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EXHIBIT 10.27
LEASE AGREEMENT
BASIC LEASE INFORMATION
LEASE DATE: March 24, 1998
LANDLORD: W9/LNP Real Estate Limited Partnership,
a Delaware limited partnership
LANDLORD'S ADDRESS: c/o LPC MS, Inc.
6480 Weathers Place, Suite 245
San Diego, California 92121
TENANT: ViaSat, Inc.,
a Delaware corporation
TENANT'S ADDRESS: 2290 Cosmos Court
Carlsbad, California 92009-1585
PREMISES: The Premises consists of (i) certain real property located on El Camino Real, Carlsbad,
California containing approximately thirteen (13) acres of land ("Land"), which Land shall be
a separate, independent tax parcel and, when approved by the City, a separate legal parcel
and (ii) certain Improvements (defined herein) to be constructed by Landlord thereon
consisting, in part, of three (3) buildings ("Buildings") containing a total of approximately
180,000 square feet. The term "Premises" shall not mean the Premises into which Tenant may
expand, as more particularly set forth in Addendum 2 to this Lease. The Premises are part of
approximately 49 acre parcel being developed by Landlord for commercial/industrial uses
(the "Park").
PREMISES ADDRESS: To be assigned after Substantial Completion of the Improvements (on El Camino Real, Carlsbad,
California)
TERM: Ten (10) years, as more particularly set forth in Section 2 and Exhibit B of this Lease plus
any extension options as set forth in Addendum 1 of this Lease
BASE RENT (Paragraph 3): Base Rent is more particularly set forth in Section 3 of this Lease
ADJUSTMENTS TO BASE RENT: Base Rent shall be adjusted as more particularly set forth in Addendum 3 to this Lease
SECURITY DEPOSIT (Paragraph 4): An initial Security Deposit of One Hundred Thousand Dollars ($100,000.00), which Security
Deposit shall be increased and may be decreased as more particularly set forth in Section 4
of this Lease
PERMITTED USES (Paragraph 9): Office headquarters, manufacturing, warehouse, and research and development and, incidental
to the aforementioned uses, a day care facility, cafeteria and recreational and sports
facilities for Tenant's employees and for satellite antennas and dishes (as more particularly
set forth in and subject to the terms of Section 42 of this Lease) but only to the extent
permitted by the City of Carlsbad and all agencies and governmental authorities having
jurisdiction thereof and for no other purposes whatsoever.
EXCLUSIVE PARKING SPACES: Seven Hundred Twenty (720) exclusive spaces
BROKER (Paragraph 38): Business Real Estate Brokerage Company for Tenant and
Colliers Iliff Thorn for Landlord
EXHIBITS: Exhibit A - Premises
Exhibit B - Work Letter
Exhibit C - Rules and Regulations
Exhibit D - Covenants, Conditions and Restrictions
Exhibit E - Hazardous Materials Disclosure Certificate - Example
Exhibit F - Change of Commencement Date - Example
Exhibit G - Tenant's Initial Hazardous Materials Disclosure Certificate
ADDENDA: Addendum 1: Options to Extend
Addendum 2: Expansion Options
Addendum 3: Base Rent Adjustment
Addendum 4: Right of First Offer to Purchase
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TABLE OF CONTENTS
SECTION PAGE
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1. PREMISES...............................................................3
2. ADJUSTMENT OF COMMENCEMENT DATE; CONDITION OF THE PREMISES;
TERMINATION RIGHT OF TENANT............................................3
3. RENT...................................................................4
4. SECURITY DEPOSIT.......................................................5
5. TENANT IMPROVEMENTS....................................................5
6. ADDITIONAL RENT........................................................7
7. UTILITIES.............................................................10
8. LATE CHARGES..........................................................10
9. USE OF PREMISES.......................................................10
10. ALTERATIONS AND ADDITIONS; AND SURRENDER OF PREMISES..................11
11. REPAIRS AND MAINTENANCE...............................................12
12. INSURANCE.............................................................13
13. WAIVER OF SUBROGATION.................................................15
14. LIMITATION OF LIABILITY AND INDEMNITY.................................15
15. ASSIGNMENT AND SUBLEASING.............................................16
16. AD VALOREM TAXES......................................................18
17. SUBORDINATION.........................................................18
18. RIGHT OF ENTRY........................................................19
19. ESTOPPEL CERTIFICATE..................................................19
20. TENANT'S DEFAULT......................................................19
21. REMEDIES FOR TENANT'S DEFAULT.........................................20
22. HOLDING OVER..........................................................21
23. LANDLORD'S DEFAULT....................................................21
24. PARKING...............................................................21
25. SALE OF PREMISES......................................................21
26. WAIVER................................................................21
27. CASUALTY DAMAGE.......................................................22
28. CONDEMNATION..........................................................23
29. ENVIRONMENTAL MATTERS/HAZARDOUS MATERIALS.............................24
30. FINANCIAL STATEMENTS..................................................27
31. GENERAL PROVISIONS....................................................27
32. SIGNS.................................................................28
33. MORTGAGEE PROTECTION..................................................28
34. QUITCLAIM.............................................................29
35. INTENTIONALLY OMITTED.................................................29
36. WARRANTIES OF TENANT..................................................29
37. COMPLIANCE WITH AMERICANS WITH DISABILITIES ACT.......................29
38. BROKERAGE COMMISSION..................................................29
39. QUIET ENJOYMENT.......................................................30
40. LANDLORD'S ABILITY TO PERFORM TENANT'S UNPERFORMED OBLIGATIONS........30
41. TENANT'S ABILITY TO PERFORM LANDLORD'S UNPERFORMED OBLIGATIONS........30
42. SATELLITE DISH........................................................30
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LEASE AGREEMENT
DATE: This Lease is made and entered into as of the Lease Date set forth on
Page 1. The Basic Lease Information set forth on Page 1 and this Lease
are and shall be construed as a single instrument.
1. PREMISES: Landlord hereby leases the Premises on an exclusive basis to
Tenant upon the terms and conditions contained herein, subject to the terms
of this Lease. The term "Premises" as used herein shall mean and refer to the
Buildings and the Land upon which the Buildings are situated. Landlord and
Tenant hereby agree that for purposes of this Lease, as of the Lease Date, the
rentable square footage area of the Buildings shall be deemed to be the number
of rentable square feet set forth in the Basic Lease Information on Page 1;
provided, however, within thirty (30) days after the date on which Landlord
causes the Improvements of each of the Buildings to be Substantially Completed
(as such term is defined in Exhibit B hereto), Landlord shall deliver to Tenant
the actual square footage of the Land and the rentable square feet contained
within the Buildings. Tenant may have its architect verify the actual square
footage of the Land and the rentable square feet contained within the Buildings,
provided that the basis of such measurement of the Buildings shall be measured
from drip line to drip line. Landlord and Tenant hereby acknowledge and agree
that as of the Lease Date the Buildings have not been constructed on the Land.
After Landlord has Substantially Completed the Improvements, Landlord and Tenant
shall execute a written amendment to this Lease, substantially in the form of
Exhibit F hereto, wherein the parties shall specify the following: (i) the
actual square footage of the Land; (ii) the rentable square feet contained
within the Buildings; (iii) the actual amount of Base Rent to be paid by Tenant,
which shall be based upon the amount of Base Rent per rentable square foot as
set forth in this Lease; and (iv) the Premises Addresses. Such measurement at
Substantial Completion shall be final.
2. COMMENCEMENT DATE; CONDITION OF THE PREMISES; TERMINATION RIGHT OF TENANT:
2.1 The Term of the Lease shall be a period of ten (10) years commencing
upon the earlier to occur of the following ("Commencement Date") and, except as
set forth in Addendum 2 to this Lease, expiring ten (10) years thereafter
("Expiration Date"): (i) the date Tenant commences business operations at the
Premises, or (ii) Substantial Completion of the Improvements (as defined in
Exhibit B) for all of the Buildings. In no event shall the Commencement Date be
prior to January 10, 1999, unless Tenant has commenced conducting its business
operations at the Premises prior to that date.
2.2 Landlord shall construct the Improvements (as defined in Exhibit B)
as more particularly set forth in Exhibit B. If the Improvements (as defined in
Exhibit B) for all of the Buildings are not Substantially Complete (as defined
in Exhibit B) on or before July 10, 1999, (i) Landlord agrees to use reasonable
efforts to Substantially Complete the Improvements for all of the Buildings as
soon as practicable thereafter, (ii) the Lease shall remain in full force and
effect, (iii) Landlord shall not be deemed to be in breach or default of the
Lease as a result thereof and Landlord shall, except as set forth below, have no
liability to Tenant as a result of any delay in occupancy (whether for damages,
abatement of all or any portion of the rent, or otherwise). Subject to Force
Majeure Delays (as defined is Exhibit B) or Tenant Caused Delays (as defined in
Exhibit B), Landlord shall cause Substantial Completion of all of the Buildings
to occur no later than September 10, 1999 or for each day of delay thereafter,
Landlord shall pay to Tenant liquidated damages in the amount of Two Thousand
Dollars ($2,000.00); provided, however, Landlord shall have the right to extend
such date by one (1) day for each day after July 10, 1999 that Landlord shall
not have received all permits and approvals necessary for construction of all of
the Buildings and such liquidated damages amount shall not be applicable to such
days of delay. Tenant shall also have the right to extend the Term for two (2)
consecutive periods of three (3) years each as more particularly set forth in
Addendum 1 to this Lease. The Lease Term and the obligation to pay Rent shall
commence on the Commencement Date. Landlord and Tenant shall execute a written
amendment to this Lease, substantially in the form of Exhibit F hereto, wherein
the parties shall specify the actual commencement date, expiration date and the
date on which Tenant is to commence paying Rent. The word "Term" whenever used
herein refers to the initial term of this Lease and any extension thereof.
Except as otherwise expressly set forth in this Lease, Tenant hereby
acknowledges and agrees that neither Landlord nor Landlord's agents or
representatives has made any representations or warranties as to the
suitability, safety or fitness of the Premises for the conduct of Tenant's
business, Tenant's intended use of the Premises or for any other purpose.
Notwithstanding the foregoing, within three (3) business days after the
Substantial Completion (as such term is defined in Exhibit B hereto) of the
Tenant Improvements for each of the Buildings representatives of Landlord and
Tenant shall make a joint inspection of Improvements and the results of each
such inspection shall be set forth in a written list specifying the incomplete
items as well as those items for which corrections need to be made to the
Improvements (the "Punchlist Items"). Landlord and Tenant shall promptly (by no
later than three (3) business days thereafter) and in good faith approve or
disapprove the written list of Punchlist Items. Landlord, at its sole cost and
expense, shall use commercially reasonable efforts to cause the Punchlist Items
to be promptly completed and/or corrected,
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as applicable. The performance of the work associated with the Punchlist Items
shall be performed in such a manner so as not to preclude or substantially
prevent Tenant's conduct of its operations in the Premises. Upon the completion
of the Punchlist Items to Tenant's reasonable satisfaction Tenant shall
immediately notify Landlord in writing that such items have been completed to
Tenant's reasonable satisfaction. In addition to the Punchlist Items, Landlord
shall also use commercially reasonable efforts to cause the Project Contractor
to correct any other deficiencies or defects in the Improvements during the
ninety (90) day period following Substantial Completion of all of the
Improvements in the Buildings. If Tenant fails to timely deliver to Landlord any
such written notice of the aforementioned patent defects or deficiencies within
said 90-day period, Landlord shall have no obligation to perform any such work
thereafter, except as otherwise specifically provided in this Lease; provided,
however, subject to the terms of Landlord's agreement with the Project
Contractor (as defined in Exhibit B), Tenant shall have the right, concurrently
with Landlord (if Landlord so desires, otherwise separately) to make a claim
against Landlord's Project Contractor for patent or latent defects in the design
or construction of the Improvements for any general applicable warranty period.
Tenant shall also have the right to enforce, concurrently with Landlord, any
warranties made or given to Landlord from the Project Contractor and major
subcontractors. Upon final completion of Punchlist Items and acceptance by
Tenant, all further obligations for repair, maintenance and replacement of the
Improvements shall be controlled under Section 11 of this Lease.
2.3 TERMINATION RIGHTS. Tenant shall have the right to terminate this
Lease in the event Landlord shall not commence demolishing the existing
improvements on the Land on or before May 1, 1998, which date shall be extended
one (1) day for each day of Force Majeure Delays (as defined in Exhibit B).
Tenant must exercise such right, if at all, on or before May 10, 1998 or such
right shall be null and void and of no further force or effect. In the event of
the proper termination of this Lease by Tenant, Landlord shall promptly return
the portion of the Security Deposit then deposited with Landlord and neither
party shall have any further obligation or liability to the other.
3. RENT:
3.1 DEFINITION OF BASE RENT: The initial monthly Base Rent is $1.062 per
square foot. This includes a Tenant Improvement Allowance (as defined in Exhibit
B) of $26.00 per square foot, as more particularly described in Section 4.1 of
Exhibit B to this Lease. The initial monthly Base Rent may decrease if the
actual TI Costs (as defined in Exhibit B) are less than $26.00 per square foot;
provided, however, the maximum amount that the initial monthly Base Rent may
decrease is by $.037 per square foot per month, which is the difference, on a
monthly basis, between $26.00 per square foot and $22.00 per square foot for TI
Costs; and, provided further, the initial monthly Base Rent shall not decrease
due to certain Tenant Changes (as defined in Exhibit B) the cost of which may be
deducted from the Tenant Improvement Allowance as more particularly described in
Sections 3.6.3 and 4.1 of Exhibit B. In other words, as more particularly
described in Section 4.1 of Exhibit B to this Lease, in no event shall the TI
Costs be less than $22.00 per square foot. In the event actual TI Costs are less
than $26.00 per square foot, the reduction in initial monthly Base Rent is
calculated by (i) taking the amount that such actual TI Costs are less than
$26.00 per square foot (but not less than $22.00 per square foot) ("Savings"),
(ii) multiplying the Savings by an amount equal to eleven percent (11%) of such
Savings and (iii) dividing the quotient in (ii) above by twelve (12) (the number
of months in a year). For example, if the actual TI Costs equal $24.00 per
square foot, the Savings is $2.00 and the reduction in initial monthly Base Rent
is calculated as follows: $2.00 x .11 = .22 (DIVIDED BY) 12 = $0.018. The
initial monthly Base Rent is reduced by $0.018 per square foot per month or, to
$1.044 per square foot per month.
If the actual TI Costs are more than $26.00 per square foot, Tenant may elect to
amortize the actual TI Costs in excess of $26.00 per square foot up to the
maximum amount of $35.00 per square foot (the "Amortized TI Costs"). The
Amortized TI Costs shall be repaid to Landlord in the form of increases to the
initial monthly Base Rent in the following manner: the actual TI Costs over
$26.00 per square foot, but less than $32.51 (an amount equal to $6.50 per
square foot) shall increase the Base Rent at the interest rate of eleven percent
(11%) per annum; and the actual TI Costs over $32.50, but less than $35.01 (an
amount equal to $2.50 per square foot ) shall be fully amortized at the interest
rate of eleven percent (11%) per annum. For example, if (a) if the actual TI
Costs are $28.00 per square foot, the initial monthly Base Rent shall increase
to the amount of $1.08 per square foot per month as follows: $2.00 x 11%
(DIVIDED BY) 12 = $0.018 + $1.062 = $1.08; or (b) if the actual TI Costs are
$34.00 per square foot, the initial monthly Base Rent shall increase to the
amount of $1.142 per square foot per month as follows: ($6.50 x 11% = .715
(DIVIDED BY) 12 = $.06) PLUS ($1.50 fully amortized over the initial Term of one
hundred twenty (120) months at 11% equals $0.02 per square foot per month) =
$1.142 ($1.062 + $0.06 + $0.02) per square foot per month.
3.2 PAYMENT OF RENT: On the date that Tenant executes this Lease, Tenant
shall deliver to Landlord the original executed Lease and One Hundred Thousand
Dollars ($100,000.00) of the Security Deposit. Insurance certificates evidencing
the liability insurance required to be obtained by Tenant under Section 12 of
this Lease shall be delivered to Landlord prior to Tenant entering onto the
Premises. Tenant agrees to pay Landlord, without prior notice or demand, or
abatement, offset, deduction or claim (except as otherwise provided in this
Lease), the Base Rent specified herein, payable in advance at Landlord's
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address specified in the Basic Lease Information on the Commencement Date and
thereafter on the first (1st) day of each month throughout the balance of the
Term of the Lease. In addition to the Base Rent set forth herein, Tenant shall
pay Landlord in advance on the Commencement Date and thereafter on the first
(1st) day of each month throughout the balance of the Term of this Lease the
Operating Expenses, Utility Expenses, (if any) and any Common Area Expenses as
set forth in Section 6.3 of this Lease, as Additional Rent. In the event of a
default by Tenant, Tenant shall also pay to Landlord as Additional Rent
hereunder, within thirty (30) days of Landlord's written demand therefor, any
and all reasonable costs and expenses incurred by Landlord to enforce the
provisions of this Lease, including, but not limited to, costs associated with
the delivery of notices, delivery and recordation of notice(s) of default,
attorneys' fees, expert fees, court costs and filing fees (collectively, the
"Enforcement Expenses"). In addition, Tenant shall pay directly to the
appropriate vendor all operating costs which are separately metered or
separately contracted for by Tenant. The term "Rent" whenever used herein refers
to the aggregate of all these amounts. If Landlord permits Tenant to occupy the
Premises without requiring Tenant to pay rental payments for a period of time,
the waiver of the requirement to pay rental payments shall only apply to waiver
of the Base Rent and Tenant shall otherwise perform all other obligations of
Tenant required hereunder. The Rent for any fractional part of a calendar month
at the commencement or termination of the Lease term shall be a prorated amount
of the Rent for a full calendar month based upon a thirty (30) day month. The
prorated Rent shall be paid on the Commencement Date and the first day of the
calendar month in which the date of termination occurs, as the case may be.
4. SECURITY DEPOSIT: Upon Tenant's execution of this Lease, Tenant shall deliver
to Landlord, as a Security Deposit for the performance by Tenant of its
obligations under this Lease, One Hundred Thousand Dollars ($100,000.00). On or
within five (5) days after Landlord notifies Tenant that all permits are ready
to be issued for commencement of construction of the Shell Improvements for the
Premises, Tenant shall deliver to Landlord an additional security deposit of One
Hundred Thousand Dollars ($100,000.00). Provided there shall have occurred no
default during the initial Term, Tenant's net income shall not have decreased
more than Two Million Dollars ($2,000,000.00) on an annual basis and Tenant's
net worth shall not have decreased, One Hundred Thousand Dollars ($100,000.00)
of the Security Deposit shall be returned to Tenant upon the commencement of the
twenty-fifth (25th) month of the initial Term and Fifty Thousand Dollars
($50,000.00) of the Security Deposit shall be returned to Tenant every two (2)
years thereafter until the Security Deposit is exhausted. However, Tenant shall
be obligated to increase the Security Deposit to Two Hundred Thousand Dollars
($200,000.00) in the event Tenant's net worth declines or net income declines
more than Two Million Dollars ($2,000,000.00) on an annual basis. In the event
the TI Costs exceed $26.00 per square foot for the Premises, the Security
Deposit shall be increased (in excess of Two Hundred Thousand Dollars
($200,000.00)) by an amount equal to five percent (5%) of the amount by which
such TI Costs exceed $26.00 per square foot for such Premises. If Tenant is in
default, Landlord may, but without obligation to do so, use the Security
Deposit, or any portion thereof, to cure the default or to compensate Landlord
for all damages sustained by Landlord resulting from Tenant's default,
including, but not limited to the Enforcement Expenses. Tenant shall, within ten
(10) days of Landlord's written demand, pay to Landlord a sum equal to the
portion of the Security Deposit so applied or used so as to replenish the amount
of the Security Deposit held to increase such deposit to the amount initially
deposited with Landlord. Within thirty (30) days after the termination of this
Lease, Landlord shall return the Security Deposit to Tenant, less such amounts
as are reasonably necessary to remedy Tenant's default(s) hereunder or to
otherwise restore the Premises to a clean and safe condition, reasonable wear
and tear excepted. If the cost to restore the Premises exceeds the amount of the
Security Deposit, Tenant shall promptly deliver to Landlord any and all of such
excess sums as reasonably determined by Landlord. Landlord shall not be required
to keep the Security Deposit separate from other funds, and, unless otherwise
required by law, Tenant shall not be entitled to interest on the Security
Deposit. In no event or circumstance shall Tenant have the right to any use of
the Security Deposit and, specifically, Tenant may not use the Security Deposit
as a credit or to otherwise offset any payments required hereunder, including,
but not limited to, Rent or any portion thereof.
5. TENANT IMPROVEMENTS, ACCESS AND TENANT'S PRE-OCCUPANCY WORK:
5.1 Landlord shall install and construct the Tenant Improvements (as
such term is defined in Exhibit B hereto) in accordance with the terms,
conditions, criteria and provisions set forth in Exhibit B. Except for
completion of the Punch-List Items, the defects and deficiencies to be corrected
during the ninety (90) day time period set forth in Section 2.2 above, and
Tenant's right to enforce any warranties and make a claim against the Project
Contractor set forth in Section 2.2 above, Tenant shall accept the Premises as
suitable for Tenant's use and as being in good operating order, condition and
repair, "AS-IS." Landlord and Tenant hereby agree to and shall be bound by the
terms, conditions and provisions of Exhibit B. Any exception to the foregoing
provisions must be made by express written agreement by both parties.
5.2 ACCESS TO THE PREMISES: Tenant and Tenant's Representatives (as
defined in Section 9 below) shall have access to the Premises during
construction of the Improvements to assure themselves that construction is in
conformance with final plans and specifications for the Improvements; provided,
(i) such access shall be subject to the terms of Section 5.3 below and (ii) in
the event any such persons interfere and/or delay construction in any manner,
form or means, such interference and/or delay shall be a Tenant
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Delay, which shall extend the Commencement Date by one (1) day for each day of
such interference and/or delay and no payment of liquidated damages shall be
paid to Tenant due to such delay of the Commencement Date.
5.3 TENANT'S PRE-OCCUPANCY WORK: Tenant shall have access to the
Premises commencing thirty (30) days prior to the Commencement Date to allow
Tenant to do other work required by Tenant to make the Premises ready for
Tenant's use and occupancy (the "Tenant's Pre-Occupancy Work") upon the
following conditions:
5.3.1 Tenant shall give to Landlord a written request to
have such access not less than three (3) business days prior to the date on
which such proposed access will first commence (the "Access Notice"). The Access
Notice shall contain or be accompanied by each of the following items, all in
form and substance reasonably acceptable to Landlord: (i) a detailed description
of and schedule for Tenant's Pre-Occupancy Work; (ii) the names and addresses of
all contractors, subcontractors and material suppliers and all other
representatives of Tenant who or which will be entering the Premises on behalf
of Tenant to perform Tenant's Pre-Occupancy Work or will be supplying materials
for such work, and the approximate number of individuals, itemized by trade, who
will be present in the Premises; (iii) copies of all contracts, subcontracts,
material purchase orders, plans and specifications pertaining to Tenant's
Pre-Occupancy Work; (iv) copies of all licenses and permits required in
connection with the performance of Tenant's Pre-Occupancy Work; and (v)
certificates of insurance (in amounts reasonably satisfactory to Landlord and
with the parties identified in, or required by, the Lease named as additional
insureds).
5.3.2 Such pre-term access by Tenant and Tenant's
employees, agents, contractors, consultants, workmen, mechanics, suppliers and
invitees shall be subject to reasonable scheduling by Landlord.
5.3.3 Tenant's employees, agents, contractors, consultants,
workmen, mechanics, suppliers and invitees shall fully cooperate, work in
harmony and not, in any manner, materially interfere with Landlord or Landlord's
agents or representatives in performing the work required to install and/or
construct the Tenant Improvements and any additional work, Landlord's work in
other areas of the Buildings or the Park, or the general operation of the
Buildings, such interference to be deemed a "Tenant-Caused Delay" under Exhibit
B to this Lease. If at any time any such person representing Tenant shall not be
cooperative or shall otherwise cause or threaten to cause any such disharmony or
interference, including, without limitation, labor disharmony, and Tenant fails
to promptly institute and maintain corrective actions as directed by Landlord,
then Landlord may revoke such license upon twenty-four (24) hours' prior written
notice to Tenant.
5.3.4 Any such entry into and occupancy of the Premises or
any portion thereof by Tenant or any person or entity working for or on behalf
of Tenant shall be deemed to be subject to all of the terms, covenants,
conditions and provisions of the Lease as set forth above in Section 2 of this
Lease. Landlord shall not be liable for any injury, loss or damage which may
occur to any of Tenant's Pre-Occupancy Work made in or about the Premises or to
any property placed therein prior to the commencement of the term of the Lease,
the same being at Tenant's sole risk and liability. Tenant shall be liable to
Landlord for any damage to any portion of the Premises, the Improvements or the
additional work related to any Tenant Changes caused by Tenant or any of
Tenant's employees, agents, contractors, consultants, workmen, mechanics,
suppliers and invitees. In the event that the performance of Tenant's
Pre-Occupancy Work causes extra costs to be incurred by Landlord or requires the
use of other Building services, such extra costs shall be treated in the same
manner as a Tenant Change.
5.3.5 Tenant shall be solely responsible for the security
of its property or equipment stored in the Premises, except for Landlord's gross
negligence or willful misconduct.
5.3.6 In consideration for Landlord permitting Tenant to
access the Premises prior to the Commencement Date, Tenant shall indemnify and
hold Landlord harmless from and against any and all claims, losses or damages
arising from (i) the use of the Premises or any portion thereof, by Tenant or
Tenant's Representatives or from any activity permitted or suffered by Tenant or
Tenant's Representatives in or about the Premises, and (ii) any breach or
default in the performance of any obligation on Tenant's part to be performed
under the Lease, or arising from any act or negligence of Tenant or Tenant's
Representatives, and from and against any and all costs, attorney's fees,
expenses and liabilities incurred in connection with such claim or any such
action or proceeding; provided, however, Tenant shall not be liable for damage
or injury occasioned by the gross negligence or willful misconduct of Landlord
and its designated agents or employees, unless covered by insurance Tenant is
required by the Lease to maintain. In no event shall Landlord be liable for any
claims, damages, or losses of any nature incurred or suffered by Tenant or
Tenant's Representatives, or any other person in or about the Premises, arising
during the period covered by this Section 5.3.6, except to the extent such
claims, damages or losses arise from the gross negligence or willful misconduct
of Landlord (provided, however, in no event shall Landlord be liable for
consequential damages).
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6. ADDITIONAL RENT : Except as otherwise expressly set forth in this Lease it is
intended by Landlord and Tenant that this Lease be a "Triple Net Lease," Tenant
shall pay directly any and all costs and expenses associated with the use,
operation, management, repair and occupancy of the Premises. All other costs and
expenses described in this Section 6 and all other sums, charges, costs and
expenses specified in this Lease other than Base Rent are to be paid by Tenant
to Landlord as additional rent (collectively, "Additional Rent").
6.1 LANDLORD'S OPERATING EXPENSES: In addition to the Base Rent set
forth in Section 3, Tenant shall pay to Landlord all Landlord's Operating
Expenses as Additional Rent. The term "Operating Expenses" as used herein shall
mean the total amounts paid or payable by Landlord in connection with the
following:
6.1.1 Landlord's annual cost of insurance (which shall be
at commercially competitive rates) insuring against fire and extended coverage
(including, if Landlord elects, "all risk" or "special purpose" coverage) and
all other insurance, including, but not limited to, earthquake, flood and/or
surface water endorsements reasonably apportioned by Landlord to the Premises,
rental value insurance against loss of Rent in an amount equal to the amount of
Rent for a period of at least six (6) months commencing on the date of loss, and
subject to the provisions of Section 27 below, any deductible;
6.1.2 Landlord's cost of: (i) modifications and/or new
improvements to the Buildings and/or Common Area occasioned by any laws or
regulations effective subsequent to the date on which the Buildings were
originally constructed; (ii) reasonably necessary replacement improvements to
the Buildings and/or Common Area after the Lease Date; and (iii) new
improvements to the Buildings and/or Common Area that reduce operating costs or
improve life/safety conditions, all as reasonably determined by Landlord;
provided, however, if any of the foregoing are in the nature of capital
improvements, then the cost of such capital improvements shall be amortized on a
straight-line basis over a reasonable period, which shall not be less than the
lesser of fifteen (15) years or the reasonably estimated useful life of such
modifications, new improvements or replacement improvements in question (with
interest at a rate reasonably determined by Landlord), and Tenant shall pay the
monthly amortized portion of such costs (including interest charges) as part of
the Operating Expenses herein;
6.1.3 Landlord's cost for the management and administration
of the Premises and Common Area, including without limitation, a property
management fee, accounting, auditing, billing, salaries for clerical and
supervisory employees and all fees, licenses and permits related to the
ownership, operation and management of the Premises and Common Area in an amount
not to exceed one and one-half percent (1-1/2%) of the Base Rent, plus
Landlord's Operating Expenses reimbursed to Landlord by Tenant under Sections
6.1.1, 6.1.2, 6.1.4, 6.2, 6.3, and 7 (but excluding for purposes of calculating
this sum, the costs described in this Section 6.1.3).
6.1.4 Any other replacements, not within the scope of
Sections 6.1.2 or 11.2.3, which under customary practices in the industry would
be considered to be "capital expenditures," shall be paid ninety percent (90%)
by Landlord and ten percent (10%) by Tenant (Tenant shall pay such amounts
within thirty (30) days of receipt of written demand therefor); provided,
however the ninety percent (90%) paid by Landlord for the costs of such capital
expense shall be reimbursed by Tenant to Landlord in accordance with the
reimbursement formula set forth in Section 6.1.2 of this Lease.
Notwithstanding anything to the contrary contained herein, for
purposes of this Lease, the term "Operating Expenses" shall not include the
following:
(a) Legal and auditing fees (other than those
fees reasonably incurred in connection with the maintenance and operation of the
Buildings and/or Common Area), leasing commissions, advertising expenses, and
other costs incurred in connection with the original development or original
leasing of the Buildings and/or Common Area or future re-leasing of the
Buildings and/or Common Area;
(b) Depreciation of the Buildings or any other
improvements situated within the Park;
(c) Any items for which Landlord is actually
reimbursed by insurance;
(d) Costs of repairs or other work necessitated
by fire, windstorm or other casualty and/or costs of repair or other work
necessitated by the exercise of the right of eminent domain to the extent
insurance proceeds or a condemnation award, as applicable, is actually received
by Landlord for such purposes; provided (i) such costs of repairs or other work
shall be paid by the parties in accordance with the provisions of Sections 27
and 28 below and (ii) a commercially reasonable deductible under any such
insurance policies shall be included as an Operating Expense if paid by
Landlord;
(e) Other than any interest charges for capital
improvements referred to in
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Section 6.1.3 hereinabove, any interest or payments on any financing for the
Buildings or the Common Area, interest and penalties incurred as a result of
Landlord's late payment of any invoice (provided that Tenant pays Operating
Expenses, Tax Expenses and Tenant's Share of Common Area Expenses to Landlord
when due as set forth herein), and any bad debt loss, rent loss or reserves for
same;
(f) Costs associated with the investigation
and/or remediation of Hazardous Materials (hereafter defined) present in, on or
about the Premises and/or Common Area, unless such costs and expenses are the
responsibility of Tenant as provided in Section 29 of this Lease, in which event
such costs and expenses shall be paid solely by Tenant in accordance with the
provisions of Section 29 of this Lease;
(g) Landlord's cost for the replacement items
set forth in Section 11.2.3 below; and
(h) Costs for services performed or materials
provided by Landlord or affiliates of Landlord to the extent such costs exceed
those amounts which would otherwise be paid to independent third parties in an
arms-length transaction;
(i) rental payments and any related costs
pursuant to any ground lease of land underlying all or any portion of the
Premises and/or Common Area;
(j) any costs, fees, dues, contributions or
similar expenses for political, charitable, industry association or similar
organizations;
(k) amortization on any mortgage or mortgages or
any other debt instrument made by Landlord encumbering the Premises and/or
Common Area;
(l) marketing costs, including leasing
commissions, attorneys' fees in connection with the negotiation and preparation
of letters, deal memos, letters of intent, leases, subleases and/or assignments,
space planning costs, and other costs and expenses incurred in connection with
lease, sublease and/or assignment negotiations and transactions with present or
prospective tenants or other occupants of the Buildings, including bad debt
expenses, attorneys' fees and other costs and expenditures incurred in
connection with disputes with present or prospective tenants or other occupants
of the Buildings;
(m) real estate brokers' leasing commissions;
(n) costs incurred by Landlord due to the
violation solely by Landlord or any tenant, including Tenant, of the terms and
conditions of any lease of space in the Buildings;
(o) Landlord's general corporate overhead and
general administrative expenses, including, but not limited to, salaries of
officers and executives of Landlord;
(p) advertising and promotional expenditures,
and costs of signs identifying the owner of the Buildings or other tenants'
signs;
(q) legal and accounting fees for preparation of
Landlord's business documents, including the preparation of any and all tax
returns;
(r) costs incurred by Landlord in the original
development and/or original construction of the Park, Premises and/or Common
Area for "tap fees" or sewer or water connection fees of the Park, Premises
and/or Common Area; and
(s) any fines, costs, penalties or interest
resulting from the gross negligence or willful misconduct of the Landlord or its
agents, contractors or employees.
6.2 TAX EXPENSES: In addition to the Base Rent set forth in Section 3,
Tenant shall pay to Landlord (and Landlord shall pay the Tax Collector prior to
delinquency) one hundred percent (100%) of all real property taxes applicable to
the Premises (except as otherwise set forth below), all personal property taxes
now or hereafter assessed or levied against the Premises or Tenant's personal
property and subject to this Section 6.2, any increases in real property taxes
and assessments attributable to any and all alterations, tenant improvements
(including, but not limited to, the Tenant Improvements) or other improvements
of any kind whatsoever placed in, on or about the Premises for the benefit of,
at the request of, or by Tenant; provided, however, (a) during the first (1st)
year of the initial Term, Tenant shall not pay any increase in real property
taxes and assessments attributable to a "Change in Ownership" which may occur
during such first (1st) year of the initial Term, (b) during the second (2nd)
year of the initial Term, in the event of a "Change in Ownership" during the
first (1st) or second (2nd) years of the initial Term, Tenant shall pay fifty
percent (50%) of any real property taxes and assessments attributable to such
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"Change in Ownership" plus the annual two percent (2%) adjustment as and when
such adjustment becomes effective, and (c) thereafter, Tenant shall pay all real
property taxes and assessments attributable to a "Change in Ownership." The term
"Tax Expenses" shall mean and include, without limitation, any form of tax and
assessment (general, special, supplemental, ordinary or extraordinary),
including the existing City of Carlsbad Community Facilities Districts
commercial rental tax, payments under any improvement bond or bonds, license
fees, license tax, business license fee, rental tax, transaction tax or levy
imposed by authority having the direct or indirect power of tax (including any
city, county, state or federal government, or any school, agricultural,
lighting, drainage or other improvement district thereof) as against any legal
or equitable interest of Landlord in the Premises, as against Landlord's right
to rent, or as against Landlord's business of leasing the Premises or the
occupancy of Tenant or any other tax, fee, or excise, however described,
including, but not limited to, any value added tax, or any tax imposed in
substitution (partially or totally) of any tax previously included within the
definition of real property taxes, or any additional tax the nature of which was
previously included within the definition of real property taxes. The term "Tax
Expenses" shall not include any franchise, estate, inheritance, net income, or
excess profits tax imposed upon Landlord. Tenant shall not be responsible for
the payment of any assessments or special taxes on the Park in conjunction with
the development or future development of the Park.
6.3 COMMON AREA EXPENSES: In addition to the Base Rent set forth in
Section 3, Tenant shall pay to Landlord Tenant's Share of Common Area Expenses
as Additional Rent in the same manner as provided in Section 3.2 and reconciled
in the same manner as set forth in Section 6.5. The term "Tenant's Share" shall
mean a percentage derived by dividing the actual gross square footage of the
Premises by the actual gross square footage of the entire Park, including the
Premises. The term "Common Area" shall mean the land, landscaping and
improvements between El Camino Real and the Premises and the main entrance and
driveway to the Premises from El Camino Real and the slopes fronting on El
Camino Real. The term "Common Area Expenses" shall mean Landlord's cost of
maintaining, repairing and replacing the improvements within the Common Area,
including, but not limited to Landlord's cost of utilities, insurance, fees,
charges and expenses, supplies, equipment, rental equipment, security and fire
protection services if provided by Landlord and other similar items used in the
operation and/or maintenance of the Common Area, and all real property taxes
applicable or reasonably apportioned by the Landlord to the Common Area. The
Landlord may be maintaining other portions of the Park under service contracts
which include the Common Area, and in such event, the expense charged to the
Common Area shall be reasonably apportioned by Landlord.
6.4 PAYMENT OF EXPENSES: Landlord shall estimate Operating Expenses,
Tax Expenses and Tenant's Share of Common Area Expenses for the calendar year in
which the Lease commences. Commencing on the Commencement Date, one-twelfth
(1/12th) of this estimated amount shall be paid by Tenant to Landlord, as
Additional Rent, and thereafter on the first (1st) day of each month throughout
the remaining months of such calendar year. Thereafter, Landlord may estimate
such expenses as of the beginning of each calendar year during the Term of this
Lease and Tenant shall pay one-twelfth (1/12th) of such estimated amount as
Additional Rent hereunder on the first (1st) day of each month during such
calendar year and for each ensuing calendar year throughout the Term of this
Lease. Tenant's obligation to pay Operating Expenses, Tax Expenses and Tenant's
Share of Common Area Expenses arising during the Term of the Lease shall survive
for a period of two (2) years following the expiration or earlier termination of
this Lease.
6.5 ANNUAL RECONCILIATION: By May 31st of each calendar year, or as
soon thereafter as reasonably possible, Landlord shall furnish Tenant with an
accounting of actual Operating Expenses, Tax Expenses and Common Area Expenses.
Within thirty (30) days of Landlord's delivery of such accounting, Tenant shall
pay to Landlord the amount of any underpayment. Notwithstanding the foregoing,
failure by Landlord to give such accounting by such date shall not constitute a
waiver by Landlord of its right to collect any of Tenant's underpayment at any
time. Landlord shall credit the amount of any overpayment by Tenant toward the
next estimated monthly installment(s) falling due, or where the Term of the
Lease has expired, refund the amount of overpayment to Tenant. If the Term of
the Lease expires prior to the annual reconciliation of expenses Landlord shall
have the right to reasonably estimate Operating Expenses, Tax Expenses and
Common Area Expenses, and if Landlord determines that an underpayment is due,
Tenant hereby agrees that Landlord shall be entitled to deduct such underpayment
from Tenant's Security Deposit. If Landlord reasonably determines that an
overpayment has been made by Tenant, Landlord shall refund said overpayment to
Tenant as soon as practicable thereafter. Notwithstanding the foregoing, failure
of Landlord to accurately estimate Operating Expenses, Tax Expenses and Common
Area Expenses or to otherwise perform such reconciliation of Operating Expenses,
Tax Expenses and Common Area Expenses, including without limitation, Landlord's
failure to deduct any portion of any underpayment from Tenant's Security
Deposit, shall not constitute a waiver of Landlord's right to collect any of
Tenant's underpayment so long as any action is brought by Landlord within two
(2) years after the after the expiration or earlier termination of this Lease.
6.6 AUDIT: After delivery to Landlord of at least thirty (30) days
prior written notice, Tenant, at its sole cost and expense through any
accountant designated by it, shall have the right to examine and/or audit the
books and records evidencing such costs and expenses for the previous one (1)
calendar year,
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during Landlord's reasonable business hours but not more frequently than once
during any calendar year. Any such accounting firm designated by Tenant may not
be compensated on a contingency fee basis. The results of any such audit (and
any negotiations between the parties related thereto) shall be maintained
strictly confidential by Tenant and its accounting firm and shall not be
disclosed, published or otherwise disseminated to any other party other than to
Landlord and its authorized agents. Landlord and Tenant shall use their
reasonable efforts to cooperate in such negotiations and to promptly resolve any
discrepancies between Landlord and Tenant in the accounting of such costs and
expenses. If the audit objectively demonstrates a mistake in Tenant's favor in
excess of five percent (5%) of the total amounts paid by Tenant for Operating
Expenses, Tax Expenses, and Tenant's Share of Common Area Expenses, Landlord
shall within thirty (30) days thereafter reimburse Tenant for the actual and
reasonable cost of the audit, and any monies shown to be owing to Tenant.
7. UTILITIES: Tenant shall pay directly the cost of all utilities, including but
not limited to, all water, sewer use, sewer discharge fees, water and sewer
connection fees (but only to the extent, if any, required in Exhibit B), gas,
heat, electricity, refuse pickup, janitorial service, telephone and other
utilities billed or separately metered to the Premises and/or Tenant. Tenant
shall cause all such utilities to be placed in Tenant's name and Tenant shall
timely pay the costs of all such utilities. Tenant shall also pay prior to
delinquency directly to the appropriate authority any assessments or charges for
utility or similar purposes included within any tax bill for the Premises,
including, without limitation, entitlement fees, allocation unit fees, and/or
any similar fees or charges, and any penalties related thereto. Tenant
acknowledges that the Premises may become subject to the rationing of utility
services or restrictions on utility use as required by a public utility company,
governmental agency or other similar entity having jurisdiction thereof.
Notwithstanding any such rationing or restrictions on use of any such utility
services, Tenant acknowledges and agrees that its tenancy and occupancy
hereunder shall be subject to such rationing restrictions as may be imposed upon
Landlord, Tenant, the Premises or Common Area, and Tenant shall in no event be
excused or relieved from any covenant or obligation to be kept or performed by
Tenant by reason of any such rationing or restrictions. Tenant further agrees to
timely and faithfully pay, prior to delinquency, any amount, tax, charge,
surcharge, assessment or imposition levied, assessed or imposed upon the
Premises, or Tenant's use and occupancy thereof.
8. LATE CHARGES: Any and all sums or charges set forth in this Section 8 are
considered part of Additional Rent. Tenant acknowledges that late payment (the
sixth (6th) day of each month or any time thereafter) by Tenant to Landlord of
Base Rent, Operating Expenses, Tax Expenses, Common Area Expenses, and Utility
Expenses (if any) (the 31st day after Tenant's receipt of Landlord's written
demand therefor or any time thereafter) or other sums due hereunder, will cause
Landlord to incur costs not contemplated by this Lease, the exact amount of such
costs being extremely difficult and impracticable to fix. Such costs include,
without limitation, processing and accounting charges, and late charges that may
be imposed on Landlord by the terms of any note secured by any encumbrance
against the Premises, and late charges and penalties imposed on Landlord as a
result of Tenant's late payment of Operating Expenses. Therefore, if any
installment of Rent or any other sum due from Tenant is not received by Landlord
within five (5) days of the date when due, Tenant shall promptly pay to Landlord
all of the following, as applicable: (a) an additional sum equal to five percent
(5%) of such delinquent amount plus interest on such delinquent amount at the
rate equal to the prime rate plus three percent (3%) for the time period such
payments are delinquent as a late charge for every month or portion thereof that
such sums remain unpaid, (b) the amount of seventy-five dollars ($75) for each
three-day notice prepared for, or served on, Tenant, (c) the amount of fifty
dollars ($50) relating to checks for which there are not sufficient funds. If
Tenant delivers to Landlord a check for which there are not sufficient funds,
Landlord may, at its sole option, require Tenant to replace such check with a
cashier's check for the amount of such check and all other charges payable
hereunder. The parties agree that this late charge and the other charges
referenced above represent a fair and reasonable estimate of the costs that
Landlord will incur by reason of late payment by Tenant. Acceptance of any late
charge or other charges shall not constitute a waiver by Landlord of Tenant's
default with respect to the delinquent amount, nor prevent Landlord from
exercising any of the other rights and remedies available to Landlord for any
other breach of Tenant under this Lease. If a late charge or other charge
becomes payable for any three (3) installments of Rent within any twelve (12)
month period, then Landlord, at Landlord's sole option, can either require the
Rent be paid quarterly in advance, or be paid monthly in advance by cashier's
check or by electronic funds transfer.
9. USE OF PREMISES:
9.1 COMPLIANCE WITH LAWS, RECORDED MATTERS, AND RULES AND REGULATIONS:
The Premises are to be used solely for the purposes and uses specified in the
Basic Lease Information and for no other uses or purposes without Landlord's
prior written consent, which consent shall not be unreasonably withheld or
delayed so long as the proposed use (i) does not involve the use of Hazardous
Materials other than as expressly permitted under the provisions of Section 29
below and (ii) is compatible and consistent with the other uses then being made
in the vicinity of the Premises, as reasonably determined by Landlord. The use
of the Premises by Tenant and its employees, representatives, agents, invitees,
licensees, subtenants, customers or contractors (collectively, "Tenant's
Representatives") shall be subject to, and at all times in compliance with, (a)
any and all applicable laws, ordinances, statutes, orders and regulations
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as same exist from time to time (collectively, the "Laws"), (b) any and all
documents, matters or instruments, including without limitation, any
declarations of covenants, conditions and restrictions, and any supplements
thereto, each of which has been or hereafter is recorded in any official or
public records with respect to the Premises and/or Common Area, or any portion
thereof (collectively, the "Recorded Matters"), and (c) any and all rules and
regulations set forth in Exhibit C, attached to and made a part of this Lease,
and any other reasonable rules and regulations promulgated by Landlord now or
hereafter enacted relating to parking and the operation of the Premises and/or
Common Area (collectively, the "Rules and Regulations"); provided, however, any
Recorded Matters which are recorded subsequent to the Lease Date shall not
materially and adversely affect Tenant's use and enjoyment of the Premises or
Common Area or be inconsistent with the terms of this Lease (provided, Tenant
acknowledges that Landlord intends to parcelize the Land such that each of the
Buildings shall be located on a separate legal parcel and Tenant shall have no
right to approve and/or consent to such parcelization). Subject to any other
express terms set forth in this Lease, Tenant agrees to, and does hereby, assume
full and complete responsibility to ensure that the design of the Tenant
Improvements is adequate to fully meet the needs and requirements of Tenant's
intended operations of its business within the Premises, and Tenant's use of the
Premises and that same are in compliance with all applicable Laws throughout the
Term of this Lease. Additionally, Tenant shall be solely responsible for the
payment of all costs, fees and expenses associated with any modifications,
improvements or alterations to the Premises and/or Common Area occasioned by the
enactment of, or changes to, any Laws arising from Tenant's particular use of
the Premises or alterations, improvements or additions made to the Premises
regardless of when such Laws became effective.
9.2 PROHIBITION ON USE: Tenant shall not use the Premises or permit
anything to be done in or about the Premises nor keep or bring anything therein
which will in any way conflict with any of the requirements of the Board of Fire
Underwriters or similar body now or hereafter constituted or in any way increase
the existing rate of or affect any policy of fire or other insurance upon any of
the Buildings or any of its contents, or cause a cancellation of any insurance
policy. No auctions may be held or otherwise conducted in, on or about the
Premises and/or Common Area without Landlord's written consent thereto, which
consent may be given or withheld in Landlord's sole discretion. Tenant shall not
do or permit anything to be done in or about the Premises which will in any way
obstruct or interfere with the rights of Landlord or other persons or businesses
in the area, or injure or annoy other tenants or use or allow the Premises to be
used for any unlawful or objectionable purpose; nor shall Tenant cause, maintain
or permit any private or public nuisance in, on or about the Premises and/or
Common Area, including, but not limited to, any offensive odors, noises, fumes
or vibrations. Tenant shall not damage or deface or otherwise commit or suffer
to be committed any waste in, upon or about the Premises. Tenant shall not place
or store, nor permit any other person or entity to place or store, any property,
equipment, materials, supplies, personal property or any other items or goods
outside of the Premises for any period of time. Tenant shall not permit any
animals, including, but not limited to, any household pets, to be brought or
kept in or about the Premises. Tenant shall place no loads upon the floors,
walls, or ceilings in excess of the maximum designed load permitted by the
applicable Uniform Building Code or which may damage any of the Buildings or
outside areas; nor place any harmful liquids in the drainage systems; nor dump
or store waste materials, refuse or other such materials, or allow such to
remain outside the Building area, except for any non-hazardous or non-harmful
materials which may be stored in refuse dumpsters or in any enclosed trash areas
provided. Tenant shall honor the terms of all Recorded Matters relating to the
Premises and/or Common Area. Tenant shall honor the Rules and Regulations. If
Tenant fails to comply with such Laws, Recorded Matters, Rules and Regulations
or the provisions of this Lease, Landlord shall have the right to pursue any and
all rights and remedies of Landlord hereunder including, but not limited to, the
payment by Tenant to Landlord of all Enforcement Expenses and Landlord's costs
and expenses, if any, to cure any of such failures of Tenant, if Landlord, at
its sole option, elects to undertake such cure. If any portion of the Common
Area is located on the Premises, Landlord shall have the right to reasonably
enter upon the Premises for the purposes of keeping and maintaining the Common
Area as required herein and that portion of the Common Area consisting of the
right of way shall be open and available to other tenants within the Park and
their invitees. The provisions of this Section 9.2 shall be applied to Tenant by
Landlord in a reasonable and non-discriminatory manner on the same basis that
Landlord applies similar provisions to other tenants within the Park.
10. ALTERATIONS AND ADDITIONS; AND SURRENDER OF PREMISES:
10.1 ALTERATIONS AND ADDITIONS: Tenant shall be permitted to make, at
Tenant's sole cost and expense, non-structural alterations and additions to the
Premises which do not require a permit without obtaining Landlord's prior
written consent provided the cost of same does not exceed One Hundred Thousand
Dollars ($100,000.00) cumulatively in any six (6) month period ("Permitted
Improvements"); provided, however, no such Permitted Improvement shall be
allowed which penetrate the roof or alter the plumbing, mechanical, electrical
or fire sprinkler/monitoring systems of the Building. Except for the Permitted
Improvements, Tenant shall not install any signs, fixtures (other than trade
fixtures), improvements, nor make or permit any other alterations or additions
to the Premises without the prior written consent of Landlord, which shall not
be unreasonably withheld or delayed. If any such alteration or addition is
expressly permitted by Landlord, including the Permitted Improvements, Tenant
shall deliver
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at least twenty (20) days prior notice to Landlord, from the date Tenant intends
to commence construction, sufficient to enable Landlord to post a Notice of
Non-Responsibility. Within twenty (20) business days of Landlord's receipt of
Tenant's written notice of any item comprising the Permitted Improvements,
Landlord shall notify Tenant whether or not Landlord will require Tenant to
remove such items from the Premises upon the expiration or earlier termination
of this Lease. In all events, Tenant shall obtain all permits or other
governmental approvals prior to commencing any of such work and deliver a copy
of same to Landlord. All alterations and additions shall be installed by a
licensed contractor approved by Landlord, at Tenant's sole expense in compliance
with all applicable Laws (including, but not limited to, the ADA as defined
herein), Recorded Matters, and Rules and Regulations. Tenant shall keep the
Premises and the property on which the Premises are situated free from any liens
arising out of any work performed, materials furnished or obligations incurred
by or on behalf of Tenant. As a condition to Landlord's consent to the
installation of any fixtures, additions or other improvements the cost of which
exceeds Five Hundred Thousand Dollars ($500,000.00), Landlord may require Tenant
to post and obtain a completion and indemnity bond for up to one hundred fifty
percent (150%) of the cost of the work.
10.2 SURRENDER OF PREMISES: Upon the termination of this Lease,
whether by forfeiture, lapse of time or otherwise, or upon the termination of
Tenant's right to possession of the Premises, Tenant will at once surrender and
deliver up the Premises, together with the Tenant Improvements (except as set
forth below), fixtures (other than trade fixtures), additions and improvements
which Landlord has notified Tenant, in writing, that Landlord will require
Tenant not to remove, to Landlord in good condition and repair (including, but
not limited to, replacing all light bulbs and ballasts not in good working
condition) and in the condition in which the Premises existed as of the
Commencement Date, except for reasonable wear and tear and casualty; provided,
however, (i) Landlord may require Tenant to remove some or all of the Tenant
Improvements so long as Landlord gives Tenant written notice of such demand at
the time of Landlord's approval of the Tenant Improvements, (ii) in the event TI
Costs exceed $35.00 per square foot ("Excess TIs"), Landlord and Tenant shall
identify and agree upon at or prior to the finalization of the TI Construction
Drawings (as defined in Exhibit B) those Excess TIs which (a) which may be
removed by Tenant at Tenant's election at the expiration or earlier termination
of the Term provided Tenant repairs any damage caused by such removal and (b)
which shall be removed by Tenant at the expiration or earlier termination of the
Term in the event Landlord requires Tenant to so remove such Excess TIs, (iii)
Tenant shall remove those Permitted Improvements of which Landlord, at least
sixty (60) days prior to the expiration or earlier termination of this Lease,
notifies Tenant must be removed at the expiration or earlier termination of this
Lease, and (iv) such removal by Tenant shall not cause the Premises to be in
non-compliance with any and all applicable codes, laws and regulations;
provided, further, in the event Landlord fails to notify Tenant that Landlord
shall require the removal of any Permitted Improvements, Tenant Improvements,
Excess TIs (except those agreed upon by Landlord and Tenant as set forth above)
or any other addition, fixture or other improvement, Tenant shall not remove any
such Permitted Improvements, Tenant Improvements, Excess TIs (except those
agreed upon by Landlord and Tenant as set forth above) or any other addition,
fixture or other improvement. Reasonable wear and tear shall not include any
damage or deterioration to the floors of the Premises arising from the use of
forklifts in, on or about the Premises (including, without limitation, any marks
or stains of any portion of the floors), and any damage or deterioration that
would have been prevented by proper maintenance by Tenant or Tenant otherwise
performing all of its obligations under this Lease. Tenant shall repair any
damage caused by the installation or removal of any Tenant Improvements, any
Excess TIs, signs, trade fixtures, furniture, furnishings, fixtures, additions
and improvements which are to be removed from the Premises by Tenant hereunder.
Tenant shall ensure that the removal of such items and the repair of the
Premises will be completed within thirty (30) days after termination of this
Lease and such tenancy shall be subject to Section 22.
11. REPAIRS AND MAINTENANCE:
11.1 TENANT'S REPAIRS AND MAINTENANCE OBLIGATIONS: Except for those
portions of the Buildings to be replaced by Landlord, as expressly provided in
Section 11.2 below, (i) Tenant shall, at Tenant's sole cost and expense, keep
and maintain the entirety of the Premises in good, clean and safe condition and
repair to the reasonable satisfaction of Landlord including, but not limited to,
repairing any damage caused by Tenant or Tenant's Representatives and replacing
any property so damaged by Tenant or Tenant's Representatives; any replacements,
including those replacements described in Section 11.2.1 of this Lease, shall be
of equal or better quality than the components or items replaced and be
reasonably approved by Landlord in advance of such replacements and Landlord
shall have the right, but not the obligation to, inspect and monitor the
installation and operation of such replacement; and (ii) Tenant shall, at
Tenant's sole cost, provide for security and fire protection services for the
Premises as may reasonably be required. Tenant shall procure and maintain
preventative maintenance contract(s) for (a) the heating, ventilation and air
conditioning systems; (b) the fire and sprinkler protection services (including,
without limitation, monitoring services; and (c) the roof systems (other than
the structural portions of the roof which are the responsibility of the Landlord
unless damage to those portions of the roof is due to Tenant's failure to
maintain its portion of the roof systems). All preventative maintenance
contract(s) shall be obtained from licensed contractors or vendors, on a
monthly, bi-monthly or quarterly basis, as reasonably determined by Landlord.
Landlord shall have the right to reasonably approve all such maintenance
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contracts prior to their execution by Tenant, and, in the event Landlord shall
reasonably conclude that Tenant is not properly maintaining the above-mentioned
systems, Landlord reserves the right, but without the obligation to do so, to
procure and maintain (i) the heating, ventilation and air conditioning systems
preventative maintenance contract(s), (ii) the fire and sprinkler protection
services and preventative maintenance contract(s) (including, without
limitation, monitoring services) and/or (iii) the roof systems preventative
maintenance contract(s). If Landlord so elects to procure and maintain any such
contract(s), Tenant will be named as a third party beneficiary in each such
contract(s) and Tenant shall reimburse Landlord for the cost thereof in
accordance with the provisions of Section 6 above. If Tenant procures and
maintains any of such contract(s), Tenant will promptly deliver to Landlord a
true and complete copy of each such contract and any and all renewals or
extensions thereof, and each service report or other summary received by Tenant
pursuant to or in connection with such contract(s). If Landlord actually
procures any of such contract(s) and the contractors or vendors thereunder fail
to promptly and adequately respond or otherwise perform the work required, then
Tenant shall notify Landlord of such in writing (including a reasonably detailed
explanation of the problems being experienced by Tenant) and Landlord shall
promptly commence and undertake such corrective action as may be reasonably
necessary to resolve such problems to Tenant's reasonable satisfaction. In
addition to the above, if required Tenant shall also obtain repair contracts
with appropriate contractors or vendors.
11.2 REPLACEMENT OBLIGATIONS: With respect to replacements of
Improvements on the Premises, other than those caused by fire or other casualty
covered under Section 27 of this Lease, Landlord and Tenant agree that they
shall have the following obligations:
11.2.1 Replacements rendered necessary by (i) the
intentional or negligent acts or omissions of Tenant or any of Tenant's
Representatives and (ii) replacements not covered by Sections 6.1.2, 6.1.4 or
11.2.3, shall be the sole responsibility of Tenant subject to waiver of
subrogation under Section 13.
11.2.2 Replacements made pursuant to Section 6.1.2 of this
Lease (if any) shall be subject to Tenant's obligation to reimburse Landlord in
accordance with Section 6.1.2 and shall be deemed to be Additional Rent
hereunder.
11.2.3 Landlord shall be solely responsible for the
replacement of the structural portions of the following portions of the
Buildings: the floors, foundations, exterior perimeter walls and roofs of the
Buildings (exclusive of the roof membrane and glass and exterior doors), as, and
when, Landlord determines such replacement to be necessary in Landlord's
reasonable discretion.
11.2.4 Replacements made pursuant to Section 6.1.4 of this
Lease, if any, shall be subject to Tenant's obligation to reimburse Landlord in
accordance with Section 6.1.4 and shall be deemed to be Additional Rent
hereunder.
11.3 TENANT'S FAILURE TO PERFORM REPAIRS AND MAINTENANCE OBLIGATIONS:
Except for normal maintenance and repair of the items described above and except
as set forth in Section 42 of this Lease, Tenant shall have no right of access
to or right to install any device on the roofs of the Buildings nor make any
penetrations of the roofs of the Buildings without the express prior written
consent of Landlord, which consent shall not be unreasonably withheld or
delayed. If Tenant refuses or neglects to commence repair and maintenance of
Premises (including the Land) as required herein and to the reasonable
satisfaction of Landlord within three (3) business days after written notice
from Landlord (unless in the case of an emergency in which case no notice shall
be required), Landlord may, but without obligation to do so, at any time make
such repairs and/or maintenance without Landlord having any liability to Tenant
for any loss or damage that may accrue to Tenant's merchandise, fixtures or
other property, or to Tenant's business by reason thereof, except to the extent
any damage is caused by the willful misconduct or gross negligence of Landlord
or its authorized agents and representatives. In the event Landlord makes such
repairs and/or maintenance, upon completion thereof Tenant shall pay to
Landlord, as additional rent, the Landlord's costs for making such repairs
and/or maintenance, plus ten percent (10%) for overhead, upon presentation of a
bill therefor, plus any Enforcement Expenses. The obligations of Tenant
hereunder shall survive two (2) years following the expiration of the Term of
this Lease or the earlier termination thereof. Subject to Section 41 of this
Lease, Tenant hereby waives any right to repair at the expense of Landlord under
any applicable Laws now or hereafter in effect respecting the Premises.
11.4 LANDLORD'S AUDIT RIGHTS. Landlord shall have the right to audit
Tenant's replacement, maintenance and repair of the Buildings' systems,
including without limitation, those systems identified in Section 11.1 of this
Lease and, in the event such audit shall reveal deficiencies and/or defects in
the replacement, repair and maintenance of such systems by Tenant, Landlord
shall have those rights granted to Landlord under Sections 11.1 and 11.3 of this
Lease.
12. INSURANCE:
12.1 TYPES OF INSURANCE: Tenant shall maintain in full force and
effect at all times during the
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Term of this Lease, at Tenant's sole cost and expense, for the protection of
Tenant and Landlord, as their interests may appear, policies of insurance issued
by a carrier or carriers reasonably acceptable to Landlord and its lender(s)
which afford the following coverages: (i) worker's compensation: statutory
limits; (ii) employer's liability, as required by law, with a minimum limit of
$100,000 per employee and $500,000 per occurrence; (iii) commercial general
liability insurance (occurrence form) providing coverage against any and all
claims for bodily injury and property damage occurring in, on or about the
Premises arising out of Tenant's and Tenant's Representatives' use and/or
occupancy of the Premises. Such insurance shall include coverage for blanket
contractual liability, fire damage, premises, personal injury, completed
operations, products liability, personal and advertising, and a plate-glass
rider to provide coverage for all glass in, on or about the Premises including,
without limitation, skylights. Such insurance shall have a combined single limit
of not less than Two Million Dollars ($2,000,000) per occurrence with a Four
Million Dollar ($4,000,000) aggregate limit and excess/umbrella insurance in the
amount of Four Million Dollars ($4,000,000). If Tenant has other locations which
it owns or leases, the policy shall include an aggregate limit per location
endorsement. If necessary, as reasonably determined by Landlord, Tenant shall
provide for restoration of the aggregate limit; (iv) comprehensive automobile
liability insurance: a combined single limit of not less than $2,000,000 per
occurrence and insuring Tenant against liability for claims arising out of the
ownership, maintenance, or use of any owned, hired or non-owned automobiles; (v)
"all risk" or "special purpose" property insurance, including without
limitation, sprinkler leakage, boiler and machinery comprehensive form, if
applicable, covering damage to or loss of any personal property, trade fixtures,
inventory, fixtures and equipment located in, on or about the Premises, and in
addition, coverage for flood, earthquake, and business interruption of Tenant,
together with, if the property of Tenant's invitees is to be kept in the
Premises, warehouser's legal liability or bailee customers insurance for the
full replacement cost of the property belonging to invitees and located in the
Premises. Such insurance shall be written on a replacement cost basis (without
deduction for depreciation) in an amount equal to eighty percent (80%) of the
full replacement value of the aggregate of the items referred to in this
subparagraph (v); and (vi) such other insurance as Landlord deems reasonably
necessary and prudent or as may otherwise be reasonably required by any of
Landlord's lenders or joint venture partners.
12.2 INSURANCE POLICIES: Insurance required to be maintained by Tenant
shall be written by companies (i) licensed to do business in the State of
California, (ii) domiciled in the United States of America, and (iii) having a
"General Policyholders Rating" of at least A:X (or such higher rating as may be
required by a lender having a lien on the Premises) as set forth in the most
current issue of "A.M. Best's Rating Guides." Any deductible amounts under any
of the insurance policies required hereunder shall not exceed Ten Thousand
Dollars ($10,000.00). Tenant shall deliver to Landlord certificates of insurance
and true and complete copies of any and all endorsements required herein for all
insurance required to be maintained by Tenant hereunder at the time of execution
of this Lease by Tenant. Tenant shall, at least thirty (30) days prior to
expiration of each policy, furnish Landlord with certificates of renewal or
"binders" thereof. Each certificate shall expressly provide that such policies
shall not be cancelable or otherwise subject to modification except after thirty
(30) days prior written notice to the parties named as additional insureds as
required in this Lease (except for cancellation for nonpayment of premium, in
which event cancellation shall not take effect until at least ten (10) days'
notice has been given to Landlord). Tenant shall have the right to provide
insurance coverage which it is obligated to carry pursuant to the terms of this
Lease under a blanket insurance policy, provided such blanket policy expressly
affords coverage for the Premises and for Landlord as required by this Lease.
12.3 ADDITIONAL INSUREDS AND COVERAGE: Landlord, any property
management company and/or agent of Landlord for the Premises and Common Area and
any lender(s) of Landlord having a lien against the Premises and Common Area
shall be named as additional insureds under all of the policies required in
Section 12.1(iii) above. Additionally, such policies shall provide for
severability of interest. All insurance to be maintained by Tenant shall, except
for workers' compensation and employer's liability insurance, be primary,
without right of contribution from insurance maintained by Landlord. Any
umbrella/excess liability policy (which shall be in "following form") shall
provide that if the underlying aggregate is exhausted, the excess coverage will
drop down as primary insurance. The limits of insurance maintained by Tenant
shall not limit Tenant's liability under this Lease. It is the parties'
intention that the insurance to be procured and maintained by Tenant as required
herein shall provide coverage for any and all damage or injury arising from or
related to Tenant's operations of its business and/or Tenant's or Tenant's
Representatives' use of the Premises. It is not contemplated or anticipated by
the parties that the aforementioned risks of loss be borne by Landlord's
insurance carriers, rather it is contemplated and anticipated by Landlord and
Tenant that such risks of loss be borne by Tenant's insurance carriers pursuant
to the insurance policies procured and maintained by Tenant as required herein.
12.4 FAILURE OF TENANT TO PURCHASE AND MAINTAIN INSURANCE: In the
event Tenant does not purchase the insurance required in this Lease or keep the
same in full force and effect throughout the Term of this Lease (including any
renewals or extensions), Landlord may, but without obligation to do so, purchase
the necessary insurance and pay the premiums therefor. If Landlord so elects to
purchase such insurance, Tenant shall promptly pay to Landlord as Additional
Rent, the amount so paid by Landlord, upon Landlord's demand therefor. In
addition, Landlord may recover from Tenant and Tenant agrees to pay, as
Additional Rent, any and all Enforcement Expenses and damages which Landlord may
sustain by
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reason of Tenant's failure to obtain and maintain such insurance. If
Tenant fails to maintain any insurance required in this Lease, Tenant shall be
liable for all losses, damages and costs resulting from such failure.
12.5 LANDLORD'S INSURANCE: Landlord shall maintain in full force and
effect during the Term of this Lease, subject to reimbursement as provided in
Section 6, policies of insurance which afford such coverages as are commercially
reasonable and as is consistent with other properties in Landlord's portfolio.
Notwithstanding the foregoing, Landlord shall obtain and keep in force during
the Term of this Lease, as an item of Operating Expenses, a policy or policies
in the name of Landlord, with loss payable to Landlord and to the holders of any
mortgages, deeds of trust or ground leases on the Premises ("Lender(s)"),
insuring loss or damage to the Buildings, including all improvements, fixtures
(other than trade fixtures) and permanent additions. However, all alterations,
additions and improvements made to the Premises by Tenant (other than the Tenant
Improvements) shall be insured by Tenant rather than by Landlord. The amount of
such insurance procured by Landlord shall be equal to at least eighty percent
(80%) of the full replacement cost of the Buildings, including all improvements
and permanent additions as the same shall exist from time to time, or the amount
required by Lenders. At Landlord's option, such policy or policies shall insure
against all risks of direct physical loss or damage (including, without
limitation, the perils of flood and earthquake), including coverage for any
additional costs resulting from debris removal and reasonable amounts of
coverage for the enforcement of any ordinance or law regulating the
reconstruction or replacement of any undamaged sections of the Buildings
required to be demolished or removed by reason of the enforcement of any
building, zoning, safety or land use laws as the result of a covered cause of
loss. If any such insurance coverage procured by Landlord has a deductible
clause, the deductible shall not exceed commercially reasonable amounts, and in
the event of any casualty, the amount of such deductible shall be an item of
Operating Expenses. Notwithstanding anything to the contrary contained herein,
to the extent the cost of maintaining insurance with respect to the Buildings is
increased as a result of Tenant's acts, omissions, use or occupancy of the
Premises, Tenant shall pay for such increase(s).
13. WAIVER OF SUBROGATION: Landlord and Tenant hereby mutually waive their
respective rights of recovery against each other for any loss of, or damage to,
either parties' property to the extent that such loss or damage is insured by an
insurance policy required to be in effect at the time of such loss or damage.
Each party shall obtain any special endorsements, if required by its insurer
whereby the insurer waives its rights of subrogation against the other party.
This provision is intended to waive fully, and for the benefit of the parties
hereto, any rights and/or claims which might give rise to a right of subrogation
in favor of any insurance carrier. The coverage obtained by Tenant pursuant to
Section 12 of this Lease shall include, without limitation, a waiver of
subrogation endorsement attached to the certificate of insurance. The provisions
of this Section 13 shall not apply in those instances in which such waiver of
subrogation would invalidate such insurance coverage or would cause either
party's insurance coverage to be voided or otherwise uncollectible. In addition
to the above, neither party shall be personally obligated under any indemnities
given to the other party to the extent that insurance carried by the party
suffering a loss actually covers such loss.
14. LIMITATION OF LIABILITY AND INDEMNITY: Except to the extent of losses,
damages, liabilities, claims, charges and costs resulting from the gross
negligence or willful misconduct of Landlord or its authorized representatives,
Tenant agrees to protect, defend (with counsel acceptable to Landlord) and hold
Landlord and Landlord's lenders, partners, members, property management company
(if other than Landlord), agents, directors, officers, employees,
representatives, contractors, shareholders, successors and assigns and each of
their respective partners, members, directors, employees, representatives,
agents, contractors, shareholders, successors and assigns (collectively, the
"Indemnitees") harmless and indemnify the Indemnitees from and against all
liabilities, damages, claims, losses, judgments, charges and expenses (including
reasonable attorneys' fees, costs of court and expenses necessary in the
prosecution or defense of any litigation including the enforcement of this
provision) arising from or in any way related to, directly or indirectly, (i)
Tenant's or Tenant's Representatives' use of the Premises, (ii) the conduct of
Tenant's business, (iii) from any activity, work or thing done, permitted or
suffered by Tenant in or about the Premises, (iv) in any way connected with the
Premises or with the improvements or personal property therein, including, but
not limited to, any liability for injury to person or property of Tenant,
Tenant's Representatives, or third party persons, and/or (v) Tenant's failure to
perform any covenant or obligation of Tenant under this Lease. Tenant agrees
that the obligations of Tenant herein shall survive the expiration or earlier
termination of this Lease.
Except to the extent of damage resulting from the gross negligence or
willful misconduct of Landlord or its authorized representatives, to the fullest
extent permitted by law, Tenant agrees that neither Landlord nor any of
Landlord's lender(s), partners, members, employees, representatives, legal
representatives, successors or assigns shall at any time or to any extent
whatsoever be liable, responsible or in any way accountable for any loss,
liability, injury, death or damage to persons or property which at any time may
be suffered or sustained by Tenant or by any person(s) whomsoever who may at any
time be using, occupying or visiting the Premises, including, but not limited
to, any acts, errors or omissions by or on behalf of any other tenants or
occupants of the Buildings. Tenant shall not, in any event or circumstance, be
permitted to offset or otherwise credit against any payments of Rent required
herein for matters for which Landlord may be liable hereunder. Landlord and its
authorized representatives shall not
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be liable for latent defects or any interference with light or air from other
structures off the Premises and not leased by Tenant.
15. ASSIGNMENT AND SUBLEASING:
15.1 PROHIBITION: Except as expressly set forth herein with respect to
a Related Entity, Tenant shall not assign, mortgage, hypothecate, encumber,
grant any license or concession, pledge or otherwise transfer this Lease
(collectively, "assignment"), in whole or in part, whether voluntarily or
involuntarily or by operation of law, nor sublet or permit occupancy by any
person other than Tenant of all or any portion of the Premises without first
obtaining the prior written consent of Landlord, which consent shall not be
unreasonably withheld. Tenant hereby agrees that Landlord may withhold its
consent to any proposed sublease or assignment if the proposed sublessee or
assignee or its business is subject to compliance with additional requirements
of the ADA (defined below) and/or Environmental Laws (defined below) beyond
those requirements which are applicable to Tenant, unless the proposed sublessee
or assignee shall (a) first deliver plans and specifications for complying with
such additional reasonable requirements and obtain Landlord's written reasonable
consent thereto, and (b) comply with all Landlord's reasonable conditions for or
contained in such consent, including without limitation, requirements for
security to assure the lien-free completion of such improvements. If Tenant
seeks to sublet or assign all or any portion of the Premises, Tenant shall
deliver to Landlord at least thirty (30) days prior to the proposed commencement
of the sublease or assignment (the "Proposed Effective Date") the following: (i)
the name of the proposed assignee or sublessee; (ii) such information as to such
assignee's or sublessee's financial responsibility and standing as Landlord may
reasonably require; and (iii) the aforementioned plans and specifications, if
any. Within ten (10) days after Landlord's receipt of a written request from
Tenant that Tenant seeks to sublet or assign all or any portion of the Premises,
Landlord shall deliver to Tenant a copy of Landlord's standard form of sublease
or assignment agreement (as applicable), which instrument shall be utilized for
each proposed sublease or assignment (as applicable), and such instrument shall
include a provision whereby the assignee assumes all of Tenant's obligations
hereunder and agrees to be bound by the terms hereof. As Additional Rent
hereunder, Tenant shall pay to Landlord a fee in the amount of five hundred
dollars ($500) plus Tenant shall reimburse Landlord for actual legal and other
expenses incurred by Landlord in connection with any actual or proposed
assignment or subletting. In the event the sublease or assignment (other than to
a Related Entity) (1) by itself or taken together with prior sublease(s) or
partial assignment(s) covers or totals, as the case may be, (a) more than
thirty-five percent (35%) of the rentable square feet of the Premises, or (b)
all of any one or more of the Buildings; or (2) is for a term which by itself or
taken together with prior or other subleases or partial assignments is greater
than fifty percent (50%) of the period remaining in the Term of this Lease as of
the time of the Proposed Effective Date; or (3) is an assignment or subletting
for any portion of the Premises for a period extending into any option or
renewal Term of this Lease, then Landlord shall have the right, to be exercised
by giving written notice to Tenant within ten (10) business days after
Landlord's receipt of Tenant's written request seeking to assign or sublet all
or a portion of the Premises, to recapture the space described in the sublease
or assignment. If such recapture notice is given, it shall serve to terminate
this Lease with respect to the proposed sublease or assignment space, or, if the
proposed sublease or assignment space covers all the Premises, it shall serve to
terminate the entire term of this Lease in either case, as of the Proposed
Effective Date. However, no termination of this Lease with respect to part or
all of the Premises shall become effective without the prior written consent,
where necessary, of the holder of each deed of trust encumbering the Premises or
any part thereof. If this Lease is terminated pursuant to the foregoing with
respect to less than the entire Premises, the Rent shall be adjusted on the
basis of the proportion of square feet retained by Tenant to the square feet
originally demised and this Lease as so amended shall continue thereafter in
full force and effect. Each permitted assignee or sublessee, including without
limitation, a Related Entity, shall assume and be deemed to assume this Lease
and shall be and remain liable jointly and severally with Tenant for payment of
Rent and for the due performance of, and compliance with all the terms,
covenants, conditions and agreements herein contained on Tenant's part to be
performed or complied with, for the term of this Lease. No assignment or
subletting shall affect the continuing primary liability of Tenant (which,
following assignment, shall be joint and several with the assignee), and Tenant
shall not be released from performing any of the terms, covenants and conditions
of this Lease. Tenant hereby acknowledges and agrees that it understands that
Landlord's accounting department may process and accept Rent payments without
verifying that such payments are being made by Tenant, a permitted sublessee or
a permitted assignee in accordance with the provisions of this Lease. Although
such payments may be processed and accepted by such accounting department
personnel, any and all actions or omissions by the personnel of Landlord's
accounting department shall not be considered as acceptance by Landlord of any
proposed assignee or sublessee nor shall such actions or omissions be deemed to
be a substitute for the requirement that Tenant obtain Landlord's prior written
consent to any such subletting or assignment, and any such actions or omissions
by the personnel of Landlord's accounting department shall not be considered as
a voluntary relinquishment by Landlord of any of its rights hereunder nor shall
any voluntary relinquishment of such rights be inferred therefrom. For purposes
hereof, and except with respect to a Related Entity, in the event Tenant is a
corporation, partnership, joint venture, trust or other entity other than a
natural person, any change in the direct or indirect ownership of Tenant
(whether pursuant to one or more transfers) which results in a change of more
than fifty percent (50%) (except for sales of shares through a regulated public
exchange) in the direct or indirect ownership of Tenant shall be deemed to be
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an assignment within the meaning of this Section 15 and shall be subject to all
the provisions hereof. Except for a permissible assignment to a Related Entity,
any and all options, first rights of refusal, tenant improvement allowances and
other similar rights granted to Tenant in this Lease, if any, shall not be
assignable by Tenant unless expressly authorized in writing by Landlord.
15.2 EXCESS SUBLEASE RENTAL OR ASSIGNMENT CONSIDERATION: In the event
of any sublease or assignment of all or any portion of the Premises where the
rent or other consideration provided for in the sublease or assignment either
initially or over the term of the sublease or assignment exceeds the Rent or pro
rata portion of the Rent, as the case may be, for such space reserved in the
Lease, Tenant shall pay the Landlord monthly, as Additional Rent, at the same
time as the monthly installments of Rent are payable hereunder, the following:
until Tenant shall have been reimbursed the actual costs expended by Tenant for
Tenant Improvements and brokerage commissions in connection with any assignment
or subletting (and no other costs shall be reimbursable to Tenant from such
profits), Tenant shall receive seventy-five percent (75%) of such profits and
Landlord shall receive twenty-five percent (25%) of such profits; provided, such
deduction of actual costs shall in no event exceed Fifteen Dollars ($15.00) per
square foot assigned or sublet. After such reimbursement of costs to Tenant, all
profits shall be shared fifty/fifty (50/50).
15.3 WAIVER: Notwithstanding any assignment or sublease, or any
indulgences, waivers or extensions of time granted by Landlord to any assignee
or sublessee, or failure by Landlord to take action against any assignee or
sublessee, Landlord may, at its option, proceed against Tenant without having
taken action against or joined such assignee or sublessee, except that Tenant
shall have the benefit of any indulgences, waivers and extensions of time
granted to any such assignee or sublessee.
15.4 RELATED ENTITY: Notwithstanding anything to the contrary
contained herein, so long as Tenant delivers to Landlord (1) at least fifteen
(15) business days prior written notice of its intention to assign or sublease
the Premises to any Related Entity, which notice shall set forth the name of the
Related Entity, (2) a copy of the proposed agreement pursuant to which such
assignment or sublease shall be effectuated, and (3) such other information
concerning the Related Entity as Landlord may reasonably require, including
without limitation, information regarding any change in the proposed use of any
portion of the Premises and any financial information with respect to such
Related Entity, and so long as Landlord approves, in writing, of any change in
the proposed use of the subject portion of the Premises and such financial
information, then Tenant may assign this Lease or sublease any portion of the
Premises (X) to any Related Entity, or (Y) in connection with any merger,
consolidation or sale of substantially all of the assets of Tenant, without
having to obtain the prior written consent of Landlord thereto. For purposes of
this Lease the term "Related Entity" shall mean and refer to any corporation or
entity which controls, is controlled by or is under common control with Tenant
and/or which arises from the merger, consolidation or sale of substantially all
of the assets of Tenant, as all of such terms are customarily used in the
industry, and in the case of a complete assignment of the Lease, with an equal
or greater net worth as Tenant has as of the proposed transfer date.
15.5 Notwithstanding anything else in the Lease, those entities
("Business Entities") (i) in which Tenant holds at least a ten percent (10%)
interest, (ii) which are performing services with or for the Tenant to fulfill
contractual obligations of the Tenant, and/or (iii) for which the Tenant is
providing services, if any of (i), (ii) and/or (iii) are not otherwise a Related
Entity, will be governed by the following terms with respect to assignments
and/or subleases under the Lease:
(1) Tenant may partially assign or sublet up to (singularly
or in the aggregate) forty percent (40%) of the rentable square feet of the
Premises to Business Entities without the prior consent of the Landlord;
provided Tenant notifies Landlord of such assignment or sublease within thirty
(30) days after it becomes effective. Any such assignment or sublease shall be
subject to Landlord's right to share in any excess Base Rent as provided in
Section 15.2. of the Lease.
(2) Any assignment or sublease to Business Entities which
singularly or in the aggregate with other such assignments or subleases exceeds
forty percent (40%) of the rentable square footage of the Premises ("Excess
Space") shall require the prior written consent of the Landlord, which consent
shall not be unreasonably withheld. It shall be reasonable for Landlord to
withhold Landlord's consent to any such assignment or subletting in the event,
at the time of such assignment or subletting Tenant shall not have a net worth
equal to at least Tenant's net worth as of the Lease Date. In the event of a
partial assignment or sublease to a Business Entity of Excess Space, Landlord
shall not have the right to recapture the Excess Space under Section 15.1 of the
Lease, but shall have the right to share in excess Base Rent pursuant to the
following terms and conditions which shall supersede Section 15.2 of the Lease
in such event:
(a) The Base Rent under the assignment or
sublease for the Excess Space shall be the greater of (i) the actual Base Rent
charged by Tenant; or (ii) the Fair Rental Value of the Excess Space as
determined pursuant to the formula set forth in Addendum 1 to the Lease.
(b) To the extent the Base Rent per rentable
square foot of the Excess Space
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as calculated under subparagraph (a) above is greater than the Base Rent per
rentable square foot paid by Tenant under the Lease, Landlord and Tenant shall
share the difference fifty/fifty (50/50) without any offset or reimbursement to
Tenant for costs and expenses incurred with respect to the assignment or
sublease of the Excess Space.
The provisions of this Section 15.5 (2) shall only be applicable during the
period(s) of time in which more than forty percent (40%) of the Premises is
assigned or sublet to one or more Business Entities.
(3) The term "Premises," as used in and for purposes only
of this Section 15.5, shall include the (i) Phase 2 Building if Landlord owns
such Phase, Tenant has exercised the Phase 2 Option, and the Commencement Date
for the Lease on the Phase 2 Building has occurred, and (ii) the Phase 3
Building if Landlord owns such Phase, Tenant has exercised the Phase 3 Option,
and the Commencement Date for the Lease on the Phase 3 Building has occurred.
16. AD VALOREM TAXES: Prior to delinquency, Tenant shall pay all taxes and
assessments levied upon trade fixtures, alterations, additions, improvements,
inventories and personal property located and/or installed on or in the Premises
by, or on behalf of, Tenant; and if requested by Landlord, Tenant shall promptly
deliver to Landlord copies of receipts for payment of all such taxes and
assessments. To the extent any such taxes are not separately assessed or billed
to Tenant, Tenant shall pay the amount thereof as invoiced by Landlord.
17. SUBORDINATION: Except as set forth below, without the necessity of any
additional document being executed by Tenant for the purpose of effecting a
subordination, and at the election of Landlord or any bona fide mortgagee or
deed of trust beneficiary with a lien on all or any portion of the Premises or
any ground lessor with respect to the land of which the Premises are a part, the
rights of Tenant under this Lease (including, without limitation, the rights set
forth in Addendum 4 hereto) and this Lease shall be subject and subordinate at
all times to: (i) all ground leases or underlying leases which may now exist or
hereafter be executed affecting the Buildings or the land upon which the
Buildings are situated or both, and (ii) the lien of any mortgage or deed of
trust which may now exist or hereafter be executed in any amount for which any
of the Buildings, the Premises, ground leases or underlying leases, or
Landlord's interest or estate in any of said items is specified as security.
Notwithstanding the foregoing, Landlord or any such ground lessor, mortgagee, or
any beneficiary shall have the right to subordinate or cause to be subordinated
any such ground leases or underlying leases or any such liens to this Lease. If
any ground lease or underlying lease terminates for any reason or any mortgage
or deed of trust is foreclosed or a conveyance in lieu of foreclosure is made
for any reason, Tenant shall, notwithstanding any subordination and upon the
request of such successor to Landlord, attorn to and become the Tenant of the
successor in interest to Landlord, provided such successor in interest will not
disturb Tenant's use, occupancy or quiet enjoyment of the Premises so long as
Tenant is not in default of the terms and provisions of this Lease. The
successor in interest to Landlord following foreclosure, sale or deed in lieu
thereof shall not be (a) liable for any act or omission of any prior lessor or
with respect to events occurring prior to acquisition of ownership; (b) subject
to any offsets or defenses which Tenant might have against any prior lessor; (c)
bound by prepayment of more than one (1) month's Rent, except in those instances
when Tenant pays Rent quarterly in advance pursuant to Section 8 hereof, then
not more than three months' Rent; or (d) liable to Tenant for any Security
Deposit not actually received by such successor in interest to the extent any
portion or all of such Security Deposit has not already been forfeited by, or
refunded to, Tenant. Landlord shall be liable to Tenant for all or any portion
of the Security Deposit not forfeited by, or refunded to Tenant, until and
unless Landlord transfers such Security Deposit to the successor in interest.
Tenant covenants and agrees to execute (and acknowledge if required by Landlord,
any lender or ground lessor) and deliver, within ten (10) days of written demand
or request by Landlord and, subject to this Section 17, in the form requested by
Landlord, ground lessor, mortgagee or beneficiary, any additional documents
evidencing the priority or subordination of this Lease (including, without
limitation, the rights set forth in Addendum 4 hereto) with respect to any such
ground leases or underlying leases or the lien of any such mortgage or deed of
trust. Tenant's failure to timely execute and deliver such additional documents
shall, at Landlord's option, constitute a material default hereunder. Tenant's
agreement to subordinate this Lease and any automatic subordination to any
future ground or underlying lease or any future deed of trust or mortgage
pursuant to the foregoing provisions of this Section 17 is conditioned upon
Landlord delivering to Tenant from the lessor under such future ground or
underlying lease or the holder of any such mortgage or deed of trust, a
non-disturbance agreement agreeing, among other things, that Tenant's right to
possession of the Premises pursuant to the terms and conditions of this Lease
shall not be disturbed provided that Tenant is not in default under this Lease
beyond the applicable notice and cure periods hereunder. If Landlord at any time
during the Term causes the Premises to be encumbered by a deed of trust or
mortgage and the beneficiary thereof requires this Lease to be subordinated to
such encumbrance or lien, Landlord or the successor of Landlord will use
commercially reasonable efforts to obtain a subordination, non-disturbance and
attornment agreement in a form reasonably acceptable to Landlord, Tenant and the
subject beneficiary. If said subordination, non-disturbance and attornment
agreement is required and agreed upon by the aforesaid parties, Landlord or the
successor of Landlord, the subject beneficiary and Tenant shall cause any such
subordination, non-disturbance and attornment agreement to be executed,
acknowledged and
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recorded concurrently with, or as soon as practicable after, the execution and
recordation of any such lien, deed of trust or mortgage. In addition to the
foregoing, if Landlord enters into a ground lease with regard to the Buildings
and/or the Land and such ground lessee requires this Lease to be subordinated to
such ground lease, the ground lessee and ground lessor will use commercially
reasonable efforts to provide to Tenant a subordination, non-disturbance and
attornment agreement in form reasonably acceptable to such ground lessee, ground
lessor, any beneficiary of ground lessee, and to Tenant. Tenant will in good
faith accept commercially reasonable non-disturbance agreements.
18. RIGHT OF ENTRY: Tenant grants Landlord or its agents the right to enter the
Premises with an escort designated by Tenant for purposes of inspection,
exhibition, posting of notices, repair or alteration during normal business
hours upon twenty-four (24) hours prior written notice (except in the event of
an emergency in which case no notice shall be required). It is further agreed
that Landlord shall have the right to use any and all reasonable means Landlord
deems necessary to enter the Premises in an emergency. Landlord shall have the
right to place "for rent" or "for lease" signs in the Common Area during the
final twelve (12) months of the Term, and on the outside of the Premises and/or
the outside of the Buildings during the final six (6) months of the Term.
Landlord shall also have the right to place "for sale" signs on the outside of
the Buildings. Tenant hereby waives any claim from damages or for any injury or
inconvenience to or interference with Tenant's business, or any other loss
occasioned thereby except for any claim for any of the foregoing arising out of
the sole active gross negligence or willful misconduct of Landlord or its
authorized representatives.
19. ESTOPPEL CERTIFICATE: Each party shall execute (and acknowledge if required
by any lender or ground lessor) and deliver to the other, within ten (10) days
after written request therefor, a statement in writing certifying that this
Lease is unmodified and in full force and effect (or, if modified, stating the
nature of such modification), the date to which the Rent and other charges are
paid in advance, if any, acknowledging that there are not, to such party's
knowledge, any uncured defaults on the part of the other party hereunder or
specifying such defaults as are claimed, and such other matters as the other
party may reasonably require. Any such statement may be conclusively relied upon
by the other party and any prospective purchaser or encumbrancer of the
Premises. A party's failure to deliver such statement within such time shall be
conclusive upon the other party that (a) this Lease is in full force and effect,
without modification except as may be represented by the requesting party; (b)
there are no uncured defaults in such party's performance; and (c) not more than
one month's Rent has been paid in advance, except in those instances when Tenant
pays Rent quarterly in advance pursuant to Section 8 hereof, then not more than
three (3) month's Rent has been paid in advance. Failure by Tenant to so deliver
such certified estoppel certificate shall be a material default of the
provisions of this Lease.
20. TENANT'S DEFAULT: The occurrence of any one or more of the following events
shall, at Landlord's option, constitute a material default by Tenant of the
provisions of this Lease:
20.1 The abandonment of the Premises by Tenant or the vacation of the
Premises by Tenant which would cause any insurance policy to be invalidated or
otherwise lapse; provided, however, notwithstanding the foregoing Tenant may
leave the Premises vacant so long as (i) Tenant fully insures or otherwise pays
for any loss or damage thereto and (ii) all insurance policies carried by
Landlord with respect to the Buildings are not invalidated, in whole or in part,
nor would such insurance policies be caused to otherwise lapse. Tenant agrees to
notice and service of notice as provided for in this Lease and waives any right
to any other or further notice or service of notice which Tenant may have under
any statute or law now or hereafter in effect;
20.2 The failure by Tenant to make any payment of Rent, Additional
Rent or any other payment required hereunder within three (3) calendar days
after the delivery by Landlord of written notice that said payment is due.
Tenant agrees that such written notice by Landlord shall serve as the
statutorily required notice under the Law (including without limitation, any
unlawful detainer statutes), and Tenant further agrees to notice and service of
notice as provided for in this Lease and waives any right to any other or
further notice or service of notice which Tenant may have under any statute or
law now or hereafter in effect on the date said payment is due.
20.3 The failure by Tenant to observe, perform or comply with any of
the conditions, covenants or provisions of this Lease (except failure to make
any payment of Rent and/or Additional Rent) and such failure is not cured within
(i) thirty (30) days of the date on which Landlord delivers written notice of
such failure to Tenant, complying with the notice requirements of Section 31.10
hereof, for all failures other than with respect to Hazardous Materials, and
(ii) ten (10) days of the date on which Landlord delivers written notice of such
failure to Tenant for all failures in any way related to Hazardous Materials.
However, Tenant shall not be in default of its obligations hereunder if such
failure cannot reasonably be cured within such thirty (30) or ten (10) day
period, as applicable, and Tenant promptly commences, and thereafter diligently
proceeds with same to completion, all actions necessary to cure such failure as
soon as is reasonably possible, but in no event shall the completion of such
cure be later than sixty (60) days after the date on which Landlord delivers to
Tenant written notice of such failure, unless Landlord, acting reasonably and in
good faith, otherwise expressly agrees in writing to a longer period of time
based upon
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the circumstances relating to such failure as well as the nature of the failure
and the nature of the actions necessary to cure such failure;
20.4 The making of a general assignment by Tenant for the benefit of
creditors, the filing of a voluntary petition by Tenant or the filing of an
involuntary petition by any of Tenant's creditors seeking the rehabilitation,
liquidation, or reorganization of Tenant under any law relating to bankruptcy,
insolvency or other relief of debtors and, in the case of an involuntary action,
the failure to remove or discharge the same within ninety (90) days of such
filing, the appointment of a receiver or other custodian to take possession of
substantially all of Tenant's assets or this leasehold, Tenant's insolvency or
inability to pay Tenant's debts or failure generally to pay Tenant's debts when
due, any court entering a decree or order directing the winding up or
liquidation of Tenant or of substantially all of Tenant's assets, Tenant taking
any action toward the dissolution or winding up of Tenant's affairs, the
cessation or suspension of Tenant's use of the Premises, or the attachment,
execution or other judicial seizure of substantially all of Tenant's assets or
this leasehold;
20.5 Tenant's use or storage of Hazardous Materials in, on or about
the Premises other than as expressly permitted by the provisions of Section 29
below, unless cured as provided in Section 20.3; or
20.6 The intentional making of any material misrepresentation or
omission by Tenant in any materials delivered by or on behalf of Tenant to
Landlord pursuant to this Lease.
21. REMEDIES FOR TENANT'S DEFAULT:
21.1 LANDLORD'S RIGHTS: In the event of Tenant's material default
under this Lease, Landlord may terminate Tenant's right to possession of the
Premises by any lawful means in which case upon delivery of written notice by
Landlord this Lease shall terminate on the date specified by Landlord in such
notice and Tenant shall immediately surrender possession of the Premises to
Landlord. In addition, the Landlord shall have the immediate right of re-entry
whether or not this Lease is terminated, and if this right of re-entry is
exercised following abandonment of the Premises by Tenant, Landlord may consider
any personal property belonging to Tenant and left on the Premises to also have
been abandoned. No re-entry or taking possession of the Premises by Landlord
pursuant to this Section 21 shall be construed as an election to terminate this
Lease unless a written notice of such intention is given to Tenant. If Landlord
relets the Premises or any portion thereof, (i) Tenant shall be liable
immediately to Landlord for all costs Landlord incurs in reletting the Premises
or any part thereof, including, without limitation, broker's commissions,
expenses of cleaning, redecorating, and other similar costs (collectively, the
"Reletting Costs"), and (ii) the rent received by Landlord from such reletting
shall be applied to the payment of, first, any indebtedness from Tenant to
Landlord other than Base Rent, Operating Expenses, Tax Expenses, Common Area
Expenses, and Utility Expenses; second, all costs including maintenance,
incurred by Landlord in reletting; and, third, Base Rent, Operating Expenses,
Tax Expenses, Common Area Expenses, Utility Expenses, and all other sums due
under this Lease. Any and all of the Reletting Costs shall be fully chargeable
to Tenant and shall not be prorated or otherwise amortized in relation to any
new lease for the Premises or any portion thereof. After deducting the payments
referred to above, any sum remaining from the rental Landlord receives from
reletting shall be held by Landlord and applied in payment of future Rent as
Rent becomes due under this Lease. In no event shall Tenant be entitled to any
excess rent received by Landlord. Reletting may be for a period shorter or
longer than the remaining term of this Lease. No act by Landlord other than
giving written notice to Tenant shall terminate this Lease. Acts of maintenance,
efforts to relet the Premises or the appointment of a receiver on Landlord's
initiative to protect Landlord's interest under this Lease shall not constitute
a termination of Tenant's right to possession. So long as this Lease is not
terminated, Landlord shall have the right to remedy any default of Tenant, to
maintain or improve the Premises, to cause a receiver to be appointed to
administer the Premises and new or existing subleases and to add to the Rent
payable hereunder all of Landlord's reasonable costs in so doing, with interest
at the maximum rate permitted by law from the date of such expenditure.
21.2 DAMAGES RECOVERABLE: If Tenant defaults under this Lease and
abandons the Premises before the end of the Term, or if Tenant's right to
possession is terminated by Landlord because of a breach or default under this
Lease, then in either such case, Landlord may recover from Tenant all damages
suffered by Landlord as a result of Tenant's failure to perform its obligations
hereunder, allowed by law and the worth at the time of the award (computed in
accordance with paragraph (3) of Subdivision (a) of Section 1951.2 of the
California Civil Code) of the amount by which the Rent then unpaid hereunder for
the balance of the Lease Term exceeds the amount of such loss of Rent for the
same period which Tenant proves could be reasonably avoided by Landlord and in
such case, Landlord prior to the award, may relet the Premises for the purpose
of mitigating damages suffered by Landlord because of Tenant's failure to
perform its obligations hereunder; provided, however, that even though Tenant
has abandoned the Premises following such default, this Lease shall nevertheless
continue in full force and effect for as long as Landlord does not terminate
Tenant's right of possession, and until such termination, Landlord shall have
the remedy described in Section 1951.4 of the California Civil Code (Landlord
may continue this Lease in effect after Tenant's breach and abandonment and
recover Rent as it becomes due, if Tenant has the right to sublet or assign,
subject only to reasonable limitations) and may enforce all its
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rights and remedies under this Lease, including the right to recover the Rent
from Tenant as it becomes due hereunder. The "worth at the time of the award"
within the meaning of Subparagraphs (a)(1) and (a)(2) of Section 1951.2 of the
California Civil Code shall be computed by allowing interest at the rate of ten
percent (10%) per annum. Tenant waives redemption or relief from forfeiture
under California Code of Civil Procedure Sections 1174 and 1179, or under any
other present or future law, in the event Tenant is evicted or Landlord takes
possession of the Premises by reason of any default of Tenant hereunder.
21.3 RIGHTS AND REMEDIES CUMULATIVE: The foregoing rights and remedies
of Landlord are not exclusive; they are cumulative in addition to any rights and
remedies now or hereafter existing at law, in equity by statute or otherwise, or
to any equitable remedies Landlord may have, and to any remedies Landlord may
have under bankruptcy laws or laws affecting creditor's rights generally. In
addition to all remedies set forth above, if Tenant materially defaults under
this Lease, any and all Base Rent waived by Landlord under Section 3 above shall
be immediately due and payable to Landlord and all options granted to Tenant
hereunder shall automatically terminate, unless otherwise expressly agreed to in
writing by Landlord.
21.4 WAIVER OF A DEFAULT: The waiver by Landlord of any default of any
provision of this Lease shall not be deemed or construed a waiver of any other
default by Tenant hereunder or of any subsequent default of this Lease, except
for the default specified in the waiver.
22. HOLDING OVER: If Tenant holds possession of the Premises after the
expiration of the Term of this Lease with Landlord's consent, Tenant shall
become a tenant from month-to-month upon the terms and provisions of this Lease,
provided the monthly Base Rent during the first two (2) months of such hold over
period shall be 125% of the Base Rent due on the last month of the Lease Term
and thereafter, monthly Base Rent shall be 150% of the Base Rent due on the last
month of the Lease Term, payable in advance on or before the first day of each
month. Acceptance by Landlord of the monthly Base Rent without the additional
applicable increase of Base Rent shall not be deemed or construed as a waiver by
Landlord of any of its rights to collect the increased amount of the Base Rent
as provided herein at any time. Such month-to-month tenancy shall not constitute
a renewal or extension for any further term. All options, if any, granted under
the terms of this Lease shall be deemed automatically terminated and be of no
force or effect during said month-to-month tenancy. Tenant shall continue in
possession until such tenancy shall be terminated by either Landlord or Tenant
giving written notice of termination to the other party at least thirty (30)
days prior to the effective date of termination. This paragraph shall not be
construed as Landlord's permission for Tenant to hold over. Acceptance of Base
Rent by Landlord following expiration or termination of this Lease shall not
constitute a renewal of this Lease.
23. LANDLORD'S DEFAULT: Landlord shall not be deemed in breach or default of
this Lease unless Landlord fails within a reasonable time to perform an
obligation required to be performed by Landlord hereunder. For purposes of this
provision, a reasonable time shall not be less than thirty (30) days after
receipt by Landlord of written notice specifying the nature of the obligation
Landlord has not performed; provided, however, that if the nature of Landlord's
obligation is such that more than thirty (30) days, after receipt of written
notice, is reasonably necessary for its performance, then Landlord shall not be
in breach or default of this Lease if performance of such obligation is
commenced within such thirty (30) day period and thereafter diligently pursued
to completion.
24. PARKING: Tenant shall have the exclusive right to use the number of parking
spaces specified in the Basic Lease Information, provided, in the event of a
sublease or assignment of the whole or any part of the Premises, the number of
parking spaces for Tenant's exclusive use shall be reduced by an amount equal to
four (4) parking spaces for each one thousand (1,000) square feet of Premises
assigned or sublet.
25. SALE OF PREMISES: In the event of any sale of the Premises by Landlord or
the cessation otherwise of Landlord's interest therein, Landlord shall be and is
hereby entirely released from any and all of its obligations to perform or
further perform under this Lease from or after the date of sale and from all
liability hereunder accruing from or after the date of such sale; and the
purchaser, at such sale or any subsequent sale of the Premises shall be deemed,
without any further agreement between the parties or their successors in
interest or between the parties and any such purchaser, to have assumed and
agreed to carry out any and all of the covenants and obligations of the Landlord
under this Lease. For purposes of this Section 25, the term "Landlord" means
only the owner and/or agent of the owner as such parties exist as of the date on
which Tenant executes this Lease. A ground lease or similar long term lease by
Landlord of the entire Buildings, of which the Premises are a part, shall be
deemed a sale within the meaning of this Section 25. Tenant agrees to attorn to
such new owner provided such new owner does not disturb Tenant's use, occupancy
or quiet enjoyment of the Premises so long as Tenant is not in default of any of
the provisions of this Lease. Landlord agrees that Landlord shall not sell the
separate legal parcels into which Landlord intends to divide the Premises (which
term, for the purposes of this sentence, shall specifically not include Phase 2
and/or Phase 3 (as defined in Addendum 2 to this Lease) to more than one (1)
owner.
26. WAIVER: No delay or omission in the exercise of any right or remedy of
Landlord on any default by Tenant shall impair such a right or remedy or be
construed as a waiver. The subsequent acceptance
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of Rent by Landlord after default by Tenant of any covenant or term of this
Lease shall not be deemed a waiver of such default, other than a waiver of
timely payment for the particular Rent payment involved, and shall not prevent
Landlord from maintaining an unlawful detainer or other action based on such
breach. No payment by Tenant or receipt by Landlord of a lesser amount than the
monthly Rent and other sums due hereunder shall be deemed to be other than on
account of the earliest Rent or other sums due, nor shall any endorsement or
statement on any check or accompanying any check or payment be deemed an accord
and satisfaction; and Landlord may accept such check or payment without
prejudice to Landlord's right to recover the balance of such Rent or other sum
or pursue any other remedy provided in this Lease. No failure, partial exercise
or delay on the part of the Landlord in exercising any right, power or privilege
hereunder shall operate as a waiver thereof.
27. CASUALTY DAMAGE:
27.1 CASUALTY. If the Premises or any part thereof shall be damaged or
destroyed by fire or other casualty, Tenant shall give immediate written notice
thereof to Landlord. Within ninety (90) days after receipt by Landlord of such
notice, Landlord shall notify Tenant, in writing, whether the necessary repairs
can reasonably be made, as reasonably determined by Landlord: (a) within one
hundred twenty (120) days; (b) in more than one hundred twenty (120) days but in
less than one hundred eighty (180) days; or (c) in more than one hundred eighty
(180) days, from the date of such notice. Notwithstanding anything to the
contrary contained in this Section 27, if any portion of the Premises is damaged
or destroyed due to the fault, negligence (active or passive) or material
default of this Lease by Tenant or any of Tenant's Representatives, this Lease
shall not terminate (and Tenant's termination rights in this Section 27 shall be
of no force or effect), Rent shall not be diminished during the repair of such
damage to the extent Landlord does not receive rental abatement insurance
proceeds, and Tenant shall be liable to Landlord for the cost of the repair
caused thereby to the extent such cost is not covered by insurance proceeds.
27.1.1 MINOR INSURED DAMAGE. If either (i) only one (1)
Building is damaged and/or (ii) less than one-third (1/3) of the total rentable
square footage for all Buildings then subject to the Lease are damaged, this
Lease shall not terminate and, provided that insurance proceeds are available to
fully repair the damage and/or Tenant otherwise contributes any shortfall
thereof to Landlord, Landlord shall, with reasonable diligence, repair the
damage, including Tenant Improvements, to substantially the same condition that
existed prior to the occurrence of such casualty, except Landlord shall not be
required to rebuild, repair, or replace any alterations or improvements
installed by or for the benefit of Tenant or any part of Tenant's property,
including without limitation, the Excess Tenant Improvements, Tenant's
furniture, furnishings or trade fixtures and equipment removable by Tenant. The
Rent payable hereunder shall be abated proportionately from the date of the
occurrence of such insured damage until any and all repairs are substantially
completed to the extent of the portion of the Premises which is rendered
unusable and unfit for occupancy.
27.1.2 MAJOR INSURED DAMAGE. If (i) more than one (1)
Building is damaged and (ii) more than one-third (1/3) of the total rentable
square footage of all Buildings then subject to the Lease are damaged, and such
damage is to such extent that repairs, rebuilding and/or restoration cannot be
reasonably completed within two hundred seventy (270) days, then Landlord shall
within ninety (90) days after such damage notify Tenant in writing that the
repairs cannot be completed within two hundred seventy (270) days. For a period
of thirty (30) days following the receipt of the above-mentioned notice from
Landlord, either Landlord or Tenant may terminate this Lease by giving written
notice thereof within such thirty (30) day period; and, in the event of such
termination, this Lease shall terminate and the Rent payable hereunder shall be
abated proportionately from the date of the occurrence of such damage; provided,
however, in the event Landlord terminates this Lease as provided herein, Tenant
may nonetheless elect to keep this Lease in full force and effect (even though
Landlord has elected not to repair any damage), with respect to any Building
which has no damage whatsoever and this Lease shall terminate as to any wholly
or partially damaged Building. In the event of such election by Tenant, the
Premises shall be reduced accordingly and the Rent payable hereunder shall be
abated proportionately from the date of the occurrence of such damage. If
Landlord elects to repair and Tenant does not elect to terminate the Lease,
Landlord shall promptly commence and diligently prosecute to completion the
repairs to the Premises, including the Tenant Improvements provided insurance
proceeds are available to fully repair the damage and/or Tenant contributes any
shortfall thereof to Landlord (except that Landlord shall not be required to
rebuild, repair, or replace any alterations or improvements installed by Tenant
or any part of Tenant's property, including without limitation, the Excess
Tenant Improvements, Tenant's furniture, furnishings or trade fixtures and
equipment removable by Tenant). During the time when Landlord is prosecuting
such repairs to completion, the Rent payable hereunder shall be abated
proportionately from the date of the occurrence of such insured damage until any
and all repairs are substantially completed, to the extent of the portion of the
Premises which are rendered unusable and are unfit for occupancy.
27.1.3 DAMAGE NEAR END OF TERM. If the Premises are damaged
or destroyed to an extent affecting more than twenty-five percent (25%) of the
rentable square footage of the Buildings during the last year of the then
applicable term of this Lease and Tenant has not or does not within thirty (30)
days of such damage exercise any option to extend the Lease (which exercise by
Tenant shall serve to extend
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the Term of this Lease and thereafter Tenant shall not have the right to
terminate this Lease as a result of such casualty), either Landlord or Tenant
may, at its option, cancel and terminate this Lease by giving written notice to
the other party of its election to do so within thirty (30) days after receipt
by Landlord of notice from Tenant of the occurrence of such casualty. If either
party so elects to terminate this Lease, Tenant shall promptly vacate the
damaged Building or Buildings and have six (6) months to vacate the remainder of
the Buildings which are undamaged provided that the Rent shall continue to be
paid proportionately to the amount of rentable square footage that Tenant
continues to occupy during this period.
27.2 UNINSURED CASUALTY; LENDER'S APPLICATION OF PROCEEDS. Tenant
shall be responsible for and shall pay to Landlord, as Additional Rent, any
commercially reasonable deductible amounts under the insurance policies for the
Premises and/or the Building. So long as Landlord actually maintains the
insurance policies required to be maintained by Landlord under this Lease, if
any portion of the Premises is damaged and (i) such damage is not fully covered
by insurance proceeds received by Landlord due to the casualty being uninsured,
(ii) a holder of indebtedness secured by the Premises applies the insurance
proceeds to the debt, or (iii) the deductible amounts under the policies make
rebuilding unfeasible in Landlord's reasonable judgment, then Landlord shall
have the right to terminate this Lease by delivering written notice of
termination to Tenant within thirty (30) days after the date of notice to Tenant
of any such event, whereupon all rights and obligations shall cease and
terminate hereunder (except for those obligations expressly provided for in this
Lease to survive such termination of the Lease); provided, however, in any of
such events described above in (i), (ii) or (iii) of this Section 27.2, Tenant
may elect to keep the Lease in full force and effect by (x) delivering a notice
of such election to Landlord during the thirty (30) day period referenced in
this Section 27.2 and (y) making a loan (upon the terms and conditions set forth
below) to Landlord in the amount of any shortfall between the amount of the
available insurance proceeds and the cost of repairing and restoring the
Premises due to the occurrence of any of the events described in (i), (ii) or
(iii) above (the "Shortfall Amount"). Prior to the commencement of any repairs,
Tenant shall cause the Shortfall Amount to be placed in a mutually agreeable
fund control which provides adequate assurance to Landlord that the Shortfall
Amount will be available for the repairs. In the event Landlord shall not repay
the loan for the Shortfall Amount as and when due, Tenant shall receive a credit
against each monthly payment of Rent under the Lease from and after the date of
Landlord's failure to repay the loan in an amount equal to the monthly payment
of the loan for the Shortfall Amount not made to Tenant by Landlord. Any loan
made by Tenant hereunder shall bear interest at a variable rate equal to the
prime rate as published in the Wall Street Journal plus one hundred (100) basis
points (1%), but not to exceed eleven percent (11%) per annum, amortized from
the date the loan for such Shortfall Amount is first drawn upon by Landlord over
the balance of the Lease Term (including any option terms exercised by Tenant).
Interest on the Shortfall Amount shall be imputed whether or not Tenant actually
obtains a loan for the Shortfall Amount.
27.3 TENANT'S WAIVER. Landlord shall not be liable for any
inconvenience or annoyance to Tenant, injury to the business of Tenant, loss of
use of any part of the Premises by Tenant or loss of Tenant's personal property,
resulting in any way from such damage, destruction or the repair thereof, except
that, Landlord shall allow Tenant a fair diminution of Rent during the time and
to the extent the Premises are unusable and unfit for occupancy as specifically
provided above in this Section 27. With respect to any damage or destruction
which Landlord is obligated to repair or may elect to repair, except as
expressly set forth herein, Tenant hereby waives all rights to terminate this
Lease or offset any amounts against Rent pursuant to rights accorded Tenant by
any law currently existing or hereafter enacted, including but not limited to,
all rights pursuant to the provisions of Sections 1932(2.), 1933(4.), 1941 and
1942 of the California Civil Code, as the same may be amended or supplemented
from time to time.
28. CONDEMNATION: If twenty-five percent (25%) or more of the Premises is
condemned by eminent domain, inversely condemned or sold in lieu of condemnation
for any public or quasi-public use or purpose ("Condemned"), then Tenant or
Landlord may terminate this Lease as of the date when physical possession of the
Premises is taken and title vests in such condemning authority, and Rent shall
be adjusted to the date of termination. Tenant shall not because of such
condemnation assert any claim against Landlord or the condemning authority for
any compensation because of such condemnation, and, except as set forth below,
Landlord shall be entitled to receive the entire amount of any award without
deduction for any estate of interest or other interest of Tenant; provided,
however, the foregoing provisions shall not preclude Tenant, at Tenant's sole
cost and expense, from obtaining any separate award to Tenant for loss of or
damage to Tenant's trade fixtures, Excess TIs, removable personal property and
goodwill or for damages for cessation or interruption of Tenant's business
provided such award is separate from Landlord's award and provided further such
separate award does not diminish or impair the award otherwise payable to
Landlord. In addition to the foregoing, Tenant shall be entitled to seek
compensation for the relocation costs recoverable by Tenant pursuant to the
provisions of California Government Code Section 7262. If neither party elects
to terminate this Lease, Landlord shall, if necessary, promptly proceed to
restore the Premises or the Building(s) to substantially its same condition
prior to such partial condemnation, allowing for the reasonable effects of such
partial condemnation, and a proportionate allowance shall be made to Tenant, as
reasonably determined by Landlord, for the Rent corresponding to the time during
which, and to the part of the Premises of which, Tenant is deprived on account
of such partial condemnation and restoration. Landlord shall not be required to
spend funds for restoration in excess of the amount received by Landlord
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as compensation awarded. The Base Rent shall be reduced on a pro rata basis to
the extent that the square footage of the Premises is reduced as a result of any
condemnation.
29. ENVIRONMENTAL MATTERS/HAZARDOUS MATERIALS:
29.1 HAZARDOUS MATERIALS DISCLOSURE CERTIFICATE: Prior to executing
this Lease, Tenant has completed, executed and delivered to Landlord Tenant's
initial Hazardous Materials Disclosure Certificate (the "Initial HazMat
Certificate"), a copy of which is attached hereto as Exhibit G and incorporated
herein by this reference. Tenant covenants, represents and warrants to Landlord
that the information on the Initial HazMat Certificate is true and correct and
accurately describes the use(s) of Hazardous Materials which will be made and/or
used on the Premises by Tenant. Tenant shall commencing with the date which is
one year from the Commencement Date and continuing every year thereafter,
complete, execute, and deliver to Landlord, a Hazardous Materials Disclosure
Certificate ("the "HazMat Certificate") describing Tenant's present use of
Hazardous Materials on the Premises, and any other reasonably necessary
documents as requested by Landlord. The HazMat Certificate required hereunder
shall be in substantially the form as that which is attached hereto as Exhibit
E.
29.2 DEFINITION OF HAZARDOUS MATERIALS: As used in this Lease, the
term Hazardous Materials shall mean and include (a) any hazardous or toxic
wastes, materials or substances, and other pollutants or contaminants, which are
or become regulated by any Environmental Laws; (b) petroleum, petroleum by
products, gasoline, diesel fuel, crude oil or any fraction thereof; (c) asbestos
and asbestos containing material, in any form, whether friable or non-friable;
(d) polychlorinated biphenyls; (e) radioactive materials; (f) lead and
lead-containing materials; (g) any other material, waste or substance displaying
toxic, reactive, ignitable or corrosive characteristics, as all such terms are
used in their broadest sense, and are defined or become defined by any
Environmental Law (defined below); or (h) any materials which cause or threatens
to cause a nuisance upon or waste to any portion of the Premises or any
surrounding property; or poses or threatens to pose a hazard to the health and
safety of persons on the Premises or any surrounding property.
29.3 PROHIBITION; ENVIRONMENTAL LAWS: Except for items disclosed in
the Initial HazMat Disclosure Certificate and other than office supplies and
janitorial supplies normally used in premises similar to the Premises and stored
in their original packaging, Tenant shall not be entitled to use nor store any
Hazardous Materials on, in, or about the Premises or any portion of the
foregoing, without, in each instance, obtaining Landlord's prior written consent
thereto. If Landlord consents to any such usage or storage, then Tenant shall be
permitted to use and/or store only those Hazardous Materials that are necessary
for Tenant's business and to the extent disclosed in the HazMat Certificate and
as expressly approved by Landlord in writing, provided that such usage and
storage is only to the extent of the quantities of Hazardous Materials as
specified in the then applicable HazMat Certificate as expressly approved by
Landlord and provided further that such usage and storage is in full compliance
with any and all local, state and federal environmental, health and/or
safety-related laws, statutes, orders, standards, courts' decisions, ordinances,
rules and regulations (as interpreted by judicial and administrative decisions),
decrees, directives, guidelines, permits or permit conditions, currently
existing and as amended, enacted, issued or adopted in the future which are or
become applicable to Tenant or all or any portion of the Premises (collectively,
the "Environmental Laws"). Tenant agrees that any changes to the type and/or
quantities of Hazardous Materials specified in the most recent HazMat
Certificate may be implemented only with the prior written consent of Landlord,
which consent may be given or withheld in Landlord's sole discretion. Tenant
shall not be entitled nor permitted to install any tanks under, on or about the
Premises for the storage of Hazardous Materials without the express written
consent of Landlord, which may be given or withheld in Landlord's sole
discretion. Landlord shall have the right at all times during the Term of this
Lease to (i) inspect the Premises, (ii) conduct tests and investigations to
determine whether Tenant is in compliance with the provisions of this Section
29, and (iii) request lists of all Hazardous Materials used, stored or otherwise
located on, under or about any portion of the Premises and/or the Common Area.
The cost of all such inspections, tests and investigations shall be borne solely
by Tenant, if Landlord reasonably determines that Tenant or any of Tenant's
Representatives are directly or indirectly responsible in any manner for any
contamination revealed by such inspections, tests and investigations. The
aforementioned rights granted herein to Landlord and its representatives shall
not create (a) a duty on Landlord's part to inspect, test, investigate, monitor
or otherwise observe the Premises or the activities of Tenant and Tenant's
Representatives with respect to Hazardous Materials, including without
limitation, Tenant's operation, use and any remediation related thereto, or (b)
liability on the part of Landlord and its representatives for Tenant's use,
storage, disposal or remediation of Hazardous Materials, it being understood
that Tenant shall be solely responsible for all liability in connection
therewith.
29.4 TENANT'S ENVIRONMENTAL OBLIGATIONS: Tenant shall give to Landlord
immediate verbal and follow-up written notice of any spills, releases,
discharges, disposals, emissions, migrations, removals or transportation of
Hazardous Materials on, under or about any portion of the Premises or in any
Common Area. Tenant, at its sole cost and expense, covenants and warrants to
promptly investigate, clean up, remove, restore and otherwise remediate
(including, without limitation, preparation of any feasibility studies or
reports and the performance of any and all closures) any spill, release,
discharge, disposal,
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emission, migration or transportation of Hazardous Materials arising from or
related to the intentional or negligent acts or omissions of Tenant or Tenant's
Representatives such that the affected portions of the Premises and any adjacent
property are returned to the condition existing prior to the appearance of such
Hazardous Materials. Any such investigation, clean up, removal, restoration and
other remediation shall only be performed after Tenant has obtained Landlord's
prior written consent, which consent shall not be unreasonably withheld so long
as such actions would not potentially have a material adverse long-term or
short-term effect on any portion of the Premises or the Common Area.
Notwithstanding the foregoing, Tenant shall be entitled to respond immediately
to an emergency without first obtaining Landlord's prior written consent.
Tenant, at its sole cost and expense, shall conduct and perform, or cause to be
conducted and performed, all closures as required by any Environmental Laws or
any agencies or other governmental authorities having jurisdiction thereof. If
Tenant fails to so promptly investigate, clean up, remove, restore, provide
closure or otherwise so remediate, Landlord may, but without obligation to do
so, take any and all steps necessary to rectify the same and Tenant shall
promptly reimburse Landlord, upon demand, for all costs and expenses to Landlord
of performing investigation, clean up, removal, restoration, closure and
remediation work. All such work undertaken by Tenant, as required herein, shall
be performed in such a manner so as to enable Landlord to make full economic use
of the Premises and Common Area after the satisfactory completion of such work.
29.5 ENVIRONMENTAL INDEMNITY: In addition to Tenant's obligations as
set forth hereinabove, Tenant agrees to, and shall, protect, indemnify, defend
(with counsel acceptable to Landlord) and hold Landlord and the other
Indemnitees harmless from and against any and all claims, judgments, damages,
penalties, fines, liabilities, losses (including, without limitation, diminution
in value of any portion of the Premises or the Common Area, damages for the loss
of or restriction on the use of rentable or usable space, and from any adverse
impact of Landlord's marketing of any space within the Buildings), suits,
administrative proceedings and costs (including, but not limited to, attorneys'
and consultant fees and court costs) arising at any time during or after the
Term of this Lease in connection with or related to, directly or indirectly, the
use, presence, transportation, storage, disposal, migration, removal, spill,
release or discharge of Hazardous Materials on, in or about any portion of the
Premises or the Common Area, as a result (directly or indirectly) of the
intentional or negligent acts or omissions of Tenant or any of Tenant's
Representatives. Neither the written consent of Landlord to the presence, use or
storage of Hazardous Materials in, on, under or about any portion of the
Premises nor the strict compliance by Tenant with all Environmental Laws shall
excuse Tenant from its obligations of indemnification pursuant hereto. Tenant
shall not be relieved of its indemnification obligations under the provisions of
this Section 29.5 due to Landlord's status as either an "owner" or "operator"
under any Environmental Laws.
29.6 SURVIVAL: Tenant's obligations and liabilities pursuant to the
provisions of this Section 29 shall survive the expiration or earlier
termination of this Lease. If it is determined by Landlord that the condition of
all or any portion of the Premises or Common Area is not in compliance with the
provisions of this Lease with respect to Hazardous Materials, including without
limitation all Environmental Laws at the expiration or earlier termination of
this Lease, then in Landlord's sole discretion, Landlord may require Tenant to
hold over possession of the Premises until Tenant can surrender the Premises to
Landlord in the condition in which the Premises existed as of the Commencement
Date and prior to the appearance of such Hazardous Materials except for
reasonable wear and tear, including without limitation, the conduct or
performance of any closures as required by any Environmental Laws. The burden of
proof hereunder shall be upon Tenant. For purposes hereof, the term "reasonable
wear and tear" shall not include any deterioration in the condition or
diminution of the value of any portion of the Premises or Common Area in any
manner whatsoever related to directly, or indirectly, Hazardous Materials. Any
such holdover by Tenant will be with Landlord's consent, will not be terminable
by Tenant in any event or circumstance and will otherwise be subject to the
provisions of Section 22 of this Lease.
29.7 EXCULPATION OF TENANT: Tenant shall not be liable to Landlord for
nor otherwise obligated to Landlord under any provision of the Lease with
respect to the following: (i) any claim, remediation, obligation, investigation,
obligation, liability, cause of action, attorney's fees, consultants' cost,
expense or damage resulting from any Hazardous Materials present in, on or about
the Premises or the Buildings to the extent not caused or otherwise permitted,
directly or indirectly, by Tenant or Tenant's Representatives; or (ii) the
removal, investigation, monitoring or remediation of any Hazardous Material
present in, on or about the Premises or the Buildings caused by any source,
including third parties, other than Tenant or Tenant's Representatives;
provided, however, Tenant shall be fully liable for and otherwise obligated to
Landlord under the provisions of this Lease for all liabilities, costs, damages,
penalties, claims, judgments, expenses (including without limitation, attorneys'
and experts' fees and costs) and losses to the extent (a) Tenant or any of
Tenant's Representatives contributes to the presence of such Hazardous
Materials, or Tenant and/or any of Tenant's Representatives exacerbates the
conditions caused by such Hazardous Materials, or (b) Tenant and/or Tenant's
Representatives allows or permits persons over which Tenant or any of Tenant's
Representatives has control, and/or for which Tenant or any of Tenant's
Representatives are legally responsible for, to cause such Hazardous Materials
to be present in, on, under, through or about any portion of the Premises or
Common Area, or (c) Tenant and/or any of Tenant's Representatives does not take
all reasonably appropriate actions to prevent such persons over which Tenant or
any of Tenant's Representatives has control and/or for which Tenant or any of
Tenant's Representatives
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are legally responsible from causing the presence of Hazardous Materials in, on,
under, through or about any portion of the Premises.
29.8 ACKNOWLEDGMENT OF ENVIRONMENTAL REPORT: Tenant hereby
acknowledges that Landlord has delivered and Tenant has received and reviewed
that certain Phase I Environmental Site Assessment Report prepared by Dudek &
Associates, dated November 1995 and that certain draft Phase I Environmental
Site Assessment Report prepared by Camp Dresser & McKee, Inc., dated March 17,
1997 and that certain Supplemental Geotechnical Investigation Report prepared by
Robert Prater Associates, dated December 1997, and that certain Phase II
Environment Site Characterization Report prepared by Genesis Environmental
Corporation, dated July 28, 1997 (collectively, "Report"). Landlord represents
to Tenant that, to Landlord's actual (not constructive or imputed and without
additional investigation or inquiry) knowledge, there are no other Hazardous
Materials present in, on or under the Premises or the Common Area except as set
forth in the Report. Landlord shall, within one hundred eighty (180) days of the
Lease Date, cause the preparation of an additional environmental report the
scope and subject matter of which shall be reasonably determined by Landlord
("Additional Report"); provided, prior to the commencement of any investigation
or inquiry which is the subject matter of the Additional Report, Tenant may
inquire in writing as to the scope and/or methods to be employed in such
Additional Report and Tenant request in writing that Landlord cause the scope
and/or methods to be employed in such Additional Report to be altered or
expanded. Such request by Tenant shall be approved or disapproved by Landlord in
Landlord's reasonable judgment. Landlord shall be responsible for the payment of
the Additional Report to the extent and only to the extent the investigation
and/or inquiry in such Additional Report is expressly and specifically required
by any applicable governmental agency or by Landlord's lender; otherwise, Tenant
shall be responsible for payment of the Additional Report. At no time during the
Term shall Tenant have the right or ability to independently perform or cause
the performance of an environmental assessment of the Land and/or Buildings.
Landlord shall provide the Additional Report to Tenant; however, in no event
shall Tenant be entitled to rely on such Additional Report and such Additional
Report shall be provided to Tenant without representation or warranty of any
kind or nature. Landlord and Tenant agree to keep strictly confidential the
Additional Report and any and all matters discussed therein; provided, however,
that notwithstanding the foregoing, the existence of the Report and Additional
Report and the matters discussed therein may be disclosed (i) to the extent as
may be required by law, regulation, court order, subpoena, or otherwise
necessary to defend or prosecute a claim, (ii) by Landlord, to any of Landlord's
officers, directors, partners, members, employees, paralegals, advisors, agents,
attorneys, accountants, inspectors, consultants, potential or actual investors,
partners, members, assignees, potential or actual lenders and potential or
actual purchasers of the Premises, and (iii) by Tenant, to Tenant's actual or
potential assignees or sublessees, officers, directors, employees, advisors,
agents, attorneys and accountants. Any Hazardous Material disclosed by such
Additional Report shall not be deemed a breach of the above representation made
by Landlord.
29.9 EXIT REPORT: Tenant shall notify Landlord in writing no more than
two hundred forty (240) days and no less than one hundred twenty (120) days
prior to the expiration or earlier termination of this Lease that Tenant desires
Landlord to cause the preparation of, at Tenant's sole cost and expense, an
environmental site assessment of the Premises ("Exit Report"). Within sixty (60)
days of receipt of such written notification, Landlord shall cause such Exit
Report to be prepared and delivered to Tenant. The scope and subject matter of
such Exit Report shall be reasonably determined by Landlord; provided, the Exit
Report shall be prepared in a manner consistent with the scope of and methods
used in the Report and Additional Report unless Landlord determines that
Tenant's use of the Premises requires additional testing or a change in the
scope or methods of the Report and Additional Report. In the event of such
determination by Landlord, Landlord shall have the right to cause such
additional testing and/or change in the scope and/or methods of the Report and
Additional Report as Landlord deems prudent. In no event shall Tenant be
entitled to rely on such Exit Report and such Exit Report shall be provided to
Tenant without representation or warranty of any kind or nature. Landlord and
Tenant agree to keep strictly confidential the Exit Report and any and all
matters discussed therein; provided, however, that notwithstanding the
foregoing, the existence of the Exit Report and the matters discussed therein
may be disclosed (i) to the extent as may be required by law, regulation, court
order, subpoena, or otherwise necessary to defend or prosecute a claim, (ii) by
Landlord, to any of Landlord's officers, directors, partners, members,
employees, paralegals, advisors, agents, attorneys, accountants, inspectors,
consultants, potential or actual investors, partners, members, assignees,
potential or actual lenders and potential or actual purchasers of the Premises,
and (iii) by Tenant, to Tenant's actual or potential assignees or sublessees,
officers, directors, employees, advisors, agents, attorneys and accountants. No
later than the expiration or earlier termination of this Lease, Tenant shall
correct any deficiencies identified in such Exit Report as being caused by or
being the probable result of Tenant's operation in accordance with its
obligations under this Section 29. The preparation of such Exit Report shall not
constitute a consent or waiver by Landlord of any kind or nature as to any
matter disclosed or not disclosed in such Exit Report. This Section 29 is the
exclusive provision in this Lease regarding cleanup, repairs or maintenance
arising from the receiving, handling, use, storage, accumulation,
transportation, generation, spillage, migration, discharge, release or disposal
of Hazardous Material in, upon or about the Premises and Common Area, by Tenant
or Tenant's Representatives and the provisions of Section 11 (Repairs and
Maintenance) shall not apply thereto.
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30. FINANCIAL STATEMENTS: The following provisions of this Section 30 shall only
apply if Tenant is no longer a publicly traded company. Tenant, for the reliance
of Landlord, any lender holding or anticipated to acquire a lien upon the
Premises or any portion thereof, or any prospective purchaser of the Premises or
any portion thereof, within ten (10) days after Landlord's request therefor, but
not more often than once annually so long as Tenant is not in default of this
Lease, shall deliver to Landlord the then current audited financial statements
of Tenant (including interim periods following the end of the last fiscal year
for which annual statements are available) which statements shall be prepared or
compiled by a certified public accountant and shall present fairly the financial
condition of Tenant at such dates and the result of its operations and changes
in its financial positions for the periods ended on such dates. If an audited
financial statement has not been prepared, Tenant shall provide Landlord with an
unaudited financial statement and/or such other information, the type and form
of which are acceptable to Landlord in Landlord's reasonable discretion, which
reflects the financial condition of Tenant. If Landlord so requests, Tenant
shall deliver to Landlord an opinion of a certified public accountant, including
a balance sheet and profit and loss statement for the most recent prior year,
all prepared in accordance with generally accepted accounting principles
consistently applied. Any and all options granted to Tenant hereunder shall be
subject to and conditioned upon Landlord's reasonable approval of Tenant's
financial condition at the time of Tenant's exercise of any such option.
31. GENERAL PROVISIONS:
31.1 TIME. Time is of the essence in this Lease and with respect to
each and all of its provisions in which performance is a factor.
31.2 SUCCESSORS AND ASSIGNS. The covenants and conditions herein
contained, subject to the provisions as to assignment, apply to and bind the
heirs, successors, executors, administrators and assigns of the parties hereto.
31.3 RECORDATION. Landlord and Tenant shall execute and record a short
form memorandum of this Lease as set forth in Exhibit B to this Lease.
31.4 LANDLORD'S PERSONAL LIABILITY. The liability of Landlord (which,
for purposes of this Lease, shall include Landlord and the owner of the
Buildings if other than Landlord) to Tenant for any default by Landlord under
the terms of this Lease shall be limited to the actual interest of Landlord and
its present or future partners or members in the Premises or the Buildings, and
Tenant agrees to look solely to the Premises for satisfaction of any liability
and shall not look to other assets of Landlord nor seek any recourse against the
assets of the individual partners, members, directors, officers, shareholders,
agents or employees of Landlord (including without limitation, any property
management company of Landlord); it being intended that Landlord and the
individual partners, members, directors, officers, shareholders, agents and
employees of Landlord (including without limitation, any property management
company of Landlord) shall not be personally liable in any manner whatsoever for
any judgment or deficiency. The liability of Landlord under this Lease is
limited to its actual period of ownership of title to the Premises or the
Buildings, and Landlord shall be automatically released from further performance
under this Lease and from all further liabilities and expenses hereunder
accruing after the date of such transfer of Landlord's interest in the Premises
or the Buildings.
31.5 SEPARABILITY. Any provisions of this Lease which shall prove to
be invalid, void or illegal shall in no way affect, impair or invalidate any
other provisions hereof and such other provision shall remain in full force and
effect.
31.6 CHOICE OF LAW. This Lease shall be governed by, and construed in
accordance with, the laws of the State of California.
31.7 ATTORNEYS' FEES. In the event any dispute between the parties
results in litigation or other proceeding, the prevailing party shall be
reimbursed by the party not prevailing for all reasonable costs and expenses,
including, without limitation, reasonable attorneys' and experts' fees and costs
incurred by the prevailing party in connection with such litigation or other
proceeding, and any appeal thereof. Such costs, expenses and fees shall be
included in and made a part of the judgment recovered by the prevailing party,
if any. In the event that Tenant is named in any litigation or other proceeding
due to the acts or omissions of Landlord with respect to the Common Area only
and Tenant is a prevailing party in such litigation or proceeding involving the
Common Area only, Tenant shall be reimbursed by Landlord for all reasonable
attorneys' fees, expert fees and court costs incurred by the Tenant in
connection with such litigation or other proceeding, and any appeal thereof.
31.8 ENTIRE AGREEMENT. This Lease supersedes any prior agreements,
representations, negotiations or correspondence between the parties, and
contains the entire agreement of the parties on matters covered. No other
agreement, statement or promise made by any party, that is not in writing and
signed by all parties to this Lease, shall be binding.
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31.9 WARRANTY OF AUTHORITY. On the date that Tenant executes this
Lease, Tenant shall deliver to Landlord an original certificate of status for
Tenant issued by the California Secretary of State or statement of partnership
for Tenant recorded in the county in which the Premises are located, as
applicable, and such other documents as Landlord may reasonably request with
regard to the lawful existence of Tenant. Each person executing this Lease on
behalf of a party represents and warrants that (1) such person is duly and
validly authorized to do so on behalf of the entity it purports to so bind, and
(2) if such party is a partnership, corporation or trustee, that such
partnership, corporation or trustee has full right and authority to enter into
this Lease and perform all of its obligations hereunder. Tenant hereby warrants
that this Lease is valid and binding upon Tenant and enforceable against Tenant
in accordance with its terms.
31.10 NOTICES. Any and all notices and demands required or permitted
to be given hereunder to Landlord shall be in writing and shall be sent: (a) by
United States mail, certified and postage prepaid; or (b) by personal delivery;
or (c) by overnight courier, addressed to Landlord at 30 Executive Park, Suite
100, Irvine, California 92614-6741. Any and all notices and demands required or
permitted to be given hereunder to Tenant shall be in writing and shall be sent:
(i) by United States mail, certified and postage prepaid; or (ii) by personal
delivery to any employee or agent of Tenant over the age of eighteen (18) years
of age; or (iii) by overnight courier, all of which shall be addressed to Tenant
at the Premises. Notice and/or demand shall be deemed given upon the earlier of
actual receipt or the third day following deposit in the United States mail. Any
notice required by any statute or law now or hereafter in effect, including, but
not limited to, California Code of Civil Procedure Sections 1161, 1161.1, and
1162 (including any amendments, supplements or substitutions thereof), is hereby
waived by Tenant.
31.11 JOINT AND SEVERAL. If Tenant consists of more than one person or
entity, the obligations of all such persons or entities shall be joint and
several.
31.12 COVENANTS AND CONDITIONS. Each provision to be performed by
Tenant hereunder shall be deemed to be both a covenant and a condition.
31.13 WAIVER OF JURY TRIAL. The parties hereto shall and they hereby
do waive trial by jury in any action, proceeding or counterclaim brought by
either of the parties hereto against the other on any matters whatsoever arising
out of or in any way related to this Lease, the relationship of Landlord and
Tenant, Tenant's use or occupancy of the Premises and/or any claim of injury,
loss or damage.
31.14 [INTENTIONALLY OMITTED.]
31.15 UNDERLINING. The use of underlining within the Lease is for
Landlord's reference purposes only and no other meaning or emphasis is intended
by this use, nor should any be inferred.
31.16 MERGER. The voluntary or other surrender of this Lease by
Tenant, the mutual termination or cancellation hereof by Landlord and Tenant, or
a termination of this Lease by Landlord for a material default by Tenant
hereunder, shall not work a merger, and, at the sole option of Landlord, (i)
shall terminate all or any existing subleases or subtenancies, or (ii) may
operate as an assignment to Landlord of any or all of such subleases or
subtenancies. Landlord's election of either or both of the foregoing options
shall be exercised by delivery by Landlord of written notice thereof to Tenant
and all known subtenants under any sublease.
32. SIGNS: Tenant shall have the right to install a sign or signs on each of the
Buildings depicting Tenant's name and logo, provided, all signs and graphics of
every kind visible in or from public view or corridors or the exterior of the
Premises shall be subject to Landlord's prior written reasonable approval, the
terms, covenants and conditions of any Recorded Matters and shall be subject to
any applicable governmental laws, ordinances, and regulations. Tenant shall
remove all such signs and graphics prior to the termination of this Lease. Such
installations and removals shall be made in a manner as to avoid damage or
defacement of the Premises; and Tenant shall repair any damage or defacement,
including without limitation, discoloration caused by such installation or
removal. Landlord shall have the right, at its option, to deduct from the
Security Deposit such sums as are reasonably necessary to remove such signs,
including, but not limited to, the costs and expenses associated with any
repairs necessitated by such removal. Tenant further agrees to maintain any such
sign, awning, canopy, advertising matter, lettering, decoration or other thing
as may be approved in good condition and repair at all times.
33. MORTGAGEE PROTECTION: Upon any default on the part of Landlord, Tenant will
give written notice by registered or certified mail to any beneficiary of a deed
of trust or mortgagee of a mortgage covering the Premises who has provided
Tenant with notice of their interest together with an address for receiving
notice, and shall offer such beneficiary or mortgagee a reasonable opportunity
to cure the default (which, in no event shall be not more than one hundred
twenty (120) days), including time to obtain possession of the Premises by power
of sale or a judicial foreclosure, if such should prove necessary to effect a
cure. If such default cannot be cured within such time period, then such
additional time as may be necessary will be given to such beneficiary or
mortgagee to effect such cure so long as such beneficiary or mortgagee has
commenced the cure within the original time period and thereafter diligently
pursues such cure to
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completion, in which event this Lease shall not be terminated while such cure
is being diligently pursued. Tenant agrees that each lender to whom this Lease
has been assigned by Landlord is an express third party beneficiary hereof.
Tenant shall not make any prepayment of Rent more than one (1) month in advance
without the prior written consent of each such lender, except if Tenant is
required to make quarterly payments of Rent in advance pursuant to the
provisions of Section 8 above. Tenant waives the collection of any deposit from
such lender(s) or any purchaser at a foreclosure sale of such lender(s)' deed of
trust unless the lender(s) or such purchaser shall have actually received and
not refunded the deposit. Tenant agrees to make all payments under this Lease to
the lender with the most senior encumbrance upon receiving a direction, in
writing, to pay said amounts to such lender. Tenant shall comply with such
written direction to pay without determining whether an event of default exists
under such lender's loan to Landlord. Nothing herein shall diminish any rights
of Tenant under Civil Code Section 1950.7.
34. QUITCLAIM: Upon any termination of this Lease, Tenant shall, at Landlord's
request, execute, have acknowledged and deliver to Landlord a quitclaim deed of
Tenant's interest in and to the Premises. If Tenant fails to so deliver to
Landlord such a quitclaim deed, Tenant hereby agrees that Landlord shall have
the full authority and right to record such a quitclaim deed signed only by
Landlord and such quitclaim deed shall be deemed conclusive and binding upon
Tenant.
35. [INTENTIONALLY OMITTED.]
36. WARRANTIES OF TENANT: Tenant hereby warrants and represents to Landlord, for
the express benefit of Landlord, that Tenant has undertaken a complete and
independent evaluation of the risks inherent in the execution of this Lease and
the operation of the Premises for the use permitted hereby, and that, based upon
said independent evaluation, Tenant has elected to enter into this Lease and,
except as otherwise expressly set forth in this Lease, hereby assumes all risks
with respect thereto. Tenant hereby further warrants and represents to Landlord,
for the express benefit of Landlord, that in entering into this Lease, Tenant
has not relied upon any statement, fact, promise or representation (whether
express or implied, written or oral) not specifically set forth herein in
writing and that any statement, fact, promise or representation (whether express
or implied, written or oral) made at any time to Tenant, which is not expressly
incorporated herein in writing, is hereby waived by Tenant.
37. COMPLIANCE WITH AMERICANS WITH DISABILITIES ACT: Landlord and Tenant hereby
agree and acknowledge that the Premises may be subject to the requirements of
the Americans with Disabilities Act, a federal law codified at 42 U.S.C. 12101
et seq, including, but not limited to Title III thereof, all regulations and
guidelines related thereto, together with any and all laws, rules, regulations,
ordinances, codes and statutes now or hereafter enacted by local or state
agencies having jurisdiction thereof, including all requirements of Title 24 of
the State of California, as the same may be in effect on the date of this Lease
and may be hereafter modified, amended or supplemented (collectively, the
"ADA"). Any Tenant Improvements to be constructed hereunder shall be in
compliance with the requirements of the ADA, and all costs incurred for purposes
of compliance therewith shall be a part of and included in the costs of the
Tenant Improvements. Tenant shall be solely responsible for conducting its own
independent investigation of this matter and for ensuring that the design of all
Tenant Improvements strictly comply with all requirements of the ADA. Subject to
reimbursement pursuant to Section 6 of the Lease, if any barrier removal work or
other work is required to the Premises under the ADA, then such work shall be
the responsibility of Landlord; provided, if such work is required under the ADA
as a result of Tenant's use of the Premises or any work or alteration made to
the Premises by or on behalf of Tenant, then such work shall be performed by
Landlord at the sole cost and expense of Tenant. Except as otherwise expressly
provided in this provision, Tenant shall be responsible at its sole cost and
expense for fully and faithfully complying with all applicable requirements of
the ADA, including without limitation, not discriminating against any disabled
persons in the operation of Tenant's business in or about the Premises, and
offering or otherwise providing auxiliary aids and services as, and when,
required by the ADA. Within ten (10) days after receipt, Landlord and Tenant
shall advise the other party in writing, and provide the other with copies of
(as applicable), any notices alleging violation of the ADA relating to any
portion of the Premises or the Buildings; any claims made or threatened in
writing regarding noncompliance with the ADA and relating to any portion of the
Premises or the Buildings; or any governmental or regulatory actions or
investigations instituted or threatened regarding noncompliance with the ADA and
relating to any portion of the Premises or the Buildings. Tenant shall and
hereby agrees to protect, defend (with counsel acceptable to Landlord) and hold
Landlord and the other Indemnitees harmless and indemnify the Indemnitees from
and against all liabilities, damages, claims, losses, penalties, judgments,
charges and expenses (including reasonable attorneys' fees, costs of court and
expenses necessary in the prosecution or defense of any litigation including the
enforcement of this provision) arising from or in any way related to, directly
or indirectly, Tenant's or Tenant's Representatives' violation or alleged
violation of the ADA. Tenant agrees that the obligations of Tenant herein shall
survive the expiration or earlier termination of this Lease.
38. BROKERAGE COMMISSION: Landlord and Tenant each represents and warrants for
the benefit of the other that it has had no dealings with any real estate
broker, agent or finder in connection with the Premises and/or the negotiation
of this Lease, except for the Broker(s) (as set forth on Page 1), and that
neither party
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knows of no other real estate broker, agent or finder who is or might be
entitled to a real estate brokerage commission or finder's fee in connection
with this Lease or otherwise based upon contacts between the claimant and such
party. Landlord shall be responsible for the payment of a brokerage commission
to Broker pursuant to separate agreement between Broker and Landlord. Each party
shall indemnify and hold harmless the other from and against any and all
liabilities or expenses arising out of claims made for a fee or commission by
any real estate broker, agent or finder in connection with the Premises and this
Lease other than Broker(s), if any, resulting from the actions of the
indemnifying party. Any real estate brokerage commission or finder's fee payable
to the Broker(s) in connection with this Lease shall only be payable and
applicable to the extent of the initial Term of the Lease and to the extent of
the Premises as same exist as of the date on which Tenant executes this Lease.
Unless expressly agreed to in writing by Landlord and Broker(s), no real estate
brokerage commission or finder's fee shall be owed to, or otherwise payable to,
the Broker(s) for any renewals or other extensions of the initial Term of this
Lease or for any additional space leased by Tenant other than the Premises as
same exists as of the date on which Tenant executes this Lease. Tenant further
represents and warrants to Landlord that Tenant will not receive (i) any portion
of any brokerage commission or finder's fee payable to the Broker(s) in
connection with this Lease or (ii) any other form of compensation or incentive
from the Broker(s) with respect to this Lease.
39. QUIET ENJOYMENT: Landlord covenants with Tenant, upon the paying of Rent and
observing and keeping the covenants, agreements and conditions of this Lease on
its part to be kept, and during the periods that Tenant is not otherwise in
default of any of the terms or provisions of this Lease, and subject to the
rights of any of Landlord's lenders, (i) that Tenant shall and may peaceably and
quietly hold, occupy and enjoy the Premises during the Term of this Lease, and
(ii) neither Landlord, nor any successor or assign of Landlord, shall disturb
Tenant's occupancy or enjoyment of the Premises.
40. LANDLORD'S ABILITY TO PERFORM TENANT'S UNPERFORMED OBLIGATIONS:
Notwithstanding anything to the contrary contained in this Lease, if Tenant
shall fail to perform any of the terms, provisions, covenants or conditions to
be performed or complied with by Tenant pursuant to this Lease, and/or if the
failure of Tenant relates to a matter which in Landlord's judgment reasonably
exercised is of an emergency nature and such failure shall remain uncured for a
period of time commensurate with such emergency, then Landlord may, at
Landlord's option without any obligation to do so, and in its sole discretion as
to the necessity therefor, perform any such term, provision, covenant, or
condition, or make any such payment and Landlord by reason of so doing shall not
be liable or responsible for any loss or damage thereby sustained by Tenant or
anyone holding under or through Tenant. If Landlord so performs any of Tenant's
obligations hereunder, the full amount of the cost and expense entailed or the
payment so made or the amount of the loss so sustained shall immediately be
owing by Tenant to Landlord, and Tenant shall promptly pay to Landlord upon
demand, as Additional Rent, the full amount thereof with interest thereon from
the date of payment at the greater of (i) ten percent (10%) per annum, or (ii)
the highest rate permitted by applicable law and Enforcement Expenses. The
obligation of Tenant to pay any amounts to Landlord in accordance with the terms
of this Section 40 shall survive the expiration or earlier termination of this
Lease.
41. TENANT'S ABILITY TO PERFORM LANDLORD'S UNPERFORMED OBLIGATIONS:
Notwithstanding anything to the contrary contained in this Lease, if Landlord
shall fail to perform any of the terms, provisions, covenants or conditions to
be performed or complied with by Landlord pursuant to this Lease after
expiration of all applicable notice and cure periods for Landlord's and any
mortgagee's benefit as set forth in Sections 23 and 33, respectively and/or if
the failure of Landlord relates to a matter which in Tenant's judgment
reasonably exercised is of an emergency nature and such failure shall remain
uncured for a period of time commensurate with such emergency, then Tenant may,
at Tenant's option, without any obligation to do so, after delivery of prior
written notice to Landlord, perform any such term, provision, covenant, or
condition. If Tenant so performs any of Landlord's obligations hereunder, the
full amount of the reasonable costs and expenses incurred shall immediately be
owing by Landlord to Tenant, and Landlord shall pay to Tenant the full amount
thereof within sixty (60) days of Landlord's receipt of Tenant's written demand
therefor. If Landlord fails to pay such sums within said 60-day period, and
provided there does not then exist a good faith dispute thereof on the part of
Landlord, Tenant may deduct such sums so demanded from the next installment of
Base Rent then due from Tenant hereunder. The obligation of Landlord to pay any
amounts to Tenant in accordance with the terms of this Section 41 shall survive
the expiration or earlier termination of this Lease.
42. SATELLITE DISH: Tenant shall have the right (but only to the extent
permitted by the City of Carlsbad and all agencies and governmental authorities
having jurisdiction thereof), at Tenant's sole cost and expense, to install and
operate a satellite or microwave dish or dishes ("Satellite Dish") along with
any necessary cables ("Cables") on a portion of the roof of each Building ("Roof
Space") and upon the Land (but such Equipment (defined below) shall only be
allowed to be placed on the Premises pursuant to the City of Carlsbad or other
applicable governmental authority approval) for the Term of the Lease (the
Satellite Dish and Cables are hereinafter collectively referred to as the
"Equipment"). The location and size of the Equipment shall be subject to
Landlord's approval in accordance with the approvals under the Work Letter,
which approval shall be based upon that which best promotes the safety,
aesthetics and efficiency of the Equipment; provided, all of the Equipment and
any modifications thereto or placement
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thereof shall be (i) at Tenant's sole cost and expense, (ii) contained visually
within the roof screen, (iii) installed and operated to Landlord's reasonable
specifications, and (iv) installed, maintained, operated and removed in
accordance with all Recorded Matters and applicable Laws. Landlord shall
cooperate reasonably with Tenant to modify the roof screen placement (subject to
all applicable Laws and Recorded Matters) if required for signal quality,
reconfiguration due to the installation of any HVAC systems and other reasonable
considerations; provided, the cost of all such modifications shall be the
responsibility of Tenant. All modifications to the Buildings, including the
roofs and Roof Space, if any, shall be reasonably approved by Landlord prior to
commencement of any work with respect to the Equipment. No additional rent shall
be paid by Tenant for use of the Roof Space and operation of the Equipment. The
Equipment shall remain the property of Tenant and Tenant shall remove the
Equipment upon the expiration or earlier termination of the Lease. Tenant shall
restore the Roof Space and any other portion of the Buildings affected by the
Equipment to its original condition, excepting ordinary wear and tear and/or
damage or destruction due to fire or other casualty not caused directly or
indirectly by Tenant, its agents, employees, contractors or the Equipment or any
part thereof. Tenant may not assign, lease, rent, sublet or otherwise transfer
any of its interest in the Roof Space or the Equipment except together with the
remainder of the Premises as more particularly set forth in Section 15. Each of
the other provisions of this Lease shall be applicable to the Equipment and the
use of the Roof Space by Tenant, including without limitation, Sections 12 and
14 of this Lease. The Equipment shall comply with all-non-interference rules of
the Federal Communications Commission. If applicable, Tenant shall provide to
Landlord a copy of (i) the Federal Communications Commission (or other agency)
grant which has awarded frequencies to Tenant and (ii) a list of Tenant's
frequencies. Tenant acknowledges and agrees that Tenant shall not have the right
to change Tenant's frequencies without Landlord's prior written consent.
Landlord may, at any time and at Landlord's sole cost and expense, relocate the
Equipment, including, without limitation, the antenna and any wiring, to a
mutually agreeable alternative site within the Premises upon sixty (60) days'
notice to Tenant. Upon relocation, Tenant's means of access and utility lines
will be relocated by Landlord or, at Landlord's option, by Tenant as required to
operate and maintain Equipment. Except as expressly provided in this Paragraph,
in no event shall the relocation of the Equipment, or any part thereof, affect,
alter, modify, or otherwise change any of the terms and conditions of the Lease.
Anything to the contrary contained herein notwithstanding, if, during the Lease
Term, as such Term may be extended, Landlord, in its reasonable judgment,
believes that the Equipment poses a human health or environmental hazard that
cannot be remediated or has not been remediated within ten (10) days after
Tenant has been notified thereof, then Tenant shall immediately cease all
operations of the Equipment and Tenant shall remove all of the Equipment within
thirty (30) days thereafter. Tenant represents to Landlord that the Equipment
shall not emit or project any electro-magnetic fields which pose a human health
or environmental hazard. In addition, Tenant shall be responsible for insuring
the Equipment and Landlord shall have no responsibility therefor. Tenant shall
indemnify, defend (by counsel reasonably acceptable to Landlord) and hold
harmless Landlord from any
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and all claims, demands, liabilities, damages, judgments, costs and expenses
(including reasonable attorneys' fees) Landlord may suffer or incur arising out
of or related to the installation, use, operation, maintenance, replacement
and/or removal of the Equipment or any portion thereof.
IN WITNESS WHEREOF, this Lease is executed by the parties as of the
Lease Date referenced on Page 1 of this Lease.
LANDLORD:
W9/LNP REAL ESTATE LIMITED PARTNERSHIP,
a Delaware limited partnership
By: LPC MS, Inc.,
as manager and agent for W9/LNP
Real Estate Limited Partnership,
a Delaware Limited Partnership
By:_____________________________
Senior Vice President
Date:___________________________
TENANT:
VIASAT, INC.,
a Delaware corporation
By:_____________________
Gregory Monahan
Its:___________________________
Date:__________________________
By:_____________________
Its:___________________________
Date:__________________________
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ADDENDUM 1
OPTIONS TO EXTEND
This Addendum 1 ("Addendum") is incorporated as part of that certain Lease
Agreement, dated for reference purposes as of March 24, 1998 (the "Lease"), by
and between W9/LNP Real Estate Limited Partnership, a Delaware limited
partnership ("Landlord"), and ViaSat, Inc., a Delaware corporation ("Tenant"),
for the leasing by Tenant of (i) a portion of that certain site on El Camino
Real, Carlsbad, California currently known as the "Hughes facility" and to be
known as Lincoln Northpointe as more particularly described in Exhibit A to the
Lease (the "Premises"). Any capitalized terms used herein and not otherwise
defined herein shall have the meaning ascribed to such terms as set forth in the
Lease.
1. GRANT OF EXTENSION OPTIONS. Subject to the provisions and conditions of this
Addendum, Tenant shall have the right, at its option (individually, an "Option"
and collectively, the "Options"), to extend the term of the Lease for two (2)
additional three (3) year periods (individually, the "First Extended Term" and
the "Second Extended Term," respectively and collectively, the "Extended
Terms").
2. TENANT'S OPTION NOTICES. Landlord must receive written notice from Tenant of
Tenant's exercise of an Option on a date which is not more than four hundred
fifty (450) days nor less than two hundred seventy (270) days prior to the end
of, with respect to the First Extended Term, the initial term of the Lease or,
with respect to the Second Extended Term, the First Extended Term ("Option
Notice"). In the event Tenant fails to timely and properly exercise such Option
for the (i) First Extended Term, all rights to both Options shall automatically
lapse and terminate and shall be of no further force or effect or (ii) the
Second Extended Term, all rights to the Option for the Second Extended Term
shall automatically terminate and be of no further force or effect.
3. ESTABLISHING THE MONTHLY BASE RENT FOR EXTENDED TERMS. The initial monthly
Base Rent for each of the Extended Terms shall be the greater of (i) four
percent (4%) in excess of the monthly Base Rent for the last month of the
initial term or First Extended Term, as applicable (excluding for purposes of
this calculation the portion of the monthly Base Rent included in such Base Rent
to amortize TI Costs between $32.50 and $35.00 per square foot), or (ii) ninety
five percent (95%) of the then current market rent for similar space within the
"competitive market area" of the Premises (the "Fair Rental Value") agreed upon
by and between Landlord and Tenant and their agents appointed for this purpose.
For purposes of this Section 3, "competitive market area" shall be conclusively
deemed to be the Carlsbad office market. The "Fair Rental Value" of the Premises
shall be defined to mean the current market rental value of the Premises as of
the commencement of each of the Extended Terms, as applicable, taking into
consideration all relevant factors, including length of term, the uses permitted
under the Lease, the quality, size, design and location of the Premises,
including but not limited to the condition and value of existing tenant
improvements, and the monthly base rent paid by tenants for premises comparable
to the Premises, located within the competitive market area of the Premises.
If Landlord and Tenant are unable to agree on the Fair Rental Value for either
of the Extended Terms, as applicable, within ten (10) days of receipt by
Landlord of the applicable Option Notice, Landlord and Tenant each, at its cost
and by giving notice to the other party, shall appoint a competent and
disinterested real estate appraiser with an "MAI" designation (hereinafter
"Appraiser") with at least five (5) years' full-time commercial real estate
brokerage experience in the geographical area of the Premises to set the Fair
Rental Value for the applicable Extended Term. If either Landlord or Tenant does
not appoint an Appraiser within ten (10) days after the other party has given
notice of the name of its Appraiser, the single Appraiser appointed shall be the
sole Appraiser and shall set the Fair Rental Value for the applicable Extended
Term. If two (2) Appraisers are appointed by Landlord and Tenant as stated in
this paragraph, they shall meet promptly and attempt to set the Fair Rental
Value. If the two (2) Appraisers are unable to agree within ten (10) days after
the second Appraiser has been appointed, they shall attempt to select a third
Appraiser, meeting the qualifications stated in this paragraph within ten (10)
days after the last day the two (2) Appraisers are given to set the Fair Rental
Value. If they are unable to agree on the third Appraiser, either Landlord or
Tenant by giving ten (10) days' notice to the other party, can apply to the
Presiding Judge of the Superior Court of the county in which the Premises is
located for the selection of a third Appraiser who meets the qualifications
stated in this paragraph. Landlord and Tenant each shall bear one-half (1/2) of
the cost of appointing the third Appraiser and of paying the third Appraiser's
fee. The third Appraiser, however selected, shall be a person who has not
previously acted in any capacity for either Landlord or Tenant. Within fifteen
(15) days after the selection of the third Appraiser, the third Appraiser shall
select and specify a Fair Rental Value for the applicable Extended Term, which
Fair Rental Value shall neither be higher than the highest Fair Rental Value nor
lower than the lowest Fair Rental Value submitted by the first two Appraisers as
the Fair Rental Value for the applicable Extended Term. If either of the first
two Appraisers fails to submit their opinion of the Fair Rental Value, then the
single Fair Rental Value submitted shall automatically be the monthly Base Rent
for the applicable Extended Term.
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Upon determination of the initial monthly Base Rent for the applicable Extended
Term, pursuant to the terms outlined above, Tenant shall have a period of
fifteen (15) days in which to rescind its Option Notice by delivering written
notice of such rescission to the Landlord, whereupon the Option shall be deemed
not to have been exercised by Tenant. In the event of such a rescission, Tenant
shall pay for the entire cost of all appraisals and reimburse Landlord for any
portions of such costs previously paid by Landlord. If Tenant fails to rescind
its Option Notice in the manner set forth, Landlord and Tenant shall immediately
execute an amendment to the Lease. Such amendment, shall set forth among other
things, the initial monthly Base Rent for the applicable Extended Term, and the
actual commencement date and expiration date of the applicable Extended Term,
and shall otherwise be on the same terms and provisions of the Lease to the
extent then applicable (by way of example only, the provisions of Exhibit B to
the Lease may not be applicable during the Second Extended Term). Tenant shall
have no other right to further extend the term of the Lease under this Addendum
unless Landlord and Tenant otherwise expressly agree in writing.
4. INCREASES IN MONTHLY BASE RENT DURING EXTENDED TERMS. The initial monthly
Base Rent in effect for the First Extended Term and Second Extended Term shall
be increased effective as of the thirtieth (30th) month anniversary date
following the commencement of the applicable Extended Term by the change in the
Index (defined in Addendum 3) in effect one (1) month prior to the commencement
of the applicable Extended Term as compared to the Index in effect one (1) month
prior to such adjustment; provided, however, in no event shall such increase, on
an annual basis, be less than three percent (3%) or more than five percent (5%)
from the commencement of the applicable Extended Term to the adjustment date.
5. CONDITION OF PREMISES AND BROKERAGE COMMISSIONS FOR THE EXTENDED TERMS. If
Tenant timely and properly exercises either or both of the Options, in
accordance with the terms contained herein: (1) Tenant shall accept the Premises
in its then "As-Is" condition and, accordingly, Landlord shall not be required
to perform any additional improvements to the Premises; and (2) each party will
solely be responsible for any and all brokerage commissions and finder's fees
payable to any broker now or hereafter procured or hired by the party or who
otherwise claims a commission based on any act or statement of the party in
connection with the Options; and the other party shall in no event or
circumstance be responsible for the payment of any such commissions and fees.
6. LIMITATIONS ON, AND CONDITIONS TO, EXTENSION OPTIONS. Each Option is personal
to Tenant and may not be assigned separate from or as a part of the Lease other
than to a Related Entity. At Landlord's option, all rights of Tenant under both
Options shall terminate and be of no force or effect if any of the following
individual events occur or any combination thereof occur: (i) Tenant has been in
default at any time beyond the expiration of any applicable notice and cure
periods during more than three (3) times during any twelve (12) month period in
the initial term of the Lease or First Extended Term, as the case may be, or is
in default in the performance of any of its obligations under this Lease beyond
any applicable notice and cure periods at the time of Tenant's exercise of the
then applicable Option; and/or (ii) there has occurred a substantial and adverse
change in Tenant's financial condition during the initial term or First Extended
Term, as then applicable; and/or (iii) Tenant has failed to exercise properly
the then applicable Option described in this Addendum in a timely manner in
strict accordance with the provisions of this Addendum; and/or (iv) Tenant no
longer has lawful possession of the Premises under the Lease, or if the Lease
has been terminated earlier, pursuant to the terms of the Lease; and/or (v)
Tenant has assigned its rights and obligations under all or part of the Lease or
Tenant has subleased twenty-five percent (25%) or more of the Premises other
than to a Related Entity and/or a Business Entity.
7. TIME IS OF THE ESSENCE. Time is of the essence with respect to each and every
time period set forth in this Addendum.
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ADDENDUM 2
EXPANSION OPTIONS
This Addendum 2 is incorporated as part of that certain Lease Agreement dated
for reference purposes March 24, 1998, by and between ViaSat, Inc., a Delaware
corporation ("Tenant") and W9/LNP Real Estate Limited Partnership, a Delaware
limited partnership ("Landlord"), for the leasing by Tenant of the Premises. Any
capitalized terms used herein and not otherwise defined herein shall have the
meaning ascribed to such terms as set forth in the Lease.
1. TENANT'S OPTION TO LEASE "PHASE 2". For a period of eighteen (18) months
following the Commencement Date (the "Phase 2 Option Period"), Tenant shall have
the option (the "Phase 2 Option") to lease and hire from Landlord an additional
approximately 60,000 square foot building with similar landscaping, recreation
facilities and other amenities to be constructed (the "Phase 2 Building") on
approximately 4.25 acres of land contiguous to the initial Premises described in
the Lease (the "Phase 2 Land"), upon the same terms and conditions contained in
the Lease and in the Work Letter, except as set forth herein (the Phase 2
Building and the Phase 2 Land are sometimes collectively referred to as "Phase
2"). Tenant shall notify Landlord of its desire to lease Phase 2, in writing, at
any time within the Phase 2 Option Period (the "Phase 2 Notice"). Within ten
(10) days after Landlord's receipt of the Phase 2 Notice, Landlord and Tenant
shall, acting reasonably and exercising good business judgment, agree upon the
actual configuration of the Phase 2 Building (the location of which is
designated as Building 5 on the "Phase II Site Plan" attached hereto and
incorporated herein as Schedule 1). Within ten (10) days after Substantial
Completion of the Phase 2 Building, the parties shall execute a new lease
substantially similar to this Lease, including without limitation, a lease which
includes a provision substantially similar to Section 31.4 of this Lease and
with a Project Schedule with substantially the same time periods as set forth in
Exhibit 5 to the Work Letter (but, for example, such new lease shall not contain
any expansion options beyond those in this original Lease). Such new lease
shall, among other things, set forth the following: (i) Base Rent for Phase 2,
as agreed upon by the parties pursuant to Section 3 below, (ii) the term of the
Lease for Phase 2, which term shall be ten (10) years from the date of
Substantial Completion of the Shell Improvements and Tenant Improvements for the
Phase 2 Building except as set forth in Section 5 below, (iii) the actual square
footage of the Phase 2 Building, (iv) the security deposit for such lease shall
be seventy five thousand dollars ($75,000.00), and (v) a default under any one
or more of this Lease, the lease for Phase 2 or the lease for Phase 3
(collectively, "Phase Leases") shall constitute a default under each of the
other Phase Leases, so long as the identity of the landlord under each Phase
Lease is the same; and, in the event the identity of the landlord under any two
(2) of the Phase Leases is the same, a default under one of such Phase Leases
shall constitute a default under the other Phase Lease; and, in the event the
identity of the landlord is different under each Phase Lease, a default under
any Phase Lease shall not be a default under any other Phase Lease. Landlord
shall provide Tenant with a Tenant Improvement Allowance for TI Costs of up to
$26.00 per square foot. Landlord shall provide Tenant up to an additional $5.00
per square foot for TI Costs provided (a) such additional $5.00 per square foot
shall be amortized over the term of the Lease for Phase 2 at an interest rate
equal to twelve percent (12%) per annum, and (b) that, at the date of Landlord's
receipt of the Phase 2 Notice, Tenant's net worth and net operating income shall
not have decreased from such net worth and net operating income as of the Lease
Date.
If Tenant does not exercise the Phase 2 Option within twelve (12)
months following the Commencement Date, from and after the commencement of the
thirteenth (13th) month following the Commencement Date, Tenant shall pay
Landlord, on a monthly basis as additional rent and option consideration, an
amount equal to interest of eleven percent (11%) per annum (compounded) on the
land value of the Phase 2 Land. Such value shall be determined by multiplying
the square footage of the Phase 2 Land by Seven Dollars and Eighty-two Cents
($7.82). In the event Tenant timely exercises the Phase 2 Option, such
additional rent and option payments shall continue until commencement of
construction of the Shell Improvements for the Phase 2 Building. In the event
Tenant fails to timely exercise the Phase 2 Option or informs Landlord prior to
the expiration of the Phase 2 Option Period that Tenant shall not elect the
Phase 2 Option, such additional rent and option payments shall continue until
the expiration of the Phase 2 Option Period unless Tenant terminates the Phase 2
Option by written notice to Landlord prior to the Commencement Date, in which
case no such payments shall be required to be made by Tenant.
2. TENANT'S OPTION TO LEASE "PHASE 3". Provided Tenant has timely and properly
exercised the Phase 2 Option, Tenant shall have, for a period of twenty-four
(24) months following the Commencement Date (the "Phase 3 Option Period"), the
option (the "Phase 3 Option") to lease and hire from Landlord an additional
approximately 60,000 square foot building and the Work Letter to be constructed
(the "Phase 3 Building") on approximately 4.25 acres of land contiguous to the
initial Premises and/or the Phase 2 Land (the "Phase 3 Land"), upon the same
terms and conditions contained in the Lease with similar landscaping, recreation
facilities and other amenities, except as set forth herein (the Phase 3 Building
and the Phase 3 Land are sometimes collectively referred to as "Phase 3").
Tenant shall notify Landlord of its desire to
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lease Phase 3, in writing, at any time within the Phase 3 Option Period (the
"Phase 3 Notice"). Within ten (10) days after Landlord's receipt of the Phase 3
Notice, Landlord and Tenant shall, acting reasonably and exercising good
business judgment, agree upon the actual configuration of the Phase 3 Building
(the location of which is designated as Building 4 on the "Phase III Site Plan"
attached hereto and incorporated herein as Schedule 2). Within ten (10) days
after Substantial Completion of the Phase 3 Building, the parties shall execute
a new lease substantially similar to this Lease, including without limitation, a
lease which includes a provision substantially similar to Section 31.4 of this
Lease (but, for example, such new lease shall not contain any expansion options
beyond those in this original Lease) setting forth the following: (i) Base Rent
for Phase 3, as agreed upon by the parties pursuant to Section 3 below, (ii) the
term of the Lease for Phase 3, which term shall be ten (10) years from the date
of Substantial Completion of the Shell Improvements and Tenant Improvements for
the Phase 3 Building except as set forth in Section 5 below, (iii) the actual
square footage of the Phase 3 Building, (iv) the security deposit for such lease
shall be seventy five thousand dollars ($75,000.00), and (v) a default under any
one or more of the Phase Leases shall constitute a default under each of the
other Phase Leases, so long as the identity of the landlord under each Phase
Lease is the same; and, in the event the identity of the landlord under any two
(2) of the Phase Leases is the same, a default under one of such Phase Leases
shall constitute a default under the other Phase Lease; and, in the event the
identity of the landlord is different under each Phase Lease, a default under
any Phase Lease shall not be a default under any other Phase Lease. Landlord
shall provide Tenant with a Tenant Improvement Allowance for TI Costs of up to
$26.00 per square foot. Landlord shall provide Tenant up to an additional $5.00
per square foot for TI Costs provided (a) such additional $5.00 per square foot
shall be amortized over the term of the Lease for Phase 3 at an interest rate
equal to twelve percent (12%) per annum, and (b) that, at the date of Landlord's
receipt of the Phase 3 Notice, Tenant's net worth and net operating income shall
not have decreased from such net worth and net operating income as of the Lease
Date.
If Tenant does not exercise the Phase 3 Option within twelve (12)
months following the Commencement Date, from and after the commencement of the
thirteenth (13th) month following the Commencement Date, Tenant shall pay
Landlord, on a monthly basis as additional rent and option consideration, an
amount equal to interest of eleven percent (11%) per annum on the land value of
the Phase 3 Land. Such value shall be determined by multiplying the square
footage of the Phase 3 Land by Seven Dollars and Eighty-two Cents ($7.82). In
the event Tenant timely exercises the Phase 3 Option, such additional rent and
option payments shall continue until commencement of construction of the Shell
Improvements for the Phase 3 Building. In the event Tenant fails to timely
exercise the Phase 3 Option or informs Landlord prior to the expiration of the
Phase 3 Option Period that Tenant shall not elect the Phase 3 Option, such
additional rent and option payments shall continue until the expiration of the
Phase 3 Option Period unless Tenant terminates the Phase 3 Option by written
notice to Landlord prior to the Commencement Date, in which case no such
payments shall be required to be made by Tenant.
3. BASE RENT FOR PHASE 2 AND/OR PHASE 3. Initial monthly Base Rent for Phase 2
shall be One Dollar and Nineteen Cents ($1.19) per square foot per month.
Initial monthly Base Rent for Phase 3, if exercised within the Phase 2 Option
Period, shall be One Dollar and Nineteen Cents ($1.19) per square foot per
month; if Tenant exercises the Phase 3 Option after the expiration of the Phase
2 Option Period, the initial monthly Base Rent for Phase 3 shall be One Dollar
and Twenty-three Cents ($1.23) per square foot per month. These initial monthly
Base Rent amounts shall not be altered except as follows: (i) in the event that
the Ten (10) Year Treasury Note Rate increases by more than 200 basis points
from five and 59 one hundreds percent (5.59%) (which is the Ten (10) Year
Treasury Note Rate as of the Lease Date) to the date of either the Phase 2
Notice or the Phase 3 Notice, as applicable, monthly Base Rent shall be
increased as follows: because the Base Rent has been calculated on an eleven
percent (11%) per annum return to Landlord, the Base Rent shall be adjusted
upward to calculate the return to Landlord at a rate equal to eleven percent
(11%) per annum plus the number of basis points in excess of 200 basis points by
which the ten (10) year Treasury Note Rate increases from the Lease Date to the
date of the Phase 2 Notice and/or Phase 3 Notice, as applicable, and/or (ii) in
the event that Tenant requests any changes to Landlord's Plans (as defined in
Exhibit B to the Lease) for such Phase (and the parties anticipate that
Landlord's Plans for Phase 2 and Phase 3 shall be identical to Landlord's Plans
for the two (2) "engineering buildings" constituting a portion of the Premises)
and such changes increase the construction costs in either Phase, the Base Rent
shall be increased such that Landlord shall receive a return on such increased
costs of an amount equal to eleven percent (11%) per annum or if such changes
decrease the construction costs, the Base Rent shall decrease by an amount
calculated in the same manner.
4. INCREASES IN BASE RENT. Base Rent shall increase on the 30th, 60th and 90th
month anniversary dates following the applicable commencement date of the Phase
by the annual change in the Index, as more specifically set forth in Addendum 3
to the Lease. Notwithstanding the foregoing, in no event shall each percentage
increase, on an annual basis, be less than three percent (3%) or more than five
percent (5%).
5. TENANT'S OPTION TO MAKE LEASE TERM CO-TERMINUS WITH THE PHASE 2 BUILDING
AND/OR PHASE 3 BUILDING LEASES. Tenant shall have the option, exercisable with
Tenant's delivery of the (i) Phase 2 Notice, to elect that the term of the lease
for the Premises be co-terminus with the term of the lease for Phase 2 and (ii)
Phase 3 Notice, to elect that the term of the Lease for the Premises and Phase 2
be co-terminus with the term of the lease for Phase 3. If Tenant makes either of
such elections,
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Base Rent shall be increased on the 120th month anniversary date of the
Commencement Date in the same manner as such Base Rent was increased on the
thirtieth (30th), sixtieth (60th) and ninetieth (90th) month anniversary dates
of the Commencement Date of the Lease and as otherwise set forth in Addendum 3
to this Lease. Tenant's Options to Extend the Term of this Lease shall be
applicable to the leases for Phase 2 and Phase 3, provided in no event shall the
expiration date of any lease for any Phase (including this Lease) be later than
the date which is sixteen (16) years from the Commencement Date (as defined in
this Lease).
6. FAILURE TO CONSTRUCT.
A. The parties acknowledge that the Tenant's ability to expand into
the Phase 2 Building and the Phase 3 Building is of material consideration to
Tenant under this Lease; provided, however, the parties further acknowledge that
Landlord may determine (in Landlord's reasonable business judgment) that it
would not be commercially reasonable for the Landlord to construct the
applicable Phase at the time Tenant exercises its option for the applicable
Phase. Landlord shall notify Tenant of such determination within sixty (60) days
following Tenant's notice. In the event Landlord fails to commence to construct
either Phase 2 or Phase 3, by ten (10) months after receipt of either the Phase
2 Notice or the Phase 3 Notice and upon the terms and conditions contained in
this Addendum 2, then Tenant shall have the option to purchase the Phase 2 Land
or the Phase 3 Land, as then applicable, at the Fair Market Value (defined
below); and, in the event Tenant actually consummates the purchase of the Phase
2 Land or Phase 3 Land, as applicable, Tenant shall receive a credit against the
purchase price for the applicable Phase in the amount of the consideration
previously paid to Landlord (and described in Sections 1 and 2 of this Addendum
2) for such Phase. Tenant shall have a period of thirty (30) days from receipt
of Landlord's written notice that Landlord is unable to construct the applicable
Phase in order to determine whether Tenant will purchase the applicable Phase
and the parties shall have thirty (30) days thereafter to agree upon the
purchase price for the Phase 2 Land or Phase 3 Land, as then applicable, and to
enter into a definitive agreement. If the parties are unable to agree upon the
purchase price for the Phase 2 Land or Phase 3 Land, as then applicable, it
shall be determined in the same manner and under the same time frames set forth
in the second paragraph of Section 3 of Addendum 1 (and no other Section or
paragraph of Addendum 1 shall be applicable hereto) of this Lease for
determination of Fair Rental Value (as defined in Addendum 1); provided,
however, Landlord and Tenant agree that, with respect to (i) Phase 2, in no
event shall the purchase price for the Phase 2 Land be less than thirteen
dollars ($13.00) or more than eighteen dollars ($18.00) per square foot of the
Phase 2 Land and (ii) Phase 3, in no event shall the purchase price for the
Phase 3 Land be less than fourteen dollars ($14.00) or more than nineteen
dollars ($19.00) per square foot of the Phase 3 Land. The purchase price
determined by the MAI appraisers, subject to the immediately preceding sentence,
shall be deemed to be the "Fair Market Value" of the Phase 2 Land or Phase 3
Land, as applicable. In the event Tenant shall not desire to purchase the Phase
2 Land or Phase 3 Land, as applicable, after the purchase price for the Phase 2
Land or Phase 3 Land, as applicable, is determined pursuant to the arbitration
procedure described above, Tenant shall have the right, by written notice
delivered to Landlord within fifteen (15) days of such determination (or such
right shall be null and void and of no further force or effect), to rescind
Tenant's exercise of the applicable option to purchase; provided, however, in
the event Tenant rescinds the exercise of Tenant's option to purchase the Phase
2 Land, Tenant shall have no further right whatsoever to exercise Tenant's
option to purchase the Phase 3 Land and such option to purchase with respect to
the Phase 3 Land shall be null and void and of no further force or effect.
B. IN CONSIDERATION OF LANDLORD GRANTING TENANT THE OPTION TO PURCHASE
THE PHASE 2 LAND AND PHASE 3 LAND AS SET FORTH IN THIS SECTION 6, TENANT
ACKNOWLEDGES AND EXPRESSLY AGREES THAT, IF LANDLORD DETERMINES (IN LANDLORD'S
REASONABLE BUSINESS JUDGMENT) THAT IT WOULD NOT BE COMMERCIALLY REASONABLE FOR
LANDLORD TO CONSTRUCT THE PHASE 2 BUILDING AND/OR PHASE 3 BUILDING, AS
APPLICABLE, AND LANDLORD FAILS TO SO CONSTRUCT THE PHASE 2 BUILDING AND/OR PHASE
3 BUILDING, AS APPLICABLE, THEN AND ONLY THEN (I) IN NO EVENT OR CIRCUMSTANCE
SHALL TENANT, ANY OF TENANT'S REPRESENTATIVES OR ANY SUCCESSOR, ASSIGN AND/OR
AFFILIATE THEREOF HAVE THE RIGHT OR ABILITY TO BRING ANY LEGAL OR EQUITABLE
ACTION, PROCEEDING OR SUIT (INCLUDING ANY ARBITRATION) OF ANY KIND OR NATURE
AGAINST LANDLORD, THE INDEMNITEES (AS DEFINED IN SECTION 14 OF THE LEASE) OR ANY
SUCCESSOR, ASSIGN OR AFFILIATE THEREOF FOR LANDLORD'S FAILURE TO CONSTRUCT THE
BUILDINGS AND (II) TENANT'S SOLE AND EXCLUSIVE REMEDY FOR SUCH FAILURE OF
LANDLORD SHALL BE THE EXERCISE BY TENANT OF THE OPTION(S) TO PURCHASE DESCRIBED
IN THIS SECTION 6. SUCH REMEDY SHALL CONSTITUTE AND BE DEEMED TO BE THE AGREED
AND LIQUIDATED DAMAGES OF TENANT, INTENDED NOT AS A PENALTY OR FORFEITURE WITHIN
THE MEANING OF CALIFORNIA CIVIL CODE SECTIONS 3275 OR 3369, BUT AS FULL
LIQUIDATED DAMAGES PURSUANT TO CALIFORNIA CIVIL CODE SECTIONS 1671, 1676 AND
1677 AND THE SOLE AND EXCLUSIVE REMEDY OF TENANT AT LAW OR IN EQUITY FOR
LANDLORD'S FAILURE TO CONSTRUCT THE PHASE 2 BUILDING AND/OR PHASE 3 BUILDING AND
(III)
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TENANT WAIVES AND RELEASES ANY RIGHTS THAT TENANT MAY HAVE UNDER
CALIFORNIA CIVIL CODE SECTIONS 1680 AND 3389 EXCEPT TO THE EXTENT NECESSARY TO
ENFORCE THE LIQUIDATED DAMAGES. IN PLACING THEIR INITIALS BELOW, EACH PARTY
SPECIFICALLY CONFIRMS THE ACCURACY OF THE STATEMENTS MADE ABOVE AND THE FACT
THAT EACH PARTY WAS REPRESENTED BY COUNSEL WHO EXPLAINED THE CONSEQUENCES OF
THIS LIQUIDATED DAMAGES PROVISION AT THE TIME THIS AGREEMENT WAS MADE.
LANDLORD'S INITIALS ____ TENANT'S INITIALS ____
7. APPLICABLE PROVISIONS OF ADDENDUM 1. Section 5(2), Section 6 and Section 7 of
Addendum 1 of this Lease shall be applicable to the Phase 2 Option and Phase 3
Option, and such provisions shall be deemed to be fully incorporated into this
Addendum 2, except the references to "initial term" and "First Extended Term,"
respectively, shall be replaced with "Phase 2 Option Period" and "Phase 3 Option
Period," respectively.
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ADDENDUM 3
ADJUSTMENTS TO BASE RENT
This Addendum 3 ("Addendum") is incorporated as part of that certain Lease
Agreement, dated for reference purposes as of March 24, 1998 (the "Lease"), by
and between W9/LNP Real Estate Limited Partnership, a Delaware limited
partnership ("Landlord"), and ViaSat, Inc., a Delaware corporation ("Tenant"),
for the leasing by Tenant of the Premises. Any capitalized terms used herein and
not otherwise defined herein shall have the meaning ascribed to such terms as
set forth in the Lease.
The following provision shall be added to and incorporated in the
above-referenced Lease. Any capitalized terms used herein, and not otherwise
defined herein, shall have the meaning ascribed to such terms as set forth in
the Lease. In the event of any inconsistencies between the terms and provisions
of this Addendum 3 and the Lease, the terms and provisions of this Addendum 3
shall control.
The monthly rent payable by Tenant to Landlord, as set forth in this Lease,
shall be adjusted effective on the first (1st) day of the (i) thirtieth (30th),
sixtieth (60th) and ninetieth (90th) month anniversary dates of the Commencement
Date of this Lease (and one hundred twentieth (120th) month in the event Tenant
makes either of the elections described in Addendum 2, Paragraph 5 of this
Lease) and (ii) thirtieth (30th) month anniversary date following the
commencement of the applicable Extended Term, if any, of this Lease (each an
"Adjustment Date"), in accordance with the percentage increase, if any, in the
"Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) for
Los Angeles-Riverside-Orange County, California" (Base: 1982-1984=100), as
published by the United States Department of Labor, Bureau of Labor Statistics
("Index").
The monthly rent payable on each Adjustment Date shall be the product of the
monthly rent in effect on the last day preceding each Adjustment Date and the
fraction described below. The denominator of such fraction shall be the Index in
effect one (1) month prior to the first day of the initial term of the Lease or
the last adjustment date, as the case may be ("Base Index"). The numerator of
such fraction shall be the Index in effect one (1) month prior to the last day
preceding each Adjustment Date ("Adjustment Index"). The monthly rent shall be
increased and paid thereafter in accordance with the percentage increase, if
any, between such Indices; provided, however, in no event shall such increase,
on an annual basis, be less than three percent (3%) or more than five percent
(5%).
Should said Bureau discontinue the publication of the above Index, or the
compilation of the Index be materially altered, or publish the same less
frequently, or vary the method of calculation of same, or alter the same in some
other manner, then Landlord shall adopt a substitute index which is most nearly
the same or substitute procedure which reasonably reflects and monitors consumer
prices, and shall be used to make such calculation. If the Index is changed so
that the base year differs from that in effect when the term commences, the
Index shall be converted in accordance with the conversion factor published by
the United States Department of Labor, Bureau of Labor Statistics, or, if said
Bureau shall not publish the same, then with the use of such conversion factor,
formula or table as may be published by Prentice Hall, Inc. or by any other
nationally recognized publisher of similar statistical information. In the event
the compilation and/or publication of the Index shall be discontinued or
materially altered, then the index most nearly the same as the Index shall be
used to make such calculation. In the event the Landlord and Tenant cannot agree
on such alternative Index, then the matter shall be submitted for decision to
the American Arbitration Association in accordance with the then rules of the
said Association and a decision of the arbitrators as to the applicable Index
shall be binding upon the parties. The cost of said arbitrator shall be paid
equally by the Landlord and Tenant.
References herein to the term "monthly rent" shall, for purposes of all
applicable provisions of this Lease, mean Base Rent and be synonymous therewith.
Example:
Hypothetical Facts:
-------------------
Lease Commencement Date or
Last Adjustment Date: 9/1/92
Adjustment Date: 9/1/93
Monthly rent in effect: 8/31/93 - $2,000.00
Base Index: July, 1992 - 410.0
Adjustment Index: July, 1993 - 430.0
Adjusted Rent Calculation:
-------------------------
Ratio of Indices: 430.0 = 1.0488 or 4.88%
410.0
Adjusted monthly rent: $2,000.00 x 4.88% = $2,097.60
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ADDENDUM 4
RIGHT OF FIRST OFFER TO PURCHASE
This Addendum 4 is incorporated as a part of that certain Lease Agreement dated
March 24, 1998 by and between ViaSat, Inc., a Delaware corporation ("Tenant"),
and W9/LNP Real Estate Limited Partnership, a Delaware limited partnership
("Landlord"), for the leasing of the Premises. Any capitalized terms used herein
and not otherwise defined herein shall have the meaning ascribed to such terms
as set forth in the Lease.
Tenant shall have a one time right of first offer ("Right of First Offer") to
purchase any portion of the Premises which constitutes a separate legal lot
including Phase 2 and Phase 3 which Landlord has elected to sell. Tenant's Right
of First Offer, as granted herein, shall be void if (i) Tenant has been in
default in the performance of any of Tenant's obligations under the Lease more
than three (3) times in any twelve (12) month period, or (ii) on the date of
Landlord's Availability Notice (defined below) Tenant is then in default in the
performance of any of its obligations under the Lease or (iii) the Premises or
any portion thereof has been assigned or subleased at the time this Right of
First Offer is offered other than to a Related Entity and/or a Business Entity.
Provided the above conditions are satisfied, and Landlord desires to sell any
portion of the Premises which constitutes a separate legal lot, Landlord shall
give Tenant written notice of such desire and the amount Landlord is willing to
offer the Premises for sale ("Landlord's Availability Notice") and Tenant shall
have the right to exercise Tenant's Right of First Offer. Tenant shall have a
period of seven (7) days following receipt of Landlord's Availability Notice to
advise Landlord of Tenant's interest in the portion of the Premises which were
the subject of Landlord's Availability Notice ("Tenant's Offer"), which Tenant's
Offer shall contain all of the terms and conditions on which Tenant is willing
and able to purchase the Building(s). If Tenant fails to deliver to Landlord
such advisement within the time specified herein, it shall be deemed that (i)
Tenant has elected not to offer to purchase the Building(s); (ii) Landlord may
thereafter enter into negotiations with any person or entity and/or negotiate
and consummate an agreement to sell the Building(s) with any person or entity on
any terms and conditions Landlord, in its sole and absolute discretion, shall
deem desirable; and (iii) all rights under this Right of First Offer shall
terminate and be of no further force or effect. Time is of the essence herein.
In the event Tenant's Offer is acceptable to Landlord, Tenant and Landlord shall
have twenty-one (21) days after Tenant's receipt of Landlord's written
acceptance of such terms and conditions in which to exclusively negotiate and
enter into a purchase and sale agreement for the Building(s). In the event
Tenant's Offer is not acceptable to Landlord, Landlord shall have the right,
within the above-referenced fourteen (14) day period, to either (i) reject
Tenant's Offer (in which case Landlord may thereafter enter into negotiations
with any person or entity and/or negotiate and consummate an agreement to sell
the Building(s) with any person or entity on any terms and conditions Landlord,
in its sole and absolute discretion, shall deem desirable, and all rights under
this Right of First Offer shall terminate and be of no further force or effect)
or (ii) counter Tenant's Offer ("Counteroffer") and Tenant shall have a period
of ten (10) days after receipt of the Counteroffer in which to accept or reject
such Counteroffer. In the event Tenant accepts such Counteroffer within the
above-referenced ten (10) day period with no changes, modifications or
amendments, Landlord and Tenant shall have a period of twenty-one (21) days
after Landlord's receipt of Tenant's written acceptance of such Counteroffer in
which to exclusively negotiate and enter into a purchase and sale agreement for
the Building(s). In the event (a) Landlord accepts Tenant's Offer, as described
in the first and second sentences of this paragraph, but Landlord and Tenant are
unable to reach agreement within the above-referenced twenty-one (21) day
period, (b) Tenant rejects the Counteroffer or does not respond to the
Counteroffer, (c) Tenant makes any changes, modifications or amendments to the
Counteroffer or, (d) following Tenant's acceptance of Landlord's Counteroffer,
Landlord and Tenant are unable to enter into a purchase and sale agreement
within the above-referenced twenty-one (21) day period, it shall be deemed that
(i) Tenant has elected not to purchase the Building(s); (ii) Landlord may
thereafter enter into negotiations with any person or entity and/or negotiate
and consummate an agreement to sell the Building(s) with any person or entity on
any terms and conditions Landlord, in its sole and absolute discretion, shall
deem desirable; and (iii) all rights under this Right of First Offer shall
terminate and be of no further force or effect.
This Right of First Offer is personal to Tenant and may not be assigned,
voluntarily or involuntarily, separate from or as a part of the Lease.
Notwithstanding the foregoing, Tenant may acquire the Buildings with a partner
or other joint venture entity in which Tenant is a member, and/or cause a third
party to acquire the Buildings as long as Tenant remains in compliance with the
above conditions to this Right of First Offer.
Upon consummation of the purchase and sale of the Building(s) to Tenant, this
Lease shall terminate and be of no further force or effect. In the event the
Building(s) are sold to any person or entity other than Tenant during the
initial term or extended term of this Lease, Tenant shall remain in possession
of the Premises subject to the terms, covenants, conditions and provisions of
this Lease.
Landlord and Tenant represent and warrant to the other that no person or entity
shall be entitled to a brokerage or real estate commission of any kind in
connection with the subject matter of this Addendum 4.
1