Net, Net, Net
LEASE
THIS LEASE dated May 19, 2000 for reference purposes only is made
between the Lessor and the Lessee named below, effective on the later of the
dates set forth under their respective signatures.
BASIC LEASE PROVISIONS
1. Premises: As depicted on Exhibit A.
Premises Address: 70 Santa Felicia
Goleta, CA 93117
Use of Premises: Lessee shall use the premises for general office,
manufacturing, research and development, shipping
and receiving. The use of the premises shall comply
with the Santa Barbara County zoning on the
property of MR-P.
2. Leased Area: As depicted on Exhibit A.
Square Feet: 11,880 square feet
3. Lessee's Percentages:
Building: 100%
Common Area: 100%
4. Initial Monthly Rent: $17,226 NNN ($1.45 per square foot per month)
Prepaid Rent: $17,226 (Representing the first month's rent to be
paid upon execution of the Lease)
Rent Adjustment: As provided in Section 3 of this Lease.
5. Term: Five (5) years and _ month.
6. Commencement
Date: May 15, 2000
Rent Commencement
Date: June 1, 2000
Termination Date: May 31, 2005
7. Security Deposit: $17,226
8. Broker(s): Blair Hayes Commercial - Lessor
Pacifica Commercial Realty - Lessee
9. Parking Spaces Provided: All spaces provided on site
10. Tenant Improvement
Allowance: As provided in Section 18 of this Lease.
11. Conditions to
Obligations and
Guaranty: The obligations of the parties under this Lease are
subject to: the premises being vacated by Howden
Fluid Systems, the existing lessee, and Lessor's
receipt of a written guaranty of this Lease, duly
executed and delivered by Raymond M. Karam.
12. Submission of this instrument for examination or signature by the Lessee
does not constitute a reservation of or option for space and it is not
effective as a lease or otherwise until execution by both Lessee and
Lessor. This document will be deemed withdrawn by Lessor if not executed by
Lessee and delivered to Lessor by May 22, 2000.
Daryush Agahi 507 $9.33 4/3/00
23351 Via Guadix
Mission Viejo, CA 92691
[Acquired from Karam (Rodgers shares)]
------ --------
33,730 $150,000
(aggregate)
IN WITNESS WHEREOF, the parties hereto have executed this Lease,
consisting of the foregoing Basic Lease Provisions, Articles 1 through 18 which
follow, and any attached Exhibits or Addendums, as of the date first above
written.
LESSOR:
Date: May ___, 2000 UNITED INSURANCE COMPANY OF AMERICA
By: __________________________________
Name:
Title:
Address:
c/o Bermant Development Company
5383 Hollister Avenue
Suite No. 150
Santa Barbara, CA 93111
LESSEE:
Date: May 19 , 2000 NANOMOTION, INC.,
a California corporation
By: /s/ Raymond M. Karam
--------------------------------
Name: Raymond M. Karma
Title: President
Address:
130 Robin Hill Rd. #110
Goleta, CA 93117
TABLE OF CONTENTS
ARTICLE PAGE
Basic Lease Provisions ............................................I-III
Table of Contents .................................................i-iii
1. LEASE OF PREMISES .....................................................1
2. TERM ..................................................................1
2.1 Commencement of Term ..............................................1
2.2 Delay in Commencement .............................................2
3. RENT ..................................................................2
3.1 Initial Annual Rent ...............................................2
3.1.1 Prepaid Rent .............................................2
3.2 Additional Rent ...................................................2
3.3 No Reduction or Offset ............................................2
3.4 Definitions: ......................................................2
3.5 Rent Adjustment ...................................................4
3.6 Calculation and Payment ...........................................5
4. SECURITY DEPOSIT ......................................................5
5. USE ...................................................................5
5.1 Use ...............................................................5
5.2 Compliance with Law; Nuisance .....................................6
5.3 Insurance Cancellation ............................................6
5.4 Hazardous Substances ..............................................6
5.5 Environmental Laws ................................................8
(a) Compliance with Environmental Laws ......................8
(b) Hazardous Materials Handling ............................8
(c) Notices .................................................9
(d) Indemnification of Lessor ...............................9
(e) lndemnification of Lessee ..............................10
6. MAINTENANCE REPAIRS AND ALTERATIONS ..................................10
6.1 Lessor's Obligations .............................................10
6.2 Lessee's Obligations .............................................11
6.3 Alterations and Additions ........................................11
6.4 Surrender ........................................................11
6.5 Lessor's Rights ..................................................12
7. INSURANCE ............................................................12
7.1 Lessee's Liability Insurance .....................................12
7.2 Lessee's Worker's Compensation Insurance .........................12
7.3 Lessee's Fire and Extended Coverage Insurance ....................12
7.4 Policy Requirements .............................................12
7.5 Lessor's Rights ..................................................13
i
7.6 Lessor's Insurance ...............................................13
7.7 Indemnification ..................................................13
7.8 Exemption of Lessor from Liability ...............................14
8. DAMAGE OR DESTRUCTION ................................................14
8.1 Partial Damage ...................................................14
8.2 Damage Near End of Term ..........................................15
8.3 Abatement of Rent; Lessee's Remedies .............................15
8.4 Insurance Proceeds Upon Termination ..............................15
8.5 Restoration ......................................................15
9. PERSONAL PROPERTY TAXES ..............................................16
10. UTILITIES ............................................................16
11. ASSIGNMENT AND SUBLETTING ............................................16
12. DEFAULTS; REMEDIES ...................................................18
12.1 Default by Lessee ...............................................19
12.2 Remedies for Default by Lessee ..................................19
12.3 Default by Lessor ...............................................20
12.4 Late Charges ....................................................21
13. CONDEMNATION OR RESTRICTION ON USE ...................................21
13.1 Eminent Domain .................................................21
13.2 Abatement of Rent ...............................................22
13.3 Temporaiy Taking ................................................22
13.4 Voluntary Sale as Taking ........................................22
14. BROKERS ..............................................................22
15. LESSOR'S LIABILITY ...................................................22
16. PARKING ..............................................................23
17. GENERAL PROVISIONS ...................................................24
17.1 Estoppel Certificate ............................................24
17.2 Severability ....................................................24
17.3 Time of Essence .................................................24
17.4 Captions ........................................................24
17.5 Notices .........................................................24
17.6 Waivers .........................................................25
17.7 Holding Over ....................................................25
17.8 Cumulative Remedies .............................................25
17.9 Inurement .......................................................25
17.10 Choice of Law ..................................................25
17.11 Subordination ..................................................25
17.12 Attorneys' Fees ................................................26
17.13 Lessor's Access ................................................26
17.14 Corporate Authority ............................................26
17.15 Surrender or Cancellation ......................................26
17.16 Entire Agreement ...............................................26
17.17 Signs ..........................................................27
ii
17.18 Interest on Past Due Obligations ..............................27
17.19 Gender; Number ...............................................27
17.20 Recording of Lease ............................................27
17.21 Waiver of Subrogation ........................................28
17.22 Confidentiality of Lease ......................................28
17.23 Quiet Enjoyment ...............................................28
17.24 Window Coverage ...............................................28
17.25 Materials Storage Restrictions ...............................28
17.26 No Agency .....................................................29
17.27 Force Majeure .................................................29
17.28 Accord and Satisfaction .......................................29
17.29 Financial Statements ..........................................29
17.30 Supersedes Proposal to Lease ..................................29
17.31 Construction ..................................................30
17.32 Non-Disturbance Agreement .....................................30
18. TENANT IMPROVEMENTS ..................................................30
19. ONE TIME OPTION TO EXTEND ............................................30
20. APPRAISAL PROVISIONS .................................................31
iii
EXHIBIT A - PREMISES
EXHIBIT B - RULES AND REGULATIONS
EXHIBIT C - GUARANTY OF LEASE
iv
1. LEASE OF PREMISES
The Lessor hereby leases to the Lessee and the Lessee leases from the
Lessor for the term, at the rental, and upon all of the conditions set forth in
this Lease, the Premises identified in Item 1 of the Basic Lease Provisions,
together with the non-exclusive use, in common, with the Lessor and other
tenants of the Building and their respective invitees, of common areas in or
about the Building and the parking garage (if any) or parking areas adjoining
the Building. The Lessee and the Lessor have agreed on the square footage set
forth in Item 2 of the Basic Lease Provisions and each party will be bound by
Item 2 through the term of this Lease or any extension thereof. The
configuration of the Project and the location of the Building, Premises and
associated common and parking areas is indicated on Exhibit B. The size,
location and function of the buildings and related structures depicted here are
approximate. The configuration of the development, the design, size, function
and location of all other improvements, and the identity and location of other
tenants to the extent depicted are subject to change without notice for any
reason deemed sufficient by the owner. The Lessor reserves the right to alter
the configuration of the Project to construct additional improvements thereon,
to withdraw areas therefrom from time to time and alter the configuration of the
associated common and parking areas, provided that the number of parking spaces
intended for the Lesse's use, and the Lessee's general use and enjoyment of the
Premises shall not thereby be materially diminished. The Lessee shall be
allocated the number of parking spaces set forth in Item 9 of the Basic Lease
Provisions and the Lessee acknowledges that the Lessor shall have no
responsibility to supervise or police the usage of the parking lot by the
tenants of the Building. Nothing in this Lease shall cause the Lessor in any way
to be construed as an employer, employee, fiduciary, a partner, a joint venturer
or otherwise associated in any way with the Lessee in the operation of the
Premises, or to subject the Lessor to any obligation, loss, charge or expense
connection with or arising from the Lessee's operation or use of the Premises.
Pursuant to Section 1652 of the California Civil Code, it is understood
and agreed that the general intent and purpose of this Lease is that this Lease
shall be an absolute triple net lease with respect to the Lessor. The Lessee
shall pay its pro rata share of all insurance, utilities, all operating costs
for the Premises, the common areas of the Building, the Building and the land on
which it is situated. It is intended that the rental return to the Lessor shall
not be reduced, offset or diminished directly or indirectly by any cost, charge,
or expense due from the Lessee and others in connection with the Premises,
Building or land upon which it is situated, nor subject to suspension or
termination for any reason. It is acknowledged and agreed that all provisions of
this Lease shall be interpreted in a manner consistent with and subordinate to
such general intent and purpose.
2. TERM
2.1 Commencement of Term
(a) The term of the Lease shall be as shown in Item 5 of the
Basic Lease Provisions, commencing on the Commencement Date, which the Lessor
and the Lessee expect to be
the Commencement Date as shown in Item 6 of the Basic Lease Provisions, but
which may be such other date as herein provided, and ending on the Termination
Date, unless sooner terminated pursuant to any provision hereof.
(b) Payment of rent shall commence on the Rent Commencement
Date.
(c) If delivery of possession occurs prior to the
CommencementDate, the term of this Lease shall commence on such date of delivery
of possession, but the Termination Date shall not be advanced.
2.2 Delay in Commencement. Notwithstanding the Commencement Date, if
for any reason the Lessor cannot deliver possession of the Premises to the
Lessee on or before said date, the Lessor shall not be subject to any liability
therefor, nor shall such failure affect the validity of this Lease or the
obligations of the Lessee hereunder. The Lessee shall not be obligated to pay
rent until delivery of possession of the Premises has occurred.
3. RENT
3.1 Initial Monthly Rent. The Lessee shall pay to the Lessor as rent
for the Premises an Initial Monthly Rent in the amount specified in Item 4 of
the Basic Lease Provisions in advance on the first day of each month, commencing
on the Rent Commencement Date specified in Item 6 of the Basic Lease Provisions.
3.1.1 Prepaid Rent. Upon Lease execution, the Lessee shall
deposit with the Lessor an amount representing the first (lst) month's rent as
provided in Item 4 of the Basic Lease Provisions.
3.2 Additional Rent. The Lessee shall reimburse the Lessor, as
additional rent, in the manner and at the times provided, for the Lessee's
proportionate share of all Building Operating Expenses and Common Area Operating
Expenses (as hereinafter defined) incurred by the Lessor. The Lessee's
proportionate share of such Building Operating Expenses and Common Area
Operating Expenses shall be based upon the Lessee's Building Percentage in the
case of Building operating Expenses, and upon the Lessee's Common Area
Percentage in the case of Common Area Operating Expenses, all as defined herein.
3.3 No Reduction or Offset. All Rent due under this Lease shall be
payable without deduction, abatement or offset.
3.4 Definitions: For purposes of this Article 3:
(a) The Lessee's Building Percentage is a percentage
calculated by dividing the Leased Area of the Premises, as shown in Item 2 of
the Basic Lease Provisions, by the leasable area of the Building, as is
stipulated to be as shown in Item 3 of the Basic Lease Provisions.
2
(b) Building Operating Expenses shall mean the sum of all
expenses incurred by the Lessor in connection with the operation, repair and
maintenance of the Building, including, but not limited to, heating and air
conditioning; all Real Property Taxes (as hereinafter defined) imposed upon or
with respect to the Building and related improvements (exclusive of the land
underlying all such improvements); all fire and extended coverage, earthquake,
loss of rents, vandalism, malicious mischief and other insurance covering the
Building and losses suffered which fall below the insurance deductible;
utilities; materials and supplies; salaries, wages and other expenses incurred
with respect to the operation, repair and maintenance of the Building, the cost
of repainting, wall covering or recarpeting Common Areas of the Building;
security and fire protection; amortization of capital investments for
improvements which are designed to reduce operating costs, improve operations or
comply with governmental conservation or safety programs over such reasonable
period as the Lessor shall determine (together with interest at three (3)
percentage points above the discount rate of the Federal Reserve Bank of San
Francisco on the unamortized amount); and an amount equal to three percent (3%)
of the combined total of the gross receipts of the Rent, Building Operating
Expenses and Common Area Operating Expenses to cover the Lessor's administrative
and overhead expenses. Building Operating Expenses attributable to the utilities
and services furnished pursuant to Article 10 shall be apportioned among the
tenants of the Building receiving such services (excluding those tenants
furnishing or paying for their own utilities and janitorial services) based on
the respective leased areas occupied by such tenants.
(c) Lessee's Common Area Percentage is a percentage figure
calculated by the project architect by dividing the Leased Area of the Premises
by the total leasable area in all improvements, including the Building and other
buildings, shown on Exhibit B, during such year as is initially stipulated to be
as shown in Item 3 of the Basic Lease Provisions. Should the Building and/or
landscape area become a separate legal lot, or should additional improvements or
common area be added to or deleted from Exhibit B, the Lessor may, at its
option, calculate the Lessee's Common Area Percentage by comparing the common
area attributable to the Premises with the common area on such legal lot or
otherwise within Exhibit B as so revised.
(d) Common Area Operating Expenses shall mean the sum of all
expenses incurred by the Lessor in connection with the operation and maintenance
of driveways, landscaping, walkways, plazas, parking facilities, and perimeter
property including, but not limited to: all items described in Section 6.1
hereof; all Real Property Taxes (as hereinafter defined) imposed upon or with
respect to the land included within Exhibit B all public liability insurance
covering Exhibit B; and losses suffered which fall below the insurance
deductible; security and fire protection; salaries, wages and other expenses
incurred with respect to maintenance of the common areas, gardening,
landscaping, repaving, repainting and trash removal (excluding the cost of an on
site manager or officer manager); depreciation of equipment used in such
maintenance; amortization of capital investments for improvements which comply
with governmental conservation or safety programs over such reasonable period as
the Lessor shall determine (together with interest at three (3) percentage
points above the discount rate of the Federal Reserve Bank of San Francisco on
the unamortized amount). General overhead and depreciation of improvements shall
not be included in
3
the expenses except as specifically set forth in the foregoing. Any governmental
surcharge, fee or assessment imposed with respect to the parking facilities
within Exhibit B shall, to the extent paid by the Lessor and not passed on to
the users of said parking facilities, be included in Common Area Operating
Expenses.
(e) Real Property Taxes shall mean all real and personal
property taxes and assessments incurred during any calendar year, including, but
not limited to: special and extraordinary assessments, meter and sewer rates and
charges, occupancy taxes or similar taxes imposed on or with respect to the real
or personal property, whether or not imposed on or measured by the rent payable
by the Lessee, and other governmental levies and charges, general and special,
ordinary and extraordinary, unforeseen as well as foreseen, of any kind and
nature whatsoever relating to the real or personal property, and any gross
rental, license or business tax measured by or levied on rent payable or space
occupied. If, by law, any property taxes are payable, or may at the option of
the taxpayer be paid, in installments (whether or not interest shall accrue on
the unpaid balance of such property taxes), the Lessor may, at the Lessor's
option, pay the same and, in such event, any accrued interest on the unpaid
balance of such property taxes shall be deemed to be Real Property Taxes as
defined herein. Real Property Taxes shall also include all expenses reasonably
incurred by the Lessor in seeking a reduction by the taxing authorities of Real
Property Taxes applicable to the Project. Real Property Taxes shall not include
any capital levy, franchise, estate, inheritance, succession, gift or transfer
tax of the Lessor, or any income, profits or excess profits tax, assessment,
charge or levy upon the income of the Lessor; provided, however, that if at any
time during the term of this Lease under the laws of the United States or the
State of California, or any political subdivision of either, a tax or excise on
rents, space or other aspects of real property, is levied or assessed against
the Lessor, the same shall be deemed to be Real Property Taxes. If any such
property taxes upon the income of the Lessor shall be imposed on a graduated
scale, based upon the Lessor's aggregate rental income, Real Property Taxes
shall include only such portion of such property taxes as would be payable if
the rent payable with respect to the Building and Common Areas were the only
rental income of the Lessor subject thereto.
3.5 Rent Adjustment. As specified in Item 4 of the Basic Lease
Provisions, the amount of the monthly rental installment shall be increased, as
of each June 1 of the Lease term (commencing June 1, 2001), by an amount equal
to Four Percent (4%) of the monthly rent for the prior year. Therefore, the
amount of such monthly rental installments shall be as follows:
Calendar Year Adjustment Date Monthly Rental Installment
2001 June 1,2001 $17,915.04
2002 June 1,2002 $18,631.64
2003 June 1,2003 $19,376.91
2004 June 1,2004 $20,151.98
4
3.6 Calculation and Payment. Annual rent shall be payable to the Lessor
without deduction or offset, in lawful money of the United States at the
Lessor's address herein or to such other persons or at such other places as the
Lessor designates in writing. Rent payable for any period for less than one (1)
month shall be prorated based upon a thirty (30) day month.
Prior to the commencement of the lease term and of each December
thereafter, the Lessor shall give the Lessee a written estimate of the Lessee's
share of Building and Common Area Operating Expenses for the ensuing year or
portion thereof. The Lessee shall pay such estimated amount to the Lessor in
equal monthly installments, in advance. Within ninety (90) days after the end of
each calendar year, the Lessor shall furnish to the Lessee a statement showing
in reasonable detail the actual Building and Common Area Operating Expenses
incurred by the Lessor during such period, and the parties shall within thirty
(30) days make any payment or allowance necessary to adjust the Lessee's
estimated payment to the Lessee's actual proportionate share as shown by such
annual statement. Any amount due the Lessee shall be credited against
installments next coming due under this paragraph.
4. SECURITY DEPOSIT
Concurrently with the Lessee's sexecution of this Lease, the Lessee
shall deposit with the Lessor the sum specified in Item 7 of the Basic Lease
Provisions as security for the faithful performance by the Lessee of all
covenants and conditions of this Lease. If the Lessee shall breach or default in
the performance of any covenants or conditions of this Lease, including the
payment of rent, the Lessor may use, apply or retain the whole or any part of
such security deposit for the payment of any rent in default or for any other
sum which the Lessor may spend or be required to spend by reason of the Lessee's
default. If the Lessor so uses or applies all or any portion of said deposit,
the Lessee shall, within ten (10) days after written demand therefor, deposit
cash with the Lessor in an amount sufficient to restore said deposit to the full
amount herein above stated and the Lessee's failure to do so shall be a material
breach of this Lease. Should the Lessee comply with all covenants and conditions
of this Lease, the security deposit or any balance thereof shall be returned to
the Lessee (or at the option of the Lessor, to the last assignee of the Lessee's
interest in this Lease) at the expiration of the term. The Lessee shall not be
entitled to interest on the security deposit and the Lessor shall have the right
to commingle said security deposit with other funds of the Lessor. Should the
Lessor sell its interest in the Premises, the Lessor may transfer to the
purchaser thereof the then unexpended or unappropriated deposit and thereupon
the Lessor shall be discharged from any liability for such funds.
5. USE
5.1 Use. The Premises shall be used and occupied for the purposes
described in Item 1 of the Basic Lease Provisions, permitted under applicable
ordinances and other Governmental requirements, the covenants, conditions and
restrictions affecting the Project, as the same may be amended from time to
time, and the Rules and Regulations as the Lessor may from time to time
5
reasonably adopt for the safety, care and cleanliness of the Building and the
Project or the preservation of good order. The Rules and Regulations presently
in effect are attached hereto as Exhibit C. The Lessor shall not be responsible
to the Lessee for the non-performance of any of said Rules and Regulations, or
non-compliance with said covenants, conditions and restrictions, by any other
tenant of the Building.
5.2 Compliance with Law; Nuisance. The Lessee, at the Lessee's sole
cost and expense, shall comply promptly and at all times with all laws,
requirements, ordinances, statutes, and regulations of all municipal, state or
federal authorities, or any board of fire insurance underwriters, or other
similar bodies, now in force or which may hereafter be in force, pertaining to
the Building and the Premises and the occupancy thereof, including any law that
requires alteration, maintenance or restoration of the Premises as the result of
the Lessee's use thereof. The judgment of any court of competent jurisdiction,
or the admission of the Lessee in any action or proceeding against the Lessee,
whether the Lessor is a party thereto or not, that the Lessee violated any such
ordinances or statutes in the use of the Premises shall be conclusive of that
fact as between the Lessor and the Lessee. The Lessee, at its sole expense,
shall also comply with all requirements for fire extinguishers or fire
extinguisher systems required in the Premises.
The Lessee shall not commit, or suffer to be committed, any waste of
the Premises, or any nuisance, annoyance or other unreasonable annoyance which
may disturb the quiet enjoyment of adjoining premises or of the Building by the
owners or occupants thereof.
5.3 Insurance Cancellation. Notwithstanding the provisions of Paragraph
5.1 above, the Lessee shall not do or permit anything to be done in or about the
Premises nor bring or keep anything therein, including all uses permitted under
Section 5.1 above, which will in any way increase the existing rate of or affect
any fire or other insurance upon the Building, or any other part thereof, or any
of its contents, and if the Lessee's use of the Premises causes an increase in
said insurance rates, the Lessee shall pay as additional rent the amount of such
increase. The Lessee shall be in default under this Lease should the Lessee
cause the cancellation of fire or other insurance upon the Building or Property
or should the Lessee fail to pay any increased insurance rate attributable to
the Lessee's use of the Premises. In determining whether increased premiums are
a result of the Lessee's use or occupancy of the Premises or Building, a
schedule issued by the Lessor's insurer computing the insurance rate on the
Premises or Building, or the leasehold improvements showing the various
components of such rate, shall be conclusive evidence of the several items and
charges which make up such rate. The Lessee shall promptly comply with all
reasonable requirements of the insurance authority or of any insurer now or
hereafter in effect relating to the Premises.
5.4 Hazardous Substances. Any corrosive, flammable, hazardous or other
special waste or materials shall be handled or disposed of as directed by
applicable state, Federal, County and City regulations. The Lessee shall handle,
store or dispose of such materials in a careful and prudent manner. At the
termination of the Lease, or any option period thereof, the Lessee shall fully
clean the Premises in such a manner that no residue of such materials or waste
shall remain on the Premises. The Lessee shall notify the appropriate
governmental authority of the presence and
6
amount of any such material or waste, and shall comply with all conditions
imposed by such authority. The Lessee shall contact the appropriate governmental
authority prior to occupancy to determine the existence of any records for the
Building and/or Premises. To the extent required by law, specifically thirty
(30) days prior to occupancy, the Lessee shall submit a Hazardous Materials
Management Plan (HMMP) and a Hazardous Materials Floor Plan (HMF) to the Lessor
and the appropriate governmental authority for approval. These plans shall be
attached in full to this Lease.
The HMMP shall include the following:
(a) The company name, address and contact person.
(b) General facility description with map showing location of
all buildings and structures.
(c) Facility hazardous material storage map showing the
location of each proposed hazardous material storage area and access to such
facilities. The map shall be updated annually by the occupant and submitted by
January 1 each year.
(d) A floor plan showing the location of each hazardous
material storage area, storage area access, and the location of emergency
equipment.
The HMF shall include the following:
(a) Hazardous Materials Handling Report describing the safe
handling of hazardous materials to prevent accidents.
(b) Separation or Hazardous Material Report outlining the
methods to be utilized to insure separation and protection of hazardous
materials from such factors that could cause fire, explosion, spills, etc.
(c) Inspection and Record Keeping Plan indicating the
procedures for inspecting each storage facility. An authorized record of
inspection shall be maintained by the Lessee.
(d) Employee Training Program to insure that employees know
how to safety handle hazardous materials.
(e) Hazardous Materials Contingency Plan that clearly
describes appropriate response procedures and measures in case of an accident.
(f) A floor plan identifying the location and quantity of each
hazardous material, including the chemical name and quantity limit for each
class.
7
The Lessee shall pay inspection fees, based on the hourly inspection
rate, for an environmental audit to be conducted by the appropriate governmental
authority, or the Lessor at the termination of the Lease and prior to
reoccupation of the Building and/or the Premises, if hazardous materials were in
use on the Building and/or Premises. The appropriate governmental authority
shall perform or the Lessee shall arrange for such an audit in a timely manner
to prevent economic hardship to the Lessor and shall certify that the Premises
are available for reoccupation, or shall specify clean-up measures that will
render the Premisis safe for reoccupation. The Lessee shall be responsible for
any clean-up that may be required as a result of the audit, if such items are
attributable to the Lessee's use of the Premises.
Should the Lessee fail to comply with any duty set forth in this
Section 5.4, the Lessor may, in addition to all other remedies now or hereafter
provided by this Lease, or by law, perform such duty or make good such default,
and any amounts which the Lessor shall advance pursuant thereto shall be repaid
by the Lessee to the Lessor on demand.
5.5 Environmental Laws.
(a) Compliance with Environmental Laws. The Lessee, in its
conduct of business on or in any activity, work, thing done, permitted or
suffered by the Lessee, its agents, contractors, employees or invitees on the
Premises, shall at all times and in all respects comply with all federal, state
and county laws, ordinances and regulations (the "Hazardous Materials Laws")
relating to industrial hygiene, environmental protection or the use, analysis,
generation, manufacture, storage, disposal or transportation of any oil,
flammable explosives, asbestos, radioactive materials or waste, or other
hazardous, toxic, contaminated or polluting materials, substances, or wastes,
including, without limitation, any "hazardous substances," "hazardous wastes,"
"hazardous materials," or "toxic substances" under any such laws, ordinances or
regulations (collectively, the "Hazardous Materials"). Such laws, ordinances or
regulations shall include, but not be limited to, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, 42
U.S.C. Section 9601, et seq; the Hazardous Materials Transportation Act, 49
U.S.C. Section 1801, et seq; the Resource Conservation and Recovery Act of
1976,42 U.S.C. Section 6901 et seq; the Clean Water Act, 33 U.S.C. Section 466,
et seq; the Safe Drinking Water Act, 14 U.S.C. Section 1401, et seq; the
Superfund Amendment and Reauthorization Act of 1986; Public Law 99-499, 100
Stat. 1613; the Toxic Substances Control Act, 15 U.S.C. Section 2601, et seq, as
amended; those substances defined as "hazardous waste", "extremely hazardous
waste", "restricted hazardous waste" or "hazardous substance" in the Hazardous
Waste Control Act, Section 25100 et seq of the California Health & Safety Code;
and those materials and substances similarly described in the Federal
Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. Section 136, et seq., as
amended, the Atomic Energy Act of 1954,42 U.S.C. Section 2011, et seq., as
amended; the Porter Cologne Water Quality Control Act, Section 1300 et seq. of
the Califomia Health & Safety Code; and any regulations adopted and publications
promulgated pursuant to said Laws.
(b) Hazardous Materials Handling. The Lessee shall, at its own
expense, procure, maintain in effect and comply with all conditions of any and
all permits, licenses and other
8
governmental and regulatory approvals required for the Lessee's use of the
Premises, including, without limitation, discharge of (appropriately treated)
materials or wastes into or through any sanitary sewer serving the Premises.
Except as discharged into the sanitary sewer in strict accordance and conformity
with all applicable Hazardous Materials Laws, the Lessee shall cause any and all
Hazardous Materials removed from the Premises to be removed and transported
solely by duly licensed haulers to duly licensed facilities for final disposal
of such materials and wastes. The Lessee shall in all respects handle, treat,
deal with and manage any and all Hazardous Materials in, on, under or about the
Premises in total conformity with all applicable Hazardous Materials Laws and
prudent industry practices regarding management of such Hazardous Materials.
Upon expiration or earlier termination of the term of the Lease, the Lessee
shall cause all Hazardous Materials to be removed from the Premises and
transported for use, storage or disposal in accordance and compliance with all
applicable Hazardous Materials Laws. The Lessee shall not take any remedial
action in response to the presence of any Hazardous Materials in or about the
Premises or the Building, nor enter into any settlement agreement, consent,
decree or other compromise in respect to any claims relating to any Hazardous
Materials in any way connected with the Premises or the Building, without first
notifying the Lessor of the Lessee's intention to do so and affording the Lessor
ample opportunity to appear, intervene or otherwise appropriately assert and
protect the Lessor's interest with respect thereto.
(c) Notices. The Lessee shall immediately notify the Lessor in
writing of any of the following activities relating to the Lessee's operations
on the Premises: (i) any enforcement, clean-up, removal or other governmental or
regulatory action instituted, completed or threatened pursuant to any Hazardous
Materials Laws; (ii) any claim made or threatened by any person against the
Lessee, the Premises or the Building relating to damage, contribution, cost
recovery compensation, loss or injury resulting from or claimed to result from
any Hazardous Materials in, on or removed from the Premises or the Building; and
(iii) any reports made to any environmental agency arising out of or in
connection with any Hazardous Materials in or removed from the Premises or the
Building, including any complaints, notices, warnings or asserted violations in
connection therewith. The Lessee shall also supply to the Lessor as promptly as
possible, and in any event within five (5) business days after the Lessee first
receives or sends the same, with copies of all claims, reports, complaints,
notices, warnings or asserted violations relating in any way to the Premises,
the Building or the Lessee's use thereof. The Lessee shall promptly deliver to
the Lessor copies of hazardous waste manifests reflecting the legal and proper
disposal of all Hazardous Materials removed from the Premises.
(d) Indemnification of Lessor. The Lessee shall indemnify,
defend, protect, and hold the Lessor, and each of the Lessor's partners,
employees, agents, attorneys, successors and assigns, free and harmless from and
against any and all claims, liabilities, penalties, forfeitures, losses or
expenses (including attorneys' fees) for death of or injury to any person or
damage to any property whatsoever arising from or caused in whole or in part,
directly or indirectly, by (A) the presence in, on, under or about the Premises
or the Building, or discharge in or from the Premises or the Building of any
Hazardous Materials or the Lessee's use, analysis, storage, transportation,
disposal, release, threatened release, discharge or generation of Hazardous
Materials
9
to, in, on, under, about or from the Premises or the Building, but only to the
extent such Hazardous Materials are present as a result of actions of the
Lessee, its officers, employees, invitees, assignees, contractors, or agents, or
(B) the Lessee's failure to comply with any Hazardous Materials Law. The
Lessee's obligations hereunder shall include, without limitation, and whether
foreseeable or unforeseeable, all costs of any required or necessary repair,
clean-up or detoxification or decontamination of the Premises or the Building,
and the preparation and implementation of any closure, remedial action or other
required plans in connection therewith, and shall survive the expiration or
earlier termination of the term of the Lease. For purposes of the release and
indemnity provisions hereof, any acts or omissions of the Lessee, or by
officers, invitees, employees, agents, assignees, contractors or subcontractors
of the Lessee or others acting for or on behalf of the Lessee (to the extent any
such individual is acting within the scope of his relationship with the Lessee),
whether or not such acts or omissions are negligent, intentional, willful or
unlawful, shall be strictly attributable to the Lessee.
(e) Indemnification of Lessee. The Lessor shall indemnify,
defend, protect, and hold the Lessee, and each of the Lessee's officers,
directors, shareholders, employees, agents, attorneys, successors and assigns,
free and harmless from and against any and all claims, liabilities, penalties,
forfeitures, losses or expenses (including attorneys' fees) for death of or
injury to any person or damage to any property whatsoever arising from or caused
in whole or in part, directly or indirectly, by (A) the presence in, on, under
or about the Premises or the Building, or discharge in or from the Premises or
the Building of any Hazardous Materials existing as of the execution of this
Lease, or the Lessor's use, analysis, storage, transportation, disposal,
release, threatened release, discharge or generation of Hazardous Materials to,
in, on, under, about or from the Premises or the Building, or (B) the Lessor's
failure to comply with Sections 5.4 and 5.5 hereof. The Lessor's obligations
hereunder shall include, without limitation, and whether foreseeable or
unforeseeable, all costs of any required or necessary repair, clean-up or
detoxification or decontamination of the Premises or the Building, and the
preparation and implementation of any closure, remedial action or other required
plans in connection therewith, and shall survive the expiration or earlier
termination of the term of the Lease. For purposes of the release and indemnity
provisions hereof, any acts or omissions of the Lessor, or by officers,
invitees, employees, agents, assignees, contractors or subcontractors of the
Lessor or others acting for or on behalf of the Lessor (to the extent any such
individual is acting within the scope of his relationship with the Lessor),
whether or not such acts or omissions are negligent, intentional, willful or
unlawful, shall be strictly attributable to the Lessor.
6. MAINTENANCE. REPAIRS AN]) ALTERATIONS
6.1 Lessor's Obligations. The Lessor shall cause to be maintained, in
good order, condition and repair, the roof structure and membrane, and exterior
walls, common windows and doors of the Building (excluding the interior surface
thereof), heating, venting and air conditioning systems, and any public and
common areas in the Building, as well as all parking areas, driveways,
sidewalks, private roads or streets, landscaping and all other areas located
within the Project other than areas occupied by other buildings (such
non-building areas being herein referred to as "Common
10
Areas"). The costs of such maintenance (other than maintenance of the
foundation, roof structure and the exterior load bearing walls) are chargeable
to the Lessee pursuant to Section 3.2 hereof.
6.2 Lessee's Obligations. The Lessee shall, during the term of this
Lease, keep in good order, condition and repair, the interior of the Premises
and every part thereof, including, but not limited to, all interior windows and
doors in and to the Premises. The Lessor shall incur no expense nor have any
obligation of any kind whatsoever in connection with the maintenance of the
interior of the Premises and the Lessee expressly waives the benefits of any
statute now or hereafter in effect which would otherwise afford the Lessee the
right to make repairs at the Lessor's expense or to terminate this Lease because
of any failure to keep the interior of the Premises in good order, condition and
repair. Notwithstanding the foregoing, the Lessor shall be liable for
maintenance or repairs which are caused by the Lessor's gross negligence. The
Lessee shall be responsible for interior janitorial services.
6.3 Alterations and Additions.
(a) The Lessee shall not, without the Lessor's prior written
consent, make any alterations, improvements, additions or utility installations
in, on or about the Premises unless such work is non-structural and does not
exceed TWO THOUSAND FIVE HUNDRED DOLLARS ($2,500). For all work, the Lessee will
provide the Lessor with as-built drawings reflecting any changes to the
Premises. As used in this Paragraph 6.3, the term "utility installations" shall
include bus ducting, power panels, fluorescent fixtures, space heaters, conduits
and wiring. As a condition to giving such consent, the Lessor may require that
the Lessee (i) agree to remove any such alterations, improvements, additions or
utility installations at the expiration or sooner termination of the term, and
to restore the Premises to their prior condition and/or (ii) provide the Lessor,
at the Lessee's sole cost and expenses, a lien and completion bond in an amount
equal to one and one-half (l 1/2) times the estimated cost of such improvements,
to insure the Lessor against any liability for mechanics' and materialmen's
liens and to insure completion of work.
(b) All alterations, improvements and additions to the
Premises shall be performed by the Lessor's contractor for the Project or other
licensed contractor approved by the Lessor, which approval shall not be
unreasonably withheld. The Lessee shall pay, when due, all claims for labor or
materials furnished to or for the Lessee at or for use in the Premises, which
claims are or may be secured by any mechanics' or materialmen's lien against the
Premises or any interest therein, and the Lessor shall have the right to post
notices of non-responsibility in or on the Premises as provided by law.
6.4 Surrender. On the last day of the term hereof, or on any sooner
termination, the Lessee shall surrender to the Lessor the Premises and, subject
to the provisions of Paragraph 6.3(a) hereof, all alterations, additions and
improvements thereto, in the same condition as when received or made, ordinary
wear and tear excepted; provided, however, that the Lessee's machinery,
equipment and trade fixtures (including utility installations) which may be
removed without irreparable or material damage to the Premises, shall remain the
property of the Lessee and be
11
removed by the Lessee. The Lessee shall repair any damage to the Premises
occasioned by the removal of the Lessee's furnishings, machinery, equipment and
trade fixtures, which repair shall include the patching and filing of holes and
repair of structural damage.
6.5 Lessor's Rights. If the Lessee fails to perform the
Lessee's obligations under this Article 6, the Lessor may, at its option (but
shall not be required to), and with a five (5) day written notice to the Lessee,
perform such obligations on behalf of the Lessee, and the cost thereof, together
with interest thereon at the rate specified in Paragraph 12.2(a) hereof, shall
immediately become due and payable as additional rent to the Lessor.
7. INSURANCE
The Lessee, at its sole cost and expense, shall, commencing on the date
the Lessee is given access to the Premises for any purpose, and during the
entire term hereof, procure, pay for and keep in full force and effect:
7.1 Lessee's Liability Insurance. Comprehensive general liability
insurance with respect to the Premises and the operations of or on behalf of the
Lessee in, on or about the Premises, including, but not limited to, personal
injury, product liability (if applicable), blanket contractual, owner's
protective, broad form property damage liability coverage, host liquor liability
and owned and non-owned automobile liability in an amount not less than TWO
MILLION DOLLARS ($2,000,000) Combined Single Limit. Such policy shall contain
(i) severability of interest, (ii) cross liability, and (iii) an endorsement
stating in substance that "such insurance as is afforded by this policy for the
benefit of the Lessor shall be primary as respects any liability or claims
arising out of the occupancy of the Premises by the Lessee, or out of the
Lessee's operations, and any insurance carried by the Lessor shall be excess and
non-contributory."
7.2 Lessee's Worker's Compensation Insurance. Worker's Compensation
coverage as required by law, together with Employer Liability coverage.
7.3 Lessee's Fire and Extended Coverage Insurance. Insurance against
fire, vandalism, malicious mischief and such other additional perils as now are
or hereafter may be included in a standard "All Risks" coverage, insuring all
improvements and betterments made to the Premises, the Lessee's trade fixtures,
furnishings, equipment, stock, loss of income or extra expense, and other items
of personal property in an amount not less than 100% of replacement value. Such
insurance shall contain (i) no coinsurance or contribution clauses, (ii) a
Replacement Cost Endorsement, and (iii) deductible amounts acceptable to the
Lessor.
7.4 Policy Requirements. All policies of insurance required to be
carried by the Lessee pursuant to these requirements shall be written by
responsible insurance companies authorized to do business in the State of
California. Any such insurance required by the Lessee hereunder may be furnished
by the Lessee under any blanket policy carried by it or under a separate policy
therefor. A true and exact copy of each paid up policy evidencing such insurance
or a
12
certificate of the insurer, certifying that such policy has been issued,
providing the coverage required and containing the provisions specified herein,
shall be delivered to the Lessor prior to the date the Lessee is given the right
to possession of the Premises, and upon renewals, not less than thirty (30) days
prior to the expiration of such coverage. The Lessor may, at any time, and from
time to time, inspect and/or copy any and all insurance policies required
hereunder. In no event shall the then limits of any policy be considered as
limiting the liability of the Lessee under this Lease.
Each policy evidencing insurance required to be carried by the Lessee
pursuant to these requirements shall contain, in form and substance satisfactory
to the Lessor: (i) a provision including the Lessor and any other parties in
interest designated by the Lessor as an additional insured; (ii) a waiver by the
Lessee's insurer of any right to subrogation against the Lessor, its agents,
employees and representatives which arise or might arise by reason of any
payment under such policy or by reason of any act or omission of the Lessor, its
agents, employees or representatives, and (iii) a provision that the insurer
will not cancel or materially change the coverage provided by such policy
without first giving the Lessor thirty (30) days' prior written notice.
7.5 Lessor's Rights. If the Lessee fails to procure, maintain and/or
pay for at the times and for the durations specified in this Lease, the
insurance required hereunder, or fails to carry insurance required by any
governmental requirement, the Lessor may (but without obligation to do so), and
with twenty-four (24) hours advance notice to the Lessee, perform such
obligations on behalf of the Lessee, and the cost thereof, together with
interest thereon at the rate specified in Paragraph 12.2(a) hereof, shall
immediately become due and payable as additional rent to the Lessor.
7.6 Lessor's Insurance. The Lessor shall maintain during the term of
this Lease such insurance against physical damage to the Building, comprehensive
liability insurance and other insurance as the Lessor may, from time to time,
determine. The Lessor will determine the limits of coverage, deductibles and
specific perils insured against. The Lessor may, but shall not be obliged to,
take out and carry any other form or forms of insurance as it or the mortgagees
of the Lessor may reasonably determine advisable. Notwithstanding any
contributions by the Lessee to the cost of insurance premiums, with respect to
the Building or any alterations of the Premises as may be provided herein, the
Lessee acknowledges that it has no right to receive any proceeds from any such
insurance policies carried by the Lessor.
7.7 Indemnification. To the fullest extent permitted by law, the Lessee
shall defend, indemnify and hold harmless the Lessor from and against any and
all claims arising from the Lessee's use of the Premises or the conduct of its
business or from any activity, work or thing done, permitted or suffered by the
Lessee, its agents, contractors, employees or invitees in or about the Premises
or elsewhere, and shall further indemnify and hold harmless the Lessor from and
against any and all claims arising from any breach or default in the performance
of any obligation on the Lessee's part to be performed hereunder, or arising
from any act, neglect, fault or omission of the Lessee, or of its agents,
employees, or invitees, and from and against all costs, attorney's fees,
expenses and liabilities incurred in or about such claim or any action or
proceeding brought thereon. In case any action or proceeding be brought against
the Lessor by reason of any such claim, the
13
Lessee, upon notice from the Lessor, shall defend the same at the Lessee's
expense by counsel approved in writing by the Lessor. The Lessee, as a material
part of the consideration to the Lessor hereunder, hereby assumes all risk of
damage to property or injury to persons in, upon or about the Premises from any
cause whatsoever, except that which is caused by the failure of the Lessor to
observe any of the terms and conditions of this Lease and such failure has
persisted for an unreasonable period of time after written notice of such
failure, and the Lessee hereby waives all of its claims in respect thereof
against the Lessor.
7.8 Exemption of Lessor from Liability. The Lessor shall not be liable
for injury to the Lessee's business or any loss of income therefrom or for
damage to the property of the Lessee, the Lessee's employees, invitees,
customers or any other person in or about the Premises, nor shall the Lessor be
liable for injury to the person of the Lessee, the Lessee's employees, agents or
contractors, whether such damage or injury is caused by or results from fire,
explosion, falling plaster, electricity, gas, water or rain, or from the
breakage, leakage, obstruction or other defects of pipes, sprinklers, wires,
appliances, plumbing, air conditioning or lighting fixtures, or from any other
cause, whether such damage or injury results from conditions arising upon the
Premises or upon other portions of the Building, or from other sources or places
and regardless of whether the cause of such damage or injury or the means of
repairing the same is inaccessible. The Lessor shall not be liable for
incorporeal hereditaments including interference or obstruction of light, air or
view. The Lessor shall not be liable for any damages arising from any act or
neglect of any other tenant of the Building or the other portions of the
Project.
8. DAMAGE OR DESTRUCTION
8.1 Partial Damage. If the Premises, or so much of the Building as to
cause the Premises to be uninhabitable, are damaged by any casualty, and the
damage (exclusive of any property or improvements installed by the Lessee in the
Premises) can be repaired within one hundred and fifty (150) days without the
payment of overtime, the Lessor shall, at the Lessor's expense, repair such
damage (exclusive of any property of the Lessee or improvements installed by the
Lessee in the Premises) as soon as practicable within said one hundred and fifty
(150) day period, and this Lease shall continue in full force and effect. If the
Premises, or so much of the Building as to cause the Premises to be
uninhabitable, are damaged by any casualty, and the damage (exclusive of any
property of the Lessee or improvements installed by the Lessee in the Premises)
cannot be repaired within one hundred and fifty (150) days without the payment
of overtime or other premiums, the Lessor or the Lessee may, at either party's
option, either (i) repair such damage as soon as practicable at the Lessor's
expense, in which event this Lease shall continue in full force and effect, or
(ii) give written notice to the other party within thirty (30) days after the
date of the occurrence of such damage of the party's intention to terminate this
Lease, in which event this Lease shall terminate as of the date of the
occurrence of such damage, provided that either party elects under clause (ii)
to terminate this lease, this lease shall terminate even if Lessor has elected
under clause (i) to repair such damage.
14
8.2 Damage Near End of Term. If the Premises, or so much of the
Building as to cause the Premises to be uninhabitable, are damaged during the
last six (6) months of the term of this Lease, or any renewal thereof, the
Lessor may, at the Lessor's option, terminate this Lease as of the date of
occurrence of such damage by giving written notice to Lessee of the Lessor's
election to do so within thirty (30) days after the date of occurrence of such
damage; provided, however, that if the term of this Lease has been extended for
any reason whatsoever, the Lessor's right to terminate this Lease shall only
apply during the last six (6) months of the then current term of this Lease.
8.3 Abatement of Rent; Lessee's Remedies.
(a) If the Lessor is obligated or elects to repair the
Premises as provided above, the rent payable for the period during which such
repair continues shall be abated, in proportion to the degree to which the
Lessee's use of the Premises is impaired. Except for such abatement, if any, the
Lessee shall have no claim against the Lessor for any damage suffered by reason
of any such damage, destruction, repair or restoration. In the event that the
Lessor exercises its rights to continue the Lease as provided in Section 8.1
above, and less than one hundred percent (100%) of the Premises is usable by the
Lessee, the rent will continue to be abated to the extent not repaired until the
entire Premises is restored.
(b) If the Lessor is obligated or elects to repair the
Premises as provided above, but does not commence such repair within ninety (90)
days after such obligation shall occur, subject to any extension of up to
another ninety (90) days for delays beyond the reasonable control of the Lessor,
the Lessee may, at the Lessee's option, terminate this Lease by giving the
Lessor written notice of the Lessee's election to do so at any time prior to the
commencement of such repair or restoration, in which event this Lease shall
terminate as of the date of such destruction.
8.4 Insurance Proceeds Upon Termination. If this Lease is terminated
pursuant to any right given the Lessee or the Lessor to do so under this Article
8, all insurance proceeds payable under Section 7.6 with respect to the damage
giving rise to such right of termination shall be paid to the Lessor and any
encumbrances of the Premises, as their interests may appear.
8.5 Restoration. The Lessor's obligation to restore shall not
include the restoration or replacement of the Lessee's furnishings, machinery,
equipment, trade fixtures or other personal property or any improvements or
alterations made by the Lessee to the Premises.
15
9. PERSONAL PROPERTY TAXES
The Lessee shall pay prior to delinquency all taxes assessed
against, levied upon or attributable to its furnishings, machinery, equipment,
trade fixtures or other personal property contained in the Premises or elsewhere
and, if required, all improvements to the Premises in excess of the Lessor's
"building standard" improvements, provided, however, that nothing contained
herein shall require the Lessor to insure the accuracy of any segregation of the
same for purposes of Section 3.4(b) hereof. When practicable, the Lessee shall
cause said furnishings, machinery, equipment, trade fixtures and all other
personal property to be assessed and billed separately from the real property of
the Lessor.
10. UTILITIES
The Lessee shall pay for all water, gas, heat, light, power, janitorial
services and other utilities and services supplied to the Premises, together
with any taxes thereon. If any such services are not separately metered or
charged to the Lessee, the Lessee shall pay a pro rata proportion, as part of
operating expenses, based on leasable area, of all charges jointly metered or
charged with other premises. The Lessor shall not be liable in damages or
otherwise unless due to the Lessor's gross negligence for any failure or
interruption of any utility services being furnished to the building and no such
failure or interruption shall entitle the Lessee to terminate this Lease. In no
event shall the Lessor be liable for any such failure or interruption caused by
the exercise of govemmental authority, strikes, riots, acts of God, war, adverse
weather conditions, fire, flood or casualties or acts of third parties beyond
the Lessor's control. The operation and control of utilities, air conditioning
and any other energy system is subject to compliance with any government
authority governing the regulation and use of energy systems within the
commercial office or industrial building structure. The Lessee shall not subject
any of the mechanical, electrical, plumbing, sewer or other utility or service
systems or equipment to exercise or use which causes damage to said systems or
equipment. Any such damages to equipment caused by the Lessee overloading such
equipment shall be rectified by the Lessee, or may, at the Lessor's option, be
rectified by the Lessor, at the Lessee's sole cost and expense.
11. ASSIGNMENT AND SUBLETTING
11.1 The Lessee shall not voluntarily or by operation of law
sublet, assign, transfer, mortgage or otherwise encumber, or grant concessions,
licenses or franchises with respect to all or any part of the Lessee's interest
in this Lease or the Premises without the prior written consent of the Lessor,
which shall not be unreasonably withheld. If the Lessee desires at any time to
assign this Lease or to sublet the Premises or any portion thereof, it shall
first notify the Lessor of its desire to do so and shall submit in writing to
the Lessor (i) the name of the proposed sublessee or assignee; (ii) the nature
of the proposed sublessee or assignee; (iii) the nature of the proposed
sublessee's or assignee's business to be carried on in the Premises; (iv) the
terms and provisions of the proposed sublease or assignment; (v) such reasonable
financial information as the Lessor may request concerning the proposed
sublessee or assignee, including, but not limited to, a balance sheet
16
as of a date within ninety (90) days of the request for the Lessor's consent,
statements of income or profit and loss for the two (2) year period preceding
the request for the Lessor's consent, and a written statement in reasonable
details as to the business experience of the proposed sublessee or assignee
during the five (5) years preceding the request for the Lessor's consent, and
(vi) the name and address of sublessee's or assignee's present or previous
landlord. The Lessor may, as a condition to granting such consent, require that
the obligations of any assignee which is a subsidiary or affiliate of another
corporation be guaranteed by the parent or controlling corporation. Any
sublease, license, concession, franchise or other permission to use the Premises
shall be expressly subject and subordinate to all applicable terms and
conditions of this Lease. Any purported or attempted assignment, transfer,
mortgage, encumbrance, subletting, license, concession, franchise or other
permission to use the Premises contrary to the provisions of this paragraph
shall be void and, at the option of the Lessor, shall terminate this Lease.
11.2 If the Lessee is a corporation, then a transfer of its stock, or
any dissolution, merger or consolidation, only if such transaction causes five
(5) or fewer persons who are not currently shareholders of the Lessee to acquire
ownership or control of shares of the Lessee's capital stock representing Fifty
Percent (50%) or more of the voting power of all of the Lessee's outstanding
stock, or the sale or other transfer of all or substantially all of the assets
of the Lessee shall constitute an assignment of the Lessee's interest in this
Lease within the meaning of this Article 11 and the provisions requiring consent
contained herein.
11.3 No subletting, assignment, license, concession, franchise or other
permission to use the Premises shall relieve the Lessee of its obligations to
pay the rent or to perform all of the other obligations to be performed by the
Lessee hereunder. The acceptance of rent by the Lessor from any other person
shall not be deemed to be a waiver by the Lessor of any provisions of this
Lease.
11.4 At any time within ten (10) days afterthe Lessor's receipt of the
information specified in Section 11.1 above, the Lessor may by written notice to
the Lessee elect (a) to sublease the Premises or the portion thereof so proposed
to be subleased by the Lessee, or to take an assignment of the Lessee's
leasehold estate hereunder, upon the same terms as those offered to the proposed
sublessee or assignee, as the case may be; or (b) to terminate this Lease as to
the portion (including all) of the Premises so proposed to be subleased or
assigned, with a proportionate abatement in the rent payable hereunder; or (c)
disapprove such assignment or subletting. If the Lessor does not act within the
ten (10) days, such failure to act is deemed a disapproval of such request for
assignment or subletting.
11.5 Each assignee or transferee, other than the Lessor, shall assume
all obligations of the Lessee under this Lease and shall be and remain liable
jointly and severally with the Lessee for the payment of the rent, and for the
due performance of all the terms, covenants, conditions and agreements to be
performed by the Lessee hereunder; provided, however, that a transferee other
than an assignee shall be liable to the Lessor for rent only in the amount set
forth in the assignment or transfer. No assignment shall be binding on the
Lessor unless such assignee or Lessee shall deliver
17
to the Lessor a counterpart of such assignment and an instrument in recordable
form which contains a covenant of assumption by such assignee satisfactory in
substance and form to the Lessor, consistent with the requirements of this
Section 11.5 but the failure or refusal of such assignee to execute such
instrument of assumption shall not release or discharge such assignee from its
liability as set forth above.
11.6 Consent by the Lessor to any subletting or assignment
shall be conditioned upon payment by the Lessee to the Lessor of all "Transfer
Consideration" (as hereafter defined) received or to be received, directly or
indirectly, by the Lessee on account of such assignment or subletting. Transfer
Consideration shall be paid to the Lessor at the same time or times as the same
is due to the Lessee. Failure to pay the Lessor the Transfer Consideration, or
any portion or installment thereof, shall be deemed a default under this Lease,
entitling the Lessor to exercise all remedies available to it under law
including, but not limited to, those specified in Article 12 of this Lease.
"Transfer Consideration" shall only mean a) in the case of a subletting, any
consideration paid or given, directly or indirectly, by the sublessee to the
Lessee pursuant to the sublease for the use of the Premises, or any portion
thereof, over and above the rent and any additional rent, however denominated,
in this Lease, payable by the Lessee to the Lessor for the use of the Premises
(or portion thereof), prorating as appropriate the amount payable by the Lessee
to the Lessor under this Lease, if less than all of the Premises is sublet, net
of broker's fees and commissions, and (b) in the case of an assignment only, any
consideration paid or given, directly or indirectly, by the sublessee or
assignee to the Lessee in exchange for entering into the sublease or assignment,
but shall not include reimbursement for any security deposit, reimbursement of
any improvements, fixtures or furnishings installed in the Premises by the
Lessee or any payment for personal property of the Lessee not in excess of the
Lessee's book value thereof net of broker's fees and commissions. As used
herein, consideration shall include consideration in any form, including, but
not limited to, money, property, assumption of liabilities other than those
arising under this Lease, discounts, services, credits or any other item or
thing of value. Irrespective of the form of such consideration, the Lessor shall
be entitled to be paid in cash in an amount equivalent to the aggregate of the
cash portion of the Transfer Consideration and the value of any non-cash portion
of the Transfer Consideration. If any Transfer Consideration is to be paid or
given in installments, the Lessee shall pay each such installment at the time
the same is to be paid or given. Notwithstanding the foregoing, Transfer
Consideration shall not include the proceeds from the sales of stock by the
Lessee or its shareholders, and the Lessor and the Lessee agree that this
provision is only intended to apply to any profit realized by the Lessee from
the increased rental value of the office space which constitutes the Premises,
and not from any profit realized in any kind of sale or merger or stock or debt
offering, or any similar corporate transaction by the Lessee.
11.7 The Lessee shall reimburse the Lessor for the Lessor's reasonable
costs and attorneys' fees incurred in conjunction with the processing and
documentation of any assignment, subletting, transfer, change of ownership or
hypothecation of this Lease or the Lessee's interest in the Premises.
12. DEFAULTS; REMEDIES
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12.1 Default by Lessee. The occurrence of any one or more of the
following events shall constitute a default of this Lease by the Lessee:
(a) The vacating or abandonment of the Premises by the Lessee
combined with the failure to pay rent;
(b) The failure of the Lessee to make any payment of rent or
any other payment required to be made by the Lessee hereunder, as and when due,
where such failure shall continue for a period of three (3) days after written
notice thereof from the Lessor to the Lessee; provided, however, that any such
notice shall be in lieu of, and not in addition to, any notice required under
California Code of Civil Procedure Section 1161;
(c) The failure by the Lessee to observe or perform any of the
covenants, conditions or provisions of this Lease (or the covenants, conditions
and restrictions governing the Project) to be observed or performed by the
Lessee, other than described in Paraaraph l2.1(b) hereof, where such failure
shall continue for a period of thirty (30) days after written notice thereof
from the Lessor to the Lessee; provided, however, that any such notice shall be
in lieu of, and not in addition to, any notice required under California Code of
Civil Procedure Section 1161; provided, further, that if the nature of the
Lessee's default is such that more than thirty (30) days are reasonably required
for its cure, then the Lessee shall not be deemed to be in default if the Lessee
commences such cure within said thirty (30) day period and thereafter diligently
prosecutes such cure to completion; or
(d) The making by the Lessee of any general assignment or
general arrangement for the benefit of creditors; the filing by or against the
Lessee of a petition to have the Lessee adjudged a bankrupt or a petition for
reorganization or arrangement under any law relating to bankruptcy (unless, in
the case of a petition filed against the Lessee, the same is dismissed within
sixty (60) days); the appointment of a trustee or receiver to take possession of
substantially all of the Lessee's assets located at the Premises, or of the
Lessee's interest in this Lease, where possession is not restored to the Lessee
within thirty (30) days; or the attachment, execution or other judicial seizure
of substantially all of the Lessee's assets located at the Premises or of the
Lessee's interest in this Lease, where such seizure is not discharged within
thirty (30) days.
12.2 Remedies for Default by Lessee. In the event of any such default,
the Lessor may at any time thereafter, upon notice and demand and without
limiting the Lessor in the exercise of any other right or remedy which the
Lessor may have by reason of such default or breach:
(a) Terminate the Lessee's right to possession of the Premises
by any lawful means, in which case this Lease shall terminate and the Lessee
shall immediately surrender possession of the Premises to the Lessor. In such
event, the Lessor shall be entitled to recover from the Lessee:
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(1) The worth at the time of award of the unpaid rent
which has been earned at the time of termination;
(2) The worth at the time of award of the amount by
which the unpaid rent which would have been earned after termination
until the time of award exceeds the amount of such rental loss that the
Lessee proves could have been reasonably avoided;
(3) The worth at the time of award of the amount by
which the unpaid rent for the balance of the term after the time of
award exceeds the amount of such rental loss that the Lessee proves
could be reasonably avoided; and
(4) Any other amount necessary to compensate the
Lessor for all the detrimentproximately caused by the Lessee's failure
to perform its obligations under this Lease or which in the ordinary
course of things would be likely to result therefrom, including, but
not limited to: the cost of recovering possession of the Premises,
expenses of releasing including necessary renovation and alteration of
the Premises, reasonable attorneys' fees and any other reasonable cost.
The "worth at the time of award" of the amounts referred to in
subparagraphs (1) and (2) above shall be computed by allowing interest
at three (3) percentage points above the discount rate of the Federal
Reserve Bank of San Francisco at the time of the award. The "worth at
the time of award" of the amount referred to in subparagraph (3) above
shall be computed by discounting such amount at three (3) percentage
points above such discount rate.
(b) Suspend or discontinue the services specified in Article
10 above, or any thereof, during the continuance of any such default and any
such suspension or discontinuance shall not be deemed or construed to be an
eviction or ejection of the Lessee.
(c) Require the Lessee to make payment of all rental
obligations in cash or by certified cashier's check.
(d) Pursue any other remedy now or hereafter available to the
Lessor under the laws or judicial decisions of the State of California,
including, but not limited to, the remedy provided in California Civil Code
Section 1951.4 to continue this Lease in effect.
(e) The Lessor, in addition to the rights hereinbefore given
in the case of the Lessee's breach or default, may pursue any other remedy
available to the Lessor at law or in equity.
12.3 Default by Lessor. The Lessor shall not be in default of any of
the obligations of the Lessor under the Lease, unless the Lessor fails to
perform such obligations within a reasonable time, but in no event more than
thirty (30) days after written notice by the Lessee to the Lessor specifying
wherein the Lessor has failed to perform such obligations; provided, however.
that if the nature of the Lessor's default is such that more than thirty (30)
days are required for its
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cure, the Lessor shall not be in default if the Lessor commences such cure
within such thirty (30) day period and thereafter diligently prosecutes the same
to completion. In the event of any such default by the Lessor, the Lessee may
pursue any remedy now or hereafter available to the Lessee under the laws of
judicial decisions of the State of California, except that the Lessee shall not
have the right to terminate this Lease except as expressly provided herein nor
to set off against any payments due under this Lease. The Lessee waives any
right to deduct the expenses of repairs done by the Lessor on the Lessor's
behalf from the rent and waives, except as herein provided, any of the Lessor's
obligations for tenantability of the Building or the Premises.
12.4 Late Charges. The Lessee acknowledges that the late payment by the
Lessee to the Lessor of rent and other sums due hereunder will cause the Lessor
to incur costs not contemplated by this Lease, the exact amount of which will be
extremely difficult to ascertain. Such costs include, but are not limited to,
processing and accounting charges and late charges which may be imposed on the
Lessor by the terms of any mortgage or trust deed covering the Premises.
Accordingly, if any installment of rent or any other sum due from the Lessee
shall not be received by the Lessor, or the Lessor's designee, within ten (10)
days after the same is due, the Lessee shall pay to the Lessor a late charge
equal to five percent (5%) of such overdue amount, monthly, until such overdue
amount is paid. The Lessee acknowledges that such late charge represents a fair
and reasonable estimate of the cost that the Lessor will incur by reason of a
late payment by the Lessee. Acceptance of such late charge by the Lessor shall
in no event constitute a waiver of the Lessee's default with respect to such
overdue amounts nor prevent the Lessor from exercising any of the other rights
and remedies granted hereunder.
13. CONDEMNATION OR RESTRICTION ON USE
13.1 Eminent Domain. If the whole of the Premises, or so much thereof
as to render the balance unusable by the Lessee, shall be taken under power of
eminent domain, this Lease shall automatically terminate as of the date of such
condemnation, or as of the date possession is taken by the condemning authority,
whichever is earlier. No award for any partial or entire taking shall be
apportioned, and the Lessee hereby assigns to the Lessor any award which may be
made in such taking or condemnation, together with any and all rights of the
Lessee now or hereafter arising in or to the same or any part thereof; provided,
however, that nothing contained herein shall be deemed to give the Lessor any
interest in or to require the Lessee to assign to the Lessor any award made to
the Lessee for its relocation expenses, the taking of personal property and
fixtures belonging to the Lessee, the interruption of or damage to the Lessee's
business and/or for the Lessee's unamortized cost of leasehold improvements. The
unamortized portion of the Lessee's expenditures for improving the Premises
shall be determined by multiplying such expenditures by a fraction, the
numerator of which shall be the number of years of the term of this Lease which
shall not have expired at the time of such appropriation or taking and the
denominator of which shall be the number of years of the term of this Lease
which shall not have expired at the time of improving the Premises. In no event
shall options to renew or extend be taken into consideration in determining the
payment to be made to the Lessee. The Lessee's right to receive compensation or
damages for its fixtures and personal property shall not be affected in any
manner thereby.
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13.2 Abatement of Rent. In the event of a partial taking which does not
result in a termination of this Lease, rent shall be abated in proportion to
that part of the Premises so made unusable by the Lessee.
13.3 Temporary Taking. No temporary taking of the Premises and/or of
the Lessee's rights therein or under this Lease shall terminate this Lease or
give the Lessee any right to any abatement of rent hereunder; and any award made
to the Lessee by reason of any such temporary taking shall belong entirely to
the Lessee and the Lessor shall not be entitled to share therein.
13.4 Voluntary Sale as Taking. A voluntary sale by the Lessor to any
public body or agency having the power of eminent domain, under threat of
condemnation while condemnation proceedings are pending, shall be deemed to be a
taking under the power of eminent domain for the purpose of this Article 13.
14. BROKERS
The Lessee represents and warrants that it has neither incurred nor is
aware of any other broker's, finder's, or similar fee in connection with the
origin, negotiation, execution or performance of this Lease and agrees to
indemnify and hold harmless the Lessor from any loss, liability, damage, cost or
expense incurred by reason of a breach of this representation.
15. LESSOR'S LIABILITY
15.1 The term "Lessor" as used herein shall mean only the owner or
owners at the time in question of the fee title or a Lessee's interest in a
ground lease of the Building. In the event of any transfer of such title or
interest, the Lessor herein named (and in case of any subsequent transfers, the
then grantor) shall be relieved from, and after the date of such transfers of
all liability for the Lessor's obligations thereafter to be performed; provided,
however, that any funds in the hands of the Lessor or the then grantor at the
time of such transfer in which the Lessee has an interest shall be delivered to
the grantee. The obligations contained in this Lease to be performed by the
Lessor shall, subject as aforesaid, be binding on the Lessor's successors and
assigns only during their respective periods of ownership.
15.2 The initial Lessor hereunder is a joint venture operating as a
California partnership. In consideration of the benefits accruing hereunder, the
Lessee, its successors and assigns, agree that, in the event of any actual or
alleged failure, breach or default hereunder by the initial Lessor:
(a) The sole and exclusive remedy shall be against the assets
of the joint venture;
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(b) No joint venturer shall be sued or named a party in any
suit or action (except as may be necessary to secure jurisdiction of the joint
venture);
(c) No service of process shall be made against any joint
venturer (except as may be necessary to secure jurisdiction of the joint
venture);
(d) No joint venturer shall be required to answer or otherwise
plead to any service of process;
(e) No judgment will be taken against any joint venturer;
(f) Any judgment taken against any joint venturer may be
vacated and set aside at any time nunc pro tunc;
(g) No writ of execution will ever be levied against the
assets of any joint venturer; and
(h) These covenants and agreements are enforceable by the
Lessor and also by any joint venturer thereof.
16. PARKING
During the term of this Lease, the Lessee shall have the right
in common with other tenants of the Building (if any) and any adjacent
buildings, to use the parking area available to tenants of the Building. The
Lessee's use of such parking facilities or that of its invitees shall be limited
to a maximum of the number of parking spaces shown in Item 9 of the Basic Lease
Provisions (but such space will not be separately identified and the Lessor
shall have no obligation to monitor the use of such parking facility), and shall
be subject to such rules and regulations as may be established, from time to
time, by the Lessor for the effective use of such parking facilities. Such rules
and regulations may include, but shall not be limited to, designation of
specific areas for use by invitees of the Lessee and the Lessor; hours during
which parking shall be available for use; parking attendants; a parking
validation or other control system to prevent parking abuse; and such other
matters affecting the parking operation to the end that said facilities shall be
utilized to maximum efficiency and in the best interest of the Lessor, the
Lessee and their respective invitees. The Lessor may temporarily close any part
of the Common Area for such periods of time as may be necessary to prevent the
public from obtaining prescriptive rights or to make repair or alterations. The
Lessor shall not have any express or implied obligation to enforce or police the
parking lot usage. The Lessee's right to use any area for parking purposes shall
be subject to restrictions or other limitations resulting from any laws,
statutes, ordinances and governmental rules, regulations or requirements now in
force or which may hereafter be in force, and no such event shall in any way
affect this Lease, abate rent, relieve the Lessee of any liabilities or
obligations under this Lease, or give rise to any claim whatsoever against the
Lessor; specifically, the Lessee's right to use any area for parking purposes
shall be subject to any preferential parking program for participants in any
ridesharing program established by the
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Lessor. If the Lessor reasonably determines that the Lessee is regularly using
in excess of the number of parking spaces specified in Item 9 of the Basic Lease
Provisions, the Lessor may, in addition to any other remedy, impose a reasonable
charge for such excess usage, payable by the Lessee upon demand.
17. GENERAL PROVISIONS
17.1 Estoppel Certificate
(a) The Lessee shall at any time, and from time to time, upon not less than ten
(10) days' prior written notice from the Lessor, execute, acknowledge and
deliver to the Lessor a statement in writing (i) certifying that this Lease is
unmodified and in full force and effect (or, if modified, stating the nature of
such modification and certifying that this Lease, as so modified, is in full
force and effect) and the date to which the rent and other charges are paid in
advance, if any, and (ii) acknowledging that there are no, to the Lessee's
knowledge, uncured defaults on the part of the Lessor hereunder, or specifying
such defaults if any are claimed. Any such statement may be conclusively relied
upon by any prospective purchaser or encumbrancer of the Premises.
(b) The Lessee's failure to deliver such statement within such
time shall be conclusive upon the Lessee that (i) this Lease is in full force
and effect without modification except as may be represented by the Lessor, (ii)
there are no uncured defaults in the Lessor's performance, and (iii) not more
than one (1) month's rent has been paid in advance.
(c) If the Lessor desires to finance or refinance the
Premises, or any part thereof, the Lessee shall deliver to any lender designated
by the Lessor such financial statements of the Lessee as may be reasonably
required by such lender. All such financial statements shall be received by the
Lessor in confidence and shall be used only for the purposes herein set forth.
17.2 Severability. The invalidity of any provision of this Lease as
determined by a court of competent jurisdiction shall in no way affect the
validity of any other provision hereof.
17.3 Time of Essence. Time is of the essence in the performanceof all
terms and conditions of this Lease in which time is an element.
17.4 Captions. Article and paragraph captions have been inserted solely
as a matter of convenience and such captions in no way define or limit the scope
or intent of any provision of this Lease.
17.5 Notices. Any notice required or permitted to be given hereunder
shall be in writing and shall be deemed to be delivered and received (a) when
personally delivered, or (b) on the second business day after the date on which
deposited in the United States mails, certified or registered mail, postage
prepaid, return receipt requested, addressed to the Lessor and the Lessee
respectively at the addresses set forth below their signatures to the Basic
Lease Provisions, or to
24
such other or additional persons or at such other addresses as may, from time to
time, be designated in writing by the Lessor or the Lessee by notice pursuant
hereto.
17.6 Waivers. No waiver of any provision hereof shall be deemed a
waiver of any other provision hereof. Consent to or approval of any act by one
of the parties hereto shall not be deemed to render unnecessary the obtaining of
such party's consent to or approval of any subsequent act. The acceptance of
rent hereunder by the Lessor shall not be a waiver of any preceding breach by
the Lessee of any provision hereof, other than the failure of the Lessee to pay
the particular rent so accepted, regardless of the Lessor's knowledge of such
preceding breach at the time of acceptance of such rent.
17.7 Holding Over. If the Lessee holds over after the expiration or
earlier termination of the term hereof without the express written consent of
the Lessor, the Lessee shall become a tenant at sufferance only at One Hundred
and Fifty Percent (150%) of the monthly rent for the Premises then in effect for
the space, in effect upon the date of such expiration or earlier termination
(subject to adjustment as provided in Article 3 hereof and prorated on a daily
basis), and otherwise upon the terms, covenants and conditions herein specified,
so far as applicable. Acceptance by the Lessor of rent after such expiration or
earlier termination shall not constitute a consent to a holdover hereunder or
result in a renewal. The foregoing provisions of this paragraph are in addition
to and do not affect the Lessor's right of re-entry or any other rights of the
Lessor hereunder or as otherwise provided by law.
17.8 Cumulative Remedies. No remedy or election hereunder shall be
deemed exclusive but shall, wherever possible, be cumulative with all other
remedies at law or in equity.
17.9 Inurement. Subject to any provisions hereof restricting assignment
or subletting by the Lessee and subject to the provisions of Article 15 hereof,
the terms and conditions contained in this Lease shall bind the parties, their
personal representatives, successors and assigns.
17.10 Choice of Law. This Lease shall be governed by the laws of the
State of California.
17.11 Subordination. This Lease shall, at the Lessor's option, be
either superior or subordinate to mortgages or deeds of trust on the Premises,
whether now existing or hereinafter created and subject to receipt by the Lessee
of a non-disturbance agreement from such lender(s). The Lessee shall, upon
written demand by the Lessor, execute such instruments as may be required, from
time to time, to subordinate the rights and interest of the Lessee under this
Lease to the lien of any mortgage or deed of trust on the Building.
Notwithstanding any such subordination, so long as the Lessee is not in default
hereunder, this Lease shall not be terminated or the Lessee's quiet enjoyment of
the Premises disturbed in the event such mortgage or deed of trust is
foreclosed. In the event of such foreclosure, the Lessee shall thereupon become
a Lessee of, and attorn to, the successor in interest to the Lessor on the same
terms and conditions as are contained in this Lease.
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17.12 Attorneys' Fees. If any action at law or equity, including an
action for declaratory relief, is brought to enforce the provisions of this
Lease, the prevailing party shall be entitled to recover actual attorneys' fees
incurred in bringing such action and/or enforcing any judgment granted therein,
all of which shall be deemed to have accrued upon the commencement of the action
and shall be paid whether or not such action is prosecuted to judgment. The
attorneys' fees to be awarded the prevailing party may be determined by the
court in the same action or in a separate action brought for that purpose. Any
judgment or order entered in such action shall contain a specific provision
providing for the recovery of actual attorneys' fees and costs incurred in
enforcing such judgment. The award of attorneys' fees shall not be computed in
accordance with any court schedule, but shall be made so as to fully reimburse
the prevailing party for all attorneys' fees, paralegal fees, costs and expenses
actually incurred in good faith, regardless of the size of the judgment, it
being the intention of the parties to fully compensate the prevailing party for
all attorneys' fees, paralegal fees, costs and expenses paid or incurred in good
faith. For purposes of this section, attorneys' fees shall include, without
limitation, attorneys' fees, paralegal fees, costs and expenses incurred in
relation to any of the following: post-judgment motions; contempt proceedings,
garnishment, levy and debtor or third party examinations; discovery; and
bankruptcy litigation.
17.13 Lessor's Access. The Lessor and the Lessor's agents shall have
the right to enter the Premises at reasonable times for the purpose of
inspecting the same, showing the same to prospective purchasers, lessees, or
lenders, and making such alterations, repairs, improvements or additions to the
Premises or to the Building as the Lessor may deem necessary or desirable. The
Lessor may at any time place on or about the Building any ordinary "For Sale"
signs and the Lessor may, at any time during the last one hundred eighty (180)
days of the term hereof (or during any period in which the Lessee is in default
under this Lease), place on or about the Building any ordinary "For Sale", "For
Lease" or similar signs, all without rebate of rent or liability to the Lessee.
17.14 Corporate Authority. If the Lessee is a corporation, the Lessee
shall, at the Lessor's request, require that each individual executing this
Lease on behalf of said corporation represent and warrant that he is duly
authorized to execute and deliver this Lease on behalf of said corporation in
accordance with a duly adopted resolution of the Board of Directors of said
corporation or in accordance with the Bylaws of said corporation, and that this
Lease is binding upon said corporation in accordance with its terms. The Lessee
shall also, at the Lessor's request, within thirty (30) days after execution of
this Lease, deliver to the Lessor a certified copy of a resolution of the Board
of Directors of said corporation authorizing or ratifying the execution of this
Lease.
17.15 Surrender or Cancellation. The voluntary or other surrender of
this Lease by the Lessee, or a mutual cancellation thereof, shall not work a
merger, and shall terminate all or any existing subleases, unless the Lessor
elects to treat such surrender or cancellation as an assignment to the Lessor of
any or all of such subleases.
17.16 Entire Agreement. This Lease, the exhibits hereto which by this
reference are incorporated herein as though set forth in full herein, covers in
full each and every agreement of
26
every kind or nature whatsoever between the parties hereto concerning the
Premises and the Building, and all preliminary negotiations and agreements of
whatsoever kind or nature are merged herein. The Lessor has made no
representations or promises whatsoever with respect to the Premises or the
Building, or the design configuration of the Project, except those contained
herein, and no other person, form or corporation has at any time had any
authority from the Lessor to make any representations or promises on behalf of
the Lessor. If any such representations or promises have been made by others,
the Lessee hereby waives all right to rely thereon. No verbal agreement or
implied covenant shall be held to vary the provisions hereof, any statute, law
or custom to the contrary notwithstanding.
Except as otherwise provided herein, nothing expressed or implied
herein is intended or shall be construed to confer upon or grant any person any
rights or remedies under or by reason of any term or condition contained in this
Lease.
17.17 Signs. No sign, placard, picture, advertisement, name or notice
shall be inscribed, displayed, printed or affixed to or near any part of the
outside or inside of the Building without the written consent of the Lessor
first had and obtained and without full compliance with all governmental
requirements and with the Project Signage Plan and any other required consents.
The Lessor shall have the right to remove any such sign, placard, picture,
advertisement, name or notice without notice to the Lessee and at the expense of
the Lessor. The Lessee further agrees to maintain any such approved signs, as
may be approved by the Lessor, in good condition and repair at all times. The
Lessee shall not place any sign on a vehicle or movable or non-movable object in
or on the street adjacent to the Project. The Lessee shall have the right to
modify the existing building monument sign at the Lessee's sole cost and
expense. Prior to any modifications, the Lessee shall obtain Lessor's approval
for all and any changes and shall obtain all necessary approvals from Santa
Barbara County. Lessee's right to monument signage under this Lease, if any, is
personal to Lessee and may not be transferred to any person, whether in
connection with any assignment or sublease or otherwise, without the prior
written consent of Lessor. Unless Lessor shall otherwise agree in writing, any
such right to monument signage shall terminate and revert to Lessor in the event
of any assignment or sublease of all or substantially all of Lessee's rights
under this Lease or in the event Lessee shall no longer occupy the Premises.
17.18 Interest on Past Due Obligations. Any amount due from the Lessee
to the Lessor hereunder which is not paid when due shall bear interest at three
(3) percentage points above the discount rate of the Federal Reserve Bank of San
Francisco at the time of the award from the date due until paid, but the payment
of such interest shall not excuse or cure any default by the Lessee.
17.19 Gender; Number. Whenever the context of this Lease requires, the
masculine gender includes the feminine or neuter, and the singular number
includes the plural.
17.20 Recording of Lease. The Lessee shall not record this Lease
without the express written consent of the Lessor. If such permission is
granted, at the expiration or sooner termination of this Lease, the Lessee shall
execute, acknowledge and deliver to the Lessor, within ten
27
(10) days after written demand from the Lessor, any quitclaim deed or other
document reasonably required by any reputable title company to remove the cloud
of this Lease from the title of the real property subject to the Lease.
17.21 Waiver of Subrogation. The Lessor and the Lessee each hereby
waive any and all rights of recovery against the other, or against the officers,
employees and agents and representatives of the other, for loss of or any damage
to such waiving party or its property, or the property of others under its
control, to the extent that such loss or damage is insured against under any
valid and collectible insurance policy in force at the time of such loss or
damages. The Lessee shall, upon obtaining the policies of insurance required
hereunder, give notice to the insurance carrier or carriers that the foregoing
mutual waiver of subrogation is contained in this Lease.
17.22 Confidentiality of Lease. The Lessee acknowledges and agrees that
the terms of this Lease are confidential and constitute proprietary information
of the Lessor. Disclosure of the terms hereof could adversely affect the ability
of the Lessor to negotiate other leases with respect to the Building and
impair the Lessor's relationship with other tenants of the Building. The Lessee
agrees that it, its partners, officers, directors, employees and attorneys,
shall not disclose the terms and conditions of this Lease to any other person
without the prior written consent of the Lessor. It is understood and agreed
that damages would be an inadequate remedy for the breach of this provision by
the Lessee, and the Lessor shall have the right to specific performance of this
provision and to injunctive relief to prevent its breach or continued breach.
There shall be excluded from this obligation any filing required by the
Securities and Exchange Commission or any other disclosure required by law.
17.23 Quiet Enjoyment. Provided the Lessee has performed all of the
terms, covenants, agreements and conditions of this Lease, including the payment
for rent and all other sums due hereunder, the Lessee shall peaceably and
quietly hold and enjoy the Premises for the term hereof, but subject to the
provisions and conditions of this Lease against the Lessor and all persons
claiming by, through or under the Lessor. The Lessee's right to use the Premises
and the Common Area as herein provided shall be subject to restrictions or other
limitations or prohibitions resulting from any laws, statutes, ordinances and
governmental rules, regulations or requirements now in force or which may
hereafter be in force and no such event shall in any way affect this Lease,
abate rent, relieve the Lessee of any liabilities or obligations under this
Lease.
17.24 Window Coverage. No window covering, including, but not limited
to, coatings or draperies, shall be used by the Lessee without the Lessor's
written approval.
17.25 Materials Storage Restrictions. The Lessee agrees to conduct its
business so as not to violate or exceed the design standards of the fire
protection system or any insurance policies maintained by the Lessor pursuant to
Article 7.
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17.26 No Agency. Neither party is the agent or partner of the other,
and the legal relationship between the parties hereto shall be governed solely
by the terms of this Lease when duly executed by both parties with respect to
the transactions contemplated hereby.
17.27 Force Majeure. Notwithstanding any of the items set forth above,
the Lessor shall bear no liability of whatever kind to the Lessee if, despite
the Lessor's exercise of due diligence, the Lessor's carrying out of its
obligations, as defined herein, prevented or delayed by legal action, nor by the
exercise of governmental authority, whether Federal, State of County, or other
or by force majeure, strikes, riots, acts of God, war, adverse weather
conditions, fire, unavoidable casualties, or acts of third parties beyond the
Lessor's control.
17.28 Accord and Satisfaction. No payment by the Lessee or receipt by
the Lessor of a lesser amount than the rent herein stipulated shall be deemed to
be other than on account of the earliest stipulated rent, nor shall any
endorsement or statement on any check or any letter accompanying any check or
payment as rent be deemed an accord and satisfaction, and the Lessor may accept
such check or payment without prejudice to the Lessor's right to recover the
balance of such rent or pursue any other remedy provided in this Lease.
17.29 Financial Statements. The Lessee shall deliver to the Lessor,
prior to the execution of this Lease, its financial statement, and the annual
financial statements of the Lessee within ninety (90) days after the end of the
Lessee's fiscal year, which shall be certified by the Lessee as true and
correct. The Lessee shall also provide financial statements of any guarantor of
this Lease, which shall be certified as true and correct by such guarantor. Such
financial statements shall be based upon generally accepted accounting
principles applied on a consistent basis. The financial statements shall clearly
show sufficient information to accurately depict the financial condition of the
Lessee as of the date thereof. Any misrepresentations in the Lessee's financial
statements will be considered, at the Lessor's option, as a breach of a material
provision of this Lease. If the Lessee is a partnership or joint venture, such
financial statements shall, upon the Lessor's request, be accompanied by similar
financial statements of each general partner or joint venture of the Lessee.
Such similar statements shall be certified to be true and correct by the subject
thereof. Within five (5) days following written request by the Lessor delivered
after any default by the Lessee in the payment of any sums owing under this
Lease, whether or not any time period allowed for the cure of such default has
expired, the Lessee shall provide the Lessor with copies of the Lessee's
financial statement for the end of the most recent quarter of the Lessee's
fiscal year, and the Lessee's financial statement (including year to date
information) for the end of the month preceding such default. In each case, such
financial statement shall meet all of the preceding requirements for annual
financial statements. The Lessee's failure to deliver the financial statements
contemplated hereby within the time specified shall constitute a material
default by the Lessee under this Lease.
17.30 Supersedes Proposal to Lease. This Lease supersedes any proposals
regarding the leasing of the Premises, whether written or oral, and any such
proposals will be terminated, and of no force or effect, effective upon the
execution of this Lease.
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17.31 Construction. The provisions of this Lease should be liberally
construed to effectuate its purposes. The language of all parts of this Lease
shall be construed simply according to its plain meaning and shall not be
construed for or against either party, as each party has participated in the
drafting of this Lease and had the opportunity to have their counsel review it.
Whenever the context and construction so requires, all words used in the
singular shall be deemed to be used in the plural, all masculine shall include
the feminine and neuter, and vice versa.
17.32 Non-Disturbance Agreement. The parties shall execute,
concurrently with the execution of this Lease, the Non-Disturbance and
Attornment Agreement attached as Exhibit D, which is incorporated by this
reference. The Lessor shall obtain its lender's execution of said agreement as
soon as reasonably practical after execution by the parties, and furnish the
Lessee with a fully executed copy.
18. TENANT IMPROVEMENTS
18.1 Lessor shall provide Lessee with a tenant improvement allowance of
$47,520 (the "Allowance") for new carpeting and paint to the Premises
(collectively, the "Work"). All aspects of completion of the Work (including
selection of materials and contractors) shall be subject to Lessor's reasonable
prior approval. The Allowance shall be payable within 15 days after satisfaction
of the following conditions: (i) the Work shall have been fully completed, (ii)
Lessee shall provide Lessor with invoices for all costs relating to the Work
(together with such supporting information as Lessor may reasonably request),
and (iii) the building and the Premises shall not be subject to any lien arising
in connection with the Work or any other work undertaken by Lessee or on its
behalf and Lessor shall have received final lien release documents (in form and
substance acceptable to Lessor) from all general contractors, subcontractors,
materialmen and other vendors who provided materials, goods and/or services in
connection with the Work. The Allowance shall not be used for any purpose other
than payment of the costs associated with the Work. An unused Allowance shall
revert and be paid to Lessor. Rent shall commence to accrue and be payable on
the Rent Commencement Date specified in the Basic Lease Provisions
notwithstanding the failure for any reason to complete the Work on or before
such Rent Commencement Date. Notwithstanding the above, Lessor shall have no
obligation to disburse the Allowance or any part thereof if any of the
conditions set forth above is not satisfied on or before September 30, 2000.
Lessor represents that the Premises on the Commencement Date are in good working
order and repair, including the plumbing, electrical, HVAC and lighting. Any
ceiling tiles in the Premises which are damaged on the Commencement Date shall
be promptly replaced by Lessor. Except as provided in this Section 18.1, the
Premises shall be delivered in "as is" condition.
19. ONE TIME OPTION TO EXTEND. Provided that (1) Lessee is not in
default under any of the terms of this Lease at the time of exercise of this
option or at the expiration of the initial term of this Lease nor has an event
occurred which upon notice or lapse of time, or both, would create a default,
and (2) Lessee has not assigned this Lease (other than by reason of an
assignment described in Section 11.2 above) nor sublet the Premises in whole or
in part, Lessee shall
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have the option to extend the term of this Lease for one (1) additional period
of five (5) years. This option is personal to Lessee and it may not be
transferred to any person, whether in connection with any assignment or sublease
or otherwise, without the prior written consent of Lessor.
Should Lessee exercise such option, the terms and conditions shall be
in accordance with the terms and conditions of the Lease, except for the
provisions relating to the rent, as provided herein.
Rent to be paid by the Lessee to the Lessor for the first year of the
extended term (commencing June 1, 2005) shall be the market rent for similar
space in comparable buildings in the Goleta area as determined by Lessor at the
time this option to extend is exercised; provided, however, that in no such
event shall the monthly rent for such first year be less than the product of (i)
the monthly rent for the last month of the initial term of this Lease multiplied
by (ii) 104%. The monthly rent for each year of the extended term shall be
increased, as of each June 1 of the extended term (commencing June 1, 2006), at
a rate equal to Four Percent (4%) of the monthly rent applicable to the prior
year. The criteria for the establishment of market rent (the "Criteria") shall
include, but not be limited to, rental rate escalation provisions, expense
recapture and security deposit requirements as necessary to reflect the then
prevailing market conditions. To exercise this option, Lessee must give notice
in writing of its election to exercise such option to Lessor a minimum of one
hundred-eighty (180) days and a maximum of three hundred-sixty (360) days prior
to the expiration of the initial term of this Lease. Lessor shall have sixty
(60) days from the date of receipt of Lessee's notice to advise Lessee of
Lessor's determination of market rent for the extended period.
Upon Lessee's receipt of notice from Lessor as to Lessor's
determination of market rent, Lessee shall have thirty (30) days to notify
Lessor in writing that it accepts such determination or that Lessee rejects such
determination (in which latter case, Lessee shall simultaneously notify Lessor
of Lessee's determination of the market rent). Lessee's failure to respond
within such thirty (30) day period shall be deemed an acceptance of Lessor's
determination of market rent and the Lease shall thereupon be extended for an
additional five (5) year period, the monthly rent for the first year of the
extended term shall be the Lessor's determination of market rent and the rent
increase provisions of this Section 19 shall apply to the balance of the
extended term.
If Lessee rejects the market rent, as provided above, Lessor and Lessee
shall forthwith attempt in good faith to agree upon the market rent. If Lessor
and Lessee fail to reach agreement on such market rent within thirty (30) days
after the date of rejection (such date, the "Outside Agreement Date"), then
each party's determination shall be submitted to appraisal in accordance with
the appraisal provisions set forth in Section 20 below.
The rent for the Premises after the expiration of the initial term of
the Lease and during any period that the market rent for the Premises is being
determined pursuant to Section 20 shall be the market rent determined by Lessor,
and the parties shall make a retroactive adjustment, if necessary, to the rent
payable for such period upon the determination of the market rent under said
Section 20.
20. APPRAISAL PROVISIONS.
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(i) Lessor and Lessee shall each appoint a real estate
appraiser who shall be an individual of substantial experience and
qualifications in commercial real estate appraisal for similar buildings in the
Goleta area and who shall have been active in such appraisal activities over the
five (5) year period ending on the date of such appointment. The determination
of the appraisers shall be limited solely to the issue of whether Lessor's or
Lessee's determination of market rent is the closer to the actual fair market
rental (considering the Criteria referred to in Section 19 above). Each such
appraiser shall be appointed within fifteen (15) days after the Outside
Agreement Date.
(ii) The two appraisers so appointed shall within fifteen (15)
days of the date of the appointment of the second appointed appraiser agree upon
and appoint a third appraiser who shall be qualified under the same criteria
referred to in parapraph (i) above.
(iii) The three appraisers shall within thirty (30) days of
the appointment of the third appraiser reach a decision as to whether the
parties shall use Lessor's or Lessee's determination of market rent for the
first year of the extended term, and shall notify Lessor and Lessee thereof,
whereupon the Lease shall be extended for an additional five (5) year, the
monthly rent for the first year of the extended term shall be in accordance with
such decision and the rent increase provisions of this Section 19 shall apply to
the balance of the extended term.
(iv) The decision of the majority of the three appraisers
shall be binding upon Lessor and Lessee.
(v) If either Lessor or Lessee fails to appoint an appraiser
within the time period specified in paragraph (i) above, the appraiser appointed
by one of them shall reach a decision based upon the same procedures as set
forth herein (i.e., by selecting either Lessor's or Lessee's determination of
market rent), and shall notify Lessor and Lessee thereof, and such appraiser's
decision shall be binding upon Lessor and Lessee.
(vi) If the two appraisers fail to agree upon and appoint a
third appraiser, both appraisers shall be dismissed and the matter to be decided
shall be forthwith submitted to arbitration in Santa Barbara County, CA under
the provisions of the American Arbitration Association based upon the same
procedures as set forth herein (i.e., by selecting either Lessor's or Lessee's
determination of market rent).
(vii) The cost of appraisal (and, if necessary, arbitration)
shall be paid by Lessor and Lessee equally.
(viii) Notwithstanding anything to the contrary in this
Section 20, the parties agree that the monthly rent for the first year of the
extended term shall not be less than the amount referred to in the proviso set
forth in the third paragraph of Section 19, and that the rent increase
provisions set forth in the third paragraph of Section 19 shall apply to the
balance of the extended term.
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EXHIBIT A
PREMISES
GRAPHIC OMITTED
70 Santa Felicia Drive
First Floor Plan
GRAPHIC OMITTED
70 Santa Felicia Drive
Second Floor Plan
EXHIBIT B
RULES AND REGULATIONS
RULES AND REGULATIONS
1. Except as otherwise provided in Section 17.17, no sign, placard,
picture, advertisement, name or notice shall be inscribed, displayed or printed
or affixed on or to any part of the outside of the Building without the written
consent of Lessor first had and obtained and Lessor shall have the right to
remove any such sign, placard, picture, advertisement, name or notice to and at
the expense of Lessee.
All approved signs or lettering on doors shall be printed,
painted, affixed or inscribed at the expense of Lessee by a person approved of
by Lessor.
Lessee shall not place anything or allow anything to be placed
near the glass of any window, door, partition or wall which may appear unsightly
from outside the Premises.
2. The directory of name identification of the Building, if any, will
be provided exclusively for the display of the names and location of Lessee and
other tenants in the Building, and Lessor reserves the right to exclude any
other names therefrom.
3. All sidewalks, halls, passages, exits, entrances of the Building, if
any, shall not be obstructed by any lessee or used by him for any purpose other
than for ingress to and egress from his respective Premises. The halls,
passages, exits, entrances, elevators, stairways, balconies and pool are not for
the use of the general public and Lessor shall in all cases retain the right to
control and prevent access thereto by all persons whose presence in the judgment
of Lessor shall be prejudicial to the safety, character, reputation and
interests of the Building and its lessees, provided that nothing herein
contained shall be construed to prevent such access to persons with whom Lessee
normally deals in the ordinary course of Lessee's business unless such persons
are engaged in illegal activities. No lessee and no employee or invitee of any
lessee shall go upon the roof of the Building without the prior consent of
Lessor. For purposes of Lessee's obligations, if any, of repair and maintenance
of the heating, ventilating and air conditioning systems of the Premises, Lessee
shall use a maintenance firm selected or designated by Lessor unless Lessee
demonstrates by written evidence reasonably satisfactory to Lessor that the
rates quoted by such firm for such work are not competitive with rates quoted by
one or more other firms which Lessee proposes to use.
4. Lessee may install new or additional locks or any bolts on any door
of the Premises; however, Lessee shall provide Lessor with access to the
Premises in the event of an emergency access requirement upon one hour notice.
5. Lessee shall not overload the floor of the Premises or mark, drive
nails, screws or drill into the partitions, woodwork or plaster or in any way
deface the Premises or any part thereof.
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6. Lessee shall not use, keep or permit to be used or kept any foul or
noxious gas or substance in the Premises, or permit or suffer the Premises to be
occupied or used in a manner offensive or objectionable to Lessor or other
occupants of the Building by reason of noise, odors and/or vibrations, or
interfere in any way with other tenants or those having business therein, nor
shall any animals or birds be brought in or kept in or about the Premises of the
Building.
7. Lessee shall be entitled to install a cafeteria/dining area for the
use of Lessee's employees and invitees and ordinary office purposes. The
Premises shall not be used for washing clothes, for lodging, or for any
improper, objectionable or immoral purposes.
8. Other than customary office cleaning and janitorial supplies used in
reasonable quantities and stored in a proper manner allowed by governmental
ordinances and in a manner consistent with Article 5.4 of this Lease, Lessee
shall not use or keep in the Premises or the Building any kerosene, gasoline or
inflammable or combustible fluid or material except in connection with Lessee's
permitted use of the Premises under this Lease and in strict conformance with
applicable law, or use any method of heating or air conditioning other than that
supplied by Lessor. Any permitted corrosive, flammable or other special wastes
shall be handled for disposal as director by Lessor.
9. Each lessee, upon the termination of his tenancy, shall deliver to
Lessor the keys of offices, rooms and toilet rooms, if any, which shall have
been furnished the lessee or which the lessee shall have had made, and in the
event of loss of any keys so furnished, shall pay Lessor therefor.
10. No lessee shall lay linoleum, tile, carpet or other similar floor
covering so that the same shall be affixed to the floor of the Premises in any
manner except as approved by Lessor. The expense of repairing any damage
resulting from a violation of this rule or removal of any floor covering shall
be borne by the lessee by whom, or by whose contractors, employees or invitees,
the damage shall have been caused.
11. Lessee shall see that the doors of the Premises are closed and
securely locked before leaving the Building and must observe strict care and
caution that all water faucets or water apparatus are entirely shut off before
Lessee or Lessee's employees leave the Building, and that all electricity shall
likewise be carefully shut off, so as to prevent waste or damage, and for any
default or carelessness Lessee shall make good all injuries sustained by other
tenants or occupants of the Building or Lessor.
12. Lessor reserves the right to exclude or expel from the Building any
person. who, in the reasonable judgment of Lessor, is intoxicated or under the
influence of liquor or drugs, or who shall in any manner do any act in violation
of any of the Rules and Regulations of the Building.
13. Requirements of Lessee as to any matters within Lessor's
obligations pursuant to its Lease will be attended to only upon application at
Lessee's address for notices. Employees of Lessor shall not perform any work or
do anything outside of their
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regular duties unless under special instructions from Lessor, and no employee
will admit any person (Lessee or otherwise) to any office without specific
instructions from Lessor.
14. Lessor shall have the right, exercisable without notice and without
liability to Lessee (other than reimbursement of costs actually incurred by
Lessee in the revision of any stationery or promotional materials), to change
the name and street address of the Building of which the Premises are a part,
but the street address shall not be changed unless required by a governmental
agency.
15. Lessee shall not disturb, solicit or canvass any occupant of the
Building and shall cooperate to prevent same.
16. Without the written consent of Lessor, Lessee shall not use the
name of the Building in connection with or in promoting or advertising the
business of Lessee except as Lessee's address.
17. Lessee's use of the common areas shall be limited to access and
parking purposes and under no circumstances shall Lessee be permitted to store
any goods or equipment, conduct any operations, or construct or place any
improvements, barriers or obstructions in the common areas, or otherwise
adversely affect the appearance thereof.
18. Canvassing, soliciting and peddling in the Building are prohibited
and Lessee shall cooperate to prevent the same.
19. Lessee shall not install any radio or television antenna,
loudspeaker or other device on the roof or exterior walls of its Premises,
provided Lessee may install an antenna or other communications devise on the
roof of the Premises with Lessor's prior written consent, which shall not be
unreasonably withheld, provided (i) such antenna or devise is adequately
screened with materials consistent with other materials of the Premises and
Building, (ii) Lessee has received all permits and approvals from governmental
agencies having jurisdiction for the construction thereof, (iii) Lessee shall
bear all costs, expenses and damages (including roof leaks) resulting from such
installation, and (iv) Lessee shall indemnify, protect, defend and hold Lessor
harmless from and against any claims, demands, costs or expenses (including
reasonable attorneys' fees) incurred by Lessor to the extent resulting from the
installation and/or operation of such equipment. Upon the expiration or earlier
termination of this Lease, Lessee shall, upon Lessor's written request, remove
the antenna or communications devise and promptly repair all damage caused by
such removal.
20. Lessor reserves the right to make such other and further
nondiscriminatory Rules and Regulations as in its reasonable judgment may be
necessary for the safety, care and cleanliness of the Premises and the Building
and for the preservation of good order therein. Lessee agrees to abide by all
such Rules and Regulations which are adopted.
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EXHIBIT C
GUARANTY OF LEASE
GUARANTY OF LEASE
WHEREAS, UNITED INSURANCE COMPANY OF AMERICA ("Lessor"), and
NANOMOTION, INC., a California corporation ("Lessee"), are about to execute a
lease, dated as of May 19, 2000 (as the same may be amended, modified or
supplemented from time to time, the "Lease"), concerning the premises located at
70 Santa Felicia, Goleta, CA 93117 (the "Premises") wherein Lessor will lease
the Premises to Lessee; and
WHEREAS, Raymond Karam ("Guarantor") has a financial interest in
Lessee; and
WHEREAS, Lessor would not execute the Lease if Guarantor did not
execute and deliver to Lessor this guaranty of the Lease.
NOW, THEREFORE, for and in consideration of the execution of the Lease
by Lessor and as a material inducement to Lessor to execute the Lease, Guarantor
hereby unconditionally and irrevocably guaranties the prompt payment by Lessee
of all rentals and all other sums payable by Lessee under the Lease and the
faithful and prompt performance by Lessee of each and every one of the terms,
conditions and covenants of the Lease to be kept and performed by Lessee.
It is specifically agreed and understood that the terms of the Lease
may be altered, affected, modified or changed by agreement between Lessor and
Lessee, or by a course of conduct, and said Lease may be assigned by Lessor or
any assignee of Lessor, in each case, without consent or notice to Guarantor,
and that this Guaranty shall thereupon and thereafter guaranty the performance
of the Lease as so changed, modified, altered, affected or assigned.
This Guaranty shall not be released, modified, or affected by failure
or delay on the part of Lessor to enforce any of the rights or remedies of the
Lessor under the Lease, whether pursuant to the terms thereof or at law or
equity. This Guaranty shall not be released, modified, or affected by the
exercise of any remedy by Lessor following a default by Lessee of its
obligations under the Lease, including any election by Lessor to declare
forfeiture of the Lease or to terminate the Lease.
No notice of default need be given to Guarantor, it being specifically
agreed and understood that the guaranty of the undersigned is a continuing
guaranty under which Lessor may proceed forthwith and immediately against Lessee
and/or against Guarantor following any breach or default by Lessee or for the
enforcement of any rights which Lessor may have as against Lessee pursuant to or
under the terms of the Lease or at law or in equity.
Lessor shall have the right to proceed against Guarantor hereunder
following any breach or default by Lessee without first proceeding against
Lessee and without previous notice to or demand upon either Lessee or Guarantor.
Guarantor hereby waives (a) notice of acceptance of this Guaranty, (b)
demand of payment, presentation and protest, (c) all right to assert or plead
any statute of limitations as to or
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relating to this Guaranty and the Lease, (d) any right to require the Lessor to
proceed against the Lessee or any other guarantor or any other person or entity
liable to Lessor, (e) any right to require Lessor to apply to any default any
security deposit or other security it may hold under the Lease, (f) any right to
require Lessor to proceed under any other remedy Lessor may have before
proceeding against Guarantor, and (g) any right of subrogation, contribution
and/or reimbursement.
The liability of Guarantor hereunder shall not be impaired, modified,
changed, released or limited in any manner whatsoever by any impairment,
modification, change, release or limitation of liability of Lessee or its estate
or of any remedy for the enforcement thereof, resulting from the operation of
any present or future provision of the Federal Bankruptcy Code, or any similar
law or statute of the United States or any State thereof covering insolvency,
bankruptcy, rehabilitation, liquidation or reorganization, it being the
intention of Guarantor that Guarantor's liability hereunder shall be determined
without regard to any rule of law or order which may relieve Lessee of any of
its obligations under the Lease.
Guarantor agrees that in the event Lessee shall become insolvent or
shall have an order for relief entered against it under the Federal Bankruptcy
Code, or shall file a petition for reorganization, arrangement or similar relief
under any present or future provision of the Federal Bankruptcy Code, or any
similar law of the United States or any State thereof, or if such petition filed
by creditors of Lessee shall not be dismissed within thirty (30) days, or if
Lessee shall seek a judicial readjustment of the rights of its creditors under
any present or future Federal or State law, or if a receiver of all or part of
its property and assets is appointed by any State or Federal court, and in any
such proceeding the Lease shall be terminated or rejected; or the obligations of
Lessee thereunder shall be modified, Lessor shall have the option either (a) to
require the Guarantor, and the Guarantor hereby so agrees, to execute and
deliver to Lessor a new lease as Lessee for the balance of the term then
remaining as provided in the Lease and upon the same terms and conditions as set
forth therein, or (b) to recover from the Guarantor that which Lessor would
otherwise be entitled to recover from Lessee under the Lease in the event of a
termination of the Lease by Lessor because of default by Lessee, and such shall
be recoverable from the Guarantor without regard to whether Lessor is entitled
to recover the same from Lessee in any such proceeding.
Guarantor agrees that, in the event any obligation is performed by
Lessee, the liability of Guarantor under this Guaranty shall remain in full
force and effect in the event that all or any part of such performance is
avoided or recovered from Lessor as a preference, fraudulent transfer or
otherwise, in any bankruptcy, insolvency, liquidation, reorganization or other
proceeding involving Lessee.
Guarantor will file all claims against Lessee in any bankruptcy or
other proceeding in which the filing of claims is required by law upon any
indebtedness of Lessee to Guarantor and will assign to Lessor, as security for
Guarantor's obligations under this Guaranty, all right of Guarantor thereunder.
If Guarantor does not file any such claim, Lessor, as attorney-in-fact for
Guarantor, is hereby authorized to do so in the name of Guarantor or, in
Lessor's discretion, to assign the claim and to cause proof of claim to be filed
in the name of Lessor's nominee. In all
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such cases, whether in administration, bankruptcy or otherwise, the person or
persons authorized to pay such claim shall pay to Lessor the full amount
thereof, and, to the full extent necessary for that purpose, Guarantor hereby
assigns to Lessor all of Guarantor's rights to any such payments or
distributions to which Guarantor would otherwise be entitled. Lessor and/or its
nominee will transfer to Guarantor all amounts realized by it with respect to
any claims assigned by Guarantor to Lessor and/or its nominee under this
paragraph after all obligations owing to Lessor under the Lease and this
Guaranty have been paid and satisfied in full.
Guarantor hereby subordinates all existing or future indebtedness of
Lessee to Guarantor to the obligations owed to Lessor under the Lease and this
Guaranty.
The obligations of Lessee under the Lease to execute and deliver
estoppel certificates and financial statements, as therein provided, shall be
deemed to also require Guarantor to do and provide the same relative to
Guarantor.
The term "Lessor" whenever used herein refers to and means the Lessor
specifically in the Lease and also any assignee of the Lessor, whether by
outright assignment or by assignment for security, and also any successor to the
interest of the Lessor or of any assignee in the Lease or any part thereof,
whether by assignment or otherwise. So long as Lessor's interest in or to the
Premises or the rents, issues and profits therefrom, or in, to or under the
Lease, are subject to any mortgage or deed of trust or assignment for security,
no acquisition by Guarantor of Lessor's interest in the Premises or under the
Lease shall affect the continuing obligation of Guarantor under this Guaranty
which shall nevertheless continue in full force and effect for the benefit of
the mortgagee, beneficiary, trustee or assignee under such mortgage, deed of
trust or assignment, of any purchaser at a sale by judicial foreclosure or under
private power of sale, and of the successors and assigns of any such mortgagee,
beneficiary, trustee, assignee or purchaser.
The term "Lessee" whenever used herein refers to and means the Lessee
specifically named in the Lease and also any assignee or sublessee of the Lease
and also any successor to the interest of the Lessee, assignee or sublessee of
such Lease or any part thereof, whether by assignment, sublease or otherwise.
If Lessor shall employ an attorney to present, enforce or defend any or
all of Lessor's rights or remedies hereunder, Guarantor shall pay all attorneys'
fees, costs and expenses and all other costs and expenses incurred by Lessor in
connection therewith, whether or not an action is commenced by Lessor for such
purpose.
Any amount due from Guarantor to Lessor which is not paid when due
shall bear interest at the lesser of (i) the then current base rate of interest
per annum established from time to time by Bank of America National Trust and
Savings Association and designated as its prime rate plus five percent (5%), or
(ii) the maximum rate or rates from time to time permitted by applicable federal
or state law, from the date such payment is due until paid, but the payment of
such interest shall not excuse or cure the failure to make such payment when
due.
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This Guaranty shall be binding upon Guarantor and the successors,
heirs, executors and administrators of Guarantor, and shall inure to the benefit
of Lessor and Lessor's successors and assigns.
Lessor may assign or transfer the Lease and this Guaranty, or both,
without notice to Guarantor and no such assignment or transfer shall extinguish
or diminish the liability of Guarantor under this Guaranty.
Should any one or more provisions of this Guaranty be determined to be
illegal or unenforceable, all other provisions nevertheless shall be effective.
No provision of this Guaranty or right of Lessor hereunder can be
waived nor can Guarantor be released from Guarantor's obligations hereunder
except by a writing duly executed by an authorized officer of Lessor. No such
waiver shall be applicable except in the specific instance for which given.
Wherever in this Guaranty the context so requires, reference to the
masculine shall be deemed to include the feminine and the neuter, and reference
to either the singular or the plural shall be deemed to include the other.
This Guaranty shall be construed and interpreted in accordance with,
and all disputes hereunder shall be governed by, the laws of the State of
Califomia.
Any married person who signs the Guaranty as guarantor expressly agrees
that recourse may be had against his or her separate property for all of his or
her obligations hereunder.
If Guarantor is a partnership or a corporation, the general partner or
partners or the shareholders will neither sell, transfer or assign nor permit
the sale, transfer or assignment, of his, her or their respective interests or
any part thereof in the partnership or shareholdings in the corporation so long
as the obligations guaranteed hereby remain unpaid or unperformed, unless the
prior consent of Lessor is obtained.
In the event that Lessee is acquired by another corporation or other
business entity (whether by merger, consolidation, sale of assets, sale of stock
or otherwise), Lessor shall release Guarantor of his obligations under this
Guaranty, and this Guaranty shall terminate, if all of the following conditions
are met: (i) Lessor shall have consented in writing to the assignment of the
Lease to the acquiring entity, (ii) no default shall have occurred and be
continuing under the Lease, (iii) Lessor, in its reasonable discretion, shall be
satisfied that the acquiring entity in such acquisition (A) meets Lessor's then
current financial and other requirements applicable to tenants for leases
comparable to the Lease, (B) is capable of satisfying in full all obligations of
tenant under the Lease, and (C) has a net worth in excess of the aggregate net
worth of Lessee and of Guarantor, and (iv) such acquiring entity shall assume in
a writing delivered to Lessor all obligations of tenant under the Lease, or
shall (if Lessee shall survive such acquisition) execute and deliver a guaranty
of the Lease in form and substance satisfactory to Lessor.
C-4
Executed at Goleta, CA on May 19, 2000, to be effective the same day as
the effective day of the Lease.
GUARANTOR
Address: 226 E. Junipero /s/ Raymond M. Karam
Santa Barbara, CA 93117 ---------------------------------
Raymond M. Karam
C-5
CONSENT
The undersigned consent and agree to the above Guaranty for the purpose
of making any community property in which they have an interest subject to the
recourse for the Guarantor's obligations hereunder.
/s/ ????????????????????
-----------------------------
(Spouse of Raymond M. Karam)
C-6