Exhibit 10.2
LEASE
BY AND BETWEEN
Technology Centre Associates LLC,
a California limited liability company
as Landlord
and
Adept Technology, Inc.,
a California corporation
as Tenant
June 1, 1998
TABLE OF CONTENTS
PAGE
ARTICLE 1 REFERENCE....................................................1
1.1 References.........................................................1
ARTICLE 2 LEASED PREMISES, TERM AND POSSESSION.........................2
2.1 Demise Of Leased Premises..........................................2
2.2 Right To Use Outside Areas.........................................3
2.3 Lease Commencement Date And Lease Term.............................3
2.4 Delivery Of Possession.............................................3
2.5 Performance Of Improvement Work; Acceptance Of Possession..........3
2.6 Surrender Of Possession............................................3
ARTICLE 3 RENT, LATE CHARGES AND SECURITY DEPOSITS.....................4
3.1 Base Monthly Rent..................................................4
3.2 Additional Rent....................................................4
3.3 Year-End Adjustments...............................................5
3.4 Late Charge, And Interest On Rent In Default.......................5
3.5 Payment Of Rent....................................................6
3.6 Prepaid Rent.......................................................6
3.7 Security Deposit...................................................6
ARTICLE 4 USE OF LEASED PREMISES AND OUTSIDE AREA......................7
4.1 Permitted Use......................................................7
4.2 General Limitations On Use.........................................7
4.3 Noise And Emissions................................................7
4.4 Trash Disposal.....................................................7
4.5 Parking............................................................7
4.6 Signs..............................................................8
4.7 Compliance With Laws And Private Restrictions......................8
4.8 Compliance With Insurance Requirements.............................8
4.9 Landlord's Right To Enter..........................................8
4.10 Use Of Outside Areas...............................................9
4.11 Environmental Protection...........................................9
i.
TABLE OF CONTENTS
(CONTINUED)
4.12 Rules And Regulations.............................................11
ARTICLE 5 REPAIRS, MAINTENANCE, SERVICES AND UTILITIES................11
5.1 Repair And Maintenance............................................11
5.2 Tenant's Obligations..............................................11
(a) Landlord's Obligation.........................................11
5.3 Utilities.........................................................12
5.4 Security..........................................................12
5.5 Energy And Resource Consumption...................................12
5.6 Limitation Of Landlord's Liability................................12
ARTICLE 6 ALTERATIONS AND IMPROVEMENTS................................12
6.1 By Tenant.........................................................12
6.2 Ownership Of Improvements.........................................13
6.3 Alterations Required By Law.......................................13
6.4 Liens.............................................................13
ARTICLE 7 ASSIGNMENT AND SUBLETTING BY TENANT.........................14
7.1 By Tenant.........................................................14
7.2 Merger Or Reorganization..........................................14
7.3 Landlord's Election...............................................15
7.4 Conditions To Landlord's Consent..................................15
7.5 Assignment Consideration And Excess Rentals Defined...............16
7.6 Payments..........................................................16
7.7 Good Faith........................................................16
7.8 Effect Of Landlord's Consent......................................17
ARTICLE 8 LIMITATION ON LANDLORD'S LIABILITY AND INDEMNITY............17
8.1 Limitation On Landlord's Liability And Release....................17
8.2 Tenant's Indemnification Of Landlord..............................17
ARTICLE 9 INSURANCE...................................................18
9.1 Tenant's Insurance................................................18
9.2 Landlord's Insurance..............................................19
ii.
TABLE OF CONTENTS
(CONTINUED)
9.3 Mutual Waiver Of Subrogation......................................19
ARTICLE 10 DAMAGE TO LEASED PREMISES...................................19
10.1 Landlord's Duty To Restore........................................19
10.2 Insurance Proceeds................................................20
10.3 Landlord's Right To Terminate.....................................20
10.4 Tenant's Right To Terminate.......................................20
10.5 Tenant's Waiver...................................................21
10.6 Abatement Of Rent.................................................21
ARTICLE 11 CONDEMNATION................................................21
11.1 Tenant's Right To Terminate.......................................21
11.2 Landlord's Right To Terminate.....................................21
11.3 Restoration.......................................................21
11.4 Temporary Taking..................................................21
11.5 Division Of Condemnation Award....................................21
11.6 Abatement Of Rent.................................................22
11.7 Taking Defined....................................................22
ARTICLE 12 DEFAULT AND REMEDIES........................................22
12.1 Events Of Tenant's Default........................................22
12.2 Landlord's Remedies...............................................23
12.3 Landlord's Default And Tenant's Remedies..........................24
12.4 Limitation Of Tenant's Recourse...................................24
12.5 Tenant's Waiver...................................................25
ARTICLE 13 GENERAL PROVISIONS..........................................25
13.1 Taxes On Tenant's Property........................................25
13.2 Holding Over......................................................25
13.3 Subordination To Mortgages........................................25
13.4 Tenant's Attornment Upon Foreclosure..............................26
13.5 Mortgagee Protection..............................................26
13.6 Estoppel Certificate..............................................26
iii.
TABLE OF CONTENTS
(CONTINUED)
13.7 Tenant's Financial Information....................................26
13.8 Transfer By Landlord..............................................27
13.9 Force Majeure.....................................................27
13.10 Notices...........................................................27
13.11 Attorneys' Fees...................................................27
13.12 Definitions.......................................................27
(a) Real Property Taxes...........................................28
(b) Landlord's Insurance Costs....................................28
(c) Property Maintenance Costs....................................28
(d) Building Maintenance Costs....................................29
(e) Property Operating Expenses...................................29
(f) Law 29
(g) Lender........................................................29
(h) Private Restrictions..........................................29
(i) Rent 29
13.13 General Waivers...................................................29
13.14 Miscellaneous.....................................................29
ARTICLE 14 CORPORATE AUTHORITY BROKERS AND ENTIRE AGREEMENT............30
14.1 Corporate Authority...............................................30
14.2 Brokerage Commissions.............................................30
14.3 Entire Agreement..................................................30
14.4 Landlord's Representations........................................30
ARTICLE 15 OPTION TO EXTEND............................................30
ARTICLE 16 TELEPHONE SERVICE...........................................32
iv.
LEASE
THIS LEASE, dated June 1, 1998 for reference purposes only, is made by
and between TECHNOLOGY CENTRE ASSOCIATES LLC, a California limited liability
company ("Landlord"), and ADEPT TECHNOLOGY, INC., a California corporation
("Tenant"), to be effective and binding upon the parties as of the date the last
of the designated signatories to this Lease shall have executed this Lease (the
"Effective Date of this Lease").
ARTICLE 1
REFERENCE
1.1 References. All references in this Lease (subject to any further
clarifications contained in this Lease) to the following terms shall have the
following meaning or refer to the respective address, person, date, time period,
amount, percentage, calendar year or fiscal year as below set forth:
Tenant's Address for Notice: Adept Technology, Inc.
150 Rose Orchard Way
San Jose, California 95134
Tenant's Representative: Chief Financial Officer
Landlord's Address for Notices: c/o Menlo Equities LLC
525 University Avenue
Suite 100
Palo Alto, California 94301
Landlord's Representative: Henry Bullock/Richard Holmstrom
Phone Number: (650) 326-9300
Intended Commencement Date: June 1, 1998
Intended Term: 5 years, 7 months
Lease Expiration Date: December 31, 2003, unless earlier terminated
by Landlord or Tenant in accordance with the terms of this
Lease, or extended by Tenant pursuant to Article 15.
Options to Renew: 1 option to renew for a term of five (5) years.
First Month's Prepaid Rent: None
Tenant's Security Deposit: $92,448.00 in the form of a letter of credit
Late Charge Amount: Five Percent (5%) of the Delinquent Amount
Tenant's Required Liability
Coverage: $3,000,000 Combined Single Limit
Broker(s): Bruce Horton, Grubb & Ellis
Property: That certain real property situated in the City of San Jose,
County of Santa Clara, State of California, as presently
improved with five buildings, which real property is shown on
1.
the Site Plan attached hereto as Exhibit "A" and is commonly
known as or otherwise described as follows: Technology Centre,
San Jose, California.
Building: That certain building within the Property in which the
Leased Premises are located (the "Building"), which Building
is shown outlined on Exhibit "A" hereto. The Building is
commonly known as or otherwise described as follows: 150
Rose Orchard Way, San Jose, California.
Outside Areas: The "Outside Areas" shall mean all areas within the
Property which are located outside the buildings, such as
pedestrian walkways, parking areas, landscaped area, open
areas and enclosed trash disposal areas.
Leased Premises: All the interior space within the Building,
including stairwells, connecting walkways, and atriums,
consisting of approximately 92,448 square feet and, for
purposes of this Lease, agreed to contain said number of
square feet.
Base Monthly Rent: The term "Base Monthly Rent" shall mean the
following:
During Period: Base Monthly Rent is:
Commencement Date through 12/31/98 $92,448.00
1/1/99 through 12/31/99 $97,070.40
1/1/2000 through 12/31/2000 $101,692.80
1/1/2001 through 12/31/2001 $165,481.92
1/1/2002 through 12/31/2002 $171,953.28
1/1/2003 through 12/31/2003 $178,424.64
Permitted Use: Light Manufacturing, Assembly of Industrial Products,
General Office, Warehouse, and Research and Development.
Tenant's Project Proportionate Share: 29.70%
Tenant's Building Proportionate Share: 100%
Exhibits: The term "Exhibits" shall mean the Exhibits of this Lease
which are described as follows:
Exhibit "A" - Site Plan showing the Property and delineating
the Building in which the Leased Premises are located.
Exhibit "B" - Floor Plan outlining the Leased Premises
ARTICLE 2
LEASED PREMISES, TERM AND POSSESSION
2.1 Demise Of Leased Premises. Landlord hereby leases to Tenant and Tenant
hereby leases from Landlord for Tenant's own use in the conduct of Tenant's
business and not for purposes of speculating in real estate, for the Lease Term
and upon the terms and subject to the conditions of this Lease, that certain
interior space described in Article 1 as the Leased Premises, reserving and
excepting to Landlord the right to fifty percent (50%) of all assignment
2.
consideration and excess rentals as provided in Article 7 below. Tenant's lease
of the Leased Premises, together with the appurtenant right to use the Outside
Areas as described in Paragraph 2.2 below, shall be subject to the continuing
compliance by Tenant with (i) all the terms and conditions of this Lease, (ii)
all Laws governing the use of the Leased Premises and the Property, (iii) all
Private Restrictions, easements and other matters now of public record
respecting the use of the Leased Premises and Property, and (iv) all reasonable
rules and regulations from time to time established by Landlord.
2.2 Right To Use Outside Areas. As an appurtenant right to Tenant's right to the
use and occupancy of the Leased Premises, Tenant shall have the right to use the
Outside Areas in conjunction with its use of the Leased Premises solely for the
purposes for which they were designated and intended and for no other purposes
whatsoever. Tenant's right to so use the Outside Areas shall be subject to the
limitations on such use as set forth in Article 1 and shall terminate
concurrently with any termination of this Lease.
2.3 Lease Commencement Date And Lease Term. Subject to Paragraph 2.4 below, the
term of this Lease shall begin, and the Lease Commencement Date shall be deemed
to have occurred, on the Intended Commencement Date, as set forth in Article 1
(the "Lease Commencement Date"). The term of this Lease shall in all events end
on the Lease Expiration Date (as set forth in Article 1). The Lease Term shall
be that period of time commencing on the Lease Commencement Date and ending on
the Lease Expiration Date (the "Lease Term").
2.4 Delivery Of Possession. Tenant is currently in possession of the Leased
Premises and acknowledges that on the Lease Commencement Date it shall take the
Leased Premises in their "as-is" condition.
2.5 Performance Of Improvement Work; Acceptance Of Possession. Tenant hereby
acknowledges that Tenant has inspected the Leased Premises and that Landlord
shall deliver the Leased Premises and all Building or operating systems to
Tenant (and Tenant hereby accepts them) in their then "AS IS" condition, with
all faults, subject to Landlord's maintenance and repair obligations under
Section 5.1(b) hereof.
2.6 Surrender Of Possession. Immediately prior to the expiration or upon the
sooner termination of this Lease, Tenant shall remove all of Tenant's signs from
the exterior of the Building and shall remove all of Tenant's equipment, trade
fixtures, furniture, supplies, wall decorations and other personal property from
within the Leased Premises, the Building and the Outside Areas, shall vacate and
surrender the Leased Premises, the Building, the Outside Areas and the Property
to Landlord in the same condition, broom clean, as existed at the Lease
Commencement Date, reasonable wear and tear excepted, and shall repair all
damage caused by such removal. Tenant shall repair all damage to the Leased
Premises, the exterior of the Building and the Outside Areas caused by Tenant's
removal of Tenant's property. Tenant shall patch and refinish, to Landlord's
reasonable satisfaction, all penetrations made by Tenant or its employees to the
floor, walls or ceiling of the Leased Premises, whether such penetrations were
made with Landlord's approval or not. Tenant shall repair or replace all stained
or damaged ceiling tiles, wall coverings and floor coverings to the reasonable
satisfaction of Landlord, to the extent of damage beyond reasonable wear and
tear. Tenant shall repair all damage to the exterior surface of the Building and
the paved surfaces of the Outside Areas caused by Tenant in connection with
removal activities and, where necessary, replace or resurface same, provided,
however, that if such damage is covered by Landlord's insurance, Tenant shall
only be responsible for the deductible amount, if any. Notwithstanding the
foregoing, Landlord reserves the right to require Tenant to remove any
specialized improvements, including raised floor computer areas, vaults, and
other improvements of such a nature as not likely to be generally usable by
likely future tenants of the Building. In the event Landlord requires such
removal, Tenant shall, upon the expiration or sooner termination of the Lease,
remove any such improvements and repair all damage caused by such removal.
Additionally, to the extent that Landlord shall have notified Tenant in writing
at the time any alterations, modifications or other improvements were completed
that it desired to have such alterations, modifications or other improvements
removed at the expiration or sooner termination of the Lease, Tenant shall, upon
the expiration or sooner termination of the Lease, remove any such alterations,
modifications or other improvements constructed or installed by Landlord or
Tenant and repair all damage caused by such removal. If the Leased Premises, the
Building, the Outside Areas and the Property are not surrendered to Landlord in
the condition required by this paragraph at the expiration or sooner termination
of this Lease, Landlord may, at Tenant's expense, so remove Tenant's signs,
property and/or improvements not so removed and make such repairs and
replacements not so made or hire, at Tenant's expense, independent contractors
to perform such work. Tenant shall be liable to Landlord for all costs incurred
by Landlord in returning the Leased Premises, the Building and the Outside Areas
to the required condition, together with interest on all costs so incurred
3.
from the date paid by Landlord until paid, at the lesser of (i) maximum rate of
interest not prohibited or made usurious by law or (ii) the sum of that rate
quoted by Wells Fargo Bank, N.T. & S.A. from time to time as its prime rate,
plus three percent (3%). Tenant shall pay to Landlord the amount of all costs so
incurred plus such interest thereon, within ten (10) days of Landlord's billing
Tenant for same. Tenant shall indemnify Landlord against loss or liability
resulting from delay by Tenant in surrendering the Leased Premises, including,
without limitation, any claims made by any succeeding Tenant or any losses to
Landlord with respect to lost opportunities to lease to succeeding tenants.
ARTICLE 3
RENT, LATE CHARGES AND SECURITY DEPOSITS
3.1 Base Monthly Rent. Commencing on the Lease Commencement Date (as determined
pursuant to Paragraph 2.3 above) and continuing throughout the Lease Term,
Tenant shall pay to Landlord, without prior demand therefor, in advance on the
first day of each calendar month, the amount set forth as "Base Monthly Rent" in
Article 1 (the "Base Monthly Rent").
3.2 Additional Rent. Commencing on the Lease Commencement Date (as determined
pursuant to Paragraph 2.3 above) and continuing throughout the Lease Term, in
addition to the Base Monthly Rent and to the extent not required by Landlord to
be contracted for and paid directly by Tenant, Tenant shall pay to Landlord as
additional rent (the "Additional Rent") the following amounts:
(a) An amount equal to all Property Operating Expenses (as defined in
Article 13) incurred by Landlord. Payment shall be made by whichever of the
following methods (or combination of methods) is (are) from time to time
designated by Landlord:
(i) Landlord may forward invoices or bills for such expenses
to Tenant, and Tenant shall, no later than thirty (30) days prior to the due
date, pay such invoices or bills and deliver satisfactory evidence of such
payment to Landlord, and/or
(ii) Landlord may bill to Tenant, on a periodic basis not more
frequently than monthly, the amount of such expenses (or group of expenses) as
paid or incurred by Landlord, and Tenant shall pay to Landlord the amount of
such expenses within thirty (30) days after receipt of a written bill therefor
from Landlord, or prior to delinquency, whichever is earlier and/or
(iii) Landlord may deliver to Tenant Landlord's reasonable
estimate of any given expense (such as Landlord's Insurance Costs or Real
Property Taxes), or group of expenses, which it anticipates will be paid or
incurred for the ensuing calendar or fiscal year, as Landlord may determine, and
Tenant shall pay to Landlord an amount equal to the estimated amount of such
expenses for such year in equal monthly installments during such year with the
installments of Base Monthly Rent.
Landlord reserves the right to change from time to time the methods of billing
Tenant for any given expense or group of expenses or the periodic basis on which
such expenses are billed.
(b) Landlord's share of the consideration received by Tenant upon
certain assignments and sublettings as required by Article 7.
(c) Any legal fees and costs that Tenant is obligated to pay or
reimburse to Landlord pursuant to Article 13; and
(d) Any other charges or reimbursements due Landlord from Tenant
pursuant to the terms of this Lease.
Notwithstanding the foregoing, Landlord may elect by thirty (30) days written
notice to Tenant to have Tenant pay Real Property Taxes or any portion thereof
directly to the applicable taxing authority, in which case Tenant shall
4.
make such payments and deliver satisfactory evidence of payment to Landlord no
later than ten (10) days before such Real Property Taxes become delinquent.
Tenant may cause an audit of Landlord's books and records to determine the
accuracy of Landlord's billings for Property Operating Expenses charges under
this Lease. If such audit reveals that the actual Property Operating Expenses
for any given year were less than the amount that Tenant paid for Property
Operating Expenses for any such year, then Landlord shall pay to Tenant the
excess. If such audit reveals a discrepancy of more than five (5%) percent of
the actual amount of any Property Operating Expenses charges, then Landlord
shall pay the cost of the audit.
Additionally, Tenant shall have the right, by appropriate proceedings, to
protest or contest any assessment, reassessment or allocation of Real Property
Taxes or any change therein or any application of any Law to the Leased Premises
or Tenant's use thereof. Landlord will reasonably cooperate with Tenant in the
contest or proceedings. If Tenant does not pay the Real Property Taxes when due
which are the subject of such protest or contest, Tenant shall post a bond in
lieu thereof in an amount reasonably determined by Landlord but not less than
one hundred twenty-five percent (125%) of the amount demanded by the taxing
authorities which holds Landlord and the Property harmless from any damage
arising out of the contest and ensuring the payment of any judgment than may be
rendered. With respect to any contest of Real Property Taxes or Laws, Tenant
shall hold Landlord and the Property harmless from any damage arising out of
such protest or contest and shall pay any judgment that may be rendered in
connection with such contest or protest. Any protest or contest conducted by
Tenant under this paragraph shall be at Tenant's expense and if interest or late
charges become payable as a result of such contest or protest, Tenant shall pay
the same. Tenant shall receive a proportionate share of any refund applicable to
the Lease Term based on the amount of Real Property Taxes paid by Tenant as
Tenant's Lot Proportionate Share.
3.3 Year-End Adjustments. If Landlord shall have elected to bill Tenant for the
Property Operating Expenses (or any group of such expenses) on an estimated
basis in accordance with the provisions of Paragraph 3.2(a)(iii) above, Landlord
shall furnish to Tenant within three months following the end of the applicable
calendar or fiscal year, as the case may be, a statement setting forth (i) the
amount of such expenses paid or incurred during the just ended calendar or
fiscal year, as appropriate, and (ii) the amount that Tenant has paid to
Landlord for credit against such expenses for such period. If Tenant shall have
paid more than its obligation for such expenses for the stated period, Landlord
shall, at its election, either (i) credit the amount of such overpayment toward
the next ensuing payment or payments of Additional Rent that would otherwise be
due or (ii) refund in cash to Tenant the amount of such overpayment. If such
year-end statement shall show that Tenant did not pay its obligation for such
expenses in full, then Tenant shall pay to Landlord the amount of such
underpayment within thirty (30) days from Landlord's billing of same to Tenant.
The provisions of this Paragraph shall survive the expiration or sooner
termination of this Lease.
3.4 Late Charge, And Interest On Rent In Default. Tenant acknowledges that the
late payment by Tenant of any monthly installment of Base Monthly Rent or any
Additional Rent will cause Landlord to incur certain costs and expenses not
contemplated under this Lease, the exact amounts of which are extremely
difficult or impractical to fix. Such costs and expenses will include without
limitation, administration and collection costs and processing and accounting
expenses. Therefor, if any installment of Base Monthly Rent is not received by
Landlord from Tenant within ten calendar days after the same becomes due, Tenant
shall immediately pay to Landlord a late charge in an amount equal to the amount
set forth in Article 1 as the "Late Charge Amount," and if any Additional Rent
is not received by Landlord within ten calendar days after same becomes due,
Tenant shall immediately pay to Landlord a late charge in an amount equal to 5%
of the Additional Rent not so paid, provided, however, that once but only once
in any twelve (12) month period during the Lease Term, Tenant shall be entitled
to written notice of non-receipt of Base Monthly Rent or Additional Rent from
Landlord, and Tenant shall not be liable for any Late Charge Amount or other
late charge hereunder if such installment of Base Monthly Rent or Additional
Rent is received by Landlord within ten (10) business days after Tenant's
receipt of such notice from Landlord. Landlord and Tenant agree that this late
charge represents a reasonable estimate of such costs and expenses and is fair
compensation to Landlord for the anticipated loss Landlord would suffer by
reason of Tenant's failure to make timely payment. In no event shall this
provision for a late charge be deemed to grant to Tenant a grace period or
extension of time within which to pay any rental installment or prevent Landlord
from exercising any right or remedy available to Landlord upon Tenant's failure
to pay each rental installment due under this Lease when due, including the
right to terminate this Lease. If any rent remains delinquent for a period in
excess of 10 calendar days, then, in addition to such late charge, Tenant
5.
shall pay to Landlord interest on any rent that is not so paid from said tenth
day at the lesser of (i) the maximum rate of interest not prohibited or made
usurious by law or (ii) the sum of that rate quoted by Wells Fargo Bank, N.T. &
S.A. from time to time as its prime rate, plus three percent (3%).
3.5 Payment Of Rent. Except as specifically provided otherwise in this Lease,
all rent shall be paid in lawful money of the United States, without any
abatement, reduction or offset for any reason whatsoever, to Landlord at such
address as Landlord may designate from time to time. Tenant's obligation to pay
Base Monthly Rent and all Additional Rent shall be appropriately prorated at the
commencement and expiration of the Lease Term. The failure by Tenant to pay any
Additional Rent as required pursuant to this Lease when due shall be treated the
same as a failure by Tenant to pay Base Monthly Rent when due, and Landlord
shall have the same rights and remedies against Tenant as Landlord would have
had Tenant failed to pay the Base Monthly Rent when due.
3.6 Prepaid Rent. Tenant shall, upon execution of this Lease, pay to Landlord
the amount set forth in Article 1 as "First Month's Prepaid Rent" as prepayment
of rent for credit against the first full month's payment of Base Monthly Rent
due hereunder.
3.7 Security Deposit. Tenant has deposited with Landlord the amount set forth in
Article 1 as the "Security Deposit" as security for the performance by Tenant of
the terms of this Lease to be performed by Tenant, and not as prepayment of
rent. Landlord may apply such portion or portions of the Security Deposit as are
reasonably necessary for the following purposes: (i) to remedy any default by
Tenant in the payment of Base Monthly Rent or Additional Rent or a late charge
or interest on defaulted rent, or any other monetary payment obligation of
Tenant under this Lease; (ii) to repair damage to the Leased Premises, the
Building or the Outside Areas caused or permitted to occur by Tenant; provided,
however, that if damage shall occur during the term of the Lease, and such
damage has not resulted in a dangerous, unsafe or unsanitary condition, Landlord
shall first notify Tenant of such damage and Tenant shall have 30 days from the
date of such notification to repair such damage at its own expense; (iii) to
clean and restore and repair the Leased Premises, the Building or the Outside
Areas following their surrender to Landlord if not surrendered in the condition
required pursuant to the provisions of Article 2, and (iv) to remedy any other
default of Tenant to the extent permitted by Law including, without limitation,
paying in full on Tenant's behalf any sums claimed by materialmen or contractors
of Tenant to be owing to them by Tenant for work done or improvements made at
Tenant's request to the Leased Premises. In this regard, Tenant hereby waives
any restriction on the uses to which the Security Deposit may be applied as
contained in Section 1950.7(c) of the California Civil Code and/or any successor
statute. In the event the Security Deposit or any portion thereof is so used,
Tenant shall pay to Landlord, promptly upon demand, an amount in cash sufficient
to restore the Security Deposit to the full original sum. If Tenant fails to
promptly restore the Security Deposit and if Tenant shall have paid to Landlord
any sums as "Last Month's Prepaid Rent," Landlord may, in addition to any other
remedy Landlord may have under this Lease, reduce the amount of Tenant's Last
Month's Prepaid Rent by transferring all or portions of such Last Month's
Prepaid Rent to Tenant's Security Deposit until such Security Deposit is
restored to the amount set forth in Article 1. Landlord shall not be deemed a
trustee of the Security Deposit. Landlord may use the Security Deposit in
Landlord's ordinary business and shall not be required to segregate it from
Landlord's general accounts. Tenant shall not be entitled to any interest on the
Security Deposit. If Landlord transfers the Building or the Property during the
Lease Term, Landlord may pay the Security Deposit to any subsequent owner in
conformity with the provisions of Section 1950.7 of the California Civil Code
and/or any successor statute, in which event the transferring landlord shall be
released from all liability for the return of the Security Deposit or Landlord
may return to Tenant the amount of the Security Deposit remaining after any
deductions made pursuant to this section. Tenant specifically grants to Landlord
(and Tenant hereby waives the provisions of California Civil Code Section 1950.7
to the contrary) a period of ninety days following a surrender of the Leased
Premises by Tenant to Landlord within which to inspect the Leased Premises, make
required restorations and repairs, receive and verify workmen's billings
therefor, and prepare a final accounting with respect to the Security Deposit.
In no event shall the Security Deposit or any portion thereof, be considered
prepaid rent. Notwithstanding the foregoing, in lieu of a cash Security Deposit,
Tenant may deliver to Landlord a clean, unconditional, irrevocable, transferable
letter of credit in the full amount of the Security Deposit required pursuant to
Article 1 hereof (the "Letter of Credit") in form and issued by a financial
institution ("Issuer") satisfactory to Landlord in its sole discretion. The
Letter of Credit shall permit partial draws, and provide that draws thereunder
will be honored upon receipt by Issuer of a written statement signed by Landlord
or its authorized agent stating that Landlord is entitled to draw down on the
Letter of Credit pursuant to the terms of the Lease. The Letter of Credit shall
have an expiration period of one (1) year but shall automatically renew by its
terms unless affirmatively cancelled by either Issuer or Tenant, in which case
Issuer must provide
6.
Landlord 30 days' prior written notice of such expiration or cancellation. If
the Letter of Credit is cancelled or terminated, and not replaced within 10 days
of Landlord's receipt of notice thereof, Landlord shall be entitled to draw on
the entire amount of the Letter of Credit. Any amount drawn under the Letter of
Credit shall be held or used by Landlord in accordance with this Section 3.7.
ARTICLE 4
USE OF LEASED PREMISES AND OUTSIDE AREA
4.1 Permitted Use. Tenant shall be entitled to use the Leased Premises solely
for the "Permitted Use" as set forth in Article 1 and for no other purpose
whatsoever. Tenant shall continuously and without interruption use the Leased
Premises for such purpose for the entire Lease Term. Any discontinuance of such
use for a period of sixty consecutive calendar days shall be, at Landlord's
election, a default by Tenant under the terms of this Lease, provided, however,
that such discontinuance shall not be a default hereunder if Tenant maintains
the Leased Premises as if fully occupied and as otherwise required by the terms
of this Lease and if such discontinuance is not due to the material diminution
in financial strength of the Tenant. Tenant shall have the right to use the
Outside Areas in conjunction with its Permitted Use of the Leased Premises
solely for the purposes for which they were designed and intended and for no
other purposes whatsoever.
4.2 General Limitations On Use. Tenant shall not do or permit anything to be
done in or about the Leased Premises, the Building, the Outside Areas or the
Property which does or could (i) jeopardize the structural integrity of the
Building or (ii) cause damage to any part of the Leased Premises, the Building,
the Outside Areas or the Property. Tenant shall not operate any equipment within
the Leased Premises which does or could (i) injure, vibrate or shake the Leased
Premises or the Building, (ii) damage, overload or impair the efficient
operation of any electrical, plumbing, heating, ventilating or air conditioning
systems within or servicing the Leased Premises or the Building, or (iii) damage
or impair the efficient operation of the sprinkler system (if any) within or
servicing the Leased Premises or the Building. Tenant shall not install any
equipment or antennas on or make any penetrations of the exterior walls or roof
of the Building or affix any equipment to or make any penetrations or cuts in
the floor, ceiling, walls or roof of the Leased Premises without the Landlord's
written approval, which approval shall not unreasonably be withheld or delayed,
but which approval shall be conditioned upon Tenant's compliance with Article 2
hereof. Tenant shall not place any loads upon the floors, walls, ceiling or roof
systems which could endanger the structural integrity of the Building or damage
its floors, foundations or supporting structural components. Tenant shall not
place any explosive, flammable or harmful fluids or other waste materials in the
drainage systems of the Leased Premises, the Building, the Outside Areas or the
Property. Tenant shall not drain or discharge any fluids in the landscaped areas
or across the paved areas of the Property. Tenant shall not use any of the
Outside Areas for the storage of its materials, supplies, inventory or equipment
and all such materials, supplies, inventory or equipment shall at all times be
stored within the Leased Premises. Tenant shall not commit nor permit to be
committed any waste in or about the Leased Premises, the Building, the Outside
Areas or the Property.
4.3 Noise And Emissions. All noise generated by Tenant in its use of the Leased
Premises shall be confined or muffled so that it does not interfere with the
businesses of or annoy the occupants and/or users of adjacent properties. All
dust, fumes, odors and other emissions generated by Tenant's use of the Leased
Premises shall be sufficiently dissipated in accordance with sound environmental
practice and exhausted from the Leased Premises in such a manner so as not to
interfere with the businesses of or annoy the occupants and/or users of adjacent
properties, or cause any damage to the Leased Premises, the Building, the
Outside Areas or the Property or any component part thereof or the property of
adjacent property owners.
4.4 Trash Disposal. Tenant shall provide trash bins or other adequate garbage
disposal facilities within the trash enclosure areas provided or permitted by
Landlord outside the Leased Premises sufficient for the interim disposal of all
of its trash, garbage and waste. All such trash, garbage and waste temporarily
stored in such areas shall be stored in such a manner so that it is not visible
from outside of such areas, and Tenant shall cause such trash, garbage and waste
to be regularly removed from the Property in a clean, sanitary and neat
condition free and clear of all trash, garbage, waste and/or boxes, pallets and
containers containing same at all times.
4.5 Parking. Tenant shall not, at any time, park or permit to be parked any
recreational vehicles, inoperative vehicles or equipment in the Outside Areas or
on any portion of the Property. Tenant agrees to assume
7.
responsibility for compliance by its employees and invitees with the parking
provisions contained herein. If Tenant or its employees park any vehicle within
the Property in violation of these provisions, then Landlord may, upon prior
written notice to Tenant giving Tenant one (1) day (or any applicable statutory
notice period, if longer than one (1) day) to remove such vehicle(s), in
addition to any other remedies Landlord may have under this Lease, charge
Tenant, as Additional Rent, and Tenant agrees to pay, as Additional Rent, Twenty
Five Dollars ($25) per day for each day or partial day that each such vehicle is
so parked within the Property.
4.6 Signs. Tenant shall not place or install on or within any portion of the
Leased Premises, the exterior of the Building, the Outside Areas or the Property
any sign, advertisement, banner, placard, or picture which is visible from the
exterior of the Leased Premises. Tenant shall not place or install on or within
any portion of the Leased Premises, the exterior of the Building, the Outside
Areas or the Property any business identification sign which is visible from the
exterior of the Leased Premises until Landlord shall have approved in writing
and in its reasonable discretion the location, size, content, design, method of
attachment and material to be used in the making of such sign; provided,
however, that so long as such signs are normal and customary business
directional or identification signs within the Building, Tenant shall not be
required to obtain Landlord's approval. Any sign, once approved by Landlord,
shall be installed at Tenant's sole cost and expense and only in strict
compliance with Landlord's approval, using a person approved by Landlord to
install same. Landlord may remove any signs (which have not been approved in
writing by Landlord), advertisements, banners, placards or pictures so placed by
Tenant on or within the Leased Premises, the exterior of the Building, the
Outside Areas or the Property and charge to Tenant the cost of such removal,
together with any costs incurred by Landlord to repair any damage caused
thereby, including any cost incurred to restore the surface (upon which such
sign was so affixed) to its original condition. Tenant shall remove all of
Tenant's signs, repair any damage caused thereby, and restore the surface upon
which the sign was affixed to its original condition, all to Landlord's
reasonable satisfaction, upon the termination of this Lease.
4.7 Compliance With Laws And Private Restrictions. Subject to Section 6.3
hereof, Tenant shall abide by and shall promptly observe and comply with, at its
sole cost and expense, all Laws and Private Restrictions respecting the use and
occupancy of the Leased Premises, the Building, the Outside Areas or the
Property including, without limitation, all Laws governing the use and/or
disposal of hazardous materials, and shall defend with competent counsel,
indemnify and hold Landlord harmless from any claims, damages or liability
resulting from Tenant's failure to so abide, observe, or comply. Tenant's
obligation hereunder shall survive the termination of the Lease. Landlord hereby
represents that it has not recorded or caused to be recorded any Private
Restrictions which have not been disclosed to Tenant prior to the date hereof
and which affect the Leased Premises and would have a material negative impact
on the Tenant or the Leased Premises.
4.8 Compliance With Insurance Requirements. With respect to any insurance
policies required or permitted to be carried by Landlord in accordance with the
provision of this Lease, copies of which have been or will, upon Tenant's
written request therefor, be provided to Tenant, Tenant shall not conduct nor
permit any other person to conduct any activities nor keep, store or use (or
allow any other person to keep, store or use) any item or thing within the
Leased Premises, the Building, the Outside Areas or the Property which (i) is
prohibited under the terms of any such policies, (ii) could result in the
termination of the coverage afforded under any of such policies, (iii) could
give to the insurance carrier the right to cancel any of such policies, or (iv)
could cause an increase in the rates (over standard rates) charged for the
coverage afforded under any of such policies. Tenant shall comply with all
requirements of any insurance company, insurance underwriter, or Board of Fire
Underwriters which are necessary to maintain, at standard rates, the insurance
coverages carried by either Landlord or Tenant pursuant to this Lease; provided,
however, that if insurance company, insurance underwriter, or Board of Fire
Underwriters requires any modification, alteration or improvement to the Leased
Premises which is of a capital nature, Landlord shall make such modification,
alteration or improvement and recover the cost from Tenant as a Property
Operating Expense pursuant to Article 3 and Section 13.12.
4.9 Landlord's Right To Enter. Landlord and its agents shall have the right to
enter the Leased Premises during normal business hours after giving Tenant at
least twenty four (24) hours prior notice (except in the event of an emergency
when no notice shall re required) notice and subject to Tenant's reasonable
security measures for the purpose of (i) inspecting the same; (ii) showing the
Leased Premises to prospective purchasers, mortgagees or tenants; (iii) making
necessary alterations, additions or repairs; and (iv) performing any of Tenant's
obligations when Tenant has failed to do so. Landlord shall have the right to
enter the Leased Premises during normal business hours (or as otherwise agreed),
subject to Tenant's reasonable security measures, for purposes of supplying any
8.
maintenance or services agreed to be supplied by Landlord. Landlord shall have
the right to enter the Outside Areas during normal business hours for purposes
of (i) inspecting the exterior of the Building and the Outside Areas; (ii)
posting notices of nonresponsibility (and for such purposes Tenant shall provide
Landlord at least thirty days' prior written notice of any work to be performed
on the Leased Premises); and (iii) supplying any services to be provided by
Landlord. Any entry into the Leased Premises or the Outside Areas obtained by
Landlord in accordance with this paragraph shall not under any circumstances be
construed or deemed to be a forcible or unlawful entry into, or a detainer of,
the Leased Premises, or an eviction, actual or constructive of Tenant from the
Leased Premises or any portion thereof; provided, however, that at all times
during any such entry, Landlord and its agents shall use commercially reasonable
efforts to minimize any disruption or interference with access to and use of the
Leased Premises.
4.10 Use Of Outside Areas. Tenant, in its use of the Outside Areas, shall at all
times keep the Outside Areas in a safe condition free and clear of all
materials, equipment, debris, trash (except within existing enclosed trash
areas), inoperable vehicles, and other items which are not specifically
permitted by Landlord to be stored or located thereon by Tenant. If, in the
opinion of Landlord, unauthorized persons are using any of the Outside Areas by
reason of, or under claim of, the express or implied authority or consent of
Tenant, then Tenant, upon demand of Landlord, shall restrain, to the fullest
extent then allowed by Law, such unauthorized use, and shall initiate such
appropriate proceedings as may be required to so restrain such use.
4.11 Environmental Protection. Tenant's obligations under this Section 4.11
shall survive the expiration or termination of this Lease.
(a) As used herein, the term "Hazardous Materials" shall mean any toxic
or hazardous substance, material or waste or any pollutant or infectious or
radioactive material, including but not limited to those substances, materials
or wastes regulated now or in the future under any of the following statutes or
regulations and any and all of those substances included within the definitions
of "hazardous substances," "hazardous materials," "hazardous waste," "hazardous
chemical substance or mixture," "imminently hazardous chemical substance or
mixture," "toxic substances," "hazardous air pollutant," "toxic pollutant," or
"solid waste" in the (a) Comprehensive Environmental Response, Compensation and
Liability Act of 1990 ("CERCLA" or "Superfund"), as amended by the Superfund
Amendments and Reauthorization Act of 1986 ("SARA"), 42 U.S.C.ss. 9601 et seq.,
(b) Resource Conservation and Recovery Act of 1976 ("RCRA"), 42 U.S.C.ss. 6901
et seq., (c) Federal Water Pollution Control Act ("FSPCA"), 33 U.S.C.ss. 1251 et
seq., (d) Clean Air Act ("CAA"), 42 U.S.C.ss. 7401 et seq., (e) Toxic Substances
Control Act ("TSCA"), 14 U.S.C.ss. 2601 et seq., (f) Hazardous Materials
Transportation Act, 49 U.S.C. ss. 1801, et seq., (g) Carpenter-Presley-Tanner
Hazardous Substance Account Act ("California Superfund"), Cal. Health & Safety
Codess. 25300 et seq., (h) California Hazardous Waste Control Act, Cal. Health &
Safety code ss. 25100 et seq., (i) Porter-Cologne Water Quality Control Act
("Porter-Cologne Act"), Cal. Water Codess. 13000 et seq., (j) Hazardous Waste
Disposal Land Use Law, Cal. Health & Safety codesss. 25220 et seq., (k) Safe
Drinking Water and Toxic Enforcement Act of 1986 ("Proposition 65"), Cal. Health
& Safety codess. 25249.5 et seq., (l) Hazardous Substances Underground Storage
Tank Law, Cal. Health & Safety codess. 25280 et seq., (m) Air Resources Law,
Cal. Health & Safety Codess. 39000 et seq., and (n) regulations promulgated
pursuant to said laws or any replacement thereof, or as similar terms are
defined in the federal, state and local laws, statutes, regulations, orders or
rules. Hazardous Materials shall also mean any and all other biohazardous wastes
and substances, materials and wastes which are, or in the future become,
regulated under applicable Laws for the protection of health or the environment,
or which are classified as hazardous or toxic substances, materials or wastes,
pollutants or contaminants, as defined, listed or regulated by any federal,
state or local law, regulation or order or by common law decision, including,
without limitation, (i) trichloroethylene, tetrachloroethylene,
perchloroethylene and other chlorinated solvents, (ii) any petroleum products or
fractions thereof, (iii) asbestos, (iv) polychlorinted biphenyls, (v) flammable
explosives, (vi) urea formaldehyde, (vii) radioactive materials and waste, and
(viii) materials and wastes that are harmful to or may threaten human health,
ecology or the environment.
(b) Notwithstanding anything to the contrary in this Lease, Tenant, at
its sole cost, shall comply with all Laws relating to the storage, use and
disposal of Hazardous Materials in connection with the Property; provided,
however, that Tenant shall not be responsible for contamination of the Leased
Premises or Outside Areas by Hazardous Materials existing as of the date the
Leased Premises are delivered to Tenant (whether before or after the Scheduled
Delivery Date) unless caused by Tenant. Tenant shall not store, use or dispose
of any Hazardous Materials except for those Hazardous Materials listed in a
Hazardous Materials management plan ("HMMP") which
9.
Tenant shall deliver to Landlord upon execution of this Lease and update at
least annually with Landlord ("Permitted Materials") which may be used, stored
and disposed of provided (i) such Permitted Materials are used, stored,
transported, and disposed of in strict compliance with applicable laws, (ii)
such Permitted Materials shall be limited to the materials listed on and may be
used only in the quantities specified in the HMMP, and (iii) Tenant shall
provide Landlord with copies of all material safety data sheets and other
documentation required under applicable Laws in connection with Tenant's use of
Permitted Materials as and when such documentation is provided to any regulatory
authority having jurisdiction, in no event shall Tenant cause or permit to be
discharged into the plumbing or sewage system of the Building or onto the land
underlying or adjacent to the Building any Hazardous Materials. Tenant shall be
solely responsible for and shall defend, indemnify, and hold Landlord and its
agents harmless from and against all claims, costs and liabilities, including
attorneys' fees and costs, arising out of or in connection with Tenant's
storage, use and/or disposal of Hazardous Materials. If the presence of
Hazardous Materials on the Leased Premises caused or permitted by Tenant results
in contamination or deterioration of water or soil, then Tenant shall promptly
take any and all action necessary to clean up such contamination, but the
foregoing shall in no event be deemed to constitute permission by Landlord to
allow the presence of such Hazardous Materials. At any time prior to the
expiration of the Lease Term if Tenant has a reasonable basis to suspect that
there has been any release or the presence of Hazardous Materials in the ground
or ground water on the Premises which did not exist upon commencement of the
Lease Term, Tenant shall have the right to conduct appropriate tests of water
and soil and to deliver to Landlord the results of such tests to demonstrate
that no contamination in excess of permitted levels has occurred as a result of
Tenant's use of the Leased Premises. Tenant shall further be solely responsible
for, and shall defend, indemnify, and hold Landlord and its agents harmless from
and against all claims, costs and liabilities, including attorneys' fees and
costs, arising out of or in connection with any removal, cleanup and restoration
work and materials required hereunder to return the Leased Premises and any
other property of whatever nature to their condition existing prior to the
appearance of the Hazardous Materials, except such Hazardous Materials as exist
on the Leased Premises because of migration to the Leased Premises from an
offsite source, in which case Landlord may undertake any removal, cleanup, or
restoration work, the cost of which shall be included in Property Operating
Expenses as defined in Section 13.12.
(c) Upon termination or expiration of the Lease, Tenant at its sole
expense shall cause all Hazardous Materials placed in or about the Leased
Premises, the Building and/or the Property by Tenant, its agents, contractors,
or invitees, and all installations (whether interior or exterior) made by or on
behalf of Tenant relating to the storage, use, disposal or transportation of
Hazardous Materials to be removed from the property and transported for use,
storage or disposal in accordance and compliance with all Laws and other
requirements respecting Hazardous Materials used or permitted to be used by
Tenant. Tenant shall apply for and shall obtain from all appropriate regulatory
authorities (including any applicable fire department or regional water quality
control board) all permits, approvals and clearances necessary for the closure
of the Property and shall take all other actions as may be required to complete
the closure of the Building and the Property. In addition, prior to vacating the
Premises, Tenant shall undertake and submit to Landlord an environmental site
assessment from an environmental consulting company reasonably acceptable to
Landlord which site assessment shall evidence Tenant's compliance with this
Paragraph 4.11.
(d) At any time prior to expiration of the Lease term, subject to
reasonable prior notice (not less than forty-eight (48) hours) and Tenant's
reasonable security requirements and provided such activities do not
unreasonably interfere with the conduct of Tenant's business at the Leased
Premises, Landlord shall have the right to enter in and upon the Property,
Building and Leased Premises in order to conduct appropriate tests of water and
soil to determine whether levels of any Hazardous Materials in excess of legally
permissible levels has occurred as a result of Tenant's use thereof. Landlord
shall furnish copies of all such test results and reports to Tenant and, at
Tenant's option and cost, shall permit split sampling for testing and analysis
by Tenant. Such testing shall be at Tenant's expense if Landlord has a
reasonable basis for suspecting and confirms the presence of Hazardous Materials
in the soil or surface or ground water in, on, under, or about the Property, the
Building or the Leased Premises, which has been caused by or resulted from the
activities of Tenant, its agents, contractors, or invitees.
(e) Landlord may voluntarily cooperate in a reasonable manner with the
efforts of all governmental agencies in reducing actual or potential
environmental damage. Tenant shall not be entitled to terminate this Lease or to
any reduction in or abatement of rent by reason of such compliance or
cooperation. Tenant agrees at all times to cooperate fully with the requirements
and recommendations of governmental agencies regulating, or otherwise involved
in, the protection of the environment.
10.
4.12 Rules And Regulations. Landlord have the right from time to time to
establish reasonable rules and regulations and/or amendments or additions
thereto respecting the use of the Leased Premises and the Outside Areas for the
care and orderly management of the Property. Upon delivery to Tenant of a copy
of such rules and regulations or any amendments or additions thereto, Tenant
shall comply with such rules and regulations. A violation by Tenant of any of
such rules and regulations shall constitute a default by Tenant under this Lease
provided Tenant has received notice of such default and has not remedied such
default within the applicable cure period. If there is a conflict between the
rules and regulations and any of the provisions of this Lease, the provisions of
this Lease shall prevail. Landlord shall not be responsible or liable to Tenant
for the violation of such rules and regulations by any other tenant of the
Property.
ARTICLE 5
REPAIRS, MAINTENANCE, SERVICES AND UTILITIES
5.1 Repair And Maintenance. Except in the case of damage to or destruction of
the Leased Premises, the Building, the Outside Areas or the Property caused by
an act of God other peril or condemnation, in which case the provisions of
Article 10 and Article 11 shall control, the parties shall have the following
obligations and responsibilities with respect to the repair and maintenance of
the Leased Premises, the Building, the Outside Areas, and the Property.
5.2 (a) Tenant's Obligations. Tenant shall, at all times during the Lease Term
and at its sole cost and expense, regularly clean and continuously keep and
maintain in good order, condition and repair (unless such repair is occasioned
by the active or gross negligence of Landlord) the Leased Premises and every
part thereof including, without limiting the generality of the foregoing, (i)
all interior walls, floors and ceilings, (ii) all windows, doors and skylights,
(iii) all electrical wiring, conduits, connectors and fixtures, (iv) all
plumbing, pipes, sinks, toilets, faucets and drains, (v) all lighting fixtures,
bulbs and lamps and all heating, ventilating and air conditioning equipment, and
(vi) all entranceways to the Leased Premises. Tenant, if requested to do so by
Landlord, shall hire, at Tenant's sole cost and expense, a licensed heating,
ventilating and air conditioning contractor to regularly and periodically (not
less frequently than every three months) inspect and perform required
maintenance on the heating, ventilating and air conditioning equipment and
systems serving the Leased Premises, or alternatively, Landlord may, at its
election, contract in its own name for such regular and periodic inspections of
and maintenance on such heating, ventilating and air conditioning equipment and
systems and charge to Tenant, as Additional Rent, the cost thereof. Tenant, if
requested to do so by Landlord, shall hire, at Tenant's sole cost and expense, a
licensed roofing contractor to regularly and periodically (not less frequently
than every three months) inspect and perform required maintenance on the roof of
the Leased Premises, or alternatively, Landlord may, at its election, contract
in its own name for such regular and periodic inspections of and maintenance on
the roof and charge to Tenant, as Additional Rent, the cost thereof. Tenant
shall, at all times during the Lease Term, keep in a clean and safe condition
the Outside Areas. Tenant shall regularly and periodically sweep and clean the
driveways and parking areas. Tenant shall, at its sole cost and expense, repair
all damage to the Leased Premises, the Building, the Outside Areas or the
Property caused by the activities of Tenant, its employees, invitees or
contractors promptly following written notice from Landlord to so repair such
damages. If Tenant shall fail to perform the required maintenance or fail to
make repairs required of it pursuant to this paragraph within a reasonable
period of time following notice from Landlord to do so, then Landlord may, at
its election and without waiving any other remedy it may otherwise have under
this Lease or at law, perform such maintenance or make such repairs and charge
to Tenant, as Additional Rent, the costs so incurred by Landlord for same. All
glass within or a part of the Leased Premises, both interior and exterior, is at
the sole risk of Tenant and any broken glass shall promptly be replaced by
Tenant at Tenant's expense with glass of the same kind, size and quality. Tenant
shall be entitled to the benefit of any warranties in favor of Landlord
applicable to Tenant's obligations under Section 5.1(a). Notwithstanding the
foregoing, if any of Tenant's obligations in this Section 5.2(a) requires Tenant
to make a capital improvement, Landlord shall make such capital improvement and
recover the cost from Tenant as a Property Operating Expense pursuant to Article
3 and Section 13.12.
(b) Landlord's Obligation. Landlord shall, at all times during the
Lease Term, maintain in good condition and repair the foundation, roof
structure, load-bearing and exterior walls of the Building and the Outside
Areas. The provisions of this subparagraph (b) shall in no way limit the right
of Landlord to charge to Tenant, as Additional Rent pursuant to Article 3 (to
the extent permitted pursuant to Article 3), the costs incurred by Landlord in
performing such maintenance and/or making such repairs.
11.
5.3 Utilities. Tenant shall arrange at its sole cost and expense and in its own
name, for the supply of gas and electricity to the Leased Premises. In the event
that such services are not separately metered, Tenant shall, at its sole
expense, cause such meters to be installed. Landlord shall maintain the water
meter(s) in its own name; provided, however, that if at any time during the
Lease Term Landlord shall require Tenant to put the water service in Tenant's
name, Tenant shall do so at Tenant's sole cost. Tenant shall be responsible for
determining if the local supplier of water, gas and electricity can supply the
needs of Tenant and whether or not the existing water, gas and electrical
distribution systems within the Building and the Leased Premises are adequate
for Tenant's needs. Tenant shall be responsible for determining if the existing
sanitary and storm sewer systems now servicing the Leased Premises and the
Property are adequate for Tenant's needs. Tenant shall pay all charges for
water, gas, electricity and storm and sanitary sewer services as so supplied to
the Leased Premises, irrespective of whether or not the services are maintained
in Landlord's or Tenant's name.
5.4 Security. Tenant acknowledges that Landlord has not undertaken any duty
whatsoever to provide security for the Leased Premises, the Building, the
Outside Areas or the Property and, accordingly, Landlord is not responsible for
the security of same or the protection of Tenant's property or Tenant's
employees, invitees or contractors. To the extent Tenant determines that such
security or protection services are advisable or necessary, Tenant shall arrange
for and pay the costs of providing same.
5.5 Energy And Resource Consumption. Landlord may voluntarily cooperate in a
reasonable manner with the efforts of governmental agencies and/or utility
suppliers in reducing energy or other resource consumption within the Property.
Tenant shall not be entitled to terminate this Lease or to any reduction in or
abatement of rent by reason of such compliance or cooperation. Tenant agrees at
all times to cooperate fully with Landlord and to abide by all reasonable rules
established by Landlord (i) in order to maximize the efficient operation of the
electrical, heating, ventilating and air conditioning systems and all other
energy or other resource consumption systems with the Property given Tenant's
Permitted Use and/or (ii) in order to comply with the reasonable requirements of
utility suppliers and governmental agencies regulating the consumption of energy
and/or other resources.
5.6 Limitation Of Landlord's Liability. Landlord shall not be liable to Tenant
for injury to Tenant, its employees, agents, invitees or contractors, damage to
Tenant's property or loss of Tenant's business or profits, nor shall Tenant be
entitled to terminate this Lease or to any reduction in or abatement of rent by
reason of (i) Landlord's failure to provide security services or systems within
the Property for the protection of the Leased Premises, the Building or the
Outside Areas, or the protection of Tenant's property or Tenant's employees,
invitees, agents or contractors, or (ii) Landlord's failure to perform any
maintenance or repairs to the Leased Premises, the Building, the Outside Areas
or the Property until Tenant shall have first notified Landlord, in writing, of
the need for such maintenance or repairs, and then only after Landlord shall
have had a reasonable period of time following its receipt of such notice within
which to perform such maintenance or repairs, or (iii) any failure,
interruption, rationing or other curtailment in the supply of water, electric
current, gas or other utility service to the Leased Premises, the Building, the
Outside Areas or the Property from whatever cause (other than Landlord's active
or gross negligence or willful misconduct), or (iv) the unauthorized intrusion
or entry into the Leased Premises by third parties (other than Landlord, its
agents or contractors).
ARTICLE 6
ALTERATIONS AND IMPROVEMENTS
6.1 By Tenant. Tenant shall not make any alterations to or modifications of the
Leased Premises or construct any improvements within the Leased Premises until
Landlord shall have first approved, in writing, the plans and specifications
therefor, which approval shall not be unreasonably withheld or delayed. All such
modifications, alterations or improvements, once so approved, shall be made,
constructed or installed by Tenant at Tenant's expense (including all permit
fees and governmental charges related thereto), using a licensed contractor
first reasonably approved by Landlord, in substantial compliance with the
Landlord-approved plans and specifications therefor. All work undertaken by
Tenant shall be done in accordance with all Laws and in a good and workmanlike
manner using new materials of good quality. Tenant shall not commence the making
of any such modifications or alterations or the construction of any such
improvements until (i) all required governmental approvals and permits shall
have been obtained, (ii) all requirements regarding insurance imposed by this
Lease have been satisfied, (iii)
12.
Tenant shall have given Landlord at lease five business days prior written
notice of its intention to commence such work so that Landlord may post and file
notices of non-responsibility, and (iv) if requested by Landlord, Tenant shall
have obtained contingent liability and broad form builder's risk insurance in an
amount satisfactory to Landlord in its reasonable discretion to cover any perils
relating to the proposed work not covered by insurance carried by Tenant
pursuant to Article 9. In no event shall Tenant make any modification,
alterations or improvements whatsoever to the Outside Areas or the exterior or
structural components of the Building including, without limitation, any cuts or
penetrations in the floor, roof or exterior walls of the Leased Premises without
Landlord's written approval, which approval shall not be unreasonably withheld
or delayed. As used in this Article, the term "modifications, alterations and/or
improvements" shall include, without limitation, the installation of additional
electrical outlets, overhead lighting fixtures, drains, sinks, partitions,
doorways, or the like. Notwithstanding the foregoing, Tenant, without Landlord's
prior written consent, shall be permitted to make non-structural alterations to
the Building, provided that: (a) such alterations do not exceed $25,000
individually or $50,000 in the aggregate in any twelve month period, (b) Tenant
shall timely provide Landlord the notice required pursuant to Paragraph 4.9
above, (c) Tenant shall notify Landlord in writing within thirty (30) days of
completion of the alteration and deliver to Landlord a set of the plans and
specifications therefor, either "as built" or marked to show construction
changes made, and (d) Tenant shall, upon Landlord's request, remove the
alteration at the termination of the Lease and restore the Leased Premises to
their condition prior to such alteration.
6.2 Ownership Of Improvements. All modifications, alterations and improvements
made or added to the Leased Premises by Tenant shall remain the property of
Tenant during the Lease. Any such modifications, alterations or improvements,
once completed, shall not be altered or removed from the Leased Premises during
the Lease Term without Landlord's written approval first obtained in accordance
with the provisions of Paragraph 6.1 above. At the expiration or sooner
termination of this Lease, all such modifications, alterations and improvements
and all of Tenant's inventory, equipment, movable furniture, wall decorations
and trade fixtures, shall be removed from the Property, subject to Tenant's
obligations under Article 2 to repair all damage caused by such removal.
Landlord shall have no obligations to reimburse Tenant for all or any portion of
the cost or value of any such modifications, alterations or improvements so
surrendered to Landlord. All modifications, alterations or improvements which
are installed or constructed on or attached to the Leased Premises by Landlord
and/or at Landlord's expense shall be deemed real property and a part of the
Leased Premises and shall be property of Landlord. All lighting, plumbing,
electrical, heating, ventilating and air conditioning fixtures, partitioning,
window coverings, wall coverings and floor coverings installed by Tenant shall
be deemed improvements to the Leased Premises and not trade fixtures of Tenant.
6.3 Alterations Required By Law. Tenant shall make all modifications,
alterations and improvements to the Leased Premises, at its sole cost, that are
required by any Law because of (i) Tenant's use or occupancy of the Leased
Premises, the Building, the Outside Areas or the Property, provided, however,
that any modifications, alterations or improvement which are capital
improvements and which are not required because of Tenant's particular use of
the Leased Premises, the Building, the Outside Areas or the Property shall be
made by Landlord and Landlord shall recover the costs of such capital
improvements from Tenant in accordance with Section 13.12 and Article 3, (ii)
Tenant's application for any permit or governmental approval, or (iii) Tenant's
making of any modifications, alterations or improvements to or within the Leased
Premises. If Landlord shall, at any time during the Lease Term, be required by
any governmental authority to make any modifications, alterations or
improvements to the Building or the Property, the cost incurred by Landlord in
making such modifications, alterations or improvements, including interest at a
rate equal to the greater of (a) 12%, or (b) the sum of that rate quoted by
Wells Fargo Bank, N.T. & S.A. from time to time as its prime rate, plus two
percent (2%) ("Wells Prime Plus Two"), shall be amortized by Landlord over the
useful life of such modifications, alterations or improvements, as determined in
accordance with generally accepted accounting principles, and the monthly
amortized cost of such modifications, alterations and improvements as so
amortized shall be considered a Property Maintenance Cost during the Lease Term
or any extension thereof.
6.4 Liens. Tenant shall keep the Property and every part thereof free from any
lien, and shall pay when due all bills arising out of any work performed,
materials furnished, or obligations incurred by Tenant, its agents, employees or
contractors relating to the Property. If any such claim of lien is recorded
against Tenant's interest in this Lease, the Property or any part thereof,
Tenant shall bond against, discharge or otherwise cause such lien to be entirely
released within ten days after the Tenant has received notice from the Landlord,
a contractor, or any other third party. Tenant's failure to do so shall be
conclusively deemed a material default under the terms of this Lease.
13.
ARTICLE 7
ASSIGNMENT AND SUBLETTING BY TENANT
7.1 By Tenant. Tenant shall not sublet the Leased Premises or any portion
thereof or assign its interest in this Lease, whether voluntarily or by
operation of Law, without Landlord's prior written consent which shall not be
unreasonably withheld. Any attempted subletting or assignment without Landlord's
prior written consent, at Landlord's election, shall constitute a default by
Tenant under the terms of this Lease. The acceptance of rent by Landlord from
any person or entity other than Tenant, or the acceptance of rent by Landlord
from Tenant with knowledge of a violation of the provisions of this paragraph,
shall not be deemed to be a waiver by Landlord of any provision of this Article
or this Lease or to be a consent to any subletting by Tenant or any assignment
of Tenant's interest in this Lease. Without limiting the circumstances in which
it may be reasonable for Landlord to withhold its consent to an assignment or
subletting, Landlord and Tenant acknowledge that it shall be reasonable for
Landlord to withhold its consent in the following instances:
(a) the proposed assignee or sublessee is a governmental agency;
(b) in Landlord's reasonable judgment, the use of the Premises by the
proposed assignee or sublessee would involve occupancy by other than a Permitted
Use as set forth in Article 1, would entail any alterations which would lessen
the value of the leasehold improvements in the Premises, or would require
increased services by Landlord;
(c) in Landlord's reasonable judgment, the financial worth of the
proposed assignee is less than that of Tenant or does not meet the credit
standards applied by Landlord;
(d) the proposed assignee or sublessee (or any of its affiliates) has
been in material default under a lease, has been in litigation with a previous
landlord, or in the ten years prior to the assignment or sublease has filed for
bankruptcy protection, has been the subject of an involuntary bankruptcy, or has
been adjudged insolvent;
(e) Landlord has experienced a previous default by or is in litigation
with the proposed assignee or sublessee;
(f) in Landlord's reasonable judgment, the Premises, or the relevant
part thereof, will be used in a manner that will violate any negative covenant
as to use contained in this Lease;
(g) the use of the Premises by the proposed assignee or sublessee will
violate any applicable law, ordinance or regulation;
(h) the proposed assignee or sublessee is, as of the date of this
Lease, a tenant in the Building;
(i) the proposed assignment or sublease fails to include all of the
terms and provisions required to be included therein pursuant to this Article 7;
(j) Tenant is in default of any monetary or material non-monetary
obligation of Tenant under this Lease, or Tenant has defaulted under this Lease
on three or more occasions during the 12 months preceding the date that Tenant
shall request consent; or
(k) in the case of a subletting of less than the entire Premises, if
the subletting would result in the division of the Premises into more than two
subparcels or would require improvements to be made outside of the Premises.
7.2 Merger Or Reorganization. If Tenant is a corporation, any dissolution,
merger, consolidation or other reorganization of Tenant, or the sale or other
transfer in the aggregate over the Lease Term of a controlling percentage of the
capital stock of Tenant, shall be deemed a voluntary assignment of Tenant's
interest in this Lease except that any public offering of capital stock or sales
of stock (other than a block trade) through an over-the-counter market or
recognized national or international exchange shall not included in determining
whether a
14.
controlling percentage of the capital stock of Tenant has been transferred. The
phrase "controlling percentage" means the ownership of and the right to vote
stock possessing more than fifty percent of the total combined voting power of
all classes of Tenant's capital stock issued, outstanding and entitled to vote
for the election of directors. If Tenant is a partnership, a withdrawal or
change, voluntary, involuntary or by operation of Law, of any general partner,
or the dissolution of the partnership, shall be deemed a voluntary assignment of
Tenant's interest in this Lease. Notwithstanding the foregoing, Tenant may,
without Landlord's prior written consent and without being subject to any of the
provisions of this Article 7, including without limitation, Landlord's right to
recapture any portion of the Property, sublet the Premises or assign this Lease
to (individually, a "Permitted Assignee," collectively, "Permitted Assignees"):
(i) a subsidiary, affiliate, division, corporation or joint venture controlling,
controlled by or under common control with Tenant; (ii) a successor corporation
related to Tenant by merger, consolidation, nonbankruptcy reorganization, or
government action; or (iii) a purchaser of substantially all of Tenant's assets
located in the Leased Premises, provided that any Permitted Assignee under (ii)
or (iii) above has a net worth equal to or greater than Tenant and does not have
any contingent or off-balance sheet liabilities that make it less credit worthy
than Tenant.
7.3 Landlord's Election. If Tenant shall desire to assign its interest under the
Lease or to sublet the Leased Premises, Tenant must first notify Landlord, in
writing, of its intent to so assign or sublet, at least thirty (30) days in
advance of the date it intends to so assign its interest in this Lease or sublet
the Leased Premises but not sooner than one hundred eighty days in advance of
such date, specifying in detail the terms of such proposed assignment or
subletting, including the name of the proposed assignee or sublessee, the
property assignee's or sublessee's intended use of the Leased Premises, current
financial statements (including a balance sheet, income statement and statement
of cash flow, all prepared in accordance with generally accepted accounting
principles) of such proposed assignee or sublessee, the form of documents to be
used in effectuating such assignment or subletting and such other information as
Landlord may reasonably request. Landlord shall have a period of ten (10)
business days following receipt of such notice and the required information
within which to do one of the following: (i) consent to such requested
assignment or subletting subject to Tenant's compliance with the conditions set
forth in Paragraph 7.4 below, or (ii) refuse to so consent to such requested
assignment or subletting, provided that such consent shall not be unreasonably
refused, or (iii) terminate this Lease as to the portion (including all) of the
Leased Premises that is the subject of the proposed assignment or subletting.
During such ten (10) business day period, Tenant covenants and agrees to supply
to Landlord, upon request, all necessary or relevant information which Landlord
may reasonably request respecting such proposed assignment or subletting and/or
the proposed assignee or sublessee. Notwithstanding the foregoing, if Landlord
elects to terminate the Lease as provided herein, Landlord shall notify Tenant
thereof during such ten (10) business day period and Tenant shall have ten (10)
business days thereafter to either (i) accept Landlord's termination or (ii)
rescind its request for consent to the assignment or subletting, in which case
the Lease shall continue in full force and effect between Tenant and Landlord.
7.4 Conditions To Landlord's Consent. If Landlord elects to consent, or shall
have been ordered to so consent by a court of competent jurisdiction, to such
requested assignment or subletting, such consent shall be expressly conditioned
upon the occurrence of each of the conditions below set forth, and any purported
assignment or subletting made or ordered prior to the full and complete
satisfaction of each of the following conditions shall be void and, at the
election of Landlord, which election may be exercised at any time following such
a purported assignment or subletting but prior to the satisfaction of each of
the stated conditions, shall constitute a material default by Tenant under this
Lease until cured by satisfying in full each such condition by the assignee or
sublessee. The conditions are as follows:
(a) Landlord having approved in form and substance the assignment or
sublease agreement and any ancillary documents, which approval shall not be
unreasonably withheld by Landlord if the requirements of this Article 7 are
otherwise complied with.
(b) Each such sublessee or assignee having agreed, in writing
satisfactory to Landlord and its counsel and for the benefit of Landlord, to
assume, to be bound by, and to perform the obligations of this Lease to be
performed by Tenant which relate to space being subleased.
(c) Tenant having fully and completely performed all of its obligations
under the terms of this Lease through and including the date of such assignment
or subletting.
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(d) Tenant having reimbursed to Landlord all reasonable costs and
reasonable attorneys' fees incurred by Landlord in conjunction with the
processing and documentation of any such requested subletting or assignment.
(e) Tenant having delivered to Landlord a complete and fully-executed
duplicate original of such sublease agreement or assignment agreement (as
applicable) and all related agreements.
(f) Tenant having paid, or having agreed in writing to pay as to future
payments, to Landlord fifty percent (50%) of all assignment consideration or
excess rentals to be paid to Tenant or to any other on Tenant's behalf or for
Tenant's benefit for such assignment or subletting as follows:
(i) If Tenant assigns its interest under this Lease and if all
or a portion of the consideration for such assignment is to be paid by the
assignee at the time of the assignment, that Tenant shall have paid to Landlord
and Landlord shall have received an amount equal to fifty percent (50%) of the
assignment consideration so paid or to be paid (whichever is the greater) at the
time of the assignment by the assignee; or
(ii) If Tenant assigns its interest under this Lease and if
Tenant is to receive all or a portion of the consideration for such assignment
in future installments, that Tenant and Tenant's assignee shall have entered
into a written agreement with and for the benefit of Landlord satisfactory to
Landlord and its counsel whereby Tenant and Tenant's assignee jointly agree to
pay to Landlord an amount equal to fifty percent (50%) of all such future
assignment consideration installments to be paid by such assignee as and when
such assignment consideration is so paid.
(iii) If Tenant subleases the Leased Premises, that Tenant and
Tenant's sublessee shall have entered into a written agreement with and for the
benefit of Landlord satisfactory to Landlord and its counsel whereby Tenant and
Tenant's sublessee jointly agree to pay to Landlord fifty percent (50%) of all
excess rentals to be paid by such sublessee as and when such excess rentals are
so paid.
7.5 Assignment Consideration And Excess Rentals Defined. For purposes of this
Article, including any amendment to this Article by way of addendum or other
writing, the term "assignment consideration" shall mean all consideration to be
paid by the assignee to Tenant or to any other party on Tenant's behalf or for
Tenant's benefit as consideration for such assignment, after deduction for any
commissions paid by Tenant or any other costs or expenses (including, without
limitation, tenant improvements, capital improvements, building upgrades, permit
fees, attorneys' fees, and other consultants' fees) incurred by Tenant in
connection with such assignment, and the term "excess rentals" shall mean all
consideration to be paid by the sublessee to Tenant or to any other party on
Tenant's behalf or for Tenant's benefit for the sublease of the Leased Premises
in excess of the rent due to Landlord under the terms of this Lease for the same
period, after deduction for any commissions paid by Tenant or any other costs or
expenses (including, without limitation, tenant improvements, capital
improvements, building upgrades, permit fees, attorneys' fees, and other
consultants' fees) incurred by Tenant in connection with such sublease. Tenant
agrees that the portion of any assignment consideration and/or excess rentals
arising from any assignment or subletting by Tenant which is to be paid to
Landlord pursuant to this Article now is and shall then be the property of
Landlord and not the property of Tenant.
7.6 Payments. All payments required by this Article to be made to Landlord shall
be made in cash in full as and when they become due. At the time Tenant,
Tenant's assignee or sublessee makes each such payment to Landlord, Tenant or
Tenant's assignee or sublessee, as the case may be, shall deliver to Landlord an
itemized statement in reasonable detail showing the method by which the amount
due Landlord was calculated and certified by the party making such payment as
true and correct.
7.7 Good Faith. The rights granted to Tenant by this Article are granted in
consideration of Tenant's express covenant that all pertinent allocations which
are made by Tenant between the rental value of the Leased Premises and the value
of any of Tenant's personal property which may be conveyed or leased generally
concurrently with and which may reasonably be considered a part of the same
transaction as the permitted assignment or subletting shall be made fairly,
honestly and in good faith. If Tenant shall breach this covenant, Landlord may
immediately declare Tenant to be in material default under the terms of this
Lease and terminate this Lease and/or exercise any other rights and remedies
Landlord has under Article 12 of this Lease.
16.
7.8 Effect Of Landlord's Consent. No subletting or assignment, even with the
consent of Landlord, shall relieve Tenant of its personal and primary obligation
to pay rent and to perform all of the other obligations to be performed by
Tenant hereunder. Consent by Landlord to one or more assignments of Tenant's
interest in this Lease or to one or more sublettings of the Leased Premises
shall not be deemed to be a consent to any subsequent assignment or subletting.
If Landlord shall have been ordered by a court of competent jurisdiction to
consent to a requested assignment or subletting, or such an assignment or
subletting shall have been ordered by a court of competent jurisdiction over the
objection of Landlord, such assignment or subletting shall not be binding
between the assignee (or sublessee) and Landlord until such time as all
conditions set forth in Paragraph 7.4 above have been fully satisfied (to the
extent not then satisfied) by the assignee or sublessee, including, without
limitation, the payment to Landlord of all agreed assignment considerations
and/or excess rentals then due Landlord.
ARTICLE 8
LIMITATION ON LANDLORD'S LIABILITY AND INDEMNITY
8.1 Limitation On Landlord's Liability And Release. Landlord shall not be liable
to Tenant for, and Tenant hereby releases Landlord and its partners, principals,
members, officers, agents, employees, lenders, attorneys, and consultants from,
any and all liability, whether in contract, tort or on any other basis, for any
injury to or any damage sustained by Tenant, Tenant's agents, employees,
contractors or invitees, any damage to Tenant's property, or any loss to
Tenant's business, loss of Tenant's profits or other financial loss of Tenant
resulting from or attributable to the condition of, the management of, the
repair or maintenance of, the protection of, the supply of services or utilities
to, the damage in or destruction of the Leased Premises, the Building, the
Property or the Outside Areas, including without limitation (i) the failure,
interruption, rationing or other curtailment or cessation in the supply of
electricity, water, gas or other utility service to the Property, the Building
or the Leased Premises; (ii) the vandalism or forcible entry into the Building
or the Leased Premises; (iii) the penetration of water into or onto any portion
of the Leased Premises; (iv) the failure to provide security and/or adequate
lighting in or about the Property, the Building or the Leased Premises, (v) the
existence of any design or construction defects within the Property, the
Building or the Leased Premises; (vi) the failure of any mechanical systems to
function properly (such as the HVAC systems); (vii) the blockage of access to
any portion of the Property, the Building or the Leased Premises, except that
Tenant does not so release Landlord from such liability to the extent such
damage was proximately caused by Landlord's or its agent's or contractors'
active or gross negligence, willful misconduct, or Landlord's failure to perform
an obligation expressly undertaken pursuant to this Lease after a reasonable
period of time shall have lapsed following receipt of written notice from Tenant
to so perform such obligation. In this regard, Tenant acknowledges that it is
fully apprised of the provisions of Law relating to releases, and particularly
to those provisions contained in Section 1542 of the California Civil Code which
reads as follows:
"A general release does not extend to
claims which the creditor does not know or
suspect to exist in his favor at the time
of executing the release, which if known
by him must have materially affected his
settlement with the debtor."
Notwithstanding such statutory provision, and for the purpose of implementing a
full and complete release and discharge, Tenant hereby (i) waives the benefit of
such statutory provision and (ii) acknowledges that, subject to the exceptions
specifically set forth herein, the release and discharge set forth in this
paragraph is a full and complete settlement and release and discharge of all
claims and is intended to include in its effect, without limitation, all claims
which Tenant, as of the date hereof, does not know of or suspect to exist in its
favor.
8.2 Tenant's Indemnification Of Landlord. Tenant shall defend with competent
counsel satisfactory to Landlord any claims made or legal actions filed or
threatened against Landlord with respect to the violation of any Law, or the
death, bodily injury, personal injury, property damage, or interference with
contractual or property rights suffered by any third party occurring within the
Leased Premises or resulting from Tenant's use or occupancy of the Leased
Premises, the Building or the Outside Areas, or resulting from Tenant's
activities in or about the Leased Premises, the Building, the Outside Areas or
the Property, and Tenant shall indemnify and hold Landlord, Landlord's partners,
principals, members, employees, agents and contractors harmless from any loss
liability, penalties, or expense whatsoever (including any loss attributable to
vacant space which otherwise would have been leased, but for such activities)
resulting therefrom, except to the extent proximately caused by the negligence
or willful misconduct of Landlord, its agents or contractors. This indemnity
agreement shall survive until the latter to
17.
occur of (i) the date of the expiration, or sooner termination, of this Lease,
or (ii) the date Tenant actually vacates the Leased Premises.
ARTICLE 9
INSURANCE
9.1 Tenant's Insurance. Tenant shall maintain insurance complying with all of
the following:
(a) Tenant shall procure, pay for and keep in full force and effect, at
all times during the Lease Term, the following:
(i) Comprehensive general liability insurance insuring Tenant
against liability for personal injury, bodily injury, death and damage to
property occurring within the Leased Premises, or resulting from Tenant's use or
occupancy of the Leased Premises, the Building, the Outside Areas or the
Property, or resulting from Tenant's activities in or about the Leased Premises
or the Property, with coverage in an amount equal to Tenant's Required Liability
Coverage (as set forth in Article 1), which insurance shall contain a "broad
form liability" endorsement insuring Tenant's performance of Tenant's
obligations to indemnify Landlord as contained in this Lease.
(ii) Fire and property damage insurance in so-called "fire and
extended coverage" form insuring Tenant against loss from physical damage to
Tenant's personal property, inventory, trade fixtures and improvements within
the Leased Premises with coverage for the full actual replacement cost thereof;
(iii) Plate glass insurance, at actual replacement cost;
(iv) Boiler insurance, if applicable;
(v) Workers' compensation insurance and any other employee
benefit insurance sufficient to comply with all laws; and (vi) With respect to
making of alterations or the construction of improvements or the like undertaken
by Tenant, contingent liability and builder's risk insurance, in an amount and
with coverage reasonably satisfactory to Landlord.
(b) Each policy of liability insurance required to be carried by Tenant
pursuant to this paragraph or actually carried by Tenant with respect to the
Leased Premises or the Property: (i) shall, except with respect to insurance
required by subparagraph (a)(vi) above, name Landlord, and such others as are
designated by Landlord, as additional insureds; (ii) shall be primary insurance
providing that the insurer shall be liable for the full amount of the loss, up
to and including the total amount of liability set forth in the declaration of
coverage, without the right of contribution from or prior payment by any other
insurance coverage of Landlord; (iii) shall be in a form reasonably satisfactory
to Landlord; (iv) shall be carried with companies reasonably acceptable to
Landlord with Best's ratings of at least A and XI; (v) shall provide that such
policy shall not be subject to cancellation, lapse or change except after at
least thirty days prior written notice to Landlord, and (vi) shall contain a
so-called "severability" or "cross liability" endorsement. Each policy of
property insurance maintained by Tenant with respect to the Leased Premises or
the Property or any property therein (i) shall provide that such policy shall
not be subject to cancellation or lapse except after at least thirty days prior
written notice to Landlord and (ii) shall contain a waiver and/or a permission
to waive by the insurer of any right of subrogation against Landlord, its
partners, principals, members, officers, employees, agents and contractors,
which might arise by reason of any payment under such policy or by reason of any
act or omission of Landlord, its partners, principals, members, officers,
employees, agents and contractors.
(c) Prior to the time Tenant or any of its contractors enters the
Leased Premises, Tenant shall deliver to Landlord, with respect to each policy
of insurance required to be carried by Tenant pursuant to this Article, a copy
of such policy (appropriately authenticated by the insurer as having been
issued, premium paid) or a certificate of the insurer certifying in form
satisfactory to Landlord that a policy has been issued, premium paid, providing
the coverage required by this Paragraph and containing the provisions specified
herein. With respect to each renewal or
18.
replacement of any such insurance, the requirements of this Paragraph must be
complied with not less than thirty days prior to the expiration or cancellation
of the policies being renewed or replaced. Landlord may, at any time and from
time to time, inspect and/or copy any and all insurance certificates evidencing
the insurance required to be carried by Tenant pursuant to this Article. If
Landlord's Lender, insurance broker, advisor or counsel reasonably determines at
any time that the amount of coverage set forth in Paragraph 9.1(a) for any
policy of insurance Tenant is required to carry pursuant to this Article is not
adequate, then Tenant shall increase the amount of coverage for such insurance
to such greater amount as Landlord's Lender, insurance broker, advisor or
counsel reasonably deems adequate.
9.2 Landlord's Insurance. With respect to insurance maintained by Landlord:
(a) Landlord shall maintain, as the minimum coverage required of it by
this Lease, fire and property damage insurance in so-called "fire and extended
coverage" form insuring Landlord (and such others as Landlord may designate)
against loss from physical damage to the Building with coverage of not less than
one hundred percent (100%) of the full actual replacement cost thereof and
against loss of rents for a period of not less than six months. Such fire and
property damage insurance, at Landlord's election but without any requirements
on Landlord's behalf to do so, (i) may be written in so-called "all risk" form,
excluding only those perils commonly excluded from such coverage by Landlord's
then property damage insurer; (ii) may provide coverage for physical damage to
the improvements so insured for up to the entire full actual replacement cost
thereof; (iii) may be endorsed to cover loss or damage caused by any additional
perils against which Landlord may elect to insure, including earthquake and/or
flood; and/or (iv) may provide coverage for loss of rents for a period of up to
twelve months. Landlord shall not be required to cause such insurance to cover
any of Tenant's personal property, inventory, and trade fixtures, or any
modifications, alterations or improvements made or constructed by Tenant to or
within the Leased Premises. Landlord shall use commercially reasonable efforts
to obtain such insurance at competitive rates.
(b) Landlord shall maintain comprehensive general liability insurance
insuring Landlord (and such others as are designated by Landlord) against
liability for personal injury, bodily injury, death, and damage to property
occurring in, on or about, or resulting from the use or occupancy of the
Property, or any portion thereof, with combined single limit coverage of at
least Three Million Dollars ($3,000,000). Landlord may carry such greater
coverage as Landlord or Landlord's Lender, insurance broker, advisor or counsel
may from time to time determine is reasonably necessary for the adequate
protection of Landlord and the Property.
(c) Landlord may maintain any other insurance which in the opinion of
its insurance broker, advisor or legal counsel is prudent in carry under the
given circumstances, provided such insurance is commonly carried by owners of
property similarly situated and operating under similar circumstances.
9.3 Mutual Waiver Of Subrogation. Notwithstanding anything to the contrary
contained herein, Landlord hereby releases Tenant, and Tenant hereby releases
Landlord and each of their respective partners, principals, members, officers,
agents, employees and servants, from any and all liability for loss, damage or
injury to the property of the other in or about the Leased Premises or the
Property which is caused by or results from a peril or event or happening which
is covered by insurance actually carried and in force at the time of the loss or
required to be carried under this Lease by the party sustaining such loss. Each
of Landlord and Tenant shall obtain from the present insurance carrier issuing
any property insurance policy required to be carried by this Lease, a waiver of
all right of recovery by way of subrogation as required herein in connection
with any injury or damage covered by such policy. In the vent either landlord or
Tenant changes insurance carriers, such party shall use commercially reasonable
efforts to obtain such a waiver from the new insurance carrier. Failure of
either Tenant or Landlord to obtain such a waiver shall not be deemed a
violation of this Lease or a default hereunder.
ARTICLE 10
DAMAGE TO LEASED PREMISES
10.1 Landlord's Duty To Restore. If the Leased Premises, the Building or the
Outside Area are damaged by any peril after the Effective Date of this Lease,
Landlord shall restore the same, as and when required by this paragraph, unless
this Lease is terminated by Landlord pursuant to Paragraph 10.3 or by Tenant
pursuant to
19.
Paragraph 10.4. If this Lease is not so terminated, then upon the issuance of
all necessary governmental permits, Landlord shall commence and diligently
prosecute to completion the restoration of the Leased Premises, the Building or
the Outside Area, as the case may be, to the extent then allowed by law, to
substantially the same condition in which it existed as of the Lease
Commencement Date. Landlord's obligation to restore shall be limited to actual
receipt of insurance proceeds and to the improvements constructed by Landlord,
except if lack of insurance proceeds is due to Landlord's failure to carry the
insurance required to be carried by Landlord under this Lease. Landlord shall
have no obligation to restore any Improvements made by Tenant to the Leased
Premises or any of Tenant's personal property, inventory or trade fixtures. If
the Lease has not been terminated as provided herein, upon completion of the
restoration by Landlord, Tenant shall forthwith replace or fully repair all of
Tenant's personal property, inventory, trade fixtures and other improvements
constructed by Tenant to like or similar conditions as existed at the time
immediately prior to such damage or destruction.
10.2 Insurance Proceeds. All insurance proceeds available from the fire and
property damage insurance carried by Landlord shall be paid to and become the
property of Landlord. If this Lease is terminated pursuant to either Paragraph
10.3 or 10.4, all insurance proceeds available from insurance carried by Tenant
which cover loss of property that is Landlord's property or would become
Landlord's property on termination of this Lease shall be paid to and become the
property of Landlord, and the remainder of such proceeds shall be paid to and
become the property of Tenant. If this Lease is not terminated pursuant to
either Paragraph 10.3 or 10.4, all insurance proceeds available from insurance
carried by Tenant which cover loss to property that is Landlord's property shall
be paid to and become the property of Landlord, and all proceeds available from
such insurance which cover loss to property which would only become the property
of Landlord upon the termination of this Lease shall be paid to and remain the
property of Tenant. The determination of Landlord's property and Tenant's
property shall be made pursuant to Paragraph 6.2.
10.3 Landlord's Right To Terminate. Landlord shall have the option to terminate
this Lease in the event any of the following occurs, which option may be
exercised only by delivery to Tenant of a written notice of election to
terminate within thirty days after the date of such damage or destruction:
(a) The Building is damaged by any peril covered by valid and
collectible insurance actually carried by Landlord and in force at the time of
such damage or destruction (an "insured peril") to such an extent that the
estimated cost to restore the Building exceeds the lesser of (i) the insurance
proceeds available from insurance actually carried by Landlord after payment of
any deductible (except if lack of insurance proceeds is due to Landlord's
failure to carry the insurance required to be carried under this Lease),
provided, however, that Tenant may elect to fund any shortfall in insurance
proceeds, in which case, Landlord may not terminate the Lease pursuant to the
foregoing provision, or (ii) fifty percent of the then actual replacement cost
thereof;
(b) The Building is damaged by an uninsured peril, which peril Landlord
was not required to insure against pursuant to the provisions of Article 9 of
this Lease.
(c) The Building is damaged by any peril and, because of the laws then
in force, the Building (i) cannot be restored at reasonable cost or (ii) if
restored, cannot be used for the same use being made thereof before such damage.
10.4 Tenant's Right To Terminate. If the Leased Premises, the Building or the
Outside Area are damaged by any peril and Landlord does not elect to terminate
this Lease or is not entitled to terminate this Lease pursuant to this Article,
then as soon as reasonably practicable, Landlord shall furnish Tenant with the
written opinion of Landlord's architect or construction consultant as to when
the restoration work required of Landlord may be complete. Tenant shall have the
option to terminate this Lease in the event any of the following occurs, which
option may be exercised only by delivery to Landlord of a written notice of
election to terminate within ten (10) business days after Tenant receives from
Landlord the estimate of the time needed to complete such restoration:
(a) If the time estimated to substantially complete or actually
complete the restoration exceeds 180 days, extended for Force Majeure from and
after the date the architect's or construction consultant's written opinion is
delivered, provided, however, if Tenant intends to terminate hereunder because
the restoration has not been completed within 180 days (as extended for Force
Majeure), Tenant shall first give Landlord written notice of its intention to
terminate, and then Landlord shall have an additional sixty (60) days to
complete restoration; or
20.
(b) If the damage occurred within twelve months of the last day of the
Lease Term and the time estimated to substantially complete the restoration
exceeds one hundred eighty days from and after the date such restoration is
commenced, or
(c) a spill of or contamination from Hazardous Materials causes the
public health authorities or the Fire Department to prevent access to Leased
Premises for a period in excess of 180 days.
10.5 Tenant's Waiver. Landlord and Tenant agree that the provisions of Paragraph
10.4 above, captioned "Tenant's Right To Terminate", are intended to supersede
and replace the provisions contained in California Civil Code, Section 1932,
Subdivision 2, and California Civil Code, Section 1934, and accordingly, Tenant
hereby waives the provisions of such Civil Code Sections and the provisions of
any successor Civil Code Sections or similar laws hereinafter enacted.
10.6 Abatement Of Rent. In the event of damage to the Leased Premises, the Base
Monthly Rent (and any Additional Rent) shall be temporarily abated from the date
such damage occurs through the period of restoration in proportion in the degree
to which Tenant's use of the Leased Premises is impaired by such damage.
ARTICLE 11
CONDEMNATION
11.1 Tenant's Right To Terminate. Except as otherwise provided in Paragraph 11.4
below regarding temporary takings, Tenant shall have the option to terminate
this Lease if, as a result of any taking, (i) all of the Leased Premises is
taken, or (ii) twenty-five percent (25%) or more of the Leased Premises or fifty
percent (50%) of the parking area is taken and the part of the Leased Premises
that remains cannot, within a reasonable period of time, be made reasonably
suitable for the continued operation of Tenant's business. Tenant must exercise
such option within a reasonable period of time, to be effective on the later to
occur of (i) the date that possession of that portion of the Leased Premises
that is condemned is taken by the condemnor or (ii) the date Tenant vacated the
Leased Premises.
11.2 Landlord's Right To Terminate. Except as otherwise provided in Paragraph
11.4 below regarding temporary takings, Landlord shall have the option to
terminate this Lease if, as a result of any taking, (i) all of the Leased
Premises is taken, (ii) twenty-five percent (25%) or more of the Leased Premises
is taken and the part of the Leased Premises that remains cannot, within one (1)
year from the date of the taking, be made reasonably suitable for the continued
operation of Tenant's business, or (iii) because of the laws then in force, the
Leased Premises may not be used for the same use being made before such taking,
whether or not restored as required by Paragraph 11.3 below. Any such option to
terminate by Landlord must be exercised within a reasonable period of time, to
be effective as of the date possession is taken by the condemnor.
11.3 Restoration. If any part of the Leased Premises or the Building is taken
and this Lease is not terminated, then Landlord shall, to the extent not
prohibited by laws then in force, repair any damage occasioned thereby to the
remainder thereof to a condition reasonably suitable for Tenant's continued
operations and otherwise, to the extent practicable, in the manner and to the
extent provided in Paragraph 10.1.
11.4 Temporary Taking. If a portion of the Leased Premises is temporarily taken
for a period of 180 days or less and such period does not extend beyond the
Lease Expiration Date, this Lease shall remain in effect. If any portion of the
Leased Premises is temporarily taken for a period which exceeds one year or
which extends beyond the Lease Expiration Date, then the rights of Landlord and
Tenant shall be determined in accordance with Paragraphs 11.1 and 11.2 above.
11.5 Division Of Condemnation Award. Any award made for any taking of the
Property, the Building, or the Leased Premises, or any portion thereof, shall
belong to and be paid to Landlord, and Tenant hereby assigns to Landlord all of
its right, title and interest in any such award; provided, however, that Tenant
shall be entitled to receive any portion of the award that is made specifically
(i) for the taking of personal property, inventory or trade fixtures belonging
to Tenant, (ii) for the interruption of Tenant's business or its moving costs,
or (iii) for the value of any leasehold improvements installed and paid for by
Tenant. The rights of Landlord and Tenant regarding any
21.
condemnation shall be determined as provided in this Article, and each party
hereby waives the provisions of Section 1265.130 of the California Code of Civil
Procedure, and the provisions of any similar law hereinafter enacted, allowing
either party to petition the Supreme Court to terminate this Lease and/or
otherwise allocate condemnation awards between Landlord and Tenant in the event
of a taking of the Leased Premises. In the event of a temporary taking, Tenant
shall receive the entire condemnation award, provided that Tenant is not in
default hereunder and continues pay all rent (including Base Monthly Rent and
Additional Rent) due under this Lease.
11.6 Abatement Of Rent. In the event of a taking of the Leased Premises (other
than a temporary taking), then, as of the date possession is taken by the
condemning authority, the Base Monthly Rent shall be reduced in the same
proportion that the area of that part of the Leased Premises so taken (less any
addition to the area of the Leased Premises by reason of any reconstruction)
bears to the area of the Leased Premises immediately prior to such taking.
11.7 Taking Defined. The term "taking" or "taken" as used in this Article 11
shall mean any transfer or conveyance of all or any portion of the Property to a
public or quasi-public agency or other entity having the power of eminent domain
pursuant to or as a result of the exercise of such power by such an agency,
including any inverse condemnation and/or any sale or transfer by Landlord of
all or any portion of the Property to such an agency under threat of
condemnation or the exercise of such power.
ARTICLE 12
DEFAULT AND REMEDIES
12.1 Events Of Tenant's Default. Tenant shall be in default of its obligations
under this Lease if any of the following events occur:
(a) Tenant shall have failed to pay Base Monthly Rent or any Additional
Rent when due provided, however, that once but only once in any twelve (12)
month period during the Lease Term, Tenant shall be entitled to written notice
of non-receipt of Base Monthly Rent or Additional Rent from Landlord, and Tenant
shall not be in default for such delinquency if such installment of Base Monthly
Rent or Additional Rent is received by Landlord within ten (10) business days
after Tenant's receipt of such notice from Landlord; or
(b) Tenant shall have done or permitted to be done any act, use or
thing in its use, occupancy or possession of the Leased Premises or the Building
or the Outside Areas which is prohibited by the terms of this Lease and such
failure continues for more than five (5) days after notice thereof by Landlord
or such longer period as is reasonably required in the event such default is
curable but not within such five (5) day period, provided such cure is promptly
commenced within such five (5) day period and is thereafter diligently
prosecuted to completion; or
(c) Tenant shall have failed to perform any term, covenant or condition
of this Lease (except those requiring the payment of Base Monthly Rent or
Additional Rent, which failures shall be governed by subparagraph (a) above)
within thirty (30) days after written notice from Landlord to Tenant specifying
the nature of such failure and requesting Tenant to perform same or within such
longer period as is reasonably required in the event such default is curable but
not within such thirty (30) day period, provided such cure is promptly commenced
within such thirty (30) day period and is thereafter diligently prosecuted to
completion; or
(d) Tenant shall have sublet the Leased Premises or assigned or
encumbered its interest in this Lease in violation of the provisions contained
in Article 7, whether voluntarily or by operation of law; or
(e) Tenant shall have abandoned the Leased Premises; or
(f) Tenant or any guarantor of this Lease shall have permitted or
suffered the sequestration or attachment of, or execution on, or the appointment
of a custodian or receiver with respect to, all or any substantial part of the
property or assets of Tenant (or such guarantor) or any property or asset
essential to the conduct of Tenant's (or such guarantor's) business, and Tenant
(or such guarantor) shall have failed to obtain a return or release of the same
within sixty (60) days thereafter, or prior to sale pursuant to such
sequestration, attachment or levy, whichever is earlier; or
22.
(g) Tenant or any guarantor of this Lease shall have made a general
assignment of all or a substantial part of its assets for the benefit of its
creditors; or
(h) Tenant or any guarantor of this Lease shall have allowed (or
sought) to have entered against it a decree or order which: (i) grants or
constitutes an order for relief, appointment of a trustee, or condemnation or a
reorganization plan under the bankruptcy laws of the United States; (ii)
approves as properly filed a petition seeking liquidation or reorganization
under said bankruptcy laws or any other debtor's relief law or similar statute
of the United States or any state thereof; or (iii) otherwise directs the
winding up or liquidation of Tenant; provided, however, if any decree or order
was entered without Tenant's consent or over Tenant's objection, Landlord may
not terminate this Lease pursuant to this Subparagraph if such decree or order
is rescinded or reversed within sixty (60) days after its original entry; or
(i) Tenant or any guarantor of this Lease shall have availed itself of
the protection of any debtor's relief law, moratorium law or other similar law
which does not require the prior entry of a decree or order.
12.2 Landlord's Remedies. In the event of any default by Tenant, and without
limiting Landlord's right to indemnification as provided in Article 8.2,
Landlord shall have the following remedies, in addition to all other rights and
remedies provided by law or otherwise provided in this Lease, to which Landlord
may resort cumulatively, or in the alternative:
(a) Landlord may, at Landlord's election, keep this Lease in effect and
enforce, by an action at law or in equity, all of its rights and remedies under
this Lease including, without limitation, (i) the right to recover the rent and
other sums as they become due by appropriate legal action, (ii) the right to
make payments required by Tenant, or perform Tenant's obligations and be
reimbursed by Tenant for the cost thereof with interest at the then maximum rate
of interest not prohibited by law from the date the sum is paid by Landlord
until Landlord is reimbursed by Tenant, and (iii) the remedies of injunctive
relief and specific performance to prevent Tenant from violating the terms of
this Lease and/or to compel Tenant to perform its obligations under this Lease,
as the case may be.
(b) Landlord may, at Landlord's election, terminate this Lease by
giving Tenant written notice of termination, in which event this Lease shall
terminate on the date set forth for termination in such notice. Any termination
under this subparagraph shall not relieve Tenant from its obligation to pay to
Landlord all Base Monthly Rent and Additional Rent then or thereafter due, or
any other sums due or thereafter accruing to Landlord, or from any claim against
Tenant for damages previously accrued or then or thereafter accruing. In no
event shall any one or more of the following actions by Landlord, in the absence
of a written election by Landlord to terminate this Lease constitute a
termination of this Lease:
(i) Appointment of a receiver or keeper in order to protect
Landlord's interest hereunder;
(ii) Consent to any subletting of the Leased Premises or
assignment of this Lease by Tenant, whether pursuant to the provisions hereof or
otherwise; or
(iii) Any action taken by Landlord or its partners,
principals, members, officers, agents, employees, or servants, which is intended
to mitigate the adverse effects of any breach of this Lease by Tenant,
including, without limitation, any action taken to maintain and preserve the
Leased Premises on any action taken to relet the Leased Premises or any portion
thereof for the account at Tenant and in the name of Tenant.
(c) In the event Tenant is in default under this Lease and abandons the
Leased Premises, Landlord may terminate this Lease, but this Lease shall not
terminate unless Landlord gives Tenant written notice of termination. If
Landlord does not terminate this Lease by giving written notice of termination,
Landlord may enforce all its rights and remedies under this Lease, including the
right and remedies provided by California Civil Code Section 1951.4 ("lessor may
continue lease in effect after lessee's breach and abandonment and recover rent
as it becomes due, if lessee has right to sublet or assign, subject only to
reasonable limitations"), as in effect on the Effective Date of this Lease.
(d) In the event Landlord terminates this Lease, Landlord shall be
entitled, at Landlord's election, to the rights and remedies provided in
California Civil Code Section 1951.2, as in effect on the Effective Date of this
23.
Lease. For purposes of computing damages pursuant to Section 1951.2, an interest
rate equal to the maximum rate of interest then not prohibited by law shall be
used where permitted. Such damages shall include, without limitation:
(i) 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 Tenant proves could be reasonably avoided,
computed by discounting such amount at the discount rate of the Federal Reserve
Bank of San Francisco, at the time of award plus one percent; and
(ii) Any other amount necessary to compensate Landlord for all
detriment proximately caused by Tenant's failure to perform Tenant's obligations
under this Lease, or which in the ordinary course of things would be likely to
result therefrom, including without limitation, the following: (i) expenses for
cleaning, repairing or restoring the Leased Premises, (ii) expenses for
altering, remodeling or otherwise improving the Leased Premises for the purpose
of reletting, including removal of existing leasehold improvements and/or
installation of additional leasehold improvements (regardless of how the same is
funded, including reduction of rent, a direct payment or allowance to a new
tenant, or otherwise), (iii) broker's fees allocable to the remainder of the
term of this Lease, advertising costs and other expenses of reletting the Leased
Premises; (iv) costs of carrying and maintaining the Leased Premises, such as
taxes, insurance premiums, utility charges and security precautions, (v)
expenses incurred in removing, disposing of and/or storing any of Tenant's
personal property, inventory or trade fixtures remaining therein; (vi)
reasonable attorney's fees, expert witness fees, court costs and other
reasonable expenses incurred by Landlord (but not limited to taxable costs) in
retaking possession of the Leased Premises, establishing damages hereunder, and
releasing the Leased Premises; and (vii) any other expenses, costs or damages
otherwise incurred or suffered as a result of Tenant's default.
12.3 Landlord's Default And Tenant's Remedies. In the event Landlord fails to
perform its obligations under this Lease, Landlord shall nevertheless not be in
default under the terms of this Lease until such time as Tenant shall have first
given Landlord written notice specifying the nature of such failure to perform
its obligations, and then only after Landlord shall have had thirty (30) days
following its receipt of such notice within which to perform such obligations;
provided that, if longer than thirty (30) days is reasonably required in order
to perform such obligations, Landlord shall have such reasonably longer period
provided that the Landlord is proceeding with due diligence to perform such
obligations. In the event of Landlord's default as above set forth, then, and
only then, Tenant may then (i) proceed in equity or at law to compel Landlord to
perform its obligations and/or to recover damages proximately caused by such
failure to perform (except as and to the extent Tenant has waived its right to
damages as provided in this Lease) or (ii) perform such obligations on behalf of
Landlord and then proceed at law to recover damages proximately caused by
Landlord's failure to perform and Tenant's subsequent performance of such
obligations (except as and to the extent Tenant has waived its right to damages
as provided in this Lease).
12.4 Limitation Of Tenant's Recourse. Tenant's recourse shall be limited to
Landlord's interest in the Property. In addition, if Landlord is a corporation,
trust, partnership, joint venture, limited liability company, unincorporated
association, or other form of business entity, Tenant agrees that (i) the
obligations of Landlord under this Lease shall not constitute personal
obligations of the officers, directors, trustees, partners, joint venturers,
members, owners, stockholders, or other principals of such business entity, and
(ii) Tenant shall have no recourse to the assets of such officers, directors,
trustees, partners, joint venturers, members, owners, stockholders or
principals. Additionally, if Landlord is a partnership or limited liability
company, then Tenant covenants and agrees:
(a) No partner or member of Landlord shall be sued or named as a party
in any suit or action brought by Tenant with respect to any alleged breach of
this Lease (except to the extent necessary to secure jurisdiction over the
partnership and then only for that sole purpose);
(b) No service of process shall be made against any partner or member
of Landlord except for the sole purpose of securing jurisdiction over the
partnership; and
(c) No writ of execution will ever be levied against the assets of any
partner or member of Landlord other than to the extent of his or her interest in
the assets of the partnership or limited liability company constituting
Landlord.
24.
Tenant further agrees that each of the foregoing covenants and agreements shall
be enforceable by Landlord and by any partner or member of Landlord and shall be
applicable to any actual or alleged misrepresentation or nondisclosure made
regarding this Lease or the Leased Premises or any actual or alleged failure,
default or breach of any covenant or agreement either expressly or implicitly
contained in this Lease or imposed by statute or at common law.
12.5 Tenant's Waiver. Landlord and Tenant agree that the provisions of Paragraph
12.3 above are intended to supersede and replace the provisions of California
Civil Code Sections 1932(1), 1941 and 1942, and accordingly, Tenant hereby
waives the provisions of California Civil Code Sections 1932(1), 1941 and 1942
and/or any similar or successor law regarding Tenant's right to terminate this
Lease or to make repairs and deduct the expenses of such repairs from the rent
due under this Lease.
ARTICLE 13
GENERAL PROVISIONS
13.1 Taxes On Tenant's Property. Tenant shall pay before delinquency any and all
taxes, assessments, license fees, use fees, permit fees and public charges of
whatever nature or description levied, assessed or imposed against Tenant or
Landlord by a governmental agency arising out of, caused by reason of or based
upon Tenant's estate in this Lease, Tenant's ownership of property, improvements
made by Tenant to the Leased Premises or the Outside Areas, improvements made by
Landlord for Tenant's use within the Leased Premises or the Outside Areas,
Tenant's use (or estimated use) of public facilities or services or Tenant's
consumption (or estimated consumption) of public utilities, energy, water or
other resources (collectively, "Tenant's Interest"). Upon demand by Landlord,
Tenant shall furnish Landlord with satisfactory evidence of these payments. If
any such taxes, assessments, fees or public charges are levied against Landlord,
Landlord's property related to the Property, the Building or the Property, or if
the assessed value of the Building or the Property is increased by the inclusion
therein of a value placed upon Tenant's Interest, regardless of the validity
thereof, Landlord shall have the right to require Tenant to pay such taxes, and
if not paid and satisfactory evidence of payment delivered to Landlord at least
ten days prior to delinquency, then Landlord shall have the right to pay such
taxes on Tenant's behalf and to invoice Tenant for the same. Tenant shall,
within the earlier to occur of (a) thirty (30) days of the date it receives an
invoice from Landlord setting forth the amount of such taxes, assessments, fees,
or public charge so levied, or (b) the due date of such invoice (which shall be
no earlier than ten (10) days after receipt by Tenant), pay to Landlord, as
Additional Rent, the amount set forth in such invoice. Failure by Tenant to pay
the amount so invoiced within such time period shall be conclusively deemed a
default by Tenant under this Lease. Tenant shall have the right to bring suit in
any court of competent jurisdiction to recover from the taxing authority the
amount of any such taxes, assessments, fees or public charges so paid.
13.2 Holding Over. This Lease shall terminate without further notice on the
Lease Expiration Date (as set forth in Article 1). Any holding over by Tenant
after expiration of the Lease Term shall neither constitute a renewal nor
extension of this Lease nor give Tenant any rights in or to the Leased Premises
except as expressly provided in this Paragraph. Any such holding over to which
Landlord has consented shall be construed to be a tenancy from month to month,
on the same terms and conditions herein specified insofar as applicable, except
that the Base Monthly Rent shall be increased to an amount equal to one hundred
fifty percent (150%) of the Base Monthly Rent payable during the last full month
immediately preceding such holding over.
13.3 Subordination To Mortgages. This Lease is subject to and subordinate to all
ground leases, mortgages and deeds of trust which affect the Building or the
Property and which are of public record as of the Effective Date of this Lease,
and to all renewals, modifications, consolidations, replacements and extensions
thereof. However, if the lessor under any such ground lease or any lender
holding any such mortgage or deed of trust shall advise Landlord that it desires
or requires this Lease to be made prior and superior thereto, then, upon written
request of Landlord to Tenant, Tenant shall promptly execute, acknowledge and
deliver any and all customary or reasonable documents or instruments which
Landlord and such lessor or lender deems necessary or desirable to make this
Lease prior thereto. Tenant hereby consents to Landlord's ground leasing the
land underlying the Building or the Property and/or encumbering the Building or
the Property as security for future loans on such terms as Landlord shall
desire, all of which future ground leases, mortgages or deeds of trust shall be
subject to and subordinate to this Lease. However, if any lessor under any such
future ground lease or any lender holding such future mortgage or deed of trust
shall
25.
desire or require that this Lease be made subject to and subordinate to such
future ground lease, mortgage or deed of trust, then Tenant agrees, within ten
days after Landlord's written request therefor, to execute, acknowledge and
deliver to Landlord any and all documents or instruments requested by Landlord
or by such lessor or lender as may be necessary or proper to assure the
subordination of this Lease to such future ground lease, mortgage or deed of
trust, but only if such lessor or lender agrees to recognize Tenant's rights
under this Lease and agrees not to disturb Tenant's quiet possession of the
Leased Premises so long as Tenant is not in default under this Lease. If
Landlord assigns the Lease as security for a loan, Tenant agrees to execute such
documents as are reasonably requested by the lender and to provide reasonable
provisions in the Lease protecting such lender's security interest which are
customarily required by institutional lenders making loans secured by a deed of
trust provided that such documents do not materially increase Tenant's
obligations under this Lease. Landlord agrees to use commercially reasonable
efforts to obtain a Subordination Nondisturbance and Attornment Agreement
("SNDA") from Metropolitan Life Insurance Company in substantially the same form
as the SNDA signed by Tenant on January 13, 1997.
13.4 Tenant's Attornment Upon Foreclosure. Tenant shall, upon request, attorn
(i) to any purchaser of the Building or the Property at any foreclosure sale or
private sale conducted pursuant to any security instruments encumbering the
Building or the Property, (ii) to any grantee or transferee designated in any
deed given in lieu of foreclosure of any security interest encumbering the
Building or the Property, or (iii) to the lessor under an underlying ground
lease of the land underlying the Building or the Property, should such ground
lease be terminated; provided that such purchaser, grantee or lessor recognizes
Tenant's rights under this Lease.
13.5 Mortgagee Protection. In the event of any default on the part of Landlord,
Tenant will give notice by registered mail to any Lender or lessor under any
underlying ground lease who shall have requested, in writing, to Tenant that it
be provided with such notice, and Tenant shall offer such Lender or lessor a
reasonable opportunity to cure the default, including time to obtain possession
of the Leased Premises by power of sale or judicial foreclosure or other
appropriate legal proceedings if reasonably necessary to effect a cure.
13.6 Estoppel Certificate. Tenant will, following any request by Landlord,
promptly execute and deliver to Landlord an estoppel certificate (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, (ii) stating the date to which the rent
and other charges are paid in advance, if any, (iii) acknowledging that there
are not, to Tenant's knowledge, any uncured defaults on the part of Landlord
hereunder, or specifying such defaults if any are claimed, and (iv) certifying
such other information about this Lease as may be reasonably requested by
Landlord, its Lender or prospective lenders, investors or purchasers of the
Building or the Property. Tenant's failure to execute and deliver such estoppel
certificate within ten (10) days after Landlord's request therefor shall be a
material default by Tenant under this Lease, and Landlord shall have all of the
rights and remedies available to Landlord as Landlord would otherwise have in
the case of any other material default by Tenant, including the right to
terminate this Lease and sue for damages proximately caused thereby, it being
agreed and understood by Tenant that Tenant's failure to so deliver such
estoppel certificate in a timely manner could result in Landlord being unable to
perform committed obligations to other third parties which were made by Landlord
in reliance upon this covenant of Tenant. Landlord and Tenant intend that any
statement delivered pursuant to this paragraph may be relied upon by any Lender
or purchaser or prospective Lender or purchaser of the Building, the Property,
or any interest in them.
13.7 Tenant's Financial Information. Tenant shall, within ten (10) business days
after Landlord's request therefor deliver to Landlord a copy of Tenant's (and
any guarantor's) current financial statements (including a balance sheet, income
statement and statement of cash flow, all prepared in accordance with generally
accepted accounting principles) and any such other information reasonably
requested by Landlord regarding Tenant's financial condition, provided, however,
that if Landlord requests such statements and information for its own use and
not in connection with a sale, refinancing, or for a potential investor in
Landlord or the Property, Landlord shall not request such statements and
information more than twice in any calendar year. Landlord shall be entitled to
disclose such financial statements or other information to its Lender, to any
present or prospective principal of or investor in Landlord, or to any
prospective Lender or purchaser of the Building, the Property, or any portion
thereof or interest therein. Any such financial statement or other information
which is marked "confidential" or "company secrets" (or is otherwise similarly
marked by Tenant) shall be confidential and shall not be disclosed by Landlord
to any third party except as specifically provided in this paragraph, unless the
same becomes a part of the public domain without the fault of Landlord.
26.
13.8 Transfer By Landlord. Landlord and its successors in interest shall have
the right to transfer their interest in the Building, the Property, or any
portion thereof at any time and to any person or entity. In the event of any
such transfer, the Landlord originally named herein (and in the case of any
subsequent transfer, the transferor), from the date of such transfer, (i) shall
be automatically relieved, without any further act by any person or entity, of
all liability for the performance of the obligations of the Landlord hereunder
which may accrue after the date of such transfer and (ii) shall be relieved of
all liability for the performance of the obligations of the Landlord hereunder
which have accrued before the date of transfer if its transferee agrees to
assume in writing and perform all such prior obligations of the Landlord
hereunder. Tenant shall attorn to any such transferee. After the date of any
such transfer, the term "Landlord" as used herein shall mean the transferee of
such interest in the Building or the Property.
13.9 Force Majeure. The obligations of each of the parties under this Lease
(other than the obligations to pay money) shall be temporarily excused if such
party is prevented or delayed in performing such obligations by reason of any
strikes, lockouts or labor disputes; government restrictions, regulations,
controls, action or inaction; civil commotion; or extraordinary weather, fire or
other acts of God.
13.10 Notices. Any notice required or desired to be given by a party regarding
this Lease shall be in writing and shall be personally served, or in lieu of
personal service may be given by reputable overnight courier service or
certified mail, postage prepaid, addressed to the other party as follows:
If to Landlord: Technology Centre Associates LLC
c/o Menlo Equities LLC
525 University Avenue
Suite 100
Palo Alto, California 94301
Attention: Henry Bullock/Richard Holmstrom
with a copy to: Cooley Godward LLP
One Maritime Plaza
20th Floor
San Francisco, California 94111
Attention: Paul Churchill
If to Tenant: Adept Technology, Inc.
150 Rose Orchard Way
San Jose, California 95134
Attention: Chief Financial Officer
with a copy to: Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94304
Attention: Real Estate Department
Any notice given in accordance with the foregoing shall be deemed received upon
actual receipt or refusal to accept delivery.
13.11 Attorneys' Fees. In the event any party shall bring any action,
arbitration proceeding or legal proceeding alleging a breach of any provision of
this Lease, to recover rent, to terminate this Lease, or to enforce, protect,
determine or establish any term or covenant of this Lease or rights or duties
hereunder of either party, the prevailing party shall be entitled to recover
from the non-prevailing party as a part of such action or proceeding, or in a
separate action for that purpose brought within one year from the determination
of such proceeding, reasonable attorneys' fees, expert witness fees, court costs
and other reasonable expenses incurred by the prevailing party.
13.12 Definitions. Any term that is given a special meaning by any provision in
this Lease shall, unless otherwise specifically stated, have such meaning
wherever used in this Lease or in any Addenda or amendment hereto. In addition
to the terms defined in Article 1, the following terms shall have the following
meanings:
27.
(a) Real Property Taxes. The term "Real Property Tax" or "Real Property
Taxes" shall each mean Tenant's Lot Percentage Share of (i) all taxes,
assessments, levies and other charges of any kind or nature whatsoever, general
and special, foreseen and unforeseen (including all instruments of principal and
interest required to pay any general or special assessments for public
improvements and any increases resulting from reassessments caused by any change
in ownership or new construction), now or hereafter imposed by any governmental
or quasi-governmental authority or special district having the direct or
indirect power to tax or levy assessments, which are levied or assessed for
whatever reason against the Property or any portion thereof, or Landlord's
interest herein, or the fixtures, equipment and other property of Landlord that
is an integral part of the Property and located thereon, or Landlord's business
of owning, leasing or managing the Property or the gross receipts, income or
rentals from the Property, (ii) all charges, levies or fees imposed by any
governmental authority against Landlord by reason of or based upon the use of or
number of parking spaces within the Property, the amount of public services or
public utilities used or consumed (e.g. water, gas, electricity, sewage or waste
water disposal) at the Property, the number of person employed by tenants of the
Property, the size (whether measured in area, volume, number of tenants or
whatever) or the value of the Property, or the type of use or uses conducted
within the Property, and all costs and fees (including attorneys' fees)
reasonably incurred by Landlord in contesting any Real Property Tax and in
negotiating with public authorities as to any Real Property Tax, and (iii) all
tax increases due to improvements made to the Leased Premises by Tenant or by
Landlord on behalf of Tenant. If, at any time during the Lease Term, the
taxation or assessment of the Property prevailing as of the Effective Date of
this Lease shall be altered so that in lieu of or in addition to any the Real
Property Tax described above there shall be levied, awarded or imposed (whether
by reason of a change in the method of taxation or assessment, creation of a new
tax or charge, or any other cause) an alternate, substitute, or additional use
or charge (i) on the value, size, use or occupancy of the Property or Landlord's
interest therein or (ii) on or measured by the gross receipts, income or rentals
from the Property, or on Landlord's business of owning, leasing or managing the
Property or (iii) computed in any manner with respect to the operation of the
Property, then any such tax or charge, however designated, shall be included
within the meaning of the terms "Real Property Tax" or "Real Property Taxes" for
purposes of this Lease. If any Real Property Tax is partly based upon property
or rents unrelated to the Property, then only that part of such Real Property
Tax that is fairly allocable to the Property shall be included within the
meaning of the terms "Real Property Tax" or "Real Property Taxes."
Notwithstanding the foregoing, the terms "Real Property Tax" or "Real Property
Taxes" shall not include (i) estate, sales, inheritance, transfer, gift or
franchise taxes of Landlord or the federal or state income tax imposed on
Landlord's income from all sources; (ii) any Real Property Taxes occasioned by
or relating to assessments and other fees for improvements and services which do
not benefit the Property; (iii) any penalties resulting from Landlord's failure
to pay Real Property Taxes before delinquency (unless Tenant has failed to pay
Landlord hereunder or if Tenant has assumed responsibility for payment of such
taxes directly); or (iv) any increase in Real Property Taxes due to improvements
made to buildings on the Property other than the Building. Landlord agrees that
where permitted to do so without penalty, Landlord shall pay Real Property Taxes
in installments.
(b) Landlord's Insurance Costs. The term "Landlord's Insurance Costs"
shall mean Tenant's Project Proportionate Share of the costs to Landlord to
carry and maintain the policies of fire and property damage insurance for the
Building and the Property and general liability and any other insurance required
or permitted to be carried by Landlord pursuant to Article 9, together with any
deductible amounts paid by Landlord upon the occurrence of any insured casualty
or loss, provided that any deductible amounts applicable to a casualty of a
capital nature shall be amortized of the useful life of the capital replacement.
(c) Property Maintenance Costs. The term "Property Maintenance Costs"
shall mean Tenant's Project Proportionate Share of all costs and expenses
(except Landlord's Insurance Costs, Real Property Taxes and Building Maintenance
Costs) paid or incurred by Landlord in protecting, operating, maintaining,
repairing and preserving the Property and all parts thereof, including without
limitation, (i) market rate professional management fees, (ii) the amortizing
portion of any costs incurred by Landlord in the making of any modifications,
alterations or improvements required by any governmental authority as set forth
in Article 6, Section 4.8, and Section 5.1, which are so amortized during the
Lease Term, and (iii) such other costs as may be paid or incurred with respect
to operating, maintaining, and preserving the Property, repairing and
resurfacing paved areas, and any other maintenance and repair Landlord is
required to perform under this Lease, provided that Landlord shall recover only
the amortizing portion of the costs incurred by Landlord in the making of any
modification, alteration, improvement or repair which is of a capital nature.
Any modification, alteration, improvement or repair which is of a capital nature
shall be amortized over its useful life and at the rate which is the greater of
(i) twelve percent (12%)or (ii) the
28.
sum of that rate quoted by Wells Fargo Bank, N.T. & S.A. from time to time as
its prime rate, plus two percent (2%). Notwithstanding the foregoing, "Property
Maintenance Costs" shall not include and Tenant shall in no event have any
obligation to perform or to pay directly, or to reimburse Landlord for, all or
any portion of the following: (i) costs for which Landlord has received
reimbursement from others; (ii) depreciation, amortization or other expense
reserves (except when such reserves are actually expended for Property
Maintenance Costs); (iii) mortgages, interest, charges and fees incurred on
debt, payments on mortgages and rent under ground leases; (iv) leasing costs
(including from disputes) for the leasing of the Property to other tenants; or
(v) capital expenditures completely allocable to buildings on the Property other
than the Building.
(d) Building Maintenance Costs. The term "Building Maintenance Costs"
shall mean Tenant's Building Proportionate Share of all capital expenditures
allocable to the Building and all other costs as may be incurred with respect to
operating, maintaining and preserving the Building including, without
limitation, repair and resurfacing the exterior surfaces of the Building
(including roofs), repairing and replacing structural parts of the Building, and
repairing and replacing, when necessary, electrical, plumbing, heating,
ventilating and air conditioning systems serving the Building.
(e) Property Operating Expenses. The term "Property Operating Expenses"
shall mean and include all Real Property Taxes, plus all Landlord's Insurance
Costs, plus all Property Maintenance Costs and Building Maintenance Costs.
(f) Law. The term "Law" shall mean any judicial decisions and any
statute, constitution, ordinance, resolution, regulation, rule, administrative
order, or other requirements of any municipal, county, state, federal, or other
governmental agency or authority having jurisdiction over the parties to this
Lease, the Leased Premises, the Building or the Property, or any of them, in
effect either at the Effective Date of this Lease or at any time during the
Lease Term, including, without limitation, any regulation, order, or policy of
any quasi-official entity or body (e.g. a board of fire examiners or a public
utility or special district).
(g) Lender. The term "Lender" shall mean the holder of any promissory
note or other evidence of indebtedness secured by the Property or any portion
thereof.
(h) Private Restrictions. The term "Private Restrictions" shall mean
(as they may exist from time to time) any and all covenants, conditions and
restrictions, private agreements, easements, and any other recorded documents or
instruments affecting the use of the Property, the Building, the Leased
Premises, or the Outside Areas.
(i) Rent. The term "Rent" shall mean collectively Base Monthly Rent and
all Additional Rent.
13.13 General Waivers. One party's consent to or approval of any act by the
other party requiring the first party's consent or approval shall not be deemed
to waive or render unnecessary the first party's consent to or approval of any
subsequent similar act by the other party. No waiver of any provision hereof, or
any waiver of any breach of any provision hereof, shall be effective unless in
writing and signed by the waiving party. The receipt by Landlord of any rent or
payment with or without knowledge of the breach of any other provision hereof
shall not be deemed a waiver of any such breach. No waiver of any provision of
this Lease shall be deemed a continuing waiver unless such waiver specifically
states so in writing and is signed by both Landlord and Tenant. No delay or
omission in the exercise of any right or remedy accruing to either party upon
any breach by the other party under this Lease shall impair such right or remedy
or be construed as a waiver of any such breach theretofore or thereafter
occurring. The waiver by either party of any breach of any provision of this
Lease shall not be deemed to be a waiver of any subsequent breach of the same or
any other provisions herein contained.
13.14 Miscellaneous. Should any provisions of this Lease prove to be invalid or
illegal, such invalidity or illegality shall in no way affect, impair or
invalidate any other provisions hereof, and such remaining provisions shall
remain in full force and effect. Time is of the essence with respect to the
performance of every provision of this Lease in which time of performance is a
factor. Any copy of this Lease which is executed by the parties shall be deemed
an original for all purposes. This Lease shall, subject to the provisions
regarding assignment, apply to and bind the respective heirs, successors,
executors, administrators and assigns of Landlord and Tenant. The term "party"
shall mean Landlord or Tenant as the context implies. If Tenant consists of more
than one person or entity, then all members of Tenant shall be jointly and
severally liable hereunder. This Lease shall be construed and
29.
enforced in accordance with the Laws of the State in which the Leased Premises
are located. The captions in this Lease are for convenience only and shall not
be construed in the construction or interpretation of any provision hereof. When
the context of this Lease requires, the neuter gender includes the masculine,
the feminine, a partnership, corporation, limited liability company, joint
venture, or other form of business entity, and the singular includes the plural.
The terms "must," "shall," "will," and "agree" are mandatory. The term "may" is
permissive. When a party is required to do something by this Lease, it shall do
so at its sole cost and expense without right of reimbursement from the other
party unless specific provision is made therefor. Where Landlord's consent is
required hereunder, the consent of any Lender shall also be required. Landlord
and Tenant shall both be deemed to have drafted this Lease, and the rule of
construction that a document is to be construed against the drafting party shall
not be employed in the construction or interpretation of this Lease. Where
Tenant is obligated not to perform any act or is not permitted to perform any
act, Tenant is also obligated to restrain any others reasonably within its
control, including agents, invitees, contractors, subcontractors and employees,
from performing such act. Landlord shall not become or be deemed a partner or a
joint venturer with Tenant by reason of any of the provisions of this Lease.
ARTICLE 14
CORPORATE AUTHORITY
BROKERS AND ENTIRE AGREEMENT
14.1 Corporate Authority. If Tenant is a corporation, each individual executing
this Lease on behalf of such corporation represents and warrants that Tenant is
validly formed and duly authorized and existing, that Tenant is qualified to do
business in the State in which the Leased Premises are located, that Tenant has
the full right and legal authority to enter into this Lease, and that he or she
is duly authorized to execute and deliver this Lease on behalf of Tenant in
accordance with its terms. Tenant shall, within thirty days after Tenant's
receipt of a written request from Landlord, deliver to Landlord a certified copy
of the resolution of its board of directors authorizing or ratifying the
execution of this Lease and if Tenant fails to do so, Landlord at its sole
election may elect to terminate this Lease.
14.2 Brokerage Commissions. Landlord and Tenant each represents, warrants and
agrees that it has not had any dealings with any real estate broker(s), leasing
agent(s), finder(s) or salesmen, other than the Broker (as named in Article 1)
with respect to the lease by it of the Leased Premises pursuant to this Lease,
and that it will indemnify, defend with competent counsel, and hold the other
party harmless from any liability for the payment of any real estate brokerage
commissions, leasing commissions or finder's fees claimed by any real estate
broker(s), leasing agent(s), finder(s), or salesmen other than the Broker to be
earned or due and payable by reason of the indemnifying party's agreement or
promise (implied or otherwise) to pay (or to have the other party pay) such a
commission or finder's fee by reason of its leasing the Leased Premises pursuant
to this Lease.
14.3 Entire Agreement. This Lease and the Exhibits (as described in Article 1),
which Exhibits are by this reference incorporated herein, constitute the entire
agreement between the parties, and there are no other agreements, understandings
or representations between the parties relating to the lease by Landlord of the
Leased Premises to Tenant, except as expressed herein. No subsequent changes,
modifications or additions to this Lease shall be binding upon the parties
unless in writing and signed by both Landlord and Tenant.
14.4 Landlord's Representations. Tenant acknowledges that neither Landlord nor
any of its agents made any representations or warranties respecting the
Property, the Building or the Leased Premises, upon which Tenant relied in
entering into the Lease, which are not expressly set forth in this Lease. Tenant
further acknowledges that neither Landlord nor any of its agents made any
representations as to (i) whether the Leased Premises may be used for Tenant's
intended use under existing Law, or (ii) the suitability of the Leased Premises
for the conduct of Tenant's business, or (iii) the exact square footage of the
Leased Premises, and that Tenant relies solely upon its own investigations with
respect to such matters. Tenant expressly waives any and all claims for damage
by reason of any statement, representation, warranty, promise or other agreement
of Landlord or Landlord's agent(s), if any, not contained in this Lease or in
any Exhibit attached hereto.
ARTICLE 15
OPTION TO EXTEND
30.
15.1 So long as Adept Technology, Inc., a California corporation (or
its Permitted Assignee, as defined in Section 7.2), is the Tenant hereunder and
occupies the entirety of the Leased Premises, and subject to the condition set
forth in clause (b) below, Tenant shall have one option to extend the term of
this Lease with respect to the entirety of the Leased Premises, for a period of
five (5) years from the expiration of the initial Lease Term (the "Extension
Period"), subject to the following conditions:
(a) The option to extend shall be exercised, if at all, by notice of
exercise given to Landlord by Tenant not more than fifteen months nor less than
nine months prior to the expiration of the initial Lease Term;
(b) Anything herein to the contrary notwithstanding, if Tenant is in
default under any of the monetary or material non-monetary terms, covenants or
conditions of this Lease, either at the time Tenant exercises the extension
option or on the commencement date of the Extension Period, Landlord shall have,
in addition to all of Landlord's other rights and remedies provided in this
Lease, the right to terminate such option to extend upon notice to Tenant.
15.2 In the event the option is exercised in a timely fashion, the Lease shall
be extended for the term of the Extension Period upon all of the terms and
conditions of this Lease, provided that the Base Monthly Rent for the Extension
Period shall be the "Fair Market Rent" for the Leased Premises, increased
annually on each anniversary of the commencement date of the Extension Period to
reflect the change in the Consumer Price Index for the San Francisco
Metropolitan Area, All Items (the "CPI"), for the twelve (12) month period
ending sixty (60) days prior to the subject adjustment date, but in no event
shall Base Monthly Rent be increased less than 4.00% per annum, nor more than
7.00% per annum for such twelve (12) month period. Base Monthly Rent shall be so
adjusted at the end of each twelve (12) month period during the Lease Term. For
purposes hereof, "Fair Market Rent" shall mean the Base Monthly Rent determined
pursuant to the process described below. In no event, however, shall any
adjustment of Base Monthly Rent pursuant to this paragraph result in a decrease
of the Base Monthly Rent for the Premises below the amount due from Tenant for
the preceding portion of the initial Lease Term for which Base Monthly Rent had
been fixed.
15.3 Within 30 days after receipt of Tenant's notice of exercise, Landlord shall
notify Tenant in writing of Landlord's estimate of the Base Monthly Rent for the
applicable extension period, based on the provisions of Paragraph 15.2 above.
Within 30 days after receipt of such notice from Landlord, Tenant shall have the
right either to (i) accept Landlord's statement of Base Monthly Rent as the Base
Monthly Rent for the applicable extension period; or (ii) elect to arbitrate
Landlord's estimate of Fair Market Rent, such arbitration to be conducted
pursuant to the provisions hereof; or (iii) rescind Tenant's exercise of the
extension option. Failure on the part of Tenant to require arbitration of Fair
Market Rent within such 30-day period or rescind its exercise of the extension
option shall constitute acceptance of the Base Monthly Rent for the applicable
extension period as calculated by Landlord. If Tenant elects arbitration, the
arbitration shall be concluded within 90 days after the date of Tenant's
election, subject to extension for an additional 30-day period if a third
arbitrator is required and does not act in a timely manner. To the extent that
arbitration has not been completed prior to the expiration of any preceding
period for which Base Monthly Rent has been determined, Tenant shall pay Base
Monthly Rent at the rate calculated by Landlord, with the potential for an
adjustment to be made once Fair Market Rent is ultimately determined by
arbitration.
15.4 In the event of arbitration, the judgment or the award rendered in any such
arbitration may be entered in any court having jurisdiction and shall be final
and binding between the parties. The arbitration shall be conducted and
determined in the County of Santa Clara in accordance with the then prevailing
rules of the American Arbitration Association or its successor for arbitration
of commercial disputes except to the extent that the procedures mandated by such
rules shall be modified as follows:
(a) Tenant shall make demand for arbitration in writing within 30 days
after service of Landlord's determination of Fair Market Rent given under
Paragraph 15.3 above, specifying therein the name and address of the person to
act as the arbitrator on its behalf. The arbitrator shall be qualified as a real
estate appraiser familiar with the Fair Market Rent of similar industrial,
research and development, or office space in the Silicon Valley area who would
qualify as an expert witness over objection to give opinion testimony addressed
to the issue in a court of competent jurisdiction. Failure on the part of Tenant
to make a proper demand in a timely manner for such arbitration shall constitute
a waiver of the right thereto. Within 15 days after the service of the demand
for arbitration, Landlord shall give notice to Tenant, specifying the name and
address of the person designated by
31.
Landlord to act as arbitrator on its behalf who shall be similarly qualified. If
Landlord fails to notify Tenant of the appointment of its arbitrator, within or
by the time above specified, then the arbitrator appointed by Tenant shall be
the arbitrator to determine the issue.
(b) In the event that two arbitrators are chosen pursuant to Paragraph
15.4(a) above, the arbitrators so chosen shall, within 15 days after the second
arbitrator is appointed determine the Fair Market Rent. If the two arbitrators
shall be unable to agree upon a determination of Fair Market Rent within such
15-day period, they, themselves, shall appoint a third arbitrator, who shall be
a competent and impartial person with qualifications similar to those required
of the first two arbitrators pursuant to Paragraph 15.4(a). In the event they
are unable to agree upon such appointment within seven days after expiration of
such 15-day period, the third arbitrator shall be selected by the parties
themselves, if they can agree thereon, within a further period of 15 days. If
the parties do not so agree, then either party, on behalf of both, may request
appointment of such a qualified person by the then Chief Judge of the United
States District Court having jurisdiction over the County of Santa Clara, acting
in his private and not in his official capacity, and the other party shall not
raise any question as to such Judge's full power and jurisdiction to entertain
the application for and make the appointment. The three arbitrators shall decide
the dispute if it has not previously been resolved by following the procedure
set forth below.
(c) Where an issue cannot be resolved by agreement between the two
arbitrators selected by Landlord and Tenant or settlement between the parties
during the course of arbitration, the issue shall be resolved by the three
arbitrators within 15 days of the appointment of the third arbitrator in
accordance with the following procedure. The arbitrator selected by each of the
parties shall state in writing his determination of the Fair Market Rent
supported by the reasons therefor with counterpart copies to each party. The
arbitrators shall arrange for a simultaneous exchange of such proposed
resolutions. The role of the third arbitrator shall be to select which of the
two proposed resolutions most closely approximates his determination of Fair
Market Rent. The third arbitrator shall have no right to propose a middle ground
or any modification of either of the two proposed resolutions. The resolution he
chooses as most closely approximating his determination shall constitute the
decision of the arbitrators and be final and binding upon the parties.
(d) In the event of a failure, refusal or inability of any arbitrator
to act, his successor shall be appointed by him, but in the case of the third
arbitrator, his successor shall be appointed in the same manner as provided for
appointment of the third arbitrator. The arbitrators shall decide the issue
within 15 days after the appointment of the third arbitrator. Any decision in
which the arbitrator appointed by Landlord and the arbitrator appointed by
Tenant concur shall be binding and conclusive upon the parties. Each party shall
pay the fee and expenses of its respective arbitrator and both shall share the
fee and expenses of the third arbitrator, if any, and the attorneys' fees and
expenses of counsel for the respective parties and of witnesses shall be paid by
the respective party engaging such counsel or calling such witnesses.
(e) The arbitrators shall have the right to consult experts and
competent authorities to obtain factual information or evidence pertaining to a
determination of Fair Market Rent, but any such consultation shall be made in
the presence of both parties with full right on their part to cross-examine. The
arbitrators shall render their decision and award in writing with counterpart
copies to each party. The arbitrators shall have no power to modify the
provisions of this Lease.
ARTICLE 16
TELEPHONE SERVICE
Notwithstanding any other provision of this Lease to the contrary:
(a) So long as the entirety of the Leased Premises is leased to Tenant:
(i) Landlord shall have no responsibility for providing to
Tenant any telephone equipment, including wiring, within the Leased Premises or
for providing telephone service or connections from the utility to the Leased
Premises; and
32.
(ii) Landlord makes no warranty as to the quality, continuity
or availability of the telecommunications services in the Building, and Tenant
hereby waives any claim against Landlord for any actual or consequential damages
(including damages for loss of business) in the event Tenant's
telecommunications services in any way are interrupted, damaged or rendered less
effective, except to the extent caused by the grossly negligent or willful act
or omission by Landlord, its agents or contractors. Tenant accepts the telephone
equipment (including, without limitation, the INC, as defined below) in its
"AS-IS" condition, and Tenant shall be solely responsible for contracting with a
reliable third party vendor to assume responsibility for the maintenance and
repair thereof (which contract shall contain provisions requiring such vendor to
inspect the INC periodically (the frequency of such inspections to be determined
by such vendor based on its experience and professional judgment), and requiring
such vendor to meet local and federal requirements for telecommunications
material and workmanship). Landlord shall not be liable to Tenant and Tenant
waives all claims against Landlord whatsoever, whether for personal injury,
property damage, loss of use of the Leased Premises, or otherwise, due to the
interruption or failure of telephone services to the Leased Premises. Tenant
hereby holds Landlord harmless and agrees to indemnify, protect and defend
Landlord from and against any liability for any damage, loss or expense due to
any failure or interruption of telephone service to the Leased Premises for any
reason except to the extent caused by gross negligence or willful misconduct of
Landlord. Tenant agrees to obtain loss of rental insurance adequate to cover any
damage, loss or expense occasioned by the interruption of telephone service.
(b) At such time as the entirety of the Leased Premise is no longer
leased to Tenant, Landlord shall in its sole discretion have the right, by
written notice to Tenant, to elect to assume limited responsibility for INC, as
provided below, and upon such assumption of responsibility by Landlord, this
subparagraph (b) shall apply prospectively.
(i) Landlord shall provide Tenant access to such quantity of
pairs in the Building intra-building network cable ("INC") as is determined to
be available by Landlord in its reasonable discretion. Tenant's access to the
INC shall be solely by arrangements made by Tenant, as Tenant may elect,
directly with Pacific Bell or Landlord (or such vendor as Landlord may
designate), and Tenant shall pay all reasonable charges as may be imposed in
connection therewith. Pacific Bell's charges shall be deemed to be reasonable.
Subject to the foregoing, Landlord shall have no responsibility for providing to
Tenant any telephone equipment, including wiring, within the Leased Premises or
for providing telephone service or connections from the utility to the Leased
Premises, except as required by law.
(ii) Tenant shall not alter, modify, add to or disturb any
telephone wiring in the Leased Premises or elsewhere in the Building without the
Landlord's prior written consent. Tenant shall be liable to Landlord for any
damage to the telephone wiring in the Building due to the act, negligent or
otherwise, of Tenant or any employee, contractor or other agent of Tenant.
Tenant shall have no access to the telephone closets within the Building, except
in the manner and under procedures established by Landlord. Tenant shall
promptly notify Landlord of any actual or suspected failure of telephone service
to the Leased Premises.
(iii) All costs incurred by Landlord for the installation,
maintenance, repair and replacement of telephone wiring in the Building shall be
a Property Maintenance Cost.
(iv) Landlord makes no warranty as to the quality, continuity
or availability of the telecommunications services in the Building, and Tenant
hereby waives any claim against Landlord for any actual or consequential damages
(including damages for loss of business) in the event Tenant's
telecommunications services in any way are interrupted, damaged or rendered less
effective, except to the extent caused by the grossly negligent or willful act
or omission by Landlord, its agents or employees. Tenant acknowledges that
Landlord meets its duty of care to Tenant with respect to the Building INC by
contracting with a reliable third party vendor to assume responsibility for the
maintenance and repair thereof (which contract shall contain provisions
requiring such vendor to inspect the INC periodically (the frequency of such
inspections to be determined by such vendor based on its experience and
professional judgment), and requiring such vendor to meet local and federal
requirements for telecommunications material and workmanship). Subject to the
foregoing, Landlord shall not be liable to Tenant and Tenant waives all claims
against Landlord whatsoever, whether for personal injury, property damage, loss
of use of the Leased Premises, or otherwise, due to the interruption or failure
of telephone services to the Leased Premises. Tenant hereby holds Landlord
harmless and agrees to indemnify, protect and defend Landlord from and against
any liability for any damage, loss or expense due to any failure or interruption
of telephone service to the Leased
33.
Premises for any reason. Tenant agrees to obtain loss of rental insurance
adequate to cover any damage, loss or expense occasioned by the interruption of
telephone service.
34.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of
the respective dates below set forth with the intent to be legally bound thereby
as of the Effective Date of this Lease first above set forth.
LANDLORD:
TECHNOLOGY CENTRE ASSOCIATES LLC, a
California limited liability company
By: Menlo Equities LLC, a
California limited liability company,
its Managing Member
Dated: June 3, 1998 By: /s/ illegible , Member
--------------------------- ----------------- -------
TENANT:
ADEPT TECHNOLOGY, INC., a
California corporation
Dated: June 2, 1998 By: /s/ Betsy A. Lange
------------------------- ----------------------------------
Title:Chief Financial Officer
35.
EXHIBIT A
SITE PLAN
[site plan drawing]
1.
EXHIBIT B
FLOOR PLAN
[floor plan drawing]
1.