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EXHIBIT 10.08
LEASE
1. BASIC PROVISIONS.
1.1 Parties. This Lease ("LEASE"), dated for reference purposes only as
of December 29, 1998, is made by and between SYNERGISM PROPERTIES IV, LLC, a
California limited liability company, ("LESSOR") and CUPERTINO ELECTRIC, INC., a
California corporation, ("LESSEE"), (collectively the "PARTIES," or individually
a "PARTY").
1.2 Premises. That certain real property, including all improvements
therein or to be provided by Lessor under the terms of this Lease, and commonly
known as 1132 North 7th Street, San Jose, located in the County of Santa Clara,
State of California, as more particularly described or depicted on Exhibit A
(Depiction of Premises) attached hereto ("PREMISES"). The Premises are part of a
larger parcel of real property owned by Lessor and described on Exhibit B
attached hereto (the "Property"). As of the Commencement Date (as defined
below), the Premises are improved with several buildings consisting of
approximately 96,451 square feet of space ( together, the "Buildings" or
individually, the "Building"), as more particularly described in Exhibit C,
together with related parking areas and access lanes, as generally shown on
Exhibit A. Lessor makes no representations or warranties, express or implied, as
to the exact area of the Premises or the existing buildings, improvements or
parking. Lessee has conducted its own investigations and is satisfied with the
Premises and the existing improvements on the Premises.
1.3 Term. Eleven (11) years and two (2) days ("Original Term")
commencing December 29, 1998 ("Commencement Date") and ending December 31, 2009
("Expiration Date"). (See also Paragraph 3 (Lease Term))
1.4 Early Possession. None.
1.5 Base Rent: $70,000 per month ("Base Rent"), payable on the first day
of each month commencing January 1, 1999. Base rent shall be adjusted pursuant
to Paragraph 4 (Rent).
1.6 Base Rent Paid Upon Execution. Three (3) months Base Rent as Base
Rent for the period January 1, 1999, through March 31, 1999.
1.7 Security Deposit. $70,000 ("Security Deposit"). (See also Paragraph
5 (Security Deposit))
1.8 Agreed Use. Commercial space, office space, construction yard,
electrical assembly, warehouse and any incidental purposes related thereto
(collectively, the "Agreed Use"). (See also Paragraph 6 (Use))
1.9 Insuring Party. Lessee is the "Insuring Party." (See also Paragraph
8 (Insurance))
1.10 Real Estate Brokers. Neither Lessor nor Lessee is represented by a
real estate broker in this transaction. (See also Paragraph 15 (Brokers))
1.11 Guarantor. The obligations of the Lessee under this Lease are to be
guaranteed by SYNERGISM, INC., a California corporation ("Guarantor"). (See also
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Paragraph 37 (Guarantor))
1.12 Exhibits. Attached hereto are Exhibits A (Depiction of Premises), B
(Description of Property), C (Description of Buildings), and D (Guaranty), all
of which constitute a part of this Lease.
2. PREMISES.
2.1 Letting. Lessor hereby leases to Lessee, and Lessee hereby leases
from Lessor, the Premises, for the term, at the rental, and upon all of the
terms, covenants and conditions set forth in this Lease. Unless otherwise
provided herein, any statement of size set forth in this Lease, or that may have
been used in calculating rental, is an approximation which the Parties agree is
reasonable and the rental based thereon is not subject to revision whether or
not the actual size is more or less. Lessee acknowledges that it has received
possession of the Premises as of the Commencement Date.
2.2 "AS IS" Condition. Lessee acknowledges that it has had full
opportunity to inspect the Premises prior to the Commencement Date and is
thoroughly familiar with the condition of the Premises, the Buildings and all
improvements thereon. Therefore, Lessee hereby accepts the condition of the
Premises, the Buildings and all improvements thereon in their "AS IS" condition,
with "ALL FAULTS" and subject to any violations of any applicable laws,
covenants or restrictions of record, building codes, regulations and ordinances
("Applicable Requirements"), as of the Commencement Date.
2.3 Acknowledgments. Lessee acknowledges that: (a) it has been advised
by Lessor to satisfy itself with respect to the condition of the Premises
(including but not limited to the electrical, HVAC and fire sprinkler systems,
security, environmental aspects, and compliance with Applicable Requirements),
and their suitability for Lessee's intended use; (b) Lessee has made such
investigation as it deems necessary with reference to such matters and assumes
all responsibility therefor as the same relate to its occupancy of the Premises;
and (c) neither Lessor, Lessor's agents, nor any Broker has made any oral or
written representations or warranties, express or implied, with respect to said
matters other than as set forth in this Lease.
3. LEASE TERM.
3.1 Term. The Commencement Date, Expiration Date and Original Term of
this Lease are as specified in Paragraph 1.3 (Term).
4. RENT.
4.1. Rent Defined. All monetary obligations of Lessee to Lessor under
the terms of this Lease (except for the Security Deposit) are deemed to be rent
("Rent").
4.2 Payment. Lessee shall cause payment of Rent to be received by Lessor
in lawful money of the United States, without offset or deduction (except as
specifically permitted in this Lease), on or before the day on which it is due.
Rent for any period during the term hereof which is for less than one (1) full
calendar month shall be prorated based upon the actual number of days of said
month. Payment of Rent shall be made to Lessor at its address stated herein or
to such other persons or place as Lessor may from time to time designate in
writing. Acceptance of a payment which is less than the amount then due shall
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not be a waiver of Lessor's rights to the balance of such Rent, regardless of
Lessor's endorsement of any check so stating.
4.3 Base Rent Escalation. Lessor and Lessee agree that Base Rent shall
be increased annually by two percent (2%) of the prior year's Base Rent,
effective on the second anniversary of the Commencement Date and each
anniversary of the Commencement Date thereafter throughout the Initial Term and
any Extension Period. For example, if the Base Rent per month were $70,000
during the first two years of the Lease, during the third year the Base Rent per
month shall be $71,400, and during the fourth year the Base Rent per month shall
be $72,828.
5. SECURITY DEPOSIT. Lessee shall deposit with Lessor upon execution hereof the
Security Deposit as security for Lessee's faithful performance of its
obligations under this Lease. If Lessee fails to pay Rent, or otherwise Defaults
under this Lease, Lessor may use, apply or retain all or any portion of said
Security Deposit for the payment of any amount due Lessor or to reimburse or
compensate Lessor for any liability, expense, loss or damage which Lessor may
suffer or incur by reason thereof. If Lessor uses or applies all or any portion
of said Security Deposit, Lessee shall within ten (10) days after written
request therefor deposit monies with Lessor sufficient to restore said Security
Deposit to the full amount required by this Lease. If the Base Rent increases
during the term of this Lease, Lessee shall, upon written request from Lessor,
deposit additional monies with Lessor so that the total amount of the Security
Deposit shall at all times bear the same proportion to the increased Base Rent
as the initial Security Deposit bore to the initial Base Rent. Should the Agreed
Use be amended to accommodate a material change in the business of Lessee or to
accommodate a sublessee or assignee, Lessor shall have the right to increase the
Security Deposit to the extent necessary, in Lessor's reasonable judgment, to
account for any increased wear and tear that the Premises may suffer as a result
thereof. If a change in control of Lessee occurs during this Lease and following
such change the financial condition of Lessee is, in Lessor's reasonable
judgment, significantly reduced, Lessee shall deposit such additional monies
with Lessor as shall be sufficient to cause the Security Deposit to be at a
commercially reasonable level based on said change in financial condition.
Lessor shall not be required to keep the Security Deposit separate from its
general accounts. Within fourteen (14) days after the expiration or termination
of this Lease, if Lessor elects to apply the Security Deposit only to unpaid
Rent, and otherwise within thirty (30) days after the Premises have been vacated
pursuant to Paragraph 7.4(c) (Indemnification) below, Lessor shall return that
portion of the Security Deposit not used or applied by Lessor. No part of the
Security Deposit shall be considered to be held in trust, to bear interest or to
be prepayment for any monies to be paid by Lessee under this Lease.
6. USE.
6.1 Use. Lessee shall use and occupy the Premises only for the Agreed
Use, or any other legal use which is reasonably comparable thereto, and for no
other purpose without Lessor's prior written consent, which consent may be
given, conditioned or denied in Lessor's sole and absolute discretion. Lessee
shall not use or permit the use of the Premises in a manner that is unlawful,
creates damage, waste or a nuisance, or that disturbs owners and/or occupants
of, or causes damage to neighboring properties. Lessor shall not unreasonably
withhold or delay its consent to any written request for a modification of the
Agreed Use, so long as the same will not impair the structural integrity of the
improvements on the Premises or the mechanical or electrical systems therein, is
not significantly more
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burdensome to the Premises. If Lessor elects to withhold consent, Lessor shall
within five (5) business days after such request give written notification of
same, which notice shall include an explanation of Lessor's objections to the
change in use.
6.2 Hazardous Substances.
(a) Reportable Uses Require Consent. The term "Hazardous
Substance" as used in this Lease shall mean any product, substance, or waste
whose presence, use, manufacture, disposal, transportation, or release, either
by itself or in combination with other materials expected to be on the Premises,
is either: (i) potentially injurious to the public health, safety or welfare,
the environment or the Premises, (ii) regulated or monitored by any governmental
authority, or (iii) a basis for potential liability of Lessor to any
governmental agency or third party under any applicable statute or common law
theory. Hazardous Substances shall include, but not be limited to, hydrocarbons,
petroleum, gasoline, and/or crude oil or any products, by-products or fractions
thereof. Lessee shall not engage in any activity in or on the Premises which
constitutes a Reportable Use of Hazardous Substances without the express prior
written consent of Lessor and timely compliance (at Lessee's expense) with all
Applicable Requirements. "Reportable Use" shall mean (i) the installation or use
of any above or below ground storage tank, (ii) the generation, possession,
storage, use, transportation, or disposal of a Hazardous Substance that requires
a permit from, or with respect to which a report, notice, registration or
business plan is required to be filed with, any governmental authority, and/or
(iii) the presence at the Premises of a Hazardous Substance with respect to
which any Applicable Requirements requires that a notice be given to persons
entering or occupying the Premises or neighboring properties. Notwithstanding
the foregoing, Lessee may use any ordinary and customary materials reasonably
required to be used in the normal course of the Agreed Use, so long as such use
is in compliance with all Applicable Requirements, is not a Reportable Use, and
does not expose the Premises or neighboring property to any meaningful risk of
contamination or damage or expose Lessor to any liability therefor. In addition,
Lessor may condition its consent to any Reportable Use upon receiving such
additional assurances as Lessor reasonably deems necessary to protect itself,
the public, the Premises and/or the environment against damage, contamination,
injury and/or liability, including, but not limited to, the installation (and
removal on or before Lease expiration or termination) of protective
modifications (such as concrete encasements) and/or increasing the Security
Deposit.
(b) Duty to Inform Lessor. If Lessee knows, or has reasonable
cause to believe, that a Hazardous Substance has come to be located in, on,
under or about the Premises, other than as previously consented to by Lessor,
Lessee shall immediately give written notice of such fact to Lessor, and provide
Lessor with a copy of any report, notice, claim or other documentation which it
has concerning the presence of such Hazardous Substance.
(c) Lessee Remediation. Lessee shall be responsible for complying
with all Applicable Requirements respecting the Premises and the Buildings,
including all those Applicable Requirements which relate to Hazardous Substances
located, and which come to be located on, or emanate from, the Premises or the
Buildings. Lessee shall not cause or permit any Hazardous Substance to be
spilled or released in, on, under, or about the Premises (including through the
plumbing or sanitary sewer system) and shall promptly, at Lessee's expense, take
all investigatory and/or remedial action reasonably recommended,
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whether or not formally ordered or required, for the cleanup of any
contamination of, and for the maintenance, security and/or monitoring of the
Premises or neighboring properties, that was caused or materially contributed to
by Lessee, or pertaining to or involving any Hazardous Substance brought onto
the Premises during the term of this Lease, by or for Lessee, or any third
party.
(d) Lessee Indemnification. Lessee shall indemnify, defend and
hold Lessor, its agents, employees, lenders and ground lessor, if any, harmless
from and against any and all loss of rents and/or damages, liabilities,
judgments, claims, expenses, penalties, and attorneys' and consultants' fees
arising out of or involving any Hazardous Substance brought onto the Premises by
or for Lessee, or any third party. Lessee's obligations shall include, but not
be limited to, the effects of any contamination or injury to person, property or
the environment created or suffered by Lessee, and the cost of investigation,
removal, remediation, restoration and/or abatement, and shall survive the
expiration or termination of this Lease. No termination, cancellation or release
agreement entered into by Lessor and Lessee shall release Lessee from its
obligations under this Lease with respect to Hazardous Substances, unless
specifically so agreed by Lessor in writing at the time of such agreement.
(e) Additional Hazardous Materials Obligations. Lessee is a
guarantor of certain obligations of Lessor to BW/IP International, Inc., a
Delaware corporation ("BW/IP") under a certain guaranty dated as of December 29,
1998 (the "Cupertino Guaranty"). The Cupertino Guaranty provides an indemnity to
BW/IP and BMCE, Inc., a Wyoming corporation and successor to United Centrifugal
Pumps, a California corporation ("BMCE") and certain other parties respecting
harmful, toxic or hazardous substances which are or may be located in, on, under
or about the Property (the "Additional Hazardous Materials Obligations"). Lessor
has comparable indemnity obligations under Section 6.3(a) ("Indemnification") of
a certain agreement with BW/IP dated as of October 30, 1998 (the "Property
Agreement"). Pursuant to Section 6.1 ("Release") of the Property Agreement,
Lessor and those claiming through it, including Lessee, have waived and released
BW/IP and its directors, officers and others from claims among others relating
to the physical condition of the Property or any law or regulation applicable
thereto, including the presence or alleged presence of harmful, toxic or
hazardous substances. In addition, pursuant to Section 6.2 ("Post-Closing
Covenants") of the Property Agreement, Lessor has assumed certain obligations
with respect to pending environmental investigations and remediations, including
the remediation plan described in the "Request for Designation of Interim
Remedial Action as a Final Remedy Pursuant to Board Order 93-075, Flowserve
Corporation Facility, 1132 North Seventh Street, San Jose, California prepared
by IT Corporation and dated April 23, 1998" (the "Remediation Plan"). The
parties acknowledge that they are each familiar with the terms of the Cupertino
Guaranty and the Property Agreement, including those provisions referred to
above, and incorporate the terms of these agreements herein by this reference.
Lessor and Lessee agree that the obligations of Lessor with
respect to Section 6.2 ("Post-Closing Covenants") and Section 6.3(a)
("Indemnification") of the Property Agreement shall during the term of this
Lease be performed by and at the sole expense of Lessee. Lessor and Lessee
hereby confirm that the indemnity obligations of Lessee under the Cupertino
Guaranty to guarantee the indemnity obligations of Lessor under Section 6.3(a)
of the Property Agreement are those of the primary obligor and not a mere
surety, and Lessee has waived, and hereby confirms that it waives, all rights of
contribution and subrogation against Lessor with respect to its obligations
under the Cupertino Guaranty and further agrees that Lessee will indemnify and
hold Lessor harmless against all loss, liabilities or obligations it may suffer
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or incur under Section 6.2 and/or Section 6.3(a) of the Property Agreement which
arise during the term of this Lease, including attorneys and experts fees and
costs. The foregoing covenant, waivers and indemnity do not extend to claims, if
any, related solely to the portions of the Property which are not included in
the Premises.
Lessor hereby agrees to indemnify, protect, defend and hold
Lessee harmless from and against all loss, costs, liabilities or obligations
Lessee may suffer or incur under the Cupertino Guaranty which arise during the
term of the Lease, including attorney's fees and costs, relating to the portions
of the Property which are not included in the Premises to the extent that Lessor
is indemnified against or receives insurance proceeds to cover such obligation.
The obligations of Lessee under this Paragraph 6.2(e) are in addition to any
obligations set forth elsewhere in Paragraph 6.2 (Hazardous Substances) of this
Lease.
6.3 Lessee's Compliance with Applicable Requirements. Except as
otherwise provided in this Lease, Lessee shall, at Lessee's sole expense, fully,
diligently and in a timely manner, materially comply with all Applicable
Requirements, the requirements of any applicable fire insurance underwriter or
rating bureau, and the recommendations of Lessor's engineers and/or consultants
which relate in any manner to the Premises, without regard to whether said
requirements are now in effect or become effective after the Commencement Date.
Lessee shall, within ten (10) days after receipt of Lessor's written request,
provide Lessor with copies of all permits and other documents, and other
information evidencing Lessee's compliance with any Applicable Requirements
specified by Lessor, and shall immediately upon receipt, notify Lessor in
writing (with copies of any documents involved) of any threatened or actual
claim, notice, citation, warning, complaint or report pertaining to or involving
the failure of Lessee or the Premises to comply with any Applicable
Requirements.
6.4 Inspection; Compliance. Lessor and Lessor's "Lender" (as defined in
Paragraph 30 (Subordination) below) and consultants shall have the right to
enter into Premises at any time, in the case of an emergency, and otherwise at
reasonable times, for the purpose of inspecting the condition of the Premises
and for verifying compliance by Lessee with this Lease. The cost of any such
inspections shall be paid by Lessor, unless a violation of Applicable
Requirements, or a contamination is found to exist or be imminent, or the
inspection is requested or ordered by a governmental authority. In such case,
Lessee shall upon request reimburse Lessor for the cost of such inspections, so
long as such inspection is reasonably related to the violation or contamination.
7. MAINTENANCE; REPAIRS; UTILITY INSTALLATIONS; TRADE FIXTURES AND
ALTERATIONS.
7.1 Lessee's Obligations.
(a) Operating Expenses. In addition to Base Rent, Lessee shall
pay all operating expenses which arise or become due during the Term in
connection with, but not limited to, Lessee's obligations under Paragraphs
7.1(b)-(d) below and Paragraph 11 (Utilities). Lessor shall have no obligation
with respect to such payments.
(b) In General. Subject to the provisions of Paragraph 2.2 ("AS
IS" Condition), 6.3 (Lessee's Compliance with Applicable Requirements), 7.2
(Lessor's Obligations), 9 (Damage or Destruction), and 14 (Condemnation), Lessee
shall, at Lessee's
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sole expense, keep the Premises, Utility Installations, and Alterations in good
order, condition and repair (whether or not the portion of the Premises
requiring repairs, or the means of repairing the same, are reasonably or readily
accessible to Lessee, and whether or not the need for such repairs occurs as a
result of Lessee's use, any prior use, the elements or the age of such portion
of the Premises), including, but not limited to, all equipment or facilities,
such as plumbing, heating, ventilating, air-conditioning, electrical, lighting
facilities, boilers, pressure vessels, fire protection system, fixtures, walls
(interior and exterior), foundations, ceilings, roofs, floors, windows, doors,
plate glass, skylights, landscaping, driveways, parking lots, fences, retaining
walls, signs, sidewalks and parkways located in, on, or adjacent to the
Premises. Lessee, in keeping the Premises in good order, condition and repair,
shall exercise and perform good maintenance practices, specifically including
the procurement and maintenance of the service contracts required by Paragraph
7.1(c) (Service Contracts) below. Lessee's obligations shall include
restorations, replacements or renewals when necessary to keep the Premises and
all improvements thereon or a part thereof in good order, condition and state of
repair. Lessee shall, during the term of this Lease, keep the exterior
appearance of the Building in a first-class condition consistent with the
exterior appearance of other similar facilities of comparable age and size in
the vicinity, including, when necessary, the exterior repainting of the
Building.
(c) Service Contracts. Lessee shall, at Lessee's sole expense,
procure and maintain contracts, with copies to Lessor, in customary form and
substance for, and with contractors specializing and experienced in the
maintenance of the following equipment and improvements, if any, if and when
installed on the Premises: (i) HVAC equipment, (ii) boiler, and pressure
vessels, (iii) fire extinguishing systems, including fire alarm and/or smoke
detection, (iv) landscaping and irrigation systems, (v) roof covering and
drains, (vi) driveways and parking lots, (vii) clarifiers (viii) basic utility
feed to the perimeter of the Building, and (ix) any other equipment, if
reasonably required by Lessor (collectively (i)-(ix), the "Basic Elements").
(d) Replacement. Subject to Lessee's indemnification of Lessor as
set forth in Paragraph 8.8 (Indemnity) below, and without relieving Lessee of
liability resulting from Lessee's failure to exercise and perform good
maintenance practices, if the Basic Elements described in Paragraph 7.1(c)
(Service Contracts) cannot be repaired other than at a cost which is in excess
of 65% of the cost of replacing such Basic Elements, then such Basic Elements
shall be replaced by Lessor, and the cost thereof shall be apportioned between
Lessor and Lessee and Lessee shall be obligated to pay, each month during the
remainder of the term of this Lease, including any extension thereof, on the
date on which Base Rent is due, an amount equal to the monthly cost, including
interest at the rate of 8% per annum, to amortize in equal monthly installments
the cost of such replacement by a fraction, the numerator of which is one, and
the denominator of which is the number of months of the useful life of such
replacement as such useful life is specified pursuant to Federal income tax
regulations or guidelines for depreciation thereof, plus (ii) an amount equal to
.00583 (7% annual interest rate expressed as a monthly figure) multiplied by the
unamortized balance after accounting for the payment of all amounts paid
pursuant to clause (i). Lessee reserves the right to prepay its obligation at
any time, and Lessor shall pay the remainder of any amounts due for such
replacement costs after the expiration of the term of this Lease.
7.2 Lessor's Obligations. Subject to the provisions of Paragraphs 2.2
("AS IS" Condition), 9 (Damage or Destruction) and 14 (Condemnation), it is
intended by the Parties
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hereto that Lessor have no obligation, in any manner whatsoever, to repair and
maintain the Premises, or the equipment therein, all of which obligations are
intended to be that of the Lessee. It is the intention of the Parties that the
terms of this Lease govern the respective obligations of the Parties as to
maintenance and repair of the Premises, and they expressly waive the benefit of
any statute or applicable law now or hereafter in effect, including the
provisions of California Civil Code Sections 1932(1), 1941 and 1942, to the
extent it is inconsistent with the terms of this Lease.
7.3 Lessee Improvements. Lessor acknowledges that Lessee shall be able
and is hereby authorized to make improvements to the Premises ("Lessee
Improvements") pursuant to plans and specifications approved in writing from
time to time by Lessee. Lessee acknowledges that Lessee is electing to make
these improvements at its sole cost and expense in an amount totaling
approximately six million dollars ($6,000,000) and that Lessor shall have no
responsibility for the costs of these Lessee Improvements notwithstanding that
these improvements may not be fully depreciated or amortized by Lessee over the
term of this Lease or any renewal options exercised by Lessee pursuant to his
Lease.
7.4 Utility Installations; Trade Fixtures; Alterations.
(a) Definitions; Consent Required. The term "Utility
Installations" refers to all floor and window coverings, air lines, power
panels, electrical distribution, security and fire protection systems,
communication systems, lighting fixtures, HVAC equipment, plumbing, and fencing
in or on the Premises. The term "Trade Fixtures" shall mean Lessee's machinery
and equipment that can be removed without doing material damage to the Premises.
The term "Alterations" shall mean any modification of the improvements, other
than Lessee Improvements, Utility Installations or Trade Fixtures, whether by
addition or deletion. "Lessee Owned Alterations and/or Utility Installations"
are defined as Alterations and/or Utility Installations made by Lessee that are
not yet owned by Lessor pursuant to Paragraph 7.5(a) (Ownership). Lessee shall
not make any Alterations or Utility Installations to the Premises without
Lessor's prior written consent. Lessee may, however, make non-structural Utility
Installations to the interior of the Premises (excluding the roof) without such
consent but upon notice to Lessor, as long as they are not visible from the
outside, do not involve puncturing, relocating or removing the roof or any
existing walls, and the cumulative cost thereof during this Lease as extended
does not exceed $50,000 in the aggregate or $10,000 in any one year.
(b) Consent. Any Alterations or Utility Installations that Lessee
shall desire to make and which require the consent of the Lessor shall be
presented to Lessor in written form with detailed plans. Consent shall be deemed
conditioned upon Lessee's: (i) acquiring all applicable governmental permits,
(ii) furnishing Lessor with copies of both the permits and the plans and
specifications prior to commencement of the work, and (iii) compliance with all
conditions of said permits and other Applicable Requirements in a prompt and
expeditious manner. Any Alterations or Utility Installations shall be performed
in a workmanlike manner with good and sufficient materials. Lessee shall
promptly upon completion furnish Lessor with as-built plans and specifications.
For work which costs an amount equal to the greater of one month's Base Rent, or
$10,000, Lessor may condition its consent upon Lessee providing a lien and
completion bond in an amount equal to one and one-half times the estimated cost
of such Alteration or Utility Installation and/or upon Lessee's posting an
additional Security Deposit with Lessor.
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(c) Indemnification. Lessee shall pay, when due, all claims for
labor or materials furnished or alleged to have been furnished to or for Lessee
at or for use on the Premises, which claims are or may be secured by any
mechanic's or materialmen's lien against the Premises or any interest therein.
Lessee shall give Lessor not less than ten (10) days' notice prior to the
commencement of any work in, on or about the Premises, and Lessor shall have the
right to post notices of non-responsibility. If Lessee shall contest the
validity of any such lien, claim or demand, then Lessee shall, at its sole
expense defend and protect itself, Lessor and the Premises against the same and
shall pay and satisfy any such adverse judgment that may be rendered thereon
before the enforcement thereof. If Lessor shall require, Lessee shall furnish a
surety bond in an amount equal to one and one-half times the amount of such
contested lien, claim or demand, indemnifying Lessor against liability for the
same. If Lessor elects to participate in any such action, Lessee shall pay
Lessor's attorneys' fees and costs.
7.5 Ownership; Removal; Surrender; and Restoration.
(a) Ownership. Subject to Lessor's right to require removal or
elect ownership as hereinafter provided, all Alterations and Utility
Installations made by Lessee shall be the property of Lessee, but considered a
part of the Premises. Lessor may, at any time, elect in writing to be the owner
of all or any specified part of the Lessee Owned Alterations and Utility
Installations. Unless otherwise instructed per Paragraph 7.5(b) (Removal)
hereof, all Improvements and Lessee Owned Alterations and Utility Installations
shall, at the expiration or termination of this Lease, become the property of
Lessor and be surrendered by Lessee with the Premises.
(b) Removal. By delivery to Lessee of written notice from Lessor
not earlier than ninety (90) and not later than thirty (30) days prior to the
end of the term of this Lease, Lessor may require that any or all Improvements,
Alterations or Utility Installations for which Lessee did not obtain Lessor's
required consent be removed by the expiration or termination of this Lease.
(c) Surrender/Restoration. Lessee shall surrender the Premises by
the Expiration Date or any earlier termination date, with all of the
improvements, parts and surfaces thereof broom clean and free of debris, and in
good operating order, condition and state of repair, ordinary wear and tear
excepted. "Ordinary wear and tear" shall not include any damage or deterioration
that would have been prevented by good maintenance practice. Lessee shall repair
any damage occasioned by the installation, maintenance or removal of Trade
Fixtures, Lessee Owned Alterations and/or Utility Installations, furnishings,
and equipment as well as the removal of any storage tank installed by or for
Lessee, and the removal, replacement, or remediation of any soil, material or
groundwater contaminated by Lessee. Trade Fixtures shall remain the property of
Lessee and shall be removed by Lessee. The failure by Lessee to timely vacate
the Premises pursuant to this Paragraph 7.5(c) without the express written
consent of Lessor shall constitute a holdover under the provisions of Paragraph
26 below.
8. INSURANCE; INDEMNITY.
8.1 Payment For Insurance. Lessee shall pay for all insurance required
under Paragraph 8 except to the extent of the cost attributable to liability
insurance carried by Lessor under Paragraph 8.2(b) (Liability Insurance --
Carried by Lessor) in excess of
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$2,000,000 per occurrence. Premiums for policy periods commencing prior to or
extending beyond the Lease term shall be prorated to correspond to the Lease
term. Payment shall be made by Lessee to Lessor within ten (10) days following
receipt of an invoice.
8.2 Liability Insurance.
(a) Carried by Lessee. Lessee shall obtain and keep in force a
Commercial General Liability Policy of Insurance protecting Lessee and Lessor
against claims for bodily injury, personal injury and property damage based upon
or arising out of the ownership, use, occupancy or maintenance of the Premises
and all areas appurtenant thereto. Such insurance shall be on an occurrence
basis providing single limit coverage in an amount not less than $2,000,000 per
occurrence with an "Additional Insured-Managers or Lessors of Premises
Endorsement" and contain the "Amendment of the Pollution Exclusion Endorsement"
for damage caused by heat, smoke or fumes from a hostile fire. The Policy shall
not contain any intra-insured exclusions as between insured persons or
organizations, but shall include coverage for liability assumed under this Lease
as an `insured contract' for the performance of Lessee's indemnity obligations
under this Lease. The limits of said insurance shall not, however, limit the
liability of Lessee nor relieve Lessee of any obligation hereunder. All
insurance carried by Lessee shall be primary to and not contributory with any
similar insurance carried by Lessor, whose insurance shall be considered excess
insurance only.
(b) Carried by Lessor. Lessor shall maintain liability insurance
as described in Paragraph 8.2(a) (Liability Insurance -- Carried by Lessee), in
addition to, and not in lieu of, the insurance required to be maintained by
Lessee. Lessee shall not be named as an additional insured therein.
8.3 Property Insurance - Building, Improvements and Rental Value.
(a) Building and Improvements. The Insuring Party shall obtain
and keep in force a policy or policies in the name of Lessor, with loss payable
to Lessor, any ground lessor, and to any Lender(s) insuring loss or damage to
the Premises. The amount of such insurance shall be equal to the full
replacement cost of the Premises, as the same shall exist from time to time, or
the amount required by any Lenders. Such policy or policies shall insure against
all risks of direct physical loss or damage (except the perils of flood and/or
earthquake unless required by a Lender), including coverage for debris removal
and the enforcement of any Applicable Requirements requiring the upgrading,
demolition, reconstruction or replacement of any portion of the Premises as the
result of a covered loss. Said policy or policies shall also contain an agreed
valuation provision in lieu of any coinsurance clause, waiver of subrogation,
and inflation guard protection causing an increase in the annual property
insurance coverage amount by a factor of not less than the adjusted U.S.
Department of Labor Consumer Price Index for All Urban Consumers for the city
nearest to where the Premises are located. If such insurance coverage has a
deductible clause, the deductible amount shall not exceed $1,000 per occurrence,
and Lessee shall be liable for such deductible amount in the event of an Insured
Loss.
(b) Rental Value. The Insuring Party shall obtain and keep in
force a policy or policies in the name of Lessor with loss payable to Lessor and
any Lender, insuring the loss of the full Rent for one (1) year. Said insurance
shall provide that in the event the Lease is terminated by reason of an insured
loss, the period of indemnity for such coverage
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shall be extended beyond the date of the completion of repairs or replacement of
the Premises, to provide for one full years loss of Rent from the date of any
such loss. Said insurance shall contain an agreed valuation provision in lieu of
any coinsurance clause, and the amount of coverage shall be adjusted annually to
reflect the projected Rent otherwise payable by Lessee, for the next twelve (12)
month period. Lessee shall be liable for any deductible amount in the event of
such loss.
(c) Adjacent Premises. If the Premises are part of a larger
building, or of a group of buildings owned by Lessor which are adjacent to the
Premises, the Lessee shall pay for any increase in the premiums for the property
insurance of such building or buildings if said increase is caused by Lessee's
acts, omissions, use or occupancy of the Premises.
8.4 Lessee's Property/Business Interruption Insurance.
(a) Property Damage. Lessee shall obtain and maintain insurance
coverage on all of Lessee's personal property, Trade Fixtures, and Lessee Owned
Alterations and Utility Installations. Such insurance shall be full replacement
cost coverage with a deductible not to exceed $1,000 per occurrence. The
proceeds from any such insurance shall be used by Lessee for the replacement of
personal property, Trade Fixtures and Lessee Owned Alterations and Utility
Installations. Lessee shall provide Lessor with written evidence that such
insurance is in force.
(b) Business Interruption. Lessee shall obtain and maintain loss
of income and extra expense insurance in amounts as will reimburse Lessee for
direct or indirect loss of earnings attributable to all perils commonly insured
against by prudent lessees in the business of Lessee or attributable to
prevention of access to the Premises as a result of such perils.
(c) No Representation of Adequate Coverage. Lessor makes no
representation that the limits or forms of coverage of insurance specified
herein are adequate to cover Lessee's property, business operations or
obligations under this Lease.
8.5 Earthquake and Flood Insurance. Notwithstanding anything to the
contrary in Paragraph 8 (Insurance; Indemnity), Lessee shall obtain and keep in
force during the Term a policy or policies of earthquake and flood insurance for
the full replacement cost of the Premises, with a deductible of no more than 10%
of the total insurable values of the Buildings at risk at the time of loss, per
building, per occurrence of an earthquake or flood.
8.6 Insurance Policies. Insurance required herein shall be by companies
duly licensed or admitted to transact business in the state where the Premises
are located, and maintaining during the policy term a "GENERAL POLICYHOLDERS
RATING" of at least B+, VIII, as set forth in the most current issue of "BEST'S
INSURANCE GUIDE", or such other rating as may be required by a Lender. Lessee
shall not do or permit to be done anything which invalidates the required
insurance policies. Lessee shall, prior to the Commencement Date, deliver to
Lessor certified copies of policies of such insurance or certificates evidencing
the existence and amounts of the required insurance. No such policy shall be
cancelable or subject to modification except after thirty (30) days prior
written notice to Lessor. Lessee shall, at least thirty (30) days prior to the
expiration of such policies, furnish Lessor With evidence of renewals or
"INSURANCE BINDERS" evidencing renewal thereof, or Lessor may
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order such insurance and charge the cost thereof to Lessee, which amount shall
be payable by Lessee to Lessor upon demand. Such policies shall be for a term of
at least one year, or the length of the remaining term of this Lease, whichever
is less. If either Party shall fail to procure and maintain the insurance
required to be carried by it, the other Party may, but shall not be required to,
procure and maintain the same. Lessor shall be named as an additional insured
under all policies of insurance required to be carried by Lessee under the
Lease.
8.7 Waiver of Subrogation. Without affecting any other rights or
remedies, Lessee hereby releases and relieves Lessor, and waives its entire
right to recover damages against Lessor, for loss of or damage to its property
arising out of or incident to the perils required of Lessee to be insured
against herein. The effect of such release and waiver is not limited by the
amount of insurance carried or required, or by any deductibles applicable
hereto. As Lessee is the Insuring Party for all real and personal property
interests on or relating to the Premises, Lessor hereby waives its right to
recover damages against Lessee and its rights of subrogation respecting any
property owned by Lessor which may be damaged, destroyed or lost in connection
with Lessee's use of the Property, but such waiver shall be limited only to the
amount of actual insurance proceeds which are received by Lessor or which are
used to restore or replace the property so damaged, destroyed or lost.
The Parties agree to have their respective property damage
insurance carriers waive any right to subrogation that such companies may have
against Lessor or Lessee, as the case may be, to the extent claims are waived as
provided above.
8.8 Indemnity. Except for Lessor's sole gross negligence or willful
misconduct occurring on or after the Commencement Date, and except as otherwise
provided in Paragraph 6.2 (Hazardous Substances) above, Lessee shall indemnify,
protect, defend and hold harmless the Premises, Lessor and its agents, Lessor's
master or ground lessor, partners and Lenders, from and against any and all
claims, loss of rents and/or damages, liens, judgments, penalties, attorneys'
and consultants' fees, expenses and/or liabilities arising out of, involving, or
in connection with, the use and/or occupancy of the Premises by Lessee, any act
or omission of Lessee or Lessee's Representatives or Visitors (each as defined
below) in or about the Property, Lessee's performance or failure to perform the
Construction Obligations (including any design work) and the Additional
Hazardous Materials Obligations related to the Premises pursuant to Paragraph
6.2(e) (Additional Hazardous Materials Obligations), Lessees' failure to comply
with or other breach of any provision of this Lease, and any loss, injury or
damage howsoever and by whomsoever caused, to any person or property, occurring
in or about the Property during the Term. For purposes of the Lease, the agents,
employees, contractors, licensees, assignees, sublessees, transferees or
representatives of Lessee are collectively defined to be "Representatives" and
the guests, customers, invitees, or visitors of Lessee are collectively defined
to be "Visitors." If any action or proceeding is brought against Lessor by
reason of any of the foregoing matters, Lessee shall upon notice defend the same
at Lessee's expense by counsel reasonably satisfactory to Lessor and Lessor
shall cooperate with Lessee in such defense. Lessor need not have first paid any
such claim in order to be defended or indemnified.
8.9 Exemption of Lessor from Liability. Lessor shall not be liable for
injury or damage to the person or goods, wares, merchandise or other property of
Lessee, Lessee's employees, contractors, invitees, customers, or any other
person in or about the Premises, whether such damage or injury is caused by or
results from fire, steam, electricity, gas, water
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or rain, or from the breakage, leakage, obstruction or other defects of pipes,
fire sprinklers, wires, appliances, plumbing, HVAC or lighting fixtures, or from
any other cause, whether the said injury or damage results from conditions
arising upon the Premises or upon other portions of the Building of which the
Premises are a part, or from other sources or places, except as provided in
Paragraph 6.2(e) (Additional Hazardous Materials Obligations). Lessor shall not
be liable for any damages arising from any act or neglect of any other lessee of
Lessor. Notwithstanding Lessor's negligence or breach of this Lease, Lessor
shall under no circumstances be liable for injury to Lessee's business or for
any loss of income or profit therefrom or any punitive or consequential damages.
9. DAMAGE OR DESTRUCTION.
9.1 Definitions.
(a) "Premises Partial Damage" shall mean damage or destruction to
the improvements on the Premises, other than Lessee Owned Alterations and
Utility Installations, which can reasonably be repaired in six (6) months or
less from the date of the damage or destruction. Lessor shall notify Lessee in
writing within thirty (30) days from the date of the damage or destruction as to
whether or not the damage is Partial or Total.
(b) "Premises Total Destruction" shall mean damage or destruction
to the Premises, other than Lessee Owned Alterations and Utility Installations
and Trade Fixtures, which cannot reasonably be repaired in six (6) months or
less from the date of the damage or destruction. Lessor shall notify Lessee in
writing within thirty (30) days from the date of the damage or destruction as to
whether or not the damage is Partial or Total.
(c) "Insured Loss" shall mean damage or destruction to
improvements on the Premises, other than Lessee Owned Alterations and Utility
Installations and Trade Fixtures, which was caused by an event required to be
covered by the insurance described in Paragraph 8.3(a) (Building and
Improvements), irrespective of any deductible amounts or coverage limits
involved.
(d) "Replacement Cost" shall mean the cost to repair or rebuild
the improvements owned by Lessor at the time of the occurrence to their
condition existing immediately prior thereto, including demolition, debris
removal and upgrading required by the operation of Applicable Requirements, and
without deduction for depreciation.
(e) "Hazardous Substance Condition" shall mean the occurrence or
discovery of a condition involving the presence of, or a contamination by, a
Hazardous Substance as defined in Paragraph 6.2(a) (Reportable Uses Require
Consent), in, on, or under the Premises.
9.2 Partial Damage - Insured Loss. If a Premises Partial Damage that is
an Insured Loss occurs, then Lessee shall, at Lessee's expense, repair such
damage and Lessee's Trade Fixtures or Lessee Owned Alterations and Utility
Installations as soon as reasonably possible and this Lease shall continue in
full force and effect. Notwithstanding the foregoing, if the required insurance
was not in force or the insurance proceeds are not sufficient to effect such
repair, Lessee shall promptly contribute the shortage in proceeds (including as
to the deductible) as and when required to complete said repairs. Lessee shall
not be entitled to reimbursement of any funds contributed by Lessee to repair
any such
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damage or destruction. Premises Partial Damage due to flood or earthquake shall
be subject to Paragraph 9.3 (Partial Damage - Uninsured Loss), notwithstanding
that there may be some insurance coverage, but the net proceeds of any such
insurance shall be made available for the repairs if made by either Party.
9.3 Partial Damage - Uninsured Loss. If a Premises Partial Damage that
is not an Insured Loss occurs, unless caused by a negligent or willful act of
Lessee (in which event Lessee shall make the repairs at Lessee's expense),
Lessor may terminate this Lease by giving written notice to Lessee within thirty
(30) days after receipt by Lessor of knowledge of the occurrence of such damage.
Such termination shall be effective sixty (60) days following the date of such
notice. In the event Lessor elects to terminate this Lease, Lessee shall have
the right within ten (10) days after receipt of the termination notice to give
written notice to Lessor of Lessee's commitment to pay for and undertake the
repair of such damage without reimbursement from Lessor. Lessee shall provide
Lessor with reasonable evidence of the availability of said funds or
satisfactory assurance thereof within thirty (30) days after making such
commitment. In such event this Lease shall continue in full force and effect,
and Lessee shall proceed to make such repairs as soon as reasonably possible
after the required funds are available. If Lessee does not make the required
commitment, this Lease shall terminate as of the date specified in the
termination notice.
9.4 Total Destruction. Notwithstanding any other provision hereof, if a
Premises Total Destruction occurs, this Lease shall terminate sixty (60) days
following such Destruction. If the damage or destruction was caused by the gross
negligence or willful misconduct of Lessee, Lessor shall have the right to
recover Lessor's damages from Lessee, except as provided in Paragraph 8.6
(Insurance Policies).
9.5 Damage Near End of Term. If at any time during the last six (6)
months of this Lease there is damage for which the cost to repair exceeds one
(1) month's Base Rent, whether or not an Insured Loss, Lessor may terminate this
Lease effective sixty (60) days following the date of occurrence of such damage
by giving a written termination notice to Lessee within thirty (30) days after
the date of occurrence of such damage. Notwithstanding the foregoing, if Lessee
at that time has an exercisable option to extend this Lease or to purchase the
Premises, then Lessee may preserve this Lease by, (a) exercising such option and
(b) undertaking and completing all needed repairs on or before the earlier of
(i) the date which is ten days after Lessee's receipt of Lessor's written notice
purporting to terminate this Lease, or (ii) the day prior to the date upon which
such option expires. If Lessee duly exercises such option during such period and
repairs such damage as soon as reasonably possible, this Lease shall continue in
full force and effect. If Lessee fails to exercise such option and commences
such repair during such period, then this Lease shall terminate on the date
specified in the termination notice and Lessee's option shall be extinguished.
9.6 Abatement of Rent; Lessee's Remedies.
(a) Abatement. In the event of Premises Partial Damage or
Premises Total Destruction or a Hazardous Substance Condition, Lessee shall
continue to pay all of the Base Rent and perform all other obligations of Lessee
hereunder, and Lessor shall have no liability for any such damage, destruction,
remediation, repair, or restoration.
9.7 Termination - Advance Payments. Upon termination of this Lease
pursuant to Paragraph 9 (Damage or Destruction), an equitable adjustment shall
be made concerning
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advance Base Rent and any other advance payments made by Lessee to Lessor.
Lessor shall, in addition, return to Lessee so much of Lessee's Security Deposit
as has not been, or is not then required to be, used by Lessor.
9.8 Waive Statutes. Lessor and Lessee agree that the terms of this Lease
shall govern the effect of any damage to or destruction of the Premises with
respect to the termination of this Lease and hereby waive the provisions of any
present or future statute to the extent inconsistent herewith.
10. TAXES.
10.1 Definition of "Taxes." For purposes of this Lease, "Taxes" shall
mean all federal, state and local government taxes, assessments and charges
(including transit or transit district taxes or assessments) of any kind or
nature, whether general, special, ordinary or extraordinary, which Lessor or its
agents shall pay or become obligated to pay because of, in connection with or
allocable to the ownership, leasing, management, equipment, systems and
apparatus located therein or used in connection with the Premises for any
calendar year wholly or partly within the Term. There shall be included in Taxes
for any calendar year the amount of all fees, costs and expenses (including
consultants', appraisers' and attorney's fees) paid by Lessor during such
calendar year in seeking or obtaining any reduction of Taxes to the extent of
any such reduction. Lessor and Lessee agree to cooperate with respect to any
contest or appeal of such Taxes. Taxes shall not include any federal or state
franchise, capital stock, inheritance, income or estate taxes, provided,
however, that if at any time during the Term, the methods of taxation prevailing
at the date hereof shall be altered so that in lieu of, or in addition to, or as
a substitute for, the whole or any part of the taxes levied, assessed or imposed
on all or any part of the Premises there shall be levied, assessed or imposed
(i) a tax, assessment, levy, imposition or charge based on the rents received
therefrom, whether or not wholly or partially as a capital levy or otherwise, or
(ii) a tax or license fee which is otherwise measured by or based in whole or in
part upon the Premises, or (iii) any other similar tax, levy, imposition, charge
or license fee however described or imposed, then the same shall be included as
Taxes hereunder, as though the Premises was the only property of Lessor subject
to such tax.
10.2
(a) Payment of Taxes. Lessee shall pay the Taxes applicable to
the Premises during the term of this Lease. Subject to Paragraph 10.2(b), all
such payments shall be made at least ten (10) days prior to any delinquency
date. Lessee shall promptly furnish Lessor with satisfactory evidence that such
taxes have been paid. If any such taxes shall cover any period of time prior to
or after the expiration or termination of this Lease, Lessee's share of such
taxes shall be prorated to cover only that portion of the tax bill applicable to
the period that this Lease is in effect, and Lessor shall reimburse Lessee for
any overpayment. If Lessee shall fail to pay any required Taxes, Lessor shall
have the right to pay the same, and Lessee shall reimburse Lessor therefor upon
demand.
(b) Advance Payment. In the event Lessee incurs a late charge on
any Rent payment, Lessor may, at Lessor's option, estimate the current Taxes,
and require that such taxes be paid in advance to Lessor by Lessee, either: (i)
in a lump sum amount equal to the installment due, at least twenty (20) days
prior to the applicable delinquency date, or (ii) monthly in advance with the
payment of the Base Rent. If Lessor elects to require payment
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monthly in advance, the monthly payment shall be an amount equal to the amount
of the estimated installment of taxes divided by the number of months remaining
before the month in which said installment becomes delinquent. When the actual
amount of the applicable tax bill is known, the amount of such equal monthly
advance payments shall be adjusted as required to provide the funds needed to
pay the applicable taxes. If the amount collected by Lessor is insufficient to
pay such Taxes when due, Lessee shall pay Lessor, upon demand, such additional
sums as are necessary to pay such obligations. All monies paid to Lessor under
this Paragraph may be intermingled with other monies of Lessor and shall not
bear interest. In the event of a Breach by Lessee in the performance of its
obligations under this Lease, then any balance of funds paid to Lessor under the
provisions of this Paragraph may, at the option of Lessor, be treated as an
additional Security Deposit.
10.3 Joint Assessment. If the Premises are not separately assessed,
Lessee's liability shall be an equitable proportion of the real property taxes
for all of the land and improvements included within the tax parcel assessed,
such proportion to be conclusively determined by Lessor from the respective
valuations assigned in the assessor's work sheets or such other information as
may be reasonably available.
10.4 Personal Property Taxes. Lessee shall pay, prior to delinquency,
all taxes assessed against and levied upon Lessee Owned Alterations, Utility
Installations, Trade Fixtures, furnishings, equipment and all personal property
of Lessee. When possible, Lessee shall cause such property to be assessed and
billed separately from the real property of Lessor. If any of Lessee's said
personal property shall be assessed with Lessor's real property, Lessee shall
pay Lessor the taxes attributable to Lessee's property within ten (10) days
after receipt of a written statement.
11. UTILITIES. Lessee shall pay for all water, gas, heat, light, power,
telephone, trash disposal and other utilities and services supplied to the
Premises, together with any taxes thereon. If any such services are not
separately metered to Lessee, Lessee shall pay a reasonable proportion, to be
determined by Lessor, of all charges jointly metered.
12. ASSIGNMENT AND SUBLETTING.
12.1 Lessor's Consent Required.
(a) Lessee shall not voluntarily or by operation of law assign,
transfer, mortgage or encumber (collectively, "Assign or Assignment") or sublet
all or any part of Lessee's interest in this Lease or in the Premises without
Lessor's prior written consent.
(b) A change in the control of Lessee shall constitute an
assignment requiring consent. The transfer, on a cumulative basis, of
twenty-five percent (25%) or more of the voting control of Lessee shall
constitute a change in control for this purpose ("Change in Control").
(c) The involvement of Lessee or its assets in any transaction,
or series of transactions (by way of merger, sale, acquisition, financing,
transfer, leveraged buy-out or otherwise), whether or not a formal assignment or
hypothecation of this Lease or Lessee's assets occurs, which results or will
result in a reduction of the Net Worth of Lessee (as defined below) by an amount
greater than twenty-five percent (25%) of such Net Worth as it was represented
at the time of the execution of this Lease or at the time of the most recent
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assignment to which Lessor has consented, or as it exists immediately prior to
said transaction or transactions constituting such reduction, whichever was or
is greater, shall be considered an assignment of this Lease to which Lessor may
withhold its consent. "Net Worth of Lessee" shall mean the net worth of Lessee
(excluding any guarantors) established under generally accepted accounting
principles.
(d) An assignment or subletting without consent shall, at
Lessor's option, be a Default curable after notice per Paragraph 13.1(c)
(Default; Breach), or a noncurable Breach without the necessity of any notice
and grace period. If Lessor elects to treat such unapproved assignment or
subletting as a noncurable Breach, Lessor may either: (i) terminate this Lease,
or (ii) upon thirty (30) days written notice, increase the monthly Base Rent to
one hundred ten percent (110%) of the Base Rent then in effect. Further, in the
event of such Breach and rental adjustment, (1) the purchase price of any option
to purchase the Premises held by Lessee shall be subject to similar adjustment
to one hundred ten percent (110%) of the price previously in effect, and (ii)
all fixed and non-fixed rental adjustments scheduled during the remainder of the
Lease term shall be increased to One Hundred Ten Percent (110%) of the scheduled
adjusted rent.
(e) Lessee's remedy for any breach of Paragraph 12.1 (Lessor's
Consent Required) by Lessor shall be limited to injunctive relief.
12.2 Terms and Conditions Applicable to Assignment and Subletting.
(a) Regardless of Lessor's consent, any assignment or subletting
shall not: (i) be effective without the express written assumption by such
assignee or sublessee of the obligations of Lessee under this Lease; (ii)
release Lessee of any obligations hereunder; or (iii) alter the primary
liability of Lessee for the payment of Rent or for the performance of any other
obligations to be performed by Lessee.
(b) Lessor may accept Rent or performance of Lessee's obligations
from any person other than Lessee pending approval or disapproval of an
assignment. Neither a delay in the approval or disapproval of such assignment
nor the acceptance of Rent or performance shall constitute a waiver or estoppel
of Lessor's right to exercise its remedies for Lessee's Default or Breach.
(c) Lessor's consent to any assignment or subletting shall not
constitute a consent to any subsequent assignment or subletting.
(d) In the event of any Default or Breach by Lessee, Lessor may
proceed directly against Lessee, any Guarantors or anyone else responsible for
the performance of Lessee's obligations under this Lease, including any assignee
or sublessee, without first exhausting Lessor's remedies against any other
person or entity responsible therefore to Lessor, or any security held by
Lessor.
(e) Each request for consent to an assignment or subletting,
whether or not in Lessee's opinion Lessor's consent is required, shall be in
writing, accompanied by information relevant to Lessor's determination as to the
financial and operational responsibility and appropriateness of the proposed
assignee or sublessee, including but not limited to the intended use and/or
required modification of the Premises, if any, together with a fee of $1,000 or
ten percent (10%) of the current monthly Base Rent applicable to the
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portion of the Premises which is the subject of the proposed assignment or
sublease, whichever is greater, as consideration for Lessor's considering and
processing said request. Lessee agrees to provide Lessor with such other or
additional information and/or documentation as may be reasonably requested.
(f) Any assignee of, or sublessee under, this Lease shall, by
reason of accepting such assignment or entering into such sublease, be deemed to
have assumed and agreed to conform and comply with each and every term,
covenant, condition and obligation herein to be observed or performed by Lessee
during the term of said assignment or sublease, other than such obligations as
are contrary to or inconsistent with provisions of an assignment or sublease to
which Lessor has specifically consented to in writing.
12.3 Transfer to An Affiliate. Notwithstanding anything to the contrary
in this Paragraph 12, Lessee may transfer or assign its interest in the Lease or
sublet the Premises or any portion thereof, without Lessor's consent, to any
corporation or other entity which controls more than seventy-five percent (75%)
of the voting control of Lessee, to any corporation or entity in which Lessee
controls seventy-five percent (75%) or more of such corporation's or entity's
voting control, or to any corporation or entity that is under common control
with Lessee (collectively, an "Affiliate"), provided that Lessee submits all of
the information and documentation specified in Paragraph 12 (Assignment and
Subletting) of this Lease, the transfer or assignment complies with the
conditions set forth in Paragraph 12.2 (Terms and Conditions of Assignment and
Subletting), and the Affiliate assumes in writing all of Lessee's obligations
under this Lease, particularly all of Lessee's obligations delineated in
Paragraph 6.2 (Hazardous Substances) of this Lease.
12.4 Additional Terms and Conditions Applicable to Subletting. The
following terms and conditions shall apply to any subletting by Lessee of all or
any part of the Premises and shall be deemed included in all subleases under
this Lease whether or not expressly incorporated therein:
(a) Lessee hereby assigns and transfers to Lessor all of Lessee's
interest in all Rent payable on any sublease, and Lessor may collect such Rent
and apply same toward Lessee's obligations under this Lease; provided, however,
that until a Breach shall occur in the performance of Lessee's obligations,
Lessee may collect said Rent. Lessor shall not, by reason of the foregoing or
any assignment of such sublease, nor by reason of the collection of Rent, be
deemed liable to the sublessee for any failure of Lessee to perform and comply
with any of Lessee's obligations to such sublessee. Lessee hereby irrevocably
authorizes and directs any such sublessee, upon receipt of a written notice from
Lessor stating that a Breach exists in the performance of Lessee's obligations
under this Lease, to pay to Lessor all Rent due and to become due under the
sublease. Sublessee shall rely upon any such notice from Lessor and shall pay
all Rents to Lessor without any obligation or right to inquire as to whether
such Breach exists, notwithstanding any claim from Lessee to the contrary.
(b) In the event of a Breach by Lessee, Lessor may, at its
option, require sublessee to attorn to Lessor, in which event Lessor shall
undertake the obligations of the sublessor under such sublease from the time of
the exercise of said option to the expiration of such sublease; provided,
however, Lessor shall not be liable for any prepaid rents or security deposit
paid by such sublessee to such sublessor or for any prior Defaults or Breaches
of such sublessor.
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(c) Any matter requiring the consent of the sublessor under a
sublease shall also require the consent of Lessor.
(d) No sublessee shall further assign or sublet all or any part
of the Premises without Lessor's prior written consent.
(e) Lessor shall deliver a copy of any notice of Default or
Breach by Lessee to the sublessee, who shall have the right to cure the Default
of Lessee within the grace period, if any, specified in such notice. The
sublessee shall have a right of reimbursement and offset from and against Lessee
for any such Defaults cured by the sublessee.
13. DEFAULT; BREACH; REMEDIES.
13.1 Default; Breach. A "Default" is defined as a failure by the Lessee
to comply with or perform any of the terms, covenants, conditions or rules under
this Lease. A "Breach" is defined as the occurrence of one or more of the
following Defaults, and the failure of Lessee to cure such Default within any
applicable grace period:
(a) The abandonment of the Premises; or the vacating of the
Premises without providing a commercially reasonable level of security, or where
the coverage of the property insurance described in Paragraph 8.3 (Property
Insurance) is jeopardized as a result thereof, or without providing reasonable
assurances to minimize potential vandalism.
(b) The failure of Lessee to make any payment of Rent or any
Security Deposit required to be made by Lessee hereunder, whether to Lessor or
to a third party, when due, to provide reasonable evidence of insurance or
surety bond, or to fulfill any obligation under this Lease which endangers or
threatens life or property, where such failure continues for a period of three
(3) business days following written notice to Lessee.
(c) The failure by Lessee to provide (i) reasonable written
evidence of compliance with Applicable Requirements, (ii) the service contracts,
(iii) the rescission of an unauthorized assignment or subletting, (iv) a Tenancy
Statement, (v) a requested subordination, (vi) evidence concerning any guaranty
and/or Guarantor, (vii) any document requested under Paragraph 42
(Reservations), or (viii) any other documentation or information which Lessor
may reasonably require of Lessee under the terms of this Lease, where any such
failure continues for a period of ten (10) days following written notice to
Lessee.
(d) A Default by Lessee as to the terms, covenants, conditions or
provisions of this Lease, or of the rules adopted under Paragraph 42
(Reservations) hereof, other than those described in subparagraphs 13.1(a), (b)
or (c), above, where such Default continues for a period of thirty (30) days
after written notice; provided, however, that if the nature of Lessee's Default
is such that more than thirty (30) days are reasonably required for its cure,
then it shall not be deemed to be a Breach if Lessee commences such cure within
said thirty (30) day period and thereafter diligently prosecutes such cure to
completion.
(e) The occurrence of any of the following events: (1) the making
of any general arrangement or assignment for the benefit of creditors; (ii)
becoming a "DEBTOR" as defined in 11 U.S.C. Section 101 or any successor statute
thereto (unless, in the case of a petition
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filed against Lessee, the same is dismissed within sixty (60) days); (iii) the
appointment of a trustee or receiver to take possession of substantially all of
Lessee's assets located at the Premises or of Lessee's interest in this Lease,
where possession is not restored to Lessee within thirty (30) days; or (iv) the
attachment, execution or other judicial seizure of substantially all of Lessee's
assets located at the Premises or of Lessee's interest in this Lease, where such
seizure is not discharged within thirty (30) days; provided, however, in the
event that any provision of this subparagraph 13.1 (e) is contrary to any
applicable law, such provision shall be of no force or effect, and not affect
the validity of the remaining provisions.
(f) The discovery that any financial statement of Lessee or of
any Guarantor given to Lessor was materially false.
(g) If the performance of Lessee's obligations under this Lease
is guaranteed: (1) the failure or refusal by Guarantor, upon request to provide
(a) evidence of the execution of the Guaranty, including the authority of the
party signing on Guarantor's behalf to obligate Guarantor, and in the case of a
corporate Guarantor, a certified copy of a resolution of its board of directors
authorizing the making of such Guaranty, (b) current financial statements, (c) a
Tenancy Statement, or (d) written confirmation that the Guaranty is still in
effect; (2) failure of the Guarantor, within sixty (60) days after the
commencement of any proceedings against Guarantor seeking relief under any state
or federal bankruptcy or other statute, law or regulation affecting creditor's
rights, to have such proceedings dismissed, or failure of the Guarantor, within
sixty (60) days after an appointment, without Guarantor's consent or
acquiescence, of any trustee, receiver or liquidator for Guarantor or for all or
any substantial part of Guarantor's assets, to have such appointment vacated;
(3) termination of Guarantor's liability with respect to this Lease other than
in accordance with the terms of such Guaranty; (4) repudiation by the Guarantor
or failure of the Guarantor to perform as required thereunder; (5) the attempt
by the Guarantor to transfer the Guarantor's rights and obligations under the
Guaranty in violation of the terms thereof; (6) death of the Guarantor; (7)
breach by the Guarantor of the Guaranty obligations on an anticipatory basis,
and Lessee's failure, within sixty (60) days following written notice of any
such event, to provide written alternative assurance or security, which, when
coupled with the then existing resources of Lessee, equals or exceeds the
combined financial resources of Lessee and the Guarantor that existed at the
time of execution of this Lease; or (8) Lessee's failure to provide Lessor with
a Substitute Guaranty (as defined in Paragraph 37.3 (Guarantor -- Transfer)) for
the original Guaranty that is acceptable to Lessor in the event of a change in
control of the Guarantor within ten (10) business days of such event.
13.2 Remedies. If Lessee fails to perform any of its affirmative duties
or obligations, within ten (10) days after written notice (or in case of an
emergency, without notice), Lessor may, at its option, perform such duty or
obligation on Lessee's behalf, including but not limited to the obtaining of
reasonably required bonds, insurance policies, or governmental licenses, permits
or approvals. The costs and expenses of any such performance by Lessor shall be
due and payable by Lessee upon receipt of invoice therefor. If any check given
to Lessor by Lessee shall not be honored by the bank upon which it is drawn,
Lessor, at its option, may require all future payments to be made by Lessee to
be by cashiers check. In the event of a Breach, Lessor may, with or without
further notice or demand, and without limiting Lessor in the exercise of any
right or remedy which Lessor may have by reason of such Breach:
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(a) Terminate Lessee's right to possession of the Premises by any
lawful means, in which case this Lease shall terminate and Lessee shall
immediately surrender possession to Lessor. In such event Lessor shall be
entitled to recover from Lessee: (i) the unpaid Rent 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 which would have been earned after termination until the
time of award exceeds the amount of such rental loss that the Lessee proves
could have been reasonably avoided; (iii) the worth at the time of award of the
amount by which the unpaid rent for the balance of the term after the time of
award exceeds the amount of such rental loss that the Lessee proves could be
reasonably avoided; and (iv) any other amount necessary to compensate Lessor for
all the detriment proximately caused by the Lessee's failure to perform its
obligations under this Lease or which in the ordinary course of things would be
likely to result therefrom, including but not limited to the cost of recovering
possession of the Premises, expenses of reletting, including necessary
renovation and alteration of the Premises, reasonable attorneys' fees, and that
portion of any leasing commission paid by Lessor in connection with this Lease
applicable to the unexpired term of this Lease. The worth at the time of award
of the amount referred to in provision (iii) of the immediately preceding
sentence shall be computed by discounting such amount at the discount rate of
the Federal Reserve Bank of the District within which the Premises are located
at the time of award plus one percent (1%). Efforts by Lessor to mitigate
damages caused by Lessee's Breach of this Lease shall not waive Lessor's right
to recover damages under Paragraph 12 (Assignment and Subletting). If
termination of this Lease is obtained through the provisional remedy of unlawful
detainer, Lessor shall have the right to recover in such proceeding any unpaid
Rent and damages as are recoverable therein, or Lessor may reserve the right to
recover all or any part thereof in a separate suit. If a notice and grace period
required under Paragraph 13.1 (Default; Breach) was not previously given, a
notice to pay rent or quit, or to perform or quit given to Lessee under the
unlawful detainer statute shall also constitute the notice required by Paragraph
13.1. In such case, the applicable grace period required by Paragraph 13.1 and
the unlawful detainer statute shall run concurrently, and the failure of Lessee
to cure the Default within the greater of the two such grace periods shall
constitute both an unlawful detainer and a Breach of this Lease entitling Lessor
to the remedies provided for in this Lease and/or by said statute.
(b) Continue the Lease and Lessee's right to possession and
recover the Rent as it becomes due, in which event Lessee may sublet or assign,
subject only to reasonable limitations. Acts of maintenance, efforts to relet,
and/or the appointment of a receiver to protect the Lessor's interests, shall
not constitute a termination of the Lessee's right to possession.
(c) Pursue any other remedy now or hereafter available under the
laws or judicial decisions of the state wherein the Premises are located.
The expiration or termination of this Lease and/or the termination of Lessee's
right to possession shall not relieve Lessee from liability under any indemnity
provisions of this Lease as to matters occurring or accruing during the term
hereof or by reason of Lessee's occupancy of the Premises.
13.3 Inducement Recapture. Any agreement for free or abated rent or
other charges, or for the giving or paying by Lessor to or for Lessee of any
cash or other bonus, inducement or consideration for Lessee's entering into this
Lease, all of which concessions are hereinafter referred to as "inducement
provisions," shall be deemed conditioned upon
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Lessee's full and faithful performance of all of the terms, covenants and
conditions of this Lease. Upon Breach of this Lease by Lessee, any such
Inducement Provision shall automatically be deemed deleted from this Lease and
of no further force or effect, and any rent, other charge, bonus, inducement or
consideration theretofore abated, given or paid by Lessor under such an
Inducement Provision shall be immediately due and payable by Lessee to Lessor,
notwithstanding any subsequent cure of said Breach by Lessee. The acceptance by
Lessor of Rent or the cure of the Breach which initiated the operation of this
paragraph shall not be deemed a waiver by Lessor of the provisions of this
paragraph unless specifically so stated in writing by Lessor at the time of such
acceptance.
13.4 Late Charges. Lessee hereby acknowledges that late payment by
Lessee of Rent will cause Lessor to incur costs not contemplated by this Lease,
the exact amount of which will be extremely difficult to ascertain. Such costs
include, but are not limited to, processing and accounting charges, and late
charges which may be imposed upon Lessor by any Lender. Accordingly, if any Rent
shall not be received by Lessor within five (5) days after such amount shall be
due, then, without any requirement for notice to Lessee, Lessee shall pay to
Lessor a one-time late charge equal to ten percent (10%) of each such overdue
amount. The Parties hereby agree that such late charge represents a fair and
reasonable estimate of the costs Lessor will incur by reason of such late
payment. Acceptance of such late charge by Lessor shall in no event constitute a
waiver of Lessee's Default or Breach with respect to such overdue amount, nor
prevent the exercise of any of the other rights and remedies granted hereunder.
In the event that a late charge is payable hereunder, whether or not collected,
for three (3) consecutive installments of Base Rent, then notwithstanding any
provision of this Lease to the contrary, Base Rent shall, at Lessor's option,
become due and payable quarterly in advance.
13.5 Interest. Any monetary payment due Lessor hereunder, other than
late charges, not received by Lessor, when due as to scheduled payments (such as
Base Rent) or within thirty (30) days following the date on which it was due for
non-scheduled payment, shall bear interest from the date when due, as to
scheduled payments, or the thirty-first (31st) day after it was due as to
non-scheduled payments. The interest ("INTEREST") charged shall be equal to the
prime rate reported in the Wall Street Journal as published closest prior to the
date when due plus four percent (4%), but shall not exceed the maximum rate
allowed by law. Interest is payable in addition to the potential late charge
provided for in Paragraph 13.4 (Late Charges).
13.6 Breach by Lessor. Lessor shall not be deemed in breach of this
Lease unless Lessor, or Lessor's Lender, fails within a reasonable time to
perform an obligation required to be performed by Lessor. For purposes of this
Paragraph, a reasonable time shall in no event be less than thirty (30) days
after receipt by Lessor, and any Lender whose name and address shall have been
furnished Lessee in writing for such purpose, of written notice specifying
wherein such obligation of Lessor has not been performed; provided, however,
that if the nature of Lessor's obligation is such that more than thirty (30)
days are reasonably required for its performance, then Lessor shall not be in
breach if performance is commenced within such thirty (30) day period and
thereafter diligently pursued to completion.
14. CONDEMNATION. If the Premises or any portion thereof are taken under the
power of eminent domain or sold under the threat of the exercise of said power
(collectively "Condemnation"), this Lease shall terminate as to the part taken
as of the date the
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condemning authority takes title or possession, whichever first occurs. If more
than fifty percent (50%) of any building portion of the Premises, or more than
fifty percent (50%) of the land area portion of the Premises not occupied by any
building, is taken by Condemnation, Lessee may, at Lessee's option, to be
exercised in writing within ten (10) days after Lessor shall have given Lessee
written notice of such taking (or in the absence of such notice, within ten (10)
days after the condemning authority shall have taken possession) terminate this
Lease as of the date the condemning authority takes such possession. If Lessee
does not terminate this Lease in accordance with the foregoing, this Lease shall
remain in full force and effect as to the portion of the Premises remaining,
except that the Base Rent shall be reduced in proportion to the reduction in
utility of the Premises caused by such Condemnation. Condemnation awards and/or
payments shall be the property of Lessor, whether such award shall be made as
compensation for diminution in value of the leasehold, the value of the part
taken, or for severance damages; provided, however, that Lessee shall be
entitled to any compensation for Lessee's relocation expenses, loss of business
goodwill and/or Trade Fixtures, without regard to whether or not this Lease is
terminated pursuant to the provisions of this Paragraph. All Alterations and
Utility Installations made to the Premises by Lessee, for purposes of
Condemnation only, shall be considered the property of the Lessee and Lessee
shall be entitled to any and all compensation which is payable therefor. In the
event that this Lease is not terminated by reason of the Condemnation, Lessor
shall repair any damage to the Premises caused by such Condemnation.
15. BROKERS.
15.1 Representations and Indemnities of Broker Relationships. Lessee and
Lessor each represent and warrant to the other that it has had no dealings with
any person, firm, broker or finder in connection with this Lease, and that no
one is entitled to any commission or finders fee in connection herewith. Lessee
and Lessor do each hereby agree to indemnify, protect, defend and hold the other
harmless from and against liability for compensation or charges which may be
claimed by any such unnamed broker, finder or other similar party by reason of
any dealings or actions of the indemnifying Party, including any costs,
expenses, and/or attorneys' fees reasonably incurred with respect thereto.
16. ESTOPPEL CERTIFICATES.
(a) Each Party (as "Responding Party") shall within ten (10) days after
written notice from the other Party (the "Requesting Party") execute,
acknowledge and deliver to the Requesting Party a statement in writing in form
similar to the then most current "Estoppel Certificate" form published by the
American Industrial Real Estate Association, plus such additional information,
confirmation and/or statements as may be reasonably requested by the Requesting
Party.
(b) If the Responding Party shall fail to execute or deliver the
Estoppel Certificate within such ten day period, the Requesting Party may
execute an Estoppel Certificate stating that: (i) the Lease is in full force and
effect without modification except as may be represented by the Requesting
Party, (ii) there are no uncured defaults in the Requesting Party's performance,
and (iii) if Lessor is the Requesting Party, not more than one month's Rent has
been paid in advance. Prospective purchasers and encumbrances may rely upon the
Requesting Party's Estoppel Certificate, and the Responding Party shall be
estopped from denying the truth of the facts contained in said Certificate.
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(c) If Lessor desires to finance, refinance, or sell the Premises, or
any part thereof, Lessee and all Guarantors shall deliver to any potential
lender or purchaser designated by Lessor such financial statements as may be
reasonably required by such lender or purchaser, including, but not limited to,
Lessee's financial statements for the past three (3) years. All such financial
statements shall be received by Lessor and such lender or purchaser in
confidence and shall be used only for the purposes herein set forth.
17. DEFINITION OF LESSOR. The term "Lessor" as used herein shall mean the owner
or owners at the time in question of the fee title to the Premises, or, if this
is a sublease, of the Lessee's interest in the prior lease. In the event of a
transfer of Lessor's title or interest in the Premises or this Lease, Lessor
shall deliver to the transferee or assignee (in cash or by credit) any unused
Security Deposit held by Lessor. Except as provided in Paragraph 15 (Brokers),
upon such transfer or assignment and delivery of the Security Deposit, as
aforesaid, the prior Lessor shall be relieved of all liability with respect to
the obligations and/or covenants under this Lease thereafter to be performed by
the Lessor. Subject to the foregoing, the obligations and/or covenants in this
Lease to be performed by the Lessor shall be binding only upon the Lessor as
hereinabove defined.
18. SEVERABILITY. The invalidity of any provision of this Lease, as determined
by a court of competent jurisdiction, shall in no way affect the validity of any
other provision hereof.
19. DAYS. Unless otherwise specifically indicated to the contrary, the word
"DAYS" as used in this Lease shall mean and refer to calendar days.
20. LIMITATION ON LIABILITY. Subject to the provisions of Paragraph 17
(Definition of Lessor) above, the obligations of Lessor under this Lease shall
not constitute personal obligations of Lessor, the individual partners of Lessor
or its or their individual partners, directors, officers or shareholders, and
Lessee shall look to the Premises, and to no other assets of Lessor, for the
satisfaction of any liability of Lessor with respect to the Lease, and shall not
seek recourse against the individual partners of Lessor, or its or their
individual partners, directors, officers or shareholders, or any of their
personal assets for such satisfaction.
21. TIME OF ESSENCE. Time is of the essence with respect to the performance of
all obligations to be performed or observed by the Parties under this Lease.
22. NO PRIOR OR OTHER AGREEMENTS; BROKER DISCLAIMER. Except for matters
specifically referred to in this Lease, this Lease contains all agreements
between the Parties with respect to any matter mentioned herein, and no other
prior or contemporaneous agreement or understanding shall be effective. Lessor
and Lessee each represents and warrants to the other that it has made, and is
relying solely upon, its own investigation as to the nature, quality, character
and financial responsibility of the other Party to this Lease and as to the
nature, quality and character of the Premises.
23. NOTICES.
23.1 Notice Requirements. All notices required or permitted by this
Lease shall be in writing and may be delivered in person (by hand or by courier)
or may be sent by regular, certified or registered mail or U.S. Postal Service
Express Mail, with postage
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prepaid, or by facsimile transmission, and shall be deemed sufficiently given if
served in a manner specified in this Paragraph 23. The addresses noted adjacent
to a Party's signature on this Lease shall be that Party's address for delivery
or mailing of notices. Either Party may by written notice to the other specify a
different address for notice, except that upon Lessee's taking possession of the
Premises, the Premises shall constitute Lessee's address for notice. A copy of
all notices to Lessor shall be concurrently transmitted to such party or parties
at such addresses as Lessor may from time to time hereafter designate in
writing.
23.2 Date of Notice. Any notice sent by registered or certified mail,
return receipt requested, shall be deemed given on the date of delivery shown on
the receipt card, or if no delivery date is shown, the postmark thereon. If sent
by regular mail the notice shall be deemed given forty-eight (48) hours after
the same is addressed as required herein and mailed with postage prepaid.
Notices delivered by United States Express Mail or overnight courier that
guarantee next day delivery shall be deemed given twenty-four (24) hours after
delivery of the same to the Postal Service or courier. Notices transmitted by
facsimile transmission or similar means shall be deemed delivered upon telephone
confirmation of receipt, provided a copy is also delivered via delivery or mail.
If notice is received on a Saturday, Sunday or legal holiday, it shall be deemed
received on the next business day.
24. WAIVERS. No waiver by Lessor of the Default or Breach of any term, covenant
or condition hereof by Lessee, shall be deemed a waiver of any other term,
covenant or condition hereof, or of any subsequent Default or Breach by Lessee
of the same or of any other term, covenant or Condition hereof. Lessor's consent
to, or approval of, any act shall not be deemed to render unnecessary the
obtaining of Lessor's consent to, or approval of, any subsequent, or similar act
by Lessee, or be construed as the basis of an estoppel to enforce the provision
or provisions of this Lease requiring such consent. The acceptance of Rent by
Lessor shall not be a waiver of any Default or Breach by Lessee. Any payment by
Lessee may be accepted by Lessor on account of monies or damages due Lessor,
notwithstanding any qualifying statements or conditions made by Lessee in
connection therewith, which such statements and/or conditions shall be of no
force or effect whatsoever unless specifically agreed to in writing by Lessor at
or before the time of deposit of such payment.
25. RECORDING. Either Lessor or Lessee shall, upon request of the other,
execute, acknowledge and deliver to the other a short form memorandum of this
Lease for recording purposes. The Party requesting recordation shall be
responsible for payment of any fees applicable thereto.
26. NO RIGHT TO HOLDOVER. Lessee has no right to retain possession of the
Premises or any part thereof beyond the expiration or termination of this Lease.
In the event that Lessee holds over, then the Base Rent shall be increased to
one hundred fifty percent (150%) of the Base Rent applicable during the month
immediately preceding the expiration or termination. Nothing contained herein
shall be construed as consent by Lessor to any holding over by Lessee.
27. CUMULATIVE REMEDIES. No remedy or election hereunder shall be deemed
exclusive but shall, wherever possible, be cumulative with all other remedies at
law or in equity.
28. COVENANTS AND CONDITIONS; CONSTRUCTION OF AGREEMENT.
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All provisions of this Lease to be observed or performed by Lessee are both
covenants and conditions. In construing this Lease, all headings and titles are
for the convenience of the Parties only and shall not be considered a part of
this Lease. Whenever required by the context, the singular shall include the
plural and vice versa. This Lease shall not be construed as if prepared by one
of the Parties, but rather according to its fair meaning as a whole, as if both
Parties had prepared it.
29. BINDING EFFECT; CHOICE OF LAW. This Lease shall be binding upon the parties,
their personal representatives, successors and assigns and be governed by the
laws of the State in which the Premises are located. Any litigation between the
Parties hereto concerning this Lease shall be initiated in the county in which
the Premises are located.
30 SUBORDINATION; ATTORNMENT; NON-DISTURBANCE.
30.1 Subordination. This Lease and any Option granted hereby shall be
subject and subordinate to any ground lease, mortgage, deed of trust, or other
hypothecation or security device (collectively, "Security Device"), now or
hereafter placed upon the Premises, to any and all advances made on the security
thereof, and to all renewals, modifications, and extensions thereof. Lessee
agrees that the holders of any such Security Devices (in this Lease together
referred to as "Lessor's Lender") shall have no liability or obligation to
perform any of the obligations of Lessor under this Lease. Any Lender may elect
to have this Lease and/or any Option granted hereby superior to the lien of its
Security Device by giving written notice thereof to Lessee, whereupon this Lease
and such Options shall be deemed prior to such Security Device, notwithstanding
the relative dates of the documentation or recordation thereof.
30.2 Attornment. Subject to the non-disturbance provisions of Paragraph
30.3 (Non-Disturbance), Lessee agrees to attorn to a Lender or any other party
who acquires ownership of the Premises by reason of a foreclosure of a Security
Device, and that in the event of such foreclosure, such new owner shall not: (i)
be liable for any act or omission of any prior lessor or with respect to events
occurring prior to acquisition of ownership; (ii) be subject to any offsets or
defenses which Lessee might have against any prior lessor; or (iii) be bound by
prepayment of more than one (1) month's rent.
30.3 Non-Disturbance. With respect to Security Devices entered into by
Lessor after the execution of this Lease, Lessee's subordination of this Lease
shall be subject to receiving a commercially reasonable non-disturbance
agreement (a "Non-Disturbance Agreement") from the Lender which Non-Disturbance
Agreement provides that Lessee's possession of the Premises, and this Lease,
including any options to extend the term hereof, will not be disturbed so long
as Lessee is not in Breach hereof and attorns to the record owner of the
Premises. Further, within sixty (60) days after the execution of this Lease,
Lessor shall use its commercially reasonable efforts to obtain a Non-Disturbance
Agreement from the holder of any pre-existing Security Device which is secured
by the Premises. In the event that Lessor is unable to provide the
Non-Disturbance Agreement within said sixty (60) days, then Lessee may, at
Lessee's option, directly contact Lessor's lender and attempt to negotiate for
the execution and delivery of a Non-Disturbance Agreement.
30.4 Self-Executing. The agreements contained in this Paragraph 30
(Subordination; Attornment; Non-Disturbance) shall be effective without the
execution of any further documents; provided, however, that, upon written
request from Lessor or a
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Lender in connection with a sale, financing or refinancing of the Premises,
Lessee and Lessor shall execute such further writings as may be reasonably
required to separately document any subordination, attornment and/or
Non-Disturbance Agreement provided for herein.
31. ATTORNEYS' FEES. If any Party or Broker brings an action or proceeding
involving the Premises to enforce the terms hereof or to declare rights
hereunder, the Prevailing Party (as hereafter defined) in any such proceeding,
action, or appeal thereon, shall be entitled to reasonable attorneys' fees. Such
fees may be awarded in the same suit or recovered in a separate suit, whether or
not such action or proceeding is pursued to decision or judgment. The term,
"Prevailing Party" shall include, without limitation, a Party who substantially
obtains or defeats the relief sought, as the case may be, whether by compromise,
settlement, judgment, or the abandonment by the other Party of its claim or
defense. The attorneys' fees award shall not be computed in accordance with any
court fee schedule, but shall be such as to fully reimburse all attorneys' fees
reasonably incurred. In addition, Lessor shall be entitled to attorneys' fees
costs and expenses incurred in the preparation and service of notices of Default
and consultations in connection therewith, whether or not a legal action is
subsequently commenced in connection with such Default or resulting Breach.
32. LESSOR'S ACCESS; SHOWING PREMISES; REPAIRS. Lessor and Lessor's agents shall
have the right to enter the Premises at any time, in the case of an emergency,
and otherwise at reasonable times for the purpose of showing the same to
prospective purchasers, lenders, or lessees, and making such alterations,
repairs, improvements or additions to the Premises as Lessor may deem necessary.
All such activities shall be without abatement of rent or liability to Lessee.
Lessor may at any time place on the Premises any ordinary "For Sale" signs and
Lessor may during the last six (6) months of the term hereof place on the
Premises any ordinary "For Lease" signs. Lessee may at any time place on or
about the Premises any ordinary "For Sublease" sign.
33. AUCTIONS. Lessee shall not conduct, nor permit to be conducted, any auction
upon the Premises without Lessor's prior written consent. Lessor shall not be
obligated to exercise any standard of reasonableness in determining whether to
permit an auction.
34. SIGNS. Lessee may place sign(s) upon the Premises which comply with all
Applicable Requirements and which are related to Lessee's business only with the
prior written consent of Lessor which shall not be unreasonably withheld.
35. TERMINATION; MERGER. Unless specifically stated otherwise in writing by
Lessor, the voluntary or other surrender of this Lease by Lessee, the mutual
termination or cancellation hereof, or a termination hereof by Lessor for Breach
by Lessee, shall automatically terminate any sublease or lesser estate in the
Premises; provided, however, that Lessor may elect to continue any one or all
existing subtenancies. Lessor's failure within ten (10) days following any such
event to elect to the contrary by written notice to the holder of any such
lesser interest, shall constitute Lessor's election to have such event
constitute the termination of such interest.
36. CONSENTS. Except as otherwise provided herein, wherever in this Lease the
consent of a Party is required to an act by or for the other Party, such consent
shall not be unreasonably withheld or delayed. Lessor's actual reasonable costs
and expenses (including,
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but not limited to, architects', attorneys', engineers' and other consultants'
fees) incurred in the consideration of, or response to, a request by Lessee for
any Lessor consent, including, but not limited to, consents to an assignment, a
subletting or the presence or use of a Hazardous Substance, shall be paid by
Lessee upon receipt of an invoice and supporting documentation therefor.
Lessor's consent to any act, assignment or subletting shall not constitute an
acknowledgment that no Default or Breach by Lessee of this Lease exists, nor
shall such consent be deemed a waiver of any then existing Default or Breach,
except as may be otherwise specifically stated in writing by Lessor at the time
of such consent. The failure to specify herein any particular condition to
Lessor's consent shall not preclude the imposition by Lessor at the time of
consent of such further or other conditions as are then reasonable with
reference to the particular matter for which consent is being given. In the
event that either Party disagrees with any determination made by the other
hereunder and reasonably requests the reasons for such determination, the
determining party shall furnish its reasons in writing and in reasonable detail
within ten (10) business days following such request.
37. GUARANTOR.
37.1 Guaranty of Lease. Concurrently with the execution of this Lease by
Lessee, and as a condition and material inducement to Lessor executing this
Lease, Synergism, Inc., which is the parent company of Lessee, shall execute and
shall deliver to Lessor a guaranty ("Guaranty") in the form attached hereto as
Exhibit D (Guaranty), guaranteeing the full performance of Lessee's obligations
under this Lease.
37.2 Default. It shall constitute a Default when one or more of the
events delineated in Paragraph 13.1(g) of this Lease occur.
37.3 Transfer. In the event of a change in control of Guarantor, whether
or not in connection with the transfer of the Lease by Lessee, the Guarantor
shall submit to Lessor a substitute guaranty ("Substitute Guaranty") in a form
identical to the original Guaranty executed by the transferee Guarantor and
assuming all of the obligations guaranteed by the Guarantor. Lessor shall have
the right to review the financial information of such transferee Guarantor and
approve or disapprove of such transferee Guarantor. The Guarantor's failure to
provide Lessor with a Substitute Guaranty from an approved transferee Guarantor
as required herein within ten (10) business days of such transfer shall
constitute a default under Paragraphs 13.1(g) (Default; Breach) and 37.2
(Guarantor -- Default) of this Lease. The Guarantor shall not be released from
its obligations under the original Guaranty unless and until Lessor has approved
the transferee Guarantor and the Substitute Guaranty has been executed and
delivered to Lessor.
38. QUIET POSSESSION. Subject to payment by Lessee of the Rent and performance
of all of the covenants, conditions and provisions on Lessee's part to be
observed and performed under this Lease, Lessee shall have quiet possession and
quiet enjoyment of the Premises during the term hereof.
39. EXTENSION OPTION. Provided that Lessee has not assigned this Lease or sublet
any or all of the Premises (it being intended that all rights pursuant to this
paragraph are and shall be personal to the original Lessee under this Lease and
only while the original Lessee is in full possession of the Premises and, if
requested by Lessor, with Lessee certifying that Lessee has no intention of
thereafter assigning or subletting, and that all rights pursuant to
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this provision shall not be transferable or exercisable for the benefit of any
Transferee), and provided Lessee is not in default under this Lease at the time
of exercise or at any time thereafter until the beginning of any such extension
of the Term, Lessee shall have the option (the "Extension Option") to extend the
Term for two (2) additional consecutive periods of five (5) years (each an
"Extension Period"), by giving written notice to Lessor of the exercise of any
such Extension Option at least twelve (12) months, but not more than fifteen
(15) months, prior to the expiration of the initial Term or the first Extension
Period (as the case may be). The exercise of the Extension Option by Lessee
shall be irrevocable and shall cover the entire Premises leased by Lessee
pursuant to this Lease. Upon such exercise, the term of the Lease shall
automatically be extended for an Extension Period without the execution of any
further instrument by the parties; provided that Lessor and Lessee shall, if
requested by either party, execute and acknowledge an instrument confirming the
exercise of the Extension Option. The Extension Option shall terminate if not
exercised precisely in the manner provided herein. The extension of the Term
shall be upon all the terms and conditions set forth in this Lease and all
Exhibits thereto, except that: (i) Lessee shall have no further option to extend
the Term of the Lease, other than as specifically set forth herein; (ii) Lessor
shall not be obligated to contribute funds toward the cost of any remodeling,
renovation, alteration or improvement work in the Premises; (iii) the Base Rent
for the first Extension Period shall be the then monthly Base Rent in effect
during the last year of the Initial Term, subject to annual adjustment pursuant
to Paragraph 4.3 of this Lease; and (iv) the Base Rent for the second Extension,
if exercised, shall be the then prevailing fair market rental value of the
Premises. The term of this Lease, whether consisting of the Initial Term alone
or the Initial Term as extended by one or both of the Extension Periods (if the
Extension Option is exercised), is referred to in this Lease as the "Term."
40. GENERAL STATEMENT OF INTENT. Lessor and Lessee hereby expressly agree that
the intent of the Lease is to create a totally "net" lease in favor of Lessor
and to require Lessee to perform and observe all covenants respecting
maintenance, repair, replacement, operation, protection, insurance and risk of
loss respecting the Premises and the improvements thereon, and that Lessor shall
have no responsibility for any portion of same.
41. SECURITY MEASURES. Lessee hereby acknowledges that the rental payable to
Lessor hereunder does not include the cost of guard service or other security
measures, and that Lessor shall have no obligation whatsoever to provide same.
Lessee assumes all responsibility for the protection of the Premises, Lessee,
its agents and Invitees and their property from the acts of third parties.
42. RESERVATIONS. Lessor reserves the right to subdivide the Property (including
all or any portion of the Premises), without the consent or joinder of Lessee,
into two or more separate parcels and to reserve, create, grant or dedicate such
access, utility, drainage and other easements and rights over or affecting the
Premises and to cause the recordation of parcel maps and restrictions and to
develop the portions of the Property other than the Premises, as Lessor in its
sole and absolute discretion, may elect, for the benefit of the Property;
provided Lessee's rights of possession of the Premises are not materially and
adversely disturbed thereby and excluding minor and temporary noise, dust or
inconvenience from adjacent subdivision or development, and Lessee waives all
claims against Lessor for damages arising from any such subdivision or
development of those portions of the Property. Lessee agrees to execute,
acknowledge and deliver to Lessor such instruments, estoppel certificates and
consents as Lessor shall request as being necessary or desirable to facilitate
such subdivision and
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development and any financing in connection therewith. Furthermore, if the
Premises are a part of a group of buildings controlled by Lessor, Lessee agrees
that it will observe all reasonable rules and regulations which Lessor may make
from time to time for the management, safety, and care of said properties,
including the care and cleanliness of the grounds and including the parking,
loading and unloading of vehicles, and that Lessee will pay its fair share of
common expenses incurred in connection therewith.
43. PERFORMANCE UNDER PROTEST. If at any time a dispute shall arise as to any
amount or sum of money to be paid by one Party to the other under the provisions
hereof, the Party against whom the obligation to pay the money is asserted shall
have the right to make payment "under protest" and such payment shall not be
regarded as a voluntary payment and there shall survive the right on the part of
said Party to institute suit for recovery of such sum. If it shall be adjudged
that there was no legal obligation on the part of said Party to pay such sum or
any part thereof, said Party shall be entitled to recover such sum or so much
thereof as it was not legally required to pay.
44. AUTHORITY AND CAPACITY. Each of the persons executing this Lease on behalf
of Lessee warrants and represents that Lessee is a duly organized and validly
existing entity, that Lessee has full right and authority to enter into this
Lease and that the persons signing on behalf of Lessee are authorized to do so
and have the power to bind Lessee to this Lease. Lessee shall provide Lessor
upon request with evidence reasonably satisfactory to Lessor confirming the
foregoing representations. It is understood and agreed that each person
executing this Lease on behalf of Lessee shall not have any personal liability
to Lessor for the performance of Lessee's obligations under this Lease.
45. AMENDMENTS. This Lease may be modified only in writing, signed by the
Parties in interest at the time of the modification. As long as they do not
materially change Lessee's obligations hereunder, Lessee agrees to make such
reasonable non-monetary modifications to this Lease as may be reasonably
required by a Lender in connection with the obtaining of normal financing or
refinancing of the Premises.
46. MULTIPLE PARTIES. If more than one person or entity is named herein as
either Lessor or Lessee, such multiple Parties shall have joint and several
responsibility to comply with the terms of this Lease.
The parties hereto have executed this Lease as of the Commencement Date.
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LESSEE
LESSOR
SYNERGISM PROPERTIES IV, LLC CUPERTINO ELECTRIC, INC.
a California limited liability company a California corporation
By: /s/ EUGENE A. RAVIZZA By: /s/ GENE RYLEY
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Name Printed: Eugene A. Ravizza Name Printed: Gene Ryley
Title: Partner Title: President
Address: Address:
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Telephone: (___) Telephone: (___)
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Facsimile: (___) Facsimile: (___)
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Federal ID No. Federal ID No.
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