant shall increase the initial amount of the Security Deposit by
depositing in cash with Landlord an additional amount equal to the amount per
month of all increases in Monthly Installments which Tenant becomes obligated to
pay pursuant to Section 3.3.1, which deposit shall be made within thirty (30)
day, after notice from Landlord to Tenant of the amount of such increase.
Landlord shall have the right, without waiving any of Landlord's other rights
and remedies under this Lease, upon the occurrence of any of the events of
default described in Article 16, to apply the Security Deposit to remedy any
failure by Tenant to repair or maintain the Premises or to perform any other
terms, covenants or conditions of this Lease. If Tenant has kept and performed
all terms, covenants and conditions of the Lease during the Term, Landlord will
within thirty (30) days following the termination hereof return the Security
Deposit to Tenant or the last permitted assignee of Tenant's interest hereunder
at the expiration of the Term. Should Landlord use any portion of the Security
Deposit to cure any default by Tenant hereunder, Tenant shall replenish the
Security Deposit to the full amount within ten (10) days after notice. Landlord
shall not be required to keep the Security Deposit separate from its general
funds, and Tenant shall not be entitled to interest on any portion of the
Security Deposit. Upon any sale or transfer of its interest in the Building,
Landlord may transfer the Security Deposit to its successor in interest and
thereupon Landlord shall be released from any liability or obligation with
respect thereto.
ARTICLE 25 - BROKERAGE
Tenant represents and warrants that the broker or brokers specified in
Article N of the Summary of Basic Terms was/were the sole broker or brokers who
negotiated and brought about the consummation of this Lease, and that no
discussions or negotiations were had with any other broker, agent or finder
concerning the leasing of the Premises. Each party hereby agrees to indemnify,
protect, defend and hold the other harmless from and against any claims for
brokerage commissions made by any broker, agent or finder not specified in
Article N of the Summary of Basic Terms arising out of any dealings, actions,
discussions, negotiations or contracts allegedly had with or on behalf of such
party, and from and against any and all losses, costs, expenses, liabilities and
damages suffered or incurred by such party as a consequence thereof, including,
without limitation, attorneys' fees and costs. In reliance on the foregoing
representation, warranty and indemnification by Tenant, Landlord hereby agrees
with Tenant that Landlord shall pay such commission or compensation due to said
broker or brokers in connection with the consummation of this Lease pursuant to
any separate agreement between Landlord and such broker. The provisions of this
Article 25 shall survive the expiration or earlier termination of this Lease.
ARTICLE 26 - MISCELLANEOUS
Section 26.1 - Capitals and Construction
The marginal notes and headings are inserted only as a matter of
convenience and for reference and in no way define, limit or describe the scope
or intent of this Lease nor do they in any way affect this Lease. The language
in all parts of this Lease shall be construed according to its normal and usual
meaning and not strictly for or against either Landlord or Tenant.
Section 26.2 - Definitions
The term "Landlord" as used in this Lease means only the owner or
mortgagee in possession or grantee in possession under a deed of trust, or the
owner of a lease of the Project (or part thereof in which the Premises is
situated) for the time being. The words "re-enter" and "re-entry" as used in
this Lease are not restricted to their technical legal meaning.
Section 26.3 - Successors and Assigns
The covenants contained in this Lease shall bind and inure to the
benefit of Landlord and Tenant and their respective legal representatives and
successors, and, except as otherwise provided in this Lease, their assigns.
Section 26.4 - Landlord's Approval
36
The review, approval, inspection or examination by Landlord of any item
to be reviewed, approved, inspected or examined by Landlord under the terms of
this Lease or the Exhibits attached hereto shall not constitute the assumption
of any responsibility by Landlord for either the accuracy or sufficiency of any
such item or the quality or suitability of such items for its intended use, and
shall not constitute an assumption of risk with respect to same, nor a
representation or certification by Landlord nor an estoppel against Landlord
that such matter is safe or reasonable or in compliance with applicable laws.
Any such review, approval, inspection or examination by Landlord is for the sole
purpose of protecting Landlord's interests in the Project and under this Lease,
and no third parties, including, without limitation Tenant or any person or
entity claiming through or under Tenant, or the contractors, agents, employees,
visitors or licensees of Tenant or any such person or entity, shall have any
rights hereunder.
Section 26.5 - Joint and Several Liability
If a partnership or more than one legal person at any time constitutes
Tenant, (1) each partner and each legal person is jointly and severally liable
for the keeping, observing and performing of all of the terms, covenants,
28
conditions, provisions and agreements of this Lease to be kept, observed or
performed by Tenant, and (2) the term "Tenant" as used in this Lease shall mean
and include each such partner or legal person jointly and severally and the act
of or notice from or notice or refund to, or the signature of, any one or more
of them, with respect to this Lease, including but not limited to any renewal,
extension, expiration, termination or modification of this Lease, shall be
binding upon each and all of the persons executing this Lease as Tenant with the
same force and effect as if each and all of them had so acted or so given or
received such notice or refund or so signed.
Section 26.6 - Governing Law
This Lease shall be governed by and construed in accordance with the
laws of the State of California.
Section 26.7 - Severability
In the event any term, covenant, condition, provision or agreement
herein contained is held to be invalid or void by any court of competent
jurisdiction, the invalidity of any such teem, covenant, condition, provision or
agreement shall in no way affect any other term, covenant, condition, provision
or agreement herein contained, unless the elimination of such term materially
and adversely affects the fundamental rights and benefits of either party to
this Lease.
Section 26.8 - Security Systems
Landlord shall not be obligated to provide or maintain any security
patrol or security system. However, if Landlord elects to provide such patrol or
system in the Building or the Common Areas, the cost thereof shall be included
in Operating Costs as defined in Section 3.4.1. Landlord shall not be
responsible for the quality of any patrol or system which is presently or in the
future provided in the Premises, Building or Project, or for damage or injury to
Tenant, its employees, invitees or others due to the failure, action or inaction
of such patrol or system.
Section 26.9 - Time of the Essence
Time is of the essence with respect to the performance of each and every
provision of this Lease to be performed by Tenant and Landlord.
Section 26.10 - Recordation
Neither this Lease, nor without Landlord's consent, which shall not be
unreasonably withheld, any notice or memorandum regarding the terms hereof,
shall be recorded by Tenant. Any such unauthorized recording shall give Landlord
the right to declare a breach of this Lease and pursue the remedies provided
herein. Tenant agrees to execute and acknowledge, at the request of Landlord, a
memorandum of this Lease, in recordable form. In the event a memorandum of this
Lease is recorded, either at the request of Landlord or Tenant, upon expiration
of the Term or earlier termination as provided herein, Tenant agrees to execute
and deliver, in recordable form, a quitclaim deed releasing all of its interest
in the Premises and the Project to Landlord.
Section 26.11 - Change of Name
If the name of Tenant or any successor or assign shall be changed during
the term of this Lease, such party shall promptly notify Landlord thereof, which
notice shall be accompanied by a certified copy of the document effecting such
change of name.
Section 26.12 - Estoppel Certificates
Tenant shall at any time and from time to time upon not less than ten
(10) days' prior notice from Landlord, execute, acknowledge and deliver to
Landlord a statement in writing certifying to those facts for which such
estoppel certificate has been reasonably requested by Landlord or any current or
prospective purchaser, mortgagee (or beneficiary under a deed of trust), ground
lessor or underlying lessor, including without limitation (a) that this Lease is
unmodified and in full force and effect (or, if modified, adequately identifying
such modification and certifying that this Lease, as so modified, is in full
force and effect) and (b) the dates to which the Base Annual Rent, additional
payments and other charges are paid, (c) whether or not there is any default by
Landlord to the best
37
of Tenant's knowledge, or by Tenant, in the performance of any term, covenant,
condition, provision or agreement contained in this Lease and (d) whether or not
to the best of Tenant's knowledge, there are any setoffs, defenses or
counterclaims against enforcement of the obligations to be performed under this
Lease and, if there are, specifying each such default, setoff, defense or
counterclaim. Any such statement may be conclusively relied upon by any
prospective purchaser or lessee, encumbrance or ground lessor of the Premises or
of all or any portion of the Project. Tenant's failure to deliver such statement
within such time shall be deemed a statement that this Lease is in full force
and effect, without modification except as may be represented by Landlord, that
there are no uncured defaults in Landlord's performance, nor any setoffs,
defenses or counterclaims, and that no more than one month's Base Annual Rent
has been paid in advance. Additionally, upon not less than ten (10) days' prior
written notice from Tenant, Landlord shall execute and deliver to Tenant a
statement in writing certifying, to the best of Landlord's knowledge, whether
(a) this Lease is unmodified and in full force and effect and (b) Tenant is not
in default of its obligations under this Lease. Any such statement may be
conclusively relied upon by any prospective sublessee or assignee or any person
who may be succeeding to the interest of Tenant under this Lease, and any
failure by Landlord to so deliver such a statement shall be deemed to certify
that this Lease is unmodified and in full force and effect and that Tenant is
not in default hereunder.
29
Section 26.13 - Authority
If Tenant or Landlord signs as a corporation, partnership, limited
liability company or other legal entity, each of the persons executing this
Lease on behalf of Tenant or Landlord does hereby covenant and warrant that the
party on whose behalf such person(s) sign is a duly authorized and existing
entity, has and is qualified to do business in the state where the Project is
located, has full right and authority to enter into this Lease, and that each
and every person signing on behalf of such party is authorized to do so. Upon
Landlord's or Tenant's request, the other party shall provide the requesting
party with evidence satisfactory to the requesting party confirming the
foregoing covenants and warranties.
Section 26.14 - Attorneys' Fees
In the event that either Landlord or Tenant fails timely to perform any
of its obligations under this Lease or in the event a dispute arises concerning
the meaning or interpretation of any provision of this Lease or the right of
either party under this Lease, the matter shall be settled by judicial
proceedings and the defaulting party or the party not prevailing in such matter,
shall, in addition to any other relief, pay all reasonable fees, costs and
expenses of the other party with respect to such proceeding, including without
limitation, court costs, expert witness fees, costs and expenses of
investigation, and all reasonable attorneys' fees, costs and expenses, in
enforcing or establishing the other party's rights hereunder in any such
proceeding, including without limitation, in any action or participation in or
in connection with any case or proceeding under Chapters 7, 11 or 13 of the
Bankruptcy ▇▇▇▇, ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Code Sections 101 et seq., or any successor
statutes, in appellate proceedings or in connection with the enforcement or
collection of any judgment obtained in any such proceeding. The parties hereto
expressly agree that (i) all fees, costs and expenses, including without
limitation, attorneys' fees, costs and expenses incurred in connection with the
enforcement or collection of any judgment obtained in any such proceeding shall
be payable as a separate item and a further obligation severable from the other
items payable under this Section, and (ii) the provisions of this sentence shall
survive the entry of any judgment in any such proceeding and shall not merge or
be deemed to have merged into any such judgment.
Section 26.15 - Waiver of Trial By Jury; Venue; Jurisdiction
The respective parties hereto hereby waive trial by jury and any
objection to venue in the county in which the Project is located, and agree and
consent to personal jurisdiction of the courts of the State of California, in
any action, proceeding or counterclaim brought by either of the parties hereto
against the other on any matter whatsoever arising out of or in any way
connected with this Lease, the relationship of Landlord and Tenant, Tenant's use
or occupancy of the Premises, or any claim of injury or damage, or the
enforcement of any remedy under any statute, emergency or otherwise.
Section 26.16 - Substitution of Premises
[Intentionally omitted]
Section 26.17 - Binding Effect
Submission of this instrument for examination or signature by Tenant
does not constitute an offer to lease, or a reservation of or option for a
lease, and it is not effective as a lease or otherwise until execution by and
delivery to both Landlord and Tenant.
Section 26.18 - Signs
Tenant shall have the right to display and maintain, at Tenant's
expense, on the exterior of the Premises, or in the interior of the Premises if
visible from the exterior of the Premises, only such signs, names, insignia,
trademarks and other descriptive, symbolic or decorative material of any kind
("Sign" or "Signs"): (a) as shall have first received the written approval of
Landlord as to type, size, color, location and other design features; (b) as
shall comply with the provisions and criteria of the Sign Program set forth in
Exhibit F hereto to the extent applicable; and (c) for which Tenant has first
obtained, at Tenant's expense, all required governmental approvals. Landlord's
review of Signs shall be made in accordance with the provisions and criteria set
forth in Exhibit F to the extent applicable. Notwithstanding any other provision
of this Lease, in no event shall Tenant make any alteration or
38
addition to or improvement on or visible from the exterior of the Premises
without Landlord's prior written consent, which may be withheld in Landlord's
sole and absolute discretion.
Section 26.19 - No Merger
The voluntary or other surrender of this Lease by Tenant, or a mutual
cancellation thereof, shall not work a merger, and shall, at the option of
Landlord terminate all or any existing subleases or subtenancies, or may, at the
option of Landlord, operate as an assignment to it of any or all such subleases
or subtenancies.
Section 26.20 - Acknowledgment of Waivers and Limitations
TENANT SPECIFICALLY ACKNOWLEDGES THAT THIS LEASE CONTAINS CERTAIN
WAIVERS OF CERTAIN STATUTORY AND COMMON LAW RIGHTS AND CERTAIN LIMITATIONS ON
DAMAGES AND THAT TENANT HAS AGREED THERETO.
Section 26.21 - Exhibits: Riders: Addenda
This lease consists of pages 1 through 33, inclusive, together with the
Summary of Basic Terms and Exhibits A through F, all of which are made a part
hereof as though fully set forth herein.
30
ARTICLE 27 - OPTION TO EXTEND
Section 27.1 - Grant of Options
Landlord hereby grants Tenant one (1) option to extend the Term of this
Lease, for an additional period of five (5) years (such period may be referred
to as the Option Term ), as to all (but not part) of the Premises as such may
then exist, upon and subject to the terms and conditions set forth in this
Article 27 (the Option To Extend).
Section 27.2 - General Provisions
The Option Term shall commence immediately after the expiration of the
initial Term of the Lease. Tenant's hiring of the Premises during the Option
Term shall be upon and subject to the same terms and conditions contained in the
Lease except that (a) the Base Annual Rent shall be equal to the Option Term
Base Rent, defined and determined in the manner set forth in Section 27.5 below,
(b) Tenant shall accept the Premises, Building and Project in an AS IS condition
without any obligation of Landlord to repaint, remodel, improve or alter the
Premises, Building or Project or to provide Tenant any allowance for any of the
foregoing and (c) there shall be no further option or right to extend the Term
of the Lease, or any right to renew this Lease during the Option Term. If Tenant
timely and properly exercises the Option To Extend, references in the Lease to
the Term shall be deemed to mean the Option Term unless the context clearly
requires otherwise.
Section 27.3 - Exercise
Tenant's election to exercise the Option To Extend must be given to
Landlord in writing no later than One Hundred Eighty (180) days prior to the
expiration of the initial Term of the Lease.
Section 27.4 - Effect of Default or Occupancy
Notwithstanding anything to the contrary contained herein, all rights of
Tenant pursuant to the Options to Extend shall automatically terminate without
notice and shall be of no further force and effect, whether or not Tenant has
timely exercised the Option to Extend granted herein, if (a) at the time of
exercise of the Option To Extend or at the time of commencement of the Option
Term, there exists a default, as defined in Section 16.1 of the Lease, or any
act or omission on the part of Tenant, which, with the passage of time or the
giving of notice, or both, would constitute a default under Section 16.1 of the
Lease, or (b) Landlord has given Tenant two (2) or more notices of the existence
of a default, as defined in Section 16.1 of the Lease, during the initial Term
of the Lease, whether or not such default is subsequently cured, or (c) a late
charge has become payable pursuant to Section 3.6.1 of the Lease three (3) or
more times during the initial Term of the Lease, or (d) Tenant does not occupy
all of the Premises at the time of exercise of an Option To Extend or at the
time of commencement of the Option Term. In the event of a termination of the
Option To Extend pursuant to this Section 27.4, Tenant shall reimburse Landlord
for all cost and expense Landlord incurs in connection with Tenant's exercise of
the Option to Extend, including, without limitation, with respect to any
brokerage commissions.
Section 27.5 - Option Term Rent
The Option Term Base Rent for the Premises for the Option Term shall
mean the greater of (a) the Base Annual Rent payable by Tenant under this Lease
for the twelve (12) month period immediately prior to the commencement of the
Option Term (the Preceding Base Rent ); or (b) the Market Base Rent, which as
used herein shall mean the amount of Base Annual Rent, including any annual or
other periodic escalations, that Landlord, under commercially reasonable
circumstances, could obtain from a third party desiring to lease the Premises
under a lease containing terms and conditions substantially identical to those
of this Lease, including without limitation additional rent payable by Tenant
with respect to Building Costs, Project Costs, Taxes and Additional Taxes
pursuant to Article 3 of the Lease, for the Option Term under market leasing
conditions then existing, and taking into account the following: the length of
term; the size, location, configuration and floor levels of the Premises; the
type and quality of improvements in or amenities available to the Premises,
Building and Project; age and location
39
of the Building and Project; services to be provided by Landlord or by Tenant;
the rent, all other monetary payments and escalations then obtainable for new
leases of space comparable to the Premises in the locality of the Project; and
other factors that would be relevant to a prospective lease by a third party of
the Premises for the Option Term in determining what such party would be willing
to pay therefor; but in each instance disregarding "Tenant Concessions" if any,
then being offered to prospective new tenants of comparable space in the Project
and in the locality of the Project. For purposes of the preceding sentence, the
term "Tenant Concessions" shall include, without limitation, so-called free
rent, tenant improvement allowances, moving allowances and lease takeovers. The
determination of Market Base Rent based upon the foregoing criteria, shall be
made by Landlord, in Landlord's sole discretion. Within thirty (30) days after
Tenant's exercise of the Option To Extend, Landlord shall notify Tenant of
Landlord's determination of Option Term Base Rent for the Premises. If
Landlord's determination of the Option Term Base Rent is greater than the
Preceding Base Rent, and if Tenant, in Tenant's sole discretion, disagrees with
the amount of Option Term Base Rent determined by Landlord, Tenant may elect to
revoke and rescind the exercise of the Option to Extend by giving written notice
thereof to Landlord within ten (10) days after notice of Landlord's
determination of Option Term Base Rent.
Section 27.6 - Options Personal
The Option to Extend is personal to Smartflex Systems, Incorporated, a
Delaware corporation, or to a Person who controls, is controlled by or is under
common control with Smartflex Systems, Incorporated, a Delaware corporation
(such Person shall be referred to herein as an "Affiliated Person"), and shall
not be transferable or Assignable, by operation of law or otherwise, either in
connection with an Assignment of the Lease, or a Sublease of all or part of the
Premises, or otherwise, except to an Affiliated Person. Any purported Assignment
of the Option To
31
Extend other than an Affiliated Person shall be void and a material breach of
this Lease, and shall constitute a default under this Lease.
Section 27.7 - Time of Essence
Without limiting the generality of Section 26.9 of this Lease, time is
of the essence to each and every term and condition of this Article 27.
Article 28 - Right of First Offer
Prior to Landlord's leasing of any space in the remainder of Building 4,
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, which comes available during the Term
and the Option Term, Landlord shall notify Tenant, in writing, of the space so
available in the configuration that Landlord intends to place on the market for
lease. Tenant shall have ten (10) business days after receipt of such notice to
notify Landlord, in writing, of Tenant's interest in leasing such space and, if
so interested Landlord shall exclusively negotiate with Tenant, in good faith,
for a period not to exceed twenty (20) business days after receipt of Tenant's
notice to come to terms on the lease of such space. Such lease negotiations
shall proceed on the basis that the lease terms are intended to reflect market
conditions at that time. If Tenant fails to notify Landlord of its interest in
such space within the 10-day period noted above, or affirmatively declines its
interest therein, Landlord shall be free to market such space to the general
public and enter into a lease with any person on any terms and conditions
Landlord finds acceptable in its sole, absolute and arbitrary discretion. If
Tenant does indicate interest in such space as provided above, but Landlord and
Tenant have not executed a binding agreement respecting the lease of such space
prior to the expiration of such 20-day period, Landlord shall be free to market
such space to the general public and enter into a lease with any person on
similar terms and conditions to which Landlord offered such space to Tenant or
on more favorable terms to Landlord. In the event of such failed negotiations,
and if Landlord fails to enter into any lease with a third party within ninety
(90) days after Landlord first markets the space to the general public, Landlord
shall re-offer the space to Tenant pursuant to this Article 28. This right of
first offer set forth above is personal to Smartflex Systems, Incorporated, a
Delaware corporation and to an Affiliated Person, and may not be transferred or
Assigned to other than an Affiliated Person and any such attempted transfer
Assignment shall be void and a material breach of this Lease and shall
constitute a default under this Lease.
IN WITNESS WHEREOF, Landlord and Tenant have respectively executed this
Lease as of the day and year set forth in Paragraph A of the Summary of Basic
Terms.
TENANT: LANDLORD:
SMARTFLEX SYSTEMS, INCORPORATED, a MISSION COURT PROPERTIES, INC., a
Delaware corporation California corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ ▇▇▇ ▇▇▇
----------------------------------- -----------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇ ▇▇▇
----------------------------------- -----------------------
Print Name: Print Name:
Its: VP & GM, EMS Business Unit Its: VP of Finance
----------------------------------- -----------------------
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ By:
----------------------------------- -----------------------
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
----------------------------------- -----------------------
Print Name: Print Name:
Its: Director of Logistics Its:
----------------------------------- -----------------------
32
40
EXHIBIT A
DESCRIPTION OF PREMISES
[SCHEMATIC DRAWING OF FLOOR PLAN]
EXHIBIT A
Page 1 of 1
41
EXHIBIT B
PROJECT DESCRIPTION
[SCHEMATIC DRAWING OF PROJECT]
EXHIBIT B
Page 1 of 1
42
EXHIBIT C
CONFIRMATION OF LEASE TERM
OR
CONFIRMATION OF COMMENCEMENT OF RENT
THIS MEMORANDUM is made on __________, 1999, between MISSION COURT
PROPERTIES, INC., a California corporation ("Landlord"), and Smartflex Systems,
Incorporated, a Delaware corporation ("Tenant"), who entered into a lease dated
for reference purposes as of March 1, 1999, covering certain premixes located at
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, as more particularly described in the
Lease. All capitalized terms, if not defined herein, shall be defined as they
are defined in the Lease.
1. The parties to this Memorandum hereby agree that the date of
__________, 1999 is [▇▇▇▇ One] ____ the "Commencement Date" or ____ the "Rent
Commencement Date".
2. Tenant hereby confirms the following:
(a) That it has accepted possession of the Premises pursuant to
the terms of the Lease;
(b) That the improvements required to be furnished according to
the Lease by Landlord have been Substantially Completed, except as follows:
(c) That Landlord has fulfilled all of its duties of an
inducement nature;
(d) That the Lease has not been modified, altered or amended,
except as follows:
(e) That there are no offsets or credits against rentals, nor
has any security deposit been paid except as provided by the Lease terms;
(f) That the total cost of the Tenant Improvements through the
date marked in Paragraph 1 above was $________________. Landlord has contributed
$__________________ to such improvements through such date, which sum has been
paid; and
(g) That the Lease is in full force and effect.
3. This Memorandum, each and all of the provisions hereof, shall inure
to the benefit, or bind, as the case may require, the parties hereto, and their
respective heirs, successors, and assigns subject to the restrictions upon
assignment and subletting contained in the Lease.
TENANT: LANDLORD:
SMARTFLEX SYSTEMS INCORPORATED, a Delaware MISSION COURT PROPERTIES, INC., a California
corporation corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ ▇▇▇ ▇▇▇
----------------------------------- --------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇ ▇▇▇
----------------------------------- --------------------------------------
Print Name: Print Name:
Its: VP & GM, EMS Business Unit Its: VP of Finance
----------------------------------- --------------------------------------
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ By:
----------------------------------- --------------------------------------
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
----------------------------------- --------------------------------------
Print Name: Print Name:
Its: Director of Logistics Its:
----------------------------------- --------------------------------------
DETAILS OF THIS EXHIBIT WILL BE COMPLETED WITHIN TEN (10) DAYS AND ALL BLANK
ITEMS, NOW EMPTY, WILL BE COMPLETED.
EXHIBIT C
Page 1 of 1
43
EXHIBIT D
WORK LETTER AND CONSTRUCTION AGREEMENT
(Allowance)
This agreement (the "Work Letter") supplements the Lease dated March 21,
1999 executed concurrently herewith by MISSION COURT PROPERTIES, INC., a
California corporation, as Landlord and SMARTFLEX SYSTEMS, INCORPORATED, a
Delaware corporation, as Tenant (the "Lease").
1. Design Matters.
1.1 Landlord, through its architects and/or space planners ("Landlord's
Architect"), shall prepare the Design Documents (defined below) and the
Construction Drawings (defined below), as they may be modified as provided
herein, in accordance with the design specified by Tenant and reasonably
approved by Landlord.
1.2. Tenant shall be responsible for the suitability for the Tenant's
needs and business of the design and function of all Tenant Improvements
(defined below). Tenant, at its own expense, shall devote such time and provide
such instructions as may be necessary to enable Landlord to complete the matters
described below and to obtain:
(a) Upon execution of the Lease, Tenant's written approval of the
Design Documents approved in writing by Tenant; and
(b) Within seven (7) days after execution of the Lease, Tenant's
written approval of a nonbinding preliminary estimate of Phase 1 of the Tenant
Improvements ("Phase 1 Preliminary Estimate") provided by Landlord of the cost
of Phase 1 of the Tenant Improvements shown on the Construction Drawings or the
Design Documents; and
(c) Within fourteen (14) days after execution of the Lease,
Tenant's written approval of the Construction Drawings relating to Phase 1 of
the Tenant Improvements approved in writing by Tenant; and
(d) Within seven (7) days after execution of the Lease, Tenant's
written approval of a nonbinding preliminary estimate of Phase 2 of the Tenant
Improvements ("Phase 2 Preliminary Estimate") provided by Landlord of the cost
of Phase 2 of the Tenant Improvements shown on the Construction Drawings or the
Design Documents; and
(e) Within fourteen (14) days after execution of the Lease,
Tenant's written approval of the Construction Drawings relating to Phase 2 of
the Tenant Improvements approved in writing by Tenant.
1.3. Certain Definitions. The following definitions shall apply for
purposes of this Work Letter:
(a) "Construction Drawings" shall mean the final architectural
and engineering plans and specifications for the real property improvements to
be constructed by Landlord in the Premises, which may be prepared in phases
relating to Phase 1 and Phase 2 of the Tenant Improvements, including all of the
Tenant Improvements and the Landlord-Provided Improvements, in sufficient detail
to be submitted for governmental approvals and building permits and to serve as
the detailed construction drawings and specifications for the contractor, and
shall include among other things, the location of all partitions, doors, HVAC
(heating, ventilating and air conditioning systems) distribution, ceiling
systems, light fixtures, plumbing installations, electrical installations and
outlets, telephone and network outlets and other installations required by
Tenant, as well as wall finishes and floor coverings;
(b) "Design Documents" shall mean layout plans and specifications
for the Tenant Improvements to be constructed by Landlord in the Premises which
are the final product of the preliminary space planning and which include, among
other things, the location of all partitions, doors, HVAC (heating, ventilating
and air conditioning systems) distribution, ceiling systems, light fixtures,
plumbing installations, electrical installations and outlets, telephone and
network outlets and other installations required by Tenant, as well as wall
finishes and floor coverings, in sufficient detail for Landlord to commence
preparation of the Construction Drawings (defined below);
(c) "Landlord-Provided Improvements" shall mean the repair of all
floor drains in the Premises, and the repair and sealing of all floors currently
existing in the Premises (and in addition to any other repair work to be done by
Landlord pursuant to Section 2.3 of the Lease) all at the sole cost and expense
of Landlord. The construction and installation of the Landlord-Provided
Improvements is sometimes referred to herein or in the Lease as "Landlord's
Work"; and
(d) All real property improvements, to be constructed by Landlord
as shown on the Construction Drawings (other than the Landlord-Provided
Improvements, as noted therein), as they may be modified as provided herein,
shall be defined as "Tenant Improvements," and the construction and installation
of such Tenant Improvements is sometimes referred to herein or in the Lease as
"Landlord's Work". The Tenant Improvements shall be constructed and installed in
two (2) phases, "Phase 1" and "Phase 2," as noted in the Construction Drawings.
The contemplated Tenant Improvements and the two phases hereof hereby are
generally as described in Schedule 1 attached to and made a part of this Work
Letter
EXHIBIT D
Page 1 of 6
44
2. Construction: Landlord's Contribution; Tenant Improvement Costs.
2.1. Construction: Landlord's Contribution. Landlord shall complete the
construction of the Tenant Improvements in a good and workmanlike manner, up to
a maximum cost to Landlord of Two Hundred Thousand Five Hundred Ten and No/100
Dollars ($209,510.00) ("Landlord's Maximum Contribution").
2.2 Tenant Improvement Costs. The cost of the Tenant Improvements
("Tenant Improvement Costs") to be paid by Landlord from, but not in excess of,
Landlord's Maximum Contribution shall include:
(a) The costs of Landlord's Architect and any other consultants
retained by Landlord in connection with the preparation of Design Documents and
Construction Drawings, and engineering costs associated with completion of the
State of California energy utilization calculations under Title 24 legislation;
(b) All costs of obtaining from the City of Fremont and any other
governmental authority building and occupancy permits, if any;
(c) All costs of interior design and finish schedule plans and
specifications;
(d) All direct and indirect costs of procuring, installing and
constructing the Tenant Improvements, including without limitation: (i) the
construction fee for overhead and profit and the cost of all on-site supervisory
and administrative staff, office, equipment and temporary services rendered or
provided by Landlord in connection with construction of the Tenant Improvements
which shall be equal to seven percent (7%) of the total cost of the construction
and installation of the Tenant Improvements, and (ii) the cost of any services
or utilities made available by Landlord, and
(e) All fees payable to Landlord's architectural and engineering
firm if it is required by Tenant to redesign any portion of the Tenant
Improvements following Tenant's approval of the Construction Drawings.
In no event shall the Tenant Improvement Costs include (i) any costs of
procuring or installing in the Premises any trade fixtures, equipment,
furniture, furnishings, telephone equipment or other personal property
("Personal Property") to be used in the Premises by Tenant, and the cost of such
Personal Property shall be paid by Tenant, or (ii) any costs or expenses of any
consultants retained by Tenant with respect to design, procurement, installation
or construction of improvements or installations, whether real or personal
property, for the Premises. Landlord and Tenant acknowledge that no as-built
drawings of the Premises will be made.
2.3. Limitations of Landlord's Obligations. Upon Substantial Completion
of the Tenant Improvements in compliance with the Construction Drawings,
Landlord shall have no further obligation to construct improvements or construct
modifications to or changes in the Tenant Improvements or, except as provided in
Section 2.3 of, or elsewhere in, the Lease, to complete or repair the Tenant
Improvements. If Landlord's Maximum Contribution exceeds Tenant Improvement
Costs, then Landlord shall apply such excess as a credit to Tenant's next
payments of Base Annual Rent coming due.
3. Costs of Tenant Improvements in Excess of Landlord's Maximum
Contribution. As soon as reasonably available after completion of the
Construction Drawings, Landlord shall notify Tenant in writing of the costs of
the Tenant Improvements in excess of the Landlord's Maximum Contribution (such
notification shall be referred to as "Landlord's Cost Statement"). Within five
(5) days after receipt of Landlord's Cost Statement, Tenant shall, in writing,
give Landlord authorization to complete the Tenant Improvements in accordance
with the Construction Drawings and Tenant shall accompany said authorization
with a good check made payable to the order of Landlord in the amount of the
excess cost authorized by Tenant of the Tenant Improvements over Landlord's
Maximum Contribution. In such authorization, Tenant may, pursuant to Section 4,
request a Change Order (defined below) to the approved Construction Drawings to
reduce or delete all or part of such excess costs, but any delay in completion
of the Premises resulting from such request for a Change Order or from the
changes so made or necessitated shall be chargeable as Tenant Delay as provided
in Section 5. If such written authorization and check (if applicable) are not
received by Landlord, Landlord shall not be obligated to commence work on the
Premises and any resulting delay in the completion of the Premises shall be
chargeable against Tenant as Tenant Delay as provided in Section 5 of this Work
Letter. Additionally, and regardless of whether the cost of the Tenant
Improvements exceeds Landlord's Maximum Contribution, the acquisition and
installation of conductive floor tile as part of the Tenant Improvements shall
be made at Tenant's sole cost and expense. Notwithstanding any contrary
implication or expression in the Lease, such conductive floor tile shall be and
remain throughout the Term of the Lease and thereafter Tenant's personal
property, and Tenant may remove the same upon the expiration or earlier
termination of the Lease.
4. Changes. If Tenant shall request any change, addition or alteration
in the approved Construction Drawings, Landlord shall promptly give Tenant a
written estimate of (a) the cost of engineering and design services and the
construction contractor services to prepare a change order (the "Change Order")
in accordance with such request, (b) the cost of work to be performed pursuant
to such Change Order, and (c) the time delay expected because of such requested
Change Order. Within three (3) business days following Tenant's receipt of the
foregoing written estimate, Tenant shall notify Landlord in writing whether it
approves such written estimate. If Tenant approves such written estimate and if
such cost is in excess of Landlord's Maximum Contribution, Tenant shall
accompany such approval with a good check made payable to the order of Landlord
in the amount of the estimated
45
cost of preparing the Change Order and performing the work thereto, and the
foregoing shall constitute Tenant's authorization to proceed. If such written
authorization, and check if required, are not received by Landlord within such
three (3) business day period, Landlord shall not be obligated to prepare the
Change Order or perform any work in connection therewith. Upon completion of the
work of the Change Order and submission of the final cost thereof by Landlord to
EXHIBIT D
Page 2 of 6
Tenant, Tenant shall promptly pay to Landlord any such additional amounts in
excess of Landlord's Maximum Contribution.
5. Tenant Delay. If the completion of the Tenant Improvements in the
Premises is delayed (i) at the request of Tenant, (b) by Tenant's failure timely
to comply with the provisions of this Work Letter, (iii) by Tenant's failure
timely to approve, pursuant to Section 1.2, Construction Drawings which are
consistent with the Design Documents, or by Tenant's request for change,
addition or alteration in the Construction Drawings which is not consistent with
the Design Documents, (iv) by all changes or alterations in the work ordered by
Tenant or by extra work ordered by Tenant, or (v) because Tenant chooses to have
additional work performed by Landlord, then Tenant shall be responsible for all
costs and any expenses occasioned by such delay including, without limitation,
any costs and expenses attributable to increases in labor or materials; and each
such event shall be a "Tenant Delay" and as provided in Section 2.1 of, or
elsewhere in, the Lease, for purposes of establishing the commencement of
Tenant's obligations under the Lease which have not commenced prior to
Substantial Completion, including, without limitation, the Rent Commencement
Date, the date on which such obligations commence shall be advanced one day for
each day of Tenant Delay.
6. Entry By Tenant. Tenant may, with Landlord's written consent, enter
the Premises after the Commencement Date but prior to the Rent Commencement Date
solely for the purpose of installing Tenant's Personal Property as long as such
entry will not interfere with the orderly construction and completion of the
Phase 1 of the Tenant Improvements. Tenant shall notify Landlord of its desired
time(s) of entry and shall submit for Landlord's approval the scope of the work
to be performed and the name(s) of the contractor(s) who will perform such work.
Tenant hereby indemnifies and agrees to protect, defend and hold Landlord, any
mortgagee, ground lessor or beneficiary of a mortgage, ground lease or deed of
trust related to the Premises, the Building or the Project harmless from and
against any and all suits, claims, actions, losses, costs or expenses (including
claims for worker's compensation) of any nature whatsoever, together with
reasonable attorneys' fees for counsel of Landlord's choice, arising out of or
in connection with the installation of Tenant's Personal Property (including but
not limited to claims for breach of warranty, personal injury or property
damage). Landlord shall have the right, in Landlord's sole and exclusive
discretion, to settle, compromise, or otherwise dispose of any and all suits,
claims, and actions related to the installation of Tenant's Personal Property or
equipment, to the extent such claims are made against Landlord. Any defense made
by Tenant under this Section 6 shall be made only with counsel (i) previously
approved in writing by Landlord, and (ii) willing to cooperate with counsel of
Landlord's choice in connection with such defense. The obligations of Tenant
under this Section 6 of this Work Letter shall survive the expiration or earlier
termination of the Lease and the performance of Landlord's Work and the
installation of Tenant's Personal Property under this Work Letter. Additionally,
after the Rent Commencement Date, to the extent that Landlord has not completed
both Phases of the Tenant Improvements, Landlord shall continue with Landlord's
Work as if Tenant were not occupying the Premises in an effort to complete the
Tenant Improvements as otherwise provided herein. Further, during the conduct of
Landlord's Work, absent Landlord's or its employee's, agents' or contractors'
gross negligence or willful misconduct, Landlord shall not be liable in any way
for any injury, loss, or damage which may occur to any items of work constructed
by Tenant or other property of Tenant that may be placed in the Premises by
Tenant, or the interference with Tenant's operations in the Premises, all being
at Tenant's sole risk.
7. Timing of Work. Subject to extension for Tenant Delay, Landlord shall
use commercially reasonable and diligent efforts to substantially complete the
construction and installation of (i) the Landlord-Provided Improvements by ▇▇▇▇▇
▇▇, ▇▇▇▇, (▇▇) Phase 1 of the Tenant Improvements by April 21, 1999 (which may
be evidenced by the issuance of a temporary certificate of occupancy or
equivalent from the City of Fremont), and (iii) Phase 2 of the Tenant
Improvements by May 7, 1999. As provided in Section 2.2.2 of the Lease,
Landlord's failure to complete any aspect of Landlord's Work on or before the
dates provided above shall in no manner affect the validity of the Lease or
incur any liability on the part of Landlord, but shall permit Tenant the right
to terminate the Lease i certain circumstances as provided in Section 2.2.2 of
the Lease.
8. Defined Terms. Capitalized terms used in this Work Letter and not
otherwise defined, other than terms capitalized in the ordinary course of
punctuation, shall, unless otherwise specified herein, have the same meanings
and definitions set forth in the Lease.
9. Force and Effect. The terms and conditions of this Work Letter
supplement the Lease and shall be construed to be a part of the Lease and shall
be deemed incorporated in the Lease by this reference. Should any inconsistency
arise between this Work Letter and the Lease as to the specific matters which
are the subject of this Work Letter, the terms and conditions of this Work
Letter shall control.
EXHIBIT D
Page 3 of 6
46
IN WITNESS WHEREOF, the Parties hereto have executed this Work Letter as
of the date first set forth in the Lease.
TENANT: LANDLORD:
SMARTFLEX SYSTEMS INCORPORATED, a Delaware MISSION COURT PROPERTIES, INC., a California
corporation corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ ▇▇▇ ▇▇▇
----------------------------------- --------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇ ▇▇▇
----------------------------------- --------------------------------------
Print Name: Print Name:
Its: VP & GM, EMS Business Unit Its: VP of Finance
----------------------------------- --------------------------------------
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ By:
----------------------------------- --------------------------------------
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
----------------------------------- --------------------------------------
Print Name: Print Name:
Its: Director of Logistics Its:
----------------------------------- --------------------------------------
EXHIBIT D
Page 4 of 6
47
SCHEDULE 1
[General Description of Tenant Improvements]
ASSUMPTIONS:
------------
1. Floor will be repaired and moisture sealed up to 9 lbs.
2. All HVAC units will be repaired and delivered in good working condition.
3. All internal lighting will be repaired and usable.
4. Electrical requirements will be sufficient for equipment operation.
5. Roof clean and any leaks repaired. All downspout cleaned.
6. Balance of building in acceptable condition.
7. Provide keys for all locking doors.
8. Tile areas of current offices will be carpeted over. (Reference Only)
NEW TENANT IMPROVEMENTS: (see new layout)
------------------------
PHASE I -- Production
1. In rear of building, we need a wall constructed, open top, to enclose the
space from the employee door to the current office line, for employee
lockers and ▇▇▇▇▇ storage.
2. All three overhead doors will need to be enclosed fully with a dual swinging
door access. This provided weather protection and a HVAC conservation. (See
layout)
3. An additional 200 feet of 20 foot high chain link fence will need to be
installed.
4. All offices and production area walls will need to be repainted. (See color
spec below)
5. All current offices and non production hallways will need to be re-carpeted
and new cove base installed. (See spec below)
6. New walls installed in two offices where marked. New doors moved or
installed in two locations. (See Layout)
7. Panels next to men's urinals to be replaced. One in each bathroom.
8. Floor tile and cove needs to be replaced in every bathroom, men's
particularly. Match cove color as close as possible.
9. Removal of North portion of wall, after arch opening, in current lunchroom
needs to be done.
10. New wall to be constructed, with 3' access door to production floor, to
close off back access stair from the production floor. Access door to have
glass panel.
11. Build cover with access door over large transformer in computer room. (Per
layout, we think a 4' access area is required.
12. New outside roof access, since this building has no current access. Install
secure metal ladder in locked pad area in rear of building.
13. Re-key locks for new tenant on all outside security doors.
PHASE II -- New Offices:
14. Enclose the current entry way as the new lobby. Entry doors style the same
as current and a new glass wall on north side to large pillar. Carpeted
floor.
15. Structure the current lobby to contain a conference room, with pocket door,
an access aisle and the current two alcoves. Provide locking folding doors
on two alcoves on North side of current lobby.
16. Glass Windows on South side on current entry are replaced with a single wide
glass door and one glass panel.
17. New layout of offices to be installed across the front glass window portion
of the building. Consisting of one large conference room, two small
bathrooms, one small kitchenette with cabinet storage, one small conference
room and seven offices. These offices will have glass panels beside or above
doors for light transmission. A wall in front of these offices will separate
the offices from the production floor. One double door, with glass panels
from this area to production floor, per layout.
18. New electrical distribution to support changes to offices.
19. Mini blinds for all required office windows and glass panels beside doors.
Same color as walls.
SPECS:
------
Paint - Everguard coatings
Walls 597T white 4200 series
Accent wall 640V D4200
Door and Trim 640V D6900
Carpet - Windsor Blue, United Tech products, contact ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇-▇▇▇-▇▇▇▇
or other brand or product closer to the same color and quality, if this
specified carpet is not readily available.
Cove Base - ▇▇▇▇▇ 4" 323-p bluebonnet
Counter tops - ▇▇▇▇▇▇▇▇ ▇▇▇▇ d-321-6
Ceiling tile - ▇▇▇▇▇▇▇▇▇ 769a
EXHIBIT D
Page 5 of 6
48
The following is an assessment of ADA requirements and a list of items need
corrective work in order to comply with the ADA codes:
FIRST FLOOR
Drinking Fountain
-----------------
Bubbler height requirement is maximum 36" above floor, existing height is 37".
Bottom of drinking fountain is required to be 27" minimum. Existing is 26-1/2".
Width of alcove is required to be minimum 32" wide, existing is 31-1/2" wide.
Women's Restroom
----------------
The maximum toe clearance for lavatories is 6" from wall. The installed
lavatories are at 12".
Handicap toilet compartment requires 48" in front of water closet. Measured
dimension is 47".
Toilets need to be replaced. The maximum allowable height of the toilet is 19",
existing seat is 19-1/2". The flush valve must be located on the approach side
of tank. Existing valve is on the wall side. Does not comply.
Sanitary Napkin Dispenser maximum height must be 40", existing is installed at
45".
Men's Restroom
--------------
Lavatory counter height must not exceed 34". Existing height is 35". The
maximum toe clearance for lavatories is 6" from wall. The installed lavatories
are at 12".
Handicap stall grab bars are located 50" from rear wall. Requirement is 52".
Coat hook currently installed at 65". Requirement is 40" maximum.
Toilets need to be replaced. The maximum allowance height of the toilet is 19",
existing seat is 19-1/2". The flush valve must be located on the approach side
of tank. Existing valve is on the wall side. Distance between center line of
water closet and side wall is required to be 18", existing condition is 17-1/2".
SECOND FLOOR
Women's Restroom
----------------
Lavatory counter height must not exceed 34", existing height is 35". The
maximum toe clearance for lavatories is 6" from wall. The installed lavatories
are at 12". 30" X 48". Clear floor space not provided without obstruction of
door.
Handicap toilet compartment requires 48" in front of water closet. Measured
dimension is 41-1/2".
Toilets need to be replaced. The maximum allowable height of the toilet is 19",
existing seat is 19-1/2". The flush valve must be located on the approach side
of tank. Existing valve is on the wall side. Distance between center line of
water closet and side wall is required to be 18", existing condition is 17-1/2".
Grab bars above toilet tank are required to be 36" above floor, existing is 35".
Men's Restroom
--------------
Lavatory counter height must not exceed 34", existing height is 35". The
maximum toe clearance for lavatories is 6" from wall. The installed lavatories
are at 12". 30" X 48" clear floor space not provided without obstruction of
door.
Toilets need to be replaced. The maximum allowable height of the toilet is 19".
Existing seat is 19-1/2". The flush valve must be located on the approach side
of tank. Existing valve is on the wall side. Does not currently comply.
Distance between center line of water closet and side wall is required to be
18". Existing condition is 17-1/2". Coat is installed at 66", requirement is
40". Grab bar installed at 33-1/2", requirement is 33".
Stairwells
----------
The handrail at the both stairwells will have to be extended to meet the
minimum extension requirement.
EXHIBIT D
Page 6 of 6
49
EXHIBIT E
RULES AND REGULATIONS
1. No sidewalks, entrances, passages, courts, elevators, vestibules,
stairways, corridors or halls shall be obstructed or encumbered by Tenant or
used for any purpose other than ingress and egress to and from the Premises or
the Building and Tenant shall further, at Tenant's own expense, keep the
sidewalks and curb directly in front of the Premises clean and free from
rubbish.
2. No awning or other projection shall be attached to the outside walls
or windows of the Building or Project without the prior written consent of
Landlord. No curtains, blinds, shades, drapes or screens shall be attached to or
hung in, or used in connection with any window or door of the Premises, without
the prior written consent of Landlord which consent will not be unreasonably
withheld or delayed. Such awnings, projections, curtains, blinds, shades,
drapes, screens and other fixtures must be of a quality, type, design, color,
material and general appearance approved by Landlord, and shall be attached in
the manner approved by Landlord. All electrical fixtures hung in offices or
spaces along the perimeter of the Premises must be fluorescent, of a quality,
type, design, bulb color, size and general appearance approved by Landlord.
3. No sign, advertisement, notice or other lettering shall be exhibited,
inscribed, painted or affixed by Tenant on any part of the outside or inside of
the Premises or of the Building or Project, without the prior written consent of
Landlord at Landlord's sole and exclusive discretion. In the event of the
violation of the foregoing by Tenant, Landlord may remove same without any
liability, and may charge the expense incurred by such removal to Tenant.
Interior signs on doors and the directory tablet shall be inscribed, painted or
affixed for Tenant by Landlord at the expense of Tenant, and shall be of a
quality, quantity, type, design, color, size, style, composition, material,
location and general appearance acceptable to Landlord.
4. The sashes, sash doors, skylights, windows and doors that reflect or
admit light or air into the halls, passageways or other public places in the
Building or Project shall not be covered or obstructed by Tenant, nor shall any
bottles, parcels or other articles be placed on the window ▇▇▇▇▇ or in the
public portions of the Building or Project.
5. No show cases or other articles shall be put in front of or affixed
to any part of the exterior of the Building or Project nor placed in public
portions thereof without the prior written consent of Landlord.
6. The water and wash closets and other plumbing fixtures shall not be
used for any purposes other than those for which they were constructed, and no
sweepings, rubbish, rags or other substances shall be thrown therein. All
damages resulting from any misuse of the fixtures shall be borne by Tenant to
the extent that Tenant or Tenant's agents, servants, employees, contractors,
visitors or licensees shall have caused the same.
7. Landlord shall have the right to prohibit any advertising or business
conducted by Tenant referring to the Building or the Project which, in
Landlord's opinion, tends to impair the reputation of the Building or Project or
its desirability as a first-class building for offices, research and development
and/or commercial services and upon notice from Landlord, Tenant shall refrain
from or discontinue such advertising.
8. If the Premises is or becomes infested with vermin as a result of the
use or any misuse or neglect of the Premises by Tenant, its agents, servants,
employees, contractors, visitors or licensees, Tenant shall forthwith at
Tenant's expense cause the same to be exterminated from time to time to the
satisfaction of Landlord and shall employ such licensed exterminators as shall
be approved in writing in advance by Landlord.
9. Tenant shall install and maintain, at Tenant's sole cost and expense,
an adequate visibly marked (at all times properly operational) fire extinguisher
next to any duplicating or photocopying machine or similar heat producing
equipment, which may or may not contain combustible material, in the Premises.
10. Tenant shall not use the name of the Building or Project for any
purpose other than as the address of the business to be conducted by Tenant in
the Premises, nor shall Tenant use any picture of the Building or Project in its
advertising, stationery or in any other manner without the prior written
permission of Landlord. Landlord expressly reserves the right at any time to
change said name without in any manner being liable to Tenant therefor.
EXHIBIT E
Page 1 of 1
50
EXHIBIT F
MISSION CORPORATE CENTER
SIGN PROGRAM
(1) Each tenant occupying more than 50% of a building shall have a
maximum of one building mounted tenant identification sign. Signage for tenants
occupying 50 % or less than 50 % of a building shall be approved on an
individual basis.
(2) Building mounted tenant identification signs shall conform to the
following specifications:
Sign: Maximum height is 4' and maximum length is 12', including
company name and logo, not to exceed 30 sq.ft.
Letters/Logo: Company name must be 1-1/2" thick high density
foam, with plastic face. Entire color shall be black if the sign
location is designated to be on the concrete wall (Building 4 only), and
white if on the glass spandrel area (all other buildings). The logo must
be the same material. Logo color may vary, but color must be approved by
Landlord.
Location: In a location approved by Landlord.
(3) "Shipping" and "Receiving" signs may be painted on an exterior wall
adjacent to truck doors. Such signs shall be black and shall be no larger than
6" by 24".
(4) The sign contractor and the detailed sign drawing are to be approved
in writing by Landlord.
(5) Signs may be lighted from exterior at ground level in a manner
approved by Landlord.
(6) All signs must conform to the City of Fremont sign ordinance.
This signage program is intended to maintain the high quality
uncluttered image of the business park. Any deviation from the program must be
approved in writing by the Landlord.
EXHIBIT F
Page 1 of 1