NET INDUSTRIAL LEASE
This Lease is between NONAR ENTERPRISES,
a California general partnership ("Landlord"),
and
VERSAFORM CORPORATION, a California corporation ("Tenant"),
Executed as of September 12, 2003
TABLE OF CONTENTS
1. LEASE OF PREMISES......................................................2
2. EXHIBITS AND ADDENDA...................................................2
3. DEFINITIONS............................................................3
4. DELIVERY OF POSSESSION.................................................9
5. LANDLORD'S REPRESENTATIONS AND WARRANTIES; ACCEPTANCE.................10
6. USE, LIMITATIONS......................................................10
7. RENT..................................................................19
8. LATE CHARGES..........................................................21
9. SECURITY DEPOSIT......................................................22
10. RENTAL ABATEMENT......................................................22
11. OPTION TO EXTEND......................................................22
12. ADDITIONAL SPACE -OPTION TO EXPAND....................................23
13. TENANT IMPROVEMENTS...................................................23
14. TENANT IMPROVEMENT ALLOWANCE..........................................24
15. OPERATING EXPENSES....................................................24
16. TAXES, ASSESSMENTS....................................................27
17. MAINTENANCE...........................................................29
18. UTILITIES AND SERVICES................................................32
19. INDEMNITY AND EXCULPATION.............................................34
20. INSURANCE.............................................................36
21. ALTERATIONS...........................................................39
22. MECHANICS' LIENS......................................................41
23. DESTRUCTION...........................................................42
24. CONDEMNATION..........................................................44
25. ASSIGNMENT............................................................46
26. DEFAULT...............................................................51
27. ADVERTISING...........................................................58
28. NO PUBLIC DISCLOSURES.................................................58
29. LANDLORD'S ENTRY ON PREMISES..........................................59
30. OFFSET STATEMENT ATTORNMENT, SUBORDINATION............................61
31. NOTICE................................................................63
32. WAIVER................................................................63
33. SALE OR TRANSFER OF PREMISES..........................................64
34. HOLDING OVER..........................................................64
35. SURRENDER OF PREMISES.................................................65
36. ABANDONMENT...........................................................66
37. ATTORNEYS' FEES.......................................................66
38. ACCESS; CHANGES IN BUILDING FACILITIES NAME...........................67
39. QUIET ENJOYMENT.......................................................67
40. FORCE MAJEUR..........................................................68
41. RELATIONSHIP OF PARTIES...............................................68
42. GENERAL PROVISIONS....................................................68
NET INDUSTRIAL LEASE
This Lease between NONAR ENTERPRISES, a California general partnership
("Landlord"), and VERSAFORM CORPORATION, a California corporation ("Tenant"),
executed as of September , 2003.
1. LEASE OF PREMISES.
1.1. In consideration of the Rent (as defined in the Article titled
"Rent") and the provisions of this Lease, Landlord leases to Tenant
and Tenant leases from Landlord the Premises described in the
Article titled "Definitions." The Premises are located within the
Building described in the Article titled "Definitions." Tenant shall
have the nonexclusive right (unless otherwise provided herein) in
common with Landlord, other tenants, subtenants and invitees, to use
of the Project Enhancement Areas and Unit Shared Use Areas (as
defined in the Article titled "Definitions").
1.2 Tenant has examined the Premises and is fully informed of their
condition.
1.3. This Lease confers no rights either with regard to the subsurface of
the land below the ground level of the Premises or with regard to
airspace above the top of the roof of the Building in which the
Premises is located.
2. EXHIBITS AND ADDENDA.
The exhibits and addenda listed below (unless lined out) are incorporated
by reference in this Lease:
2.1. Exhibit "A" - Site Plan designating the Premises, Building, Unit and
Project Enhancement Areas.
2.2 Exhibit "B" - Rules and Regulations.
2.3 Exhibit "C" - Building Floor Plan, Landlord's Work and Tenant
Improvements to the Premises.
2.4 Exhibit "D" - Tenant's Trade Fixtures
2.5 Exhibit "E" - Permitted Tenant Materials
2.6 Exhibit "F" - Operating Expenses
3. DEFINITIONS.
As used in this Lease, the following terms shall have the following
meanings:
3.1. Base Rent: $31,628.00 per month, based on rent at $0.43 per rentable
square foot per month for 75,554 rentable square feet (as determined
pursuant to Section 3.14 of this Lease).
3.2. Building: The building in the Project containing the Premises and
having the address of 1377 Specialty Drive, Vista, California.
3.3. Commencement Date: October 1, 2003, or the date of Landlord's
receipt of a Certificate of Occupancy for the Premises, whichever is
later.
3.4. Expiration Date: Ten (10) years after the Commencement Date, unless
otherwise sooner terminated in accordance with the provisions of
this Lease.
3.5. Landlord's Mailing Address: NONAR ENTERPRISES, 4275 Executive
Square, Suite 1020 La Jolla, California 92037 Attention: Michael P.
Cafagna, General Partner
3.6. Tenant's Mailing Address: VERSAFORM CORPORATION 1377 Specialty Drive
Vista, CA 92083 Attention: Duane Hahn, General Manager
3.7. Operating Expenses: As defined in the Article titled "Operating
Expenses." Operating Expenses will be determined as provided in the
Article titled "Operating Expenses," and may be more or less than
the estimated Operating Expenses.
3.8. Intentionally omitted.
3.9. Premises: Commencing October 1, 2003, Tenant shall occupy that
portion of the Project located at 1377 Specialty Drive, Vista,
California, consisting of Suites A-B, and containing approximately
73,554 square feet of Rentable Area (subject to adjustment pursuant,
to Section 3.14 of this Lease), shown by diagonal lines on Exhibit
"C." Commencing October 1, 2004, Tenant shall occupy that portion of
the Project located at 1377 Specialty Drive, Vista, California,
consisting of Suites A-C, and containing approximately 85,004 square
feet of Rentable Area (subject to adjustment pursuant to Section
3.14 of this Lease), shown by diagonal lines on Exhibit "C" and
thereafter the term "Premises" shall mean and refer to Suites A, B
and C.
3.10. Project: A multi-tenant industrial/office/commercial real property
development of Landlord and Landlord's affiliates located in Vista,
California. The Project includes the land, the buildings and all
other improvements located thereon, including the Project
Enhancement Areas and the Unit Shared Use Areas. The Project is
known as the Rancho Vista Business Park.
3.11. Project Enhancement Areas: Specific areas of one or more lots within
the Project which have been designated to be used for the
enhancement of the Project. Project Enhancement Areas may include,
but are not limited to, landscaped areas containing lighted monument
signs for the Project.
3.12. Project Enhancement Area Expenses: All direct costs of operation and
maintenance of the Project Enhancement Areas, as determined by
standard accounting practices, including, but not limited to,
electrical lighting for Project monument signs, water for
landscaping, landscape maintenance and repair and reserves.
3.13. Rent: All costs and expenses that Tenant assumes or agrees to pay to
Landlord under this Lease shall be deemed additional rent. The sum
total of such costs and expenses plus the Base Rent is at times
referred to herein as the "Rent".
3.14. Rentable Area: As to the Premises, the rentable square footage of
the portion of the Building as may from time to time be leased by
Tenant under this Lease as determined according to a method for
industrial buildings similar to the Standard Method For Measuring
Floor Area In Office Buildings, ANSI/BOMA Z65.1-1996. As to the
Building, the rentable square footage of the Building as determined
according to the Standard Method For Measuring Floor Area In Office
Buildings, ANSI/BOMA Z65.1-1996. If Tenant shall notify Landlord
that Tenant disputes the measurement of the Premises as determined
by Landlord, then Landlord and Tenant shall jointly choose an
architect to determine the Rentable Area of the Premises. Such
architect's determination shall be binding and conclusive on
Landlord and Tenant. If the square footage determination made by
such architect exceeds or is less than the disputed square footage
determination made by Landlord, then the amount of Base Rent payable
by Tenant under this Lease and Tenant's Pro Rata Share of the
Building (as defined in Section 3.17 of this Lease) shall be
proportionally adjusted and Landlord shall pay the fees of such
architect for making such determination. If such architect concurs
with the square footage determination made by Landlord, then Tenant
shall pay the fees of such architect for making such determination.
3.15. Security Deposit (See the Article titled "Security Deposit"):
$36,551.72.
3.16. Tenant's First Adjustment Date (See the Article titled "Rent"): The
first day of the first calendar month following the Commencement
Date plus twelve (12) months.
3.17. Tenant's Pro Rata Share of the Building: Tenant's Pro Rata Share of
the Building is a fraction, the numerator of which is the Rentable
Area of the Premises (as determined pursuant to Section 3.14 of this
Lease), and the denominator of which is the total Rentable Area of
the Building (as determined pursuant to Section 3.14 of this Lease).
As of the date hereof, Tenant's Pro Rata Share of the Building is
86.53%. If Rentable Area is added to or removed from the Premises or
the Building, Landlord shall recalculate Tenant's Pro Rata Share of
the Building for purposes of this Lease.
3.18. Tenant's Pro Rata Share of the Project: Such share is calculated as
follows: Tenant's Pro Rata Share of the Building times a fraction,
the numerator of which is the gross square footage of the lot on
which the Premises is located (the "Lot") as reasonably determined
by Landlord, and the denominator of which is 2,617,630 (the total
gross square footage of the Project). As of the date hereof, the
gross square footage of the Lot is 213,357 square feet and Tenant's
Pro Rata Share of the Project is 7.05%. If land is added to or
removed from the Project or the Lot, Landlord shall recalculate (i)
the total gross square footage of the Project or the Lot, as
applicable, and (ii) Tenant's Pro Rata Share of the Project for
purposes of this Lease.
3.19. Tenant's Pro Rata Share of the Unit: Such share is calculated as
follows: Tenant's Pro Rata Share of the Building times a fraction,
the numerator of which is the gross square footage of the Lot, and
the denominator of which is the total gross square footage of all
the lots in the Unit, as determined by Landlord from time to time.
As of the date hereof, the total gross square footage of all lots in
the Unit is 213,357 square feet and Tenant's Pro Rata Share of the
Unit is 86.53%. If land is added to or removed from the any of the
lots in the Unit, Landlord shall recalculate the total gross square
footages of the lots in the Unit and Tenant's Pro Rata Share of the
Unit for purposes of this Lease.
3.20. Tenant's Use Clause (See the Article titled "Use, Limitations"):
Tenant shall use and occupy the Premises for general office purposes
and for the manufacture, heat treating, forming, cutting,
warehousing, inventory and distribution of aircraft related products
and related purposes and for any other purpose approved in writing
by Landlord, which approval shall not be unreasonably withheld,
conditioned or delayed. The manufacture and forming of aircraft
related products may include, without limitation, (i) stretching,
drilling and routing of aluminum and steel over dies and other metal
forming activities, (ii) use of heat treating ovens, (iii) welding
and (iv) minor painting.
3.21. Term: The period commencing on the Commencement Date and expiring at
midnight on the Expiration Date. For purposes of this Lease, the
term "Term" shall mean the initial ten (10) year term of this Lease,
plus any extension of such ten (10) year term exercised by Tenant
pursuant to Section 11 of this Lease.
3.22. Trade Name: Versaform
3.23. Unit: The portion of the Project consisting of the Lot. The Unit is
depicted and designated on the Site Plan attached hereto as Exhibit
"A"
3.24. Unit Shared Use Area: All areas of a lot within the Unit except for
buildings and Exclusive Use Areas, if any.
3.25. Unit Shared Use Area Expenses: All direct costs of operation and
maintenance of the Unit Shared Use Areas of the Unit, as determined
by standard accounting practices, including, but not limited to,
exterior lighting, exterior water, landscape maintenance and repair,
porter, parking lot maintenance and repair, trash collection
services and reserves.
3.26. Miscellaneous Definitions:
Alteration: any addition or change to, or modification of, the Premises
made by Tenant after the completion of construction of the Tenant
Improvements, including, without limitation, fixtures, but excluding
Tenant's Trade Fixtures, and Tenant Improvements.
Authorized Representative: any officer, agent, employee, or independent
contractor retained or employed by either Party, acting within
authority given him by that Party.
Claims:all claims, actions, demands, liabilities, damages, costs,
penalties, forfeitures, losses or expenses, including, without
limitation, reasonable attorneys' fees and the costs and expenses of
enforcing any indemnification, defense or hold harmless obligation
under the Lease.
Commencement Date Memorandum: the form of memorandum attached to the Lease.
Damage:injury, deterioration, or loss to a person or property caused by
another person's acts or omissions. Damage includes death.
Damages: a monetary compensation or indemnity that can be recovered in the
courts by any person who has suffered damage to his person,
property, or rights through another's act or omission.
Declaration: that certain Declaration of Covenants, Conditions and
Restrictions for Rancho Vista Business Park recorded in the San
Diego County Recorder's Office on July 25, 1991 as Document No.
1991-0367696.
Destruction: any damage to or disfigurement of the Premises.
Domestic Water: metered water service to the interior of the Building.
Encumbrance: any deed of trust, mortgage, or other written security device
or agreement affecting the Premises, and the note or other
obligation secured by it, that constitutes security for the payment
of a debt or performance of an obligation.
Expiration: the coming to an end of a time period specified in the Lease,
including, without limitation, any extension of the Term resulting
from the exercise of an option to extend.
Good Condition: first-class, neat, clean, and broom-clean physical
condition, and is equivalent to similar phrases referring to
physical adequacy in appearance and for use.
Hold Harmless: to defend and indemnify from all liability, losses,
penalties, damages, costs, expenses (including, without limitation,
reasonable attorneys' fees), causes of action, claims, or judgments
arising out of or related to any damage, as defined hereinabove, to
any person or property. Landlord Parties: Landlord and Property
Manager and their respective officers, directors, partners,
shareholders, members and employees.
Landlord's Work: The work listed and referred to as "Landlord's Work" on
Exhibit "C."
Law: any law, judicial decision, statute, constitution, ordinance,
resolution, regulation, rule, administrative order, direction, or
other requirement of any municipal, county, state, federal, or other
government agency or authority having jurisdiction over the Parties,
Project, Building, or the Premises in effect either at the time of
execution of the Lease or at any time during the Term, including,
without limitation, any regulation or order of a quasi-official
entity or body (e.g., board of fire examiners or public utilities).
The reference in this Lease to any legislation or any portion
thereof shall be read as though the words "or any statutory
modifications or re-enactment thereof or any statutory provisions
substituted in lieu thereof' were added to such reference.
Lender:the beneficiary, mortgagee, secured Party, or other holder of an
encumbrance, as defined hereinabove.
Lien: a charge imposed on the Premises by someone other than Landlord, by
which the Premises are made security for the performance of an act.
Most of the liens referred to in this Lease are mechanics' liens.
Maintenance: repairs, repainting, and cleaning.
Mortgage: any mortgage, deed of trust, security interest or other security
document of like nature that at any time may encumber all or any
part of the Project and any replacements, renewals, amendments,
modifications, extensions or refinancings thereof, and each advance
(including future advances) made under any such instrument.
Party: shall mean Landlord or Tenant; and if more than one person or entity
is Landlord or Tenant, the obligations imposed on that Party shall
be joint and several.
Person:one or more human beings, or legal entities or other artificial
persons, including, without limitation, partnerships, corporations,
trusts, estates, associations, and any combination of human beings
and legal entities.
ProjectTenant: a person or entity (or their successor in interest) who has
signed a valid existing lease for a space in the Project.
Property Manager: an agent Landlord may appoint from time to time to manage
the Project. Property Manager is authorized to manage the Project.
Landlord appointed Property Manager to act as Landlord's agent for
leasing, managing, and operating the Project. The Property Manager
then serving is authorized to accept service of process and to
receive and give notices and demands on Landlord's behalf.
Provision: any term, agreement, covenant, condition, clause, qualification,
restriction, reservation, or other stipulation in this Lease that
defines or otherwise controls, establishes, or limits the
performance required or permitted by either Party.
Restoration: the reconstruction, rebuilding, rehabilitation, and repairs
that are necessary to return destroyed portions of the Premises and
other property to substantially the same physical condition in which
they were immediately before the destruction.
Successor: assignee, transferee, personal representative, heir, or other
person or entity succeeding lawfully, and pursuant to the provisions
of this Lease, to the rights or obligations of either Party.
Tenant Improvements: any addition to or modification of the Premises made
by or for Tenant before, at, or near the commencement of the Term,
including, without limitation, fixtures (not including Tenant's
Trade Fixtures).
Tenant's Personal Property: Tenant's equipment, furniture, merchandise, and
movable property placed in the Premises by Tenant, including
Tenant's Trade Fixtures.
Tenant's Taxes: Any and all taxes, assessments, levies, fees, and other
governmental charges of every kind or nature levied or assessed by
municipal, county, state, federal, or other taxing or assessing
authorities with respect to: all furniture, fixtures, equipment, and
any other personal property of any kind owned by Tenant and placed,
installed, or located within, upon, or about the Premises to the
extent that the property tax on such property is assessed directly
to Landlord; all alterations of whatsoever kind or nature, if any,
made by or for Tenant to the Premises after the execution of this
Lease; and the leasehold interest of Tenant. Tenant's Taxes shall
also include taxes irrespective of whether any of the items are
assessed as real or personal property and irrespective of whether
any of such items or taxes are assessed to or against Landlord or
Tenant.
Tenant's Trade Fixtures: any machinery, equipment, apparatus, appliance or
other property and all appurtenances thereto from time to time
installed in or on or affixed to the Premises by Tenant for purposes
of conducting of Tenant's business on the Premises, including,
without limitation, the machinery, equipment, apparatus, appliances
and property listed on Exhibit "D".
Termination: the ending of the Term before expiration for any reason.
4. DELIVERY OF POSSESSION.
4.1. Prior to delivery of possession of the Premises to Tenant, Landlord,
at Landlord's sole cost and expense, shall perform Landlord's Work
in a good and workmanlike manner and in substantial accordance with
all applicable Laws. If for any reason Landlord does not deliver
possession of the Premises to Tenant on the Commencement Date,
Landlord shall not be subject to any liability for such failure, the
Expiration Date shall not change, the validity of this Lease shall
not be impaired, this Lease shall be neither void nor voidable, but
Rent shall be abated until delivery of possession. Notwithstanding
the foregoing, if Landlord does not deliver possession of the
Premises to Tenant in the condition required hereunder by November
1, 2003, Tenant shall have the right to terminate this Lease.
4.2. Landlord shall permit Tenant to enter into possession of the
Premises before the Commencement Date for the purpose of
constructing the Tenant Improvements and installing Tenant's Trade
Fixtures and such possession shall be subject to the provisions of
this Lease, except for the payment of Rent.
4.3. If the delay in completion of Landlord's Work is the result of any
delay caused by Tenant (a "Tenant delay"), the Commencement Date
shall not be delayed by the number of days of such Tenant delay and,
for purposes of Tenant's obligation to pay Rent, the Commencement
Date shall be deemed to have occurred on the date that the Premises
would have been ready for occupancy but for the Tenant delay. In the
event Tenant requests not to initially improve certain areas of the
Premises, the Commencement Date for those areas will be the same as
the improved Premises.
4.4. Intentionally omitted.
4.5. After the Commencement Date, Landlord will deliver to Tenant the
Commencement Date Memorandum with all blanks completed. Tenant will,
within 10 business days after receiving it, execute and deliver to
Landlord the Commencement Date Memorandum. Tenant's failure to
execute and deliver to Landlord the Commencement Date Memorandum
does not affect any obligation of Tenant under this Lease. If Tenant
does not timely execute and deliver to Landlord the Commencement
Date Memorandum, Landlord and any prospective purchaser or
encumbrancer may conclusively rely on the information contained in
the unexecuted Commencement Date Memorandum that Landlord delivered
to Tenant.
5. LANDLORD'S REPRESENTATIONS AND WARRANTIES; ACCEPTANCE.
5.1. Landlord represents and warrants that as of the date hereof and as
of the Commencement Date, (i) the Lot, the Building, the Premises
and the Unit Shared Use Area(s) located within the Unit comply in
all material respects with all applicable Laws and covenants or
restrictions of record in effect (provided, however, that said
representations and warranties shall not apply to any Tenant
Improvements made by Tenant prior to the Commencement Date); (ii)
the roof, existing mechanical, plumbing, heating, ventilation and
air conditioning equipment and systems serving the Premises comply
in all material respects with the requirements of all applicable
Laws, are in good working order and condition and are suitable for
operation over the initial Term of this Lease, (iii) Landlord, or
one of its affiliates, is the owner in fee of the Lot, the Building
and the Premises; (iv) Landlord has no knowledge that Tenant's
intended use as described in Section 3.20 of this Lease, will
violate any applicable zoning ordinances, and (v) Landlord has full
power and authority to lease the Premises to Tenant.
5.2. The taking of possession or use of the Premises by Tenant for any
purpose other than construction of the Tenant Improvements and the
installation of Tenant's Trade Fixtures shall conclusively establish
that the Premises were, at such time, in satisfactory condition
(except for latent defects) and in conformity with the provisions of
this Lease in all respects, excepting only items not comprising a
part of the Tenant's Improvements of which Tenant shall give
Landlord written notice in reasonable detail within fifteen (15)
days after Tenant takes such possession or commences such use of the
Premises or the Term of this Lease otherwise commences. Landlord
shall correct or repair the items mentioned in such notice promptly
following Landlord's receipt of such notice from Tenant.
5.3. Tenant acknowledges that except as otherwise expressly set forth in
this Lease, neither Landlord nor any agent of Landlord has made any
representation or warranty with respect to the Premises or the
Project or with respect to their suitability or fitness for the
conduct of Tenant's business or for any other purpose.
6. USE, LIMITATIONS.
6.1. Tenant shall use the Premises solely for the purposes set forth in
the Tenant's Use Clause and for no other use without Landlord's
prior written consent. Landlord shall not unreasonably withhold or
delay its consent to any request by Tenant for a modification of the
purposes for which the Premises may be used under this Lease as set
forth in the Tenant's Use Clause, so long as the same will not
impair the structural integrity of the Premises or the Building or
the mechanical or electrical systems therein, and is not
significantly more burdensome to the Premises and the Building. If
Landlord objects to a requested change in use of the Premises,
Landlord shall, within ten (10) business days after receiving such
request from Tenant, give written notification of same, which notice
shall include an explanation of Landlord's objections to the
requested change in use.
6.2. Tenant shall conduct its business at the Premises under the trade
name set forth in the Tenant's Trade Name Clause and under no other
trade name unless first obtaining the written consent of Landlord
which consent shall not be unreasonably withheld, conditioned or
delayed.
6.3. Tenant shall not do, bring, or keep anything in or about the
Premises that will cause a cancellation of any insurance covering
the Premises or its contents. To the extent that the rate of any
insurance carried by Landlord is increased as a result of Tenant's
use of the Premises, Tenant shall pay to Landlord within ten (10)
business days before the date Landlord is obligated to pay such
increased premium of insurance (provided that Landlord has
previously delivered to Tenant a certified statement from Landlord's
insurance carrier stating that the rate increase was caused solely
by an activity of Tenant on the Premises, as permitted in this
Lease) or within ten (10) business days after Landlord delivers such
certificate to Tenant, whichever date is later, a sum equal to the
difference between the original premium and the increased premium.
6.4. Tenant shall comply in all material respects with all terms and
conditions of the Declaration relating to Tenant's use and occupancy
of the Premises.
6.5. Tenant shall comply in all material respects with all Laws
concerning the Premises or Tenant's use of the Premises, including,
without limitation, the obligation at Tenant's cost to alter,
maintain, change, or restore the Premises in compliance and
conformity with all Laws relating to the condition, use, or
occupancy of the Premises during the Term. Tenant will also comply
in all material respects with the reasonable requirements of any
fire insurance underwriters or other similar body now or hereafter
constituted relating to or affecting the conditions, use, or
occupancy of the Premises. Tenant agrees to install at its sole cost
and expense any improvements, changes, or alterations required by
any governmental authority as a result of Tenant's use of the
Premises or its manner of operation or any Alterations made by
Tenant. If Tenant contests the validity or application of any Law or
other requirement of any governmental authority, Tenant shall
furnish a bond as reasonably required by Landlord and shall protect,
defend, hold harmless, and indemnify Landlord to the reasonable
satisfaction of Landlord from and against all claims, losses,
damages, costs, expenses, and liabilities arising from any such
contest, including reasonable attorneys' fees incurred by Landlord
in monitoring Tenant's compliance.
6.6. Tenant shall not do or permit anything to be done in or about the
Premises that will, in any way, unreasonably obstruct or interfere
with the rights of other Project Tenants or occupants of the Project
or materially injure them. Tenant shall not use the Premises in any
manner that will cause, maintain, permit, or constitute waste,
nuisance, or an unreasonable annoyance to the quiet enjoyment of any
other tenant of the Building (including, without limitation, the use
in any manner not permitted under this Lease of loudspeakers or
sound or light apparatus that can be heard or seen outside the
Premises). Tenant shall not allow the Premises to be used for any
unlawful purpose. Landlord expressly acknowledges and agrees that
notwithstanding anything to the contrary contained in this Section
6.6, Tenant may install and use speakers on the outside of the
Building for paging purposes and Tenant's use of such speakers for
such purposes shall not constitute a violation of this Section 6.6.
6.7. Tenant shall not use the Premises for sleeping, washing clothes,
cooking, or except as permitted under this Lease, the preparation,
manufacture, or mixing of anything that might emit any odor or
objectionable noises or lights. Landlord expressly acknowledges and
agrees that notwithstanding anything to the contrary contained in
this Section 6.7, (i) Tenant may install and use within the
Premises, kitchen type facilities and appliances for the purpose of
providing food and drink to Tenant's employees and invitees and (ii)
the emission of certain odors and the generation of certain noises
are incidental to the operation of Tenant's business on the Premises
and provided that such noise and odors do not violate any applicable
Laws, the generation of such odors and noise by Tenant on the
Premises shall not constitute a violation of this Section 6.7.
6.8. Tenant shall not, without the prior written consent of the Landlord:
use any apparatus or device in or about the Premises that will
change the temperature otherwise maintained by the air conditioning
or heating system; increase the amount of electricity or water, if
any, usually furnished or supplied for use of the Premises,
Building, or Project for the use described in the Tenant's Use
Clause; nor connect with electric current, except through approved
electrical outlets in the Premises, or water pipes, any apparatus or
device for the purposes of using electric current or water. Landlord
expressly acknowledges and agrees that notwithstanding anything to
the contrary contained in this Section 6.8, Tenant shall be using
heat generating equipment as part of Tenant's business operations on
the Premises, and that Tenant's use of such equipment shall not
constitute a violation of this Section 6.8.
6.9. Tenant shall not do or permit anything on the Premises that will
cause damage to the Premises. Any overloading of electrical circuits
shall be the responsibility of Tenant. No machinery, apparatus, or
other appliance shall be used or operated in or on the Premises that
will in any manner weaken, materially injure or damage the Premises
due to excessive vibrations, shaking or other causes. Landlord
reserves the right to prescribe the weight and position of all
files, safes, and heavy equipment that Tenant desires to place in
the Premises so as to properly distribute weight. Tenant shall be
responsible for all structural engineering required to determine
structural load. Landlord acknowledges and agrees that
notwithstanding anything to the contrary contained in this Section
6.9, certain equipment and machinery used by Tenant in the operation
of its business on the Premises will cause vibrations and noise, and
that provided that Tenant's use of such equipment and machinery does
not violate any applicable Laws, Tenant's use of such equipment and
machinery on the Premises shall not constitute a violation of this
Section 6.9.
6.10. Tenant shall not display or sell merchandise or allow carts,
portable signs, devices or other objects to be stored or remain
outside the defined exterior and permanent doorways of the Premises.
Notwithstanding anything to the contrary contained in this Section
6.10, Tenant shall have the right to use, without any additional
charge to Tenant, approximately 15,000 square feet in the parking
area located behind the Building for outside storage/staging (said
portion of the parking area being hereinafter referred to as the
"Exterior Storage Area") provided that Tenant obtains approval to do
so from the City of Vista, California and complies with any
screening requirements imposed by such City as a condition of such
approval.
6.11. Tenant's usual and customary business hours are 5:00 a.m. to 7:00
p.m., Monday through Saturday provided, however, that Tenant shall
have access to the Premises on a twenty-four (24) hours per day and
three hundred sixty five (365) days per year basis, and Tenant may
conduct its business on the Premises on such days and during such
hours as Tenant from time to time deems necessary, in its sole and
absolute discretion.
6.12. Tenant shall not conduct or permit any sale by auction on the
Premises.
6.13. Tenant shall have for its use and benefit the non-exclusive right in
common with Landlord and future owners, other tenants of buildings
contained within the Unit and their respective agents, employees,
customers, licensees, subtenants, invitees, and all others to whom
Landlord has granted or may grant such rights, to use the Unit
Shared Use Areas during the entire Term for ingress and egress,
roadway, automobile parking and sidewalks. However, Landlord shall,
at all times, have the right and privilege of determining the nature
and extent of the Unit Shared Use Areas and of making such changes
which in its opinion are deemed to be desirable provided, however,
proper and reasonable access to the Premises is maintained at all
times and any such change does not unreasonably interfere with or
disrupt, or have a material adverse effect on, Tenant's business
operations in the Premises. Such changes may include, but shall not
be limited to the following: Converting Unit Shared Use Areas into
leasable areas; adding additional buildings and improvements on the
Lot or on adjacent lots, which may share access, Project Enhancement
Areas and Unit Shared Use Areas, and parking facilities;
constructing additional parking facilities in the Unit Shared Use
Areas; increasing or decreasing Unit Shared Use Area land and/or
facilities; changing the location, number, size, and shape of
driveways, entrances, exits, lobbies, automobile parking spaces,
parking areas, loading and unloading areas, ingress, egress,
landscaped areas, walkways, the direction and flow of traffic
(provided such changes shall not unreasonably restrict or prevent
Tenant from having proper access to the Premises for loading,
parking or other normal day to day operations); installation of
prohibited areas, landscaped areas, and all other facilities
thereof. Tenant acknowledges that such activities may result in
occasional inconvenience to Tenant. Landlord reserves the right from
time to time to close temporarily any of the Unit Shared Use Areas
for maintenance purposes so long as reasonable vehicular and
pedestrian access to the Premises is available. Nothing contained
herein shall be deemed to create any liability upon Landlord as a
result of said changes or for any damage to motor vehicles of
customers or employees or for loss of property from within such
motor vehicles, unless caused by the negligence or willful
misconduct of Landlord, its agents, servants or employees. Any
changes in the Unit Shared Use Area land and/or facilities (other
than the parking reserved for Tenant's use pursuant to the last
sentence of this Section 6.13 and the Exterior Storage Area) shall
not entitle Tenant to any compensation or diminution or abatement of
rent, nor shall any diminution of such areas be deemed constructive
or actual eviction. Except for the parking reserved for Tenant's use
pursuant to the last sentence of this Section 6.13 and the Exterior
Storage Area, all Unit Shared Use Areas and facilities not located
within the Premises, which Tenant may be permitted to use and
occupy, pursuant to this Lease, are to be used and occupied under a
revocable license. Notwithstanding anything to the contrary
contained in this Section 6.13, (i) Tenant shall at all times have
the exclusive right to use One Hundred Seventy-Four (174) parking
spaces in the parking areas on the Lot which are adjacent to the
Building (some of which may be in the Exterior Storage Area) at no
additional charge to Tenant, (ii) as of the date hereof, the truck
parking area at the west end of the Building is reserved for use by
the current tenant of Suite C in the Building and (iii) at such time
as Tenant commences occupying Suite C, the use of such truck parking
area shall be reserved for Tenant's exclusive use at no additional
charge to Tenant.
6.14. Landlord reserves the right from time to time to install, use,
maintain, repair and replace pipes, ducts, conduits, wires and
appurtenant meters and equipment for service to other parts of the
Project above the ceiling surfaces, below the floor surfaces, within
the walls and in central core areas of the Premises, and to relocate
any pipes, ducts, conduits, wires and appurtenant meters and
equipment included in the Premises that are located in the Premises
or located elsewhere outside the Premises, and to expand the Project
provided that any such installation, use, maintenance, repair and
replacement does not unreasonably interfere with or disrupt, or have
a material adverse effect on, Tenant's business operations in the
Premises. Notwithstanding anything to the contrary contained in this
Section 6.14, in the event Landlord elects to relocate any pipes,
ducts, conduits, wires and appurtenant meters and equipment included
in the Premises that are located in the Premises or located
elsewhere outside the Premises, any such items shall be relocated to
locations reasonably acceptable to Tenant. Any work to be performed
in the Premises by Landlord under this Section 6.14 shall be
performed upon reasonable advance notice to Tenant during Tenant's
normal business hours provided, however, that Landlord shall not
have access rights to the portion of the Premises housing Tenant's
computer equipment or any portion of the Premises from time to time
designated as a "secure area" by Tenant unless accompanied by a
representative of Tenant.
6.15. Landlord shall, at all times during the Term, have the sole and
exclusive control of the Unit Shared Use Areas, and may, at any time
during the Term, exclude and restrain any person from use or
occupancy thereof, excepting, however, Tenant, and bona fide
customers, patrons, contractors, invitees and service-suppliers of
Tenant; and other tenants of Landlord who make use of such areas in
accordance with the Rules and Regulations established by Landlord
from time to time with respect thereto. The rights of Tenant
hereunder, in and to the Unit Shared Use Areas, shall, at all times,
be subject to the rights of Landlord, other tenants of the Building
and all others to whom Landlord has granted such rights, to use the
same in common with Tenant. Tenant shall not, at any time, interfere
with the rights of Landlord, other tenants, or any other person
entitled to use the Unit Shared Use Areas. It shall be the duty of
Tenant to keep all Unit Shared Use Areas free and clear of any
obstructions created or permitted by Tenant or resulting from
Tenant's operations on the Premises and to permit the use of any of
the parking and roadway access areas only for normal parking and
ingress and egress by the such customers, patrons and
service-suppliers to and from the Building.
6.16. If, in the reasonable opinion of Landlord, unauthorized persons are
using any Unit Shared Use Areas by reason of the presence of Tenant
in the Premises, Tenant, upon written demand of Landlord, shall use
reasonable efforts to prevent such use by such unauthorized persons.
Nothing herein shall affect the rights of Landlord, at any time, to
remove any such unauthorized persons from the Unit Shared Use Areas
or to restrain the use of any of the Unit Shared Use Areas by
unauthorized persons.
6.17. Tenant agrees to comply with such reasonable rules and regulations
(the "Rules and Regulations") in the use of the Premises and the
Unit Shared Use Areas as Landlord may adopt from time to time for
the orderly and proper operation of the Project provided that no
such Rule or Regulation shall conflict with or materially diminish
any right granted to Tenant under this Lease or change in any manner
Tenant's hours of operation at the Premises or the parking rights
granted to Tenant in Section 6.13 of this Lease. Tenant shall use
reasonable efforts to cause others who use the Unit Shared Use Areas
with Tenant's express or implied permission to abide by Landlord's
Rules and Regulations. Landlord shall provide Tenant thirty (30)
days written notice of any amendment to any existing Rules and
Regulations or the adoption of any new Rules and Regulations.
Landlord acknowledges and agrees that notwithstanding anything to
the contrary contained in the Rules and Regulations, (i) trucks
(including tractor/trailer combinations) servicing Tenant's business
on the Premises and vehicles belonging to business visitors to
Tenant's business on the Premises may park overnight in the parking
places reserved for Tenant's exclusive use pursuant to Section 6.13
of this Lease, (ii) Tenant may install one or more antennas and
satellite dishes on the Building in locations reasonably acceptable
to Landlord, and (iii) Tenant may install a card key access system
at the main entrance to the Premises and once Tenant takes
possession of Suite C within the Building, at the main entrance of
the Building. and at any other points of ingress/egress to the
Building or at interior points in the Building, without Tenant being
deemed to be in breach of any such Rules and Regulations. However,
Tenant shall provide Landlord with reasonably sufficient card keys
to enable Landlord to have the access necessary to perform
Landlord's obligations described in this Lease. Landlord shall not
be responsible to Tenant for the non-performance by any other tenant
or occupant of the Project of any of such Rules and Regulations.
Subject to the limitations contained in the first sentence of this
Section 6.17, such Rules and Regulations may include, but are not
limited to, the following:
6.17.1. Normal business hours;
6.17.2. Intentionally omitted:
6.17.3. The restricting of employee parking to a limited,
designated area or areas and the imposition of fines for
violations of such restrictions or designations; and
6.17.4. The regulation of removal, storage, and disposal of
Tenant's refuse and other rubbish.
6.18. Tenant shall make a reasonable inspection as to the existence of any
Hazardous Substances on the Premises prior to the commencement of
the Lease as necessary to satisfy itself as to the condition of the
Premises.
6.19. Tenant, at its sole cost and expense, will comply in all material
respects with all Hazardous Substances Laws (including, but not
limited to any federal, state or local statutes, laws, ordinances or
regulations in effect either at the time of execution of the Lease
or at any time during the term, that control, classify, regulate,
list or define Hazardous Substances) relating to the presence,
treatment, storage, transportation, disposal, release or management
of Hazardous Substances in, on, under or about the Project. Tenant
shall not enter into any settlement agreement, consent decree or
other compromise with respect to any Claims relating to or in any
way connected with Hazardous Substances in, on, under or about the
Project, without first notifying Landlord of Tenant's intention to
do so and affording Landlord reasonable opportunity to investigate,
appear, intervene and otherwise assert and protect Landlord's
interest in the Project.
6.20. Tenant shall not cause or permit any Hazardous Substance to be used,
stored, generated, or disposed of on or in the Premises by Tenant,
Tenant's agents, employees, contractors, or invitees without first
obtaining Landlord's written consent. If Hazardous Substances are
used, stored, generated, or disposed of on or in the Premises except
as permitted above, or if the Premises become contaminated in any
manner for which Tenant is legally liable, Tenant shall indemnify,
defend and hold harmless the Landlord from any and all claims,
damages, fines, judgments, penalties, costs, liabilities, or losses
(including, without limitation, a decrease in value of the Premises,
damages caused by loss or restriction of rentable or usable space,
or any damages caused by adverse impact on marketing of the space,
and any and all sums paid for settlement of claims, litigation
expenses, attorneys' fees, consultant, and expert fees) of whatever
kind or nature, known or unknown, contingent or otherwise, arising
during or after the Lease term and arising as a result of that
contamination by Tenant. This indemnification includes, without
limitation, any and all costs incurred because of any investigation
of the site or any cleanup, removal, or restoration mandated by a
federal, state, or local agency or political subdivision. Without
limitation of the foregoing, if Tenant causes or permits the
presence of any Hazardous Substance on the Premises and that results
in contamination, Tenant shall promptly, at its sole expense, take
any and all necessary actions to return the Premises to the
condition existing prior to the presence of any such Hazardous
Substance on the Premises. Tenant shall first obtain Landlord's
approval for any such remedial action. The provisions of this
Section shall be in addition to any other obligations and
liabilities Tenant may have to Landlord at law or equity and shall
survive the transactions contemplated herein and shall survive the
termination of this Lease. Notwithstanding the foregoing, Tenant may
use nominal amounts of Hazardous Substances as are normal and
customary for general office use, provided that Tenant complies with
all applicable Laws relating thereto.
6.20.1. As used herein, "Hazardous Substance" means any substance
that is toxic, ignitable, reactive, or corrosive and that
is now or hereafter regulated by any local or State
government with jurisdiction over the Premises or Tenant,
or the United States Government. "Hazardous Substance"
includes, but is not limited to, any and all material or
substances that are defined as "hazardous waste,"
"extremely hazardous waste," or a "hazardous substance"
pursuant to Law. "Hazardous Substance" includes, but is
not limited to, petroleum based products, paints and
solvents, lead, cyanide, DDT, printing inks, acids,
friable asbestos, PCB's, contaminants, toxic wastes, toxic
pollutants, dredged soil, solid waste, pesticides,
herbicides, fertilizers and other agricultural chemicals
or wastes, incinerator residue, sewage, garbage, sewage
sludge, munitions, chemical products and wastes, and any
other liquid, solid or gaseous pollutants or hazardous
substances or wastes which are or may become subject to
regulation under any State or Federal environmental
protection law or regulation.
6.20.2. Any Hazardous Substance permitted on the Premises as
provided above, and all containers therefore, shall be
used, kept, stored, and disposed of in a manner that
complies in all material respects with all Laws applicable
to such Hazardous Substance.
6.20.3. Tenant shall not discharge, leak, or emit, or permit to be
discharged, leaked, or emitted, any material into the
atmosphere, ground, sewer system, or any body of water, if
that material (as is reasonably determined by any
applicable governmental authority) does or may pollute or
contaminate the same, or may adversely affect (a) the
health, welfare, or safety of persons, whether located on
the Premises or elsewhere, or (b) the condition, use or
enjoyment of the building or any other real or personal
property. Tenant shall immediately notify Landlord of any
release of any Hazardous Substance on or near the Premises
of which Tenant acquires actual knowledge whether or not
such release is in a quantity that would otherwise be
reportable to a public agency and shall also comply with
the notification requirements of California Health &
Safety Code section 25359.7.
6.20.4. Within 30 days after the commencement of each Lease Year,
Tenant shall disclose to Landlord the names and
approximate amounts of each and every Hazardous Substance
that Tenant intends to store, use, or dispose of on the
Premises in the coming Lease Year. In addition, at the
commencement of each Lease Year, beginning with the second
Lease Year, Tenant shall disclose to Landlord the names
and amounts of all Hazardous Substances that were actually
used, stored, or disposed of on the Premises if those
materials were not previously identified to Landlord at
the commencement of the previous Lease Year.
6.21. Tenant shall notify Landlord of any of the following actions
affecting Landlord, Tenant, or the Project that result from or in
any way relate to Tenant's use of the Premises promptly after
receiving notice of the same: (a) any enforcement, clean-up, removal
or other governmental or regulatory action instituted, completed or
threatened under any Hazardous Substances Law; (b) any Claim made or
threatened by any person relating to damage, contribution,
liability, cost recovery, compensation, loss or injury resulting
from or claimed to result from any Hazardous Substance; and (c) any
reports made by any person, including Tenant, to any environmental
agency relating to any Hazardous Substance, including any
complaints, notices, warnings or asserted violations. Tenant will
also deliver to Landlord, as promptly as possible and in any event
within five business days after Tenant first receives or sends the
same, copies of all Claims, reports, complaints, notices, warnings
or asserted violations relating in any way to the Premises or
Tenant's use of the Premises. Upon Landlord's written request,
Tenant will promptly deliver to Landlord documentation acceptable to
Landlord reflecting the disposal in accordance with the requirements
of all applicable Laws of all Hazardous Substances removed or to be
removed from the Premises. All such documentation will list Tenant
or its agent as a responsible party and will not attribute
responsibility for any such Hazardous Substances to Landlord or
Property Manager.
6.22. Tenant acknowledges and agrees that all reporting and warning
obligations required under Hazardous Substances Laws resulting from
or in any way relating to Tenant's use of the Premises are Tenant's
sole responsibility, regardless whether the Hazardous Substances
Laws permit or require Landlord to report or warn.
6.23. Tenant shall obtain from the City of Vista, the Fire Department, and
any other government agencies all permits necessary to operate its
business at the Premises. In the event any of these agencies require
building modifications to adapt the Building to Tenant's current or
future use, Tenant shall make such modifications at Tenant's sole
expense.
6.24. Landlord shall, at an interval determined at Landlord's discretion,
monitor Tenant's program and efforts to manage and control Hazardous
Substances and conduct inspections that it deems proper to determine
whether any contamination has taken place. If contamination caused
by Tenant is discovered through such monitoring and inspection, the
following program shall be instituted at Tenant's expense:
6.25. A low-level geotechnical reconnaissance shall be conducted to
determine soil classification, depth of ground water, nearest
drinking water aquifer, direction of ground water flow.
6.26. Based on the result of this inspection, three (3) to (6) ground
water monitor wells shall be placed at strategic points on the
Premises or other appropriate locations in the Project. These are
wells shall use specially prepared PVC and stainless steel pipes and
fittings as recommended by the testing engineers or technicians.
6.27. A "background analysis" of the site shall then be conducted for
"priority pollutants." This analysis establishes the pollutants
present in the soil and ground water at the beginning of the
monitoring period. Landlord and Tenant should maintain this analysis
on file for future reference and comparison.
6.28. Every three (3) years, or such other interval as may be recommended
by the testing engineers or technicians, an analysis shall be made
of the ground water drawn from the monitoring wells to determine if
new or increased pollutants are present in the ground water. An
industrial environmental laboratory using a spectrometer and other
appropriate analytical processes shall conduct analysis.
6.29. If, on the basis of this testing procedure it is determined that
there is continued pollution of the Premises, Tenant shall
immediately take steps as required, at Tenant's sole expense, to
contain, clean up, and discontinue the contamination of the soil
and/or groundwater.
6.30. Regular monitoring of the ground water shall then continue for the
duration of the lease period.
6.31. The discovery of Hazardous Substances on the Premises shall not
constitute grounds for rescission or termination of the Lease by the
Tenant, nor for offset against, or abatement of, any rents due under
the terms of the Lease.
7. RENT.
7.1. Tenant shall pay the Rent to Landlord in lawful money of the United
States of America, without deduction, setoff, prior notice, or
demand. Rent is due on or before the first day of each calendar
month, commencing on the Commencement Date and continuing during the
Term. Base Rent for the first calendar month or portion of it shall
be paid upon execution of this Lease. Base Rent for any partial
month shall be prorated at the rate of 1/30th of the Base Rent per
day. Thereafter, Rent shall be payable in accordance with the terms
of this Section. The total consideration for the Term of this Lease
shall be increased by the amount of any such prorated installment
hereby required. All Rent shall be paid to Landlord at the address
provided in this Lease or at such other place as Landlord may from
time to time designate in writing.
7.2. Landlord shall have the right to accept all Rent and other payments,
whether full or partial, and to negotiate checks and payments
thereof, without any waiver of rights, irrespective of any
conditions to the contrary that Tenant seeks to impose. No security
or guaranty that may now or later be furnished to Landlord for the
payment of Rent herein reserved or for performance by Tenant of the
other covenants or conditions of this Lease shall in any way be a
bar or defense to any action in unlawful detainer, or for the
recovery of the Premises or to any action that Landlord may at any
time commence for a breach of any of the covenants or conditions of
this Lease.
7.2.1. The amount of Base Rent (and the corresponding Monthly
Installments of Base Rent) payable hereunder shall be
adjusted annually (the "Adjustment Date"), commencing on
Tenant's First Adjustment Date. Adjustments, if any, shall
be based upon the following:
7.2.2. Commencing on October 1, 2004, the Base Rent shall be
$37,648.00;
7.2.3. Commencing on October 1, 2005, the Base Rent shall be
$38,778.00;
7.2.4. Commencing on October 1, 2006, the Base Rent shall be
$39,941.00;
7.2.5. Commencing on October 1, 2007, the Base Rent shall be
$41,139.00;
7.2.6. Commencing on October 1, 2008, the Base Rent shall be
$42,373.00;
7.2.7. Commencing on October l, 2009, the Base Rent shall be
$43,645.00;
7.2.8. Commencing on October 1, 2010, the Base Rent shall be
$44,954.00,
7.2.9. Commencing on October 1, 2011, the Base Rent shall be
$46,303.00;
7.2.10. Commencing on October 1, 2012, the Base Rent shall be
$47,692.00.
7.2.11. Rent or any other sum not paid to Landlord when due shall
bear interest at the rate of 10% per annum from the date
due until fully paid. Paying such interest shall not
excuse or cure any default by Tenant under this Lease.
7.3. If this Lease terminates before the Expiration Date for reasons
other than the occurrence of an Event of Default under this Lease,
Base Rent shall be prorated to the date of termination, and Landlord
shall immediately repay to Tenant all Base Rent then prepaid and
unearned.
8. LATE CHARGES.
8.1. If during any twelve (12) consecutive month period of the Term,
Tenant twice fails to pay any payment of Rent or any other sum
required hereby within ten (10) days after the same shall be due and
payable, and Tenant thereafter during the same period fails to pay
any other payment of Rent or any other sum required hereby within
ten (10) days after the same shall be due and payable, a late charge
by way of damages shall be immediately due and payable with respect
to such subsequent late payment in addition to the interest provided
above. Tenant recognizes and acknowledges that default in making,
when due, payments of Rent required hereby will result in Landlord
incurring additional costs and expenses. Such costs and expenses
include, but are not limited to, processing and accounting charges,
legal costs, late charges that may be imposed on Landlord by the
terms of any encumbrance and note secured by any encumbrance
covering the Premises, loss to Landlord of the use of the money due,
and late charges that may be imposed on Landlord by the terms of any
mortgage or trust deed covering the Premises. Tenant hereby agrees
that, in the event of any such late payment, Landlord will be
damaged and will be entitled to compensation for these damages, but
such damages are, and will continue to be extremely difficult and
impractical to ascertain for the following reasons: (i) the damages
to which Landlord will be entitled in a court of law will be based
on the difference between the actual value of Rent on the Premises
at the time such payment is due and the Rent for the Premises as set
forth in this Lease which difference must be based on opinions of
rental value of the Premises which can vary in significant amounts;
and (ii) it is impossible to predict as of the date on which this
Lease is entered into whether the rental value of the Premises will
increase or decrease as of the date of any future payments, and
Tenant desires to limit the amount of damages for which Tenant might
be liable should Tenant fail to make any payment of Rent required
hereby. Tenant therefore agrees (i) that a late charge equal to five
percent (5%) of each payment of Rent that becomes delinquent is a
reasonable estimate of said damages to Landlord and (ii) to pay any
late charge due hereunder on demand.
8.2. Acceptance of any late charge, or any part thereof, shall not
constitute a waiver of Tenant's default with respect to the overdue
amount, or prevent Landlord from exercising any of the other rights
and remedies available to Landlord after the giving of any required
notice and the expiration of any applicable cure period provided in
this Lease. Any late charge shall be deemed additional Rent and
collection thereof shall be in addition to all of Landlord's other
rights and remedies hereunder or at law or in equity and shall be
construed as liquidated damages or as limiting Landlord's remedies
in any manner. If Rent is not received by the due date, Landlord
shall notify Tenant and Tenant shall, on demand of Landlord,
immediately cure the default by presentment of Rent and late charge
(if applicable) to Landlord.
8.3. Any payments of any kind returned for insufficient funds will be
subject to an additional handling charge of twenty-five dollars
($25.00).
8.4. Tax Allocation: For purposes of the Internal Revenue Code, Landlord
and Tenant hereby agree to allocate the stated rents provided herein
to the periods that correspond to the actual Rent payments as
provided under the terms and conditions of this Lease.
9. SECURITY DEPOSIT.
9.1. On execution of this Lease, Tenant shall deposit with Landlord the
Security Deposit for the full and faithful performance by Tenant of
the provisions of this Lease. Upon the occurrence of and during the
continuation of an Event of Default under this Lease, Landlord can
use, apply, or retain the Security Deposit, or any portion of it, to
cure the applicable Event of Default, for the payment of any other
amount that Landlord may spend or become obligated to spend by
reason of such Event of Default, or to compensate Landlord in
accordance with the terms of this Lease, for any loss or damage
sustained by Landlord resulting from such Event of Default. Tenant
shall immediately upon Tenant's receipt of Landlord's written demand
therefor, pay to Landlord a sum equal to the portion of the Security
Deposit expended or applied by Landlord as provided in this Section
so as to maintain the Security Deposit in the sum initially
deposited with Landlord. It is expressly agreed that the Security
Deposit is not an advance rental deposit or a measure of Landlord's
damages in the case of an Event of Default. If no Event of Default
exists at the expiration or termination of this Lease, Landlord
shall return the Security Deposit, if any remains, to Tenant, less
any amounts as may be required to restore the Premises to the
condition required under Article titled "Surrender of Premises."
Landlord's obligations with respect to the Security Deposit are
those of a debtor and not a trustee. Landlord can maintain the
Security Deposit separate and apart from Landlord's general funds or
can commingle the Security Deposit with Landlord's general and other
funds. Landlord shall not be required to pay Tenant interest on the
Security Deposit.
10. RENTAL ABATEMENT.
10.1. Tenant shall have the privilege to occupy the Premises without
payment of the entire Base Rent for the months of November 2003,
December 2003, January 2004 and February 2004 only.
10.2. Tenant shall continue to be responsible for additional rent,
including, but not limited to, Operating Expenses and any other
charges due pursuant to the provisions of this Lease (with the
exception of the entire Base Rent) during the rental abatement
period.
11. OPTION TO EXTEND.
11.1. Tenant shall have Two (2), Five (5)-year option(s) to extend the
Term of this Lease, subject to the following conditions precedent:
(i) no Event of Default exists at the time Tenant exercises the
applicable option to extend; and (ii) Tenant shall give Landlord
notice in writing at least six (6) months prior to the expiration of
the initial Term or the first extended term, as the case may be,
that Tenant intends to extend the Term. Each extended Term shall be
subject to all of the terms and conditions of this Lease, except
that the amount of Base Rent for each such extended term shall be
adjusted to 95% of the then prevailing market rate for comparable
space at the time the applicable extended term is to commence. The
market rate shall be determined by agreement of the parties.
11.2. If Landlord and Tenant are unable to agree as to the market rate for
the Premises by the date which is three (3) months prior to the
expiration of the then current Term, Landlord may solicit offers to
lease the Premises to someone other than Tenant. If Landlord
receives an offer from someone other than Tenant to lease the
Premises, Landlord shall notify Tenant of such offer. Within ten
(10) business days (exclusive of holidays and weekends) after
Landlord gives such notice, Tenant may elect, in writing sent to
Landlord, to lease the Premises on the same terms as are contained
in such offer. If Tenant fails to make such election, Tenant's
rights, as set forth in this article, shall be automatically
terminated.
12. ADDITIONAL SPACE -OPTION TO EXPAND.
12.1. If, at, any time during the first year of this Lease, Tenant desires
to lease the area of the Building known as Suite "C" (referred to
herein as the "Additional Space"), Tenant shall notify Landlord of
its intention to lease the Additional Space with forty-five (45)
days notice in writing. If Tenant elects to lease the Additional
Space, Tenant shall lease the Additional Space on the same terms and
conditions of this Lease. Whether or not Tenant exercises its option
to lease the Additional Space within the first year, Tenant shall
occupy the entire building (Suites A, B and C, totaling
approximately 85,004 square feet) commencing on the first day of the
second lease year.
13. TENANT IMPROVEMENTS.
13.1. Tenant shall construct and install the Tenant Improvements in the
Premises. Tenant's design plans and material specifications for the
Tenant Improvements (the "Tenant Improvement Plans") shall be
submitted to Landlord for review and approval as hereinafter
provided in this Lease. Landlord, at Landlord's cost, shall provide
Tenant CAD drawings for each floor of the Building, the site plan
for the Lot: and the Building and a survey of the Lot indicating the
location of easements and utilities. Landlord shall have a period of
fourteen (14) days after the date on which Landlord receives the
Tenant Improvement Plans in which to approve the Tenant Improvement
Plans or to request corrections or changes thereto. Landlord's
approval of the Tenant Improvement plans shall not be unreasonably
withheld, conditioned or delayed. If Landlord neither approves nor
disapproves the Tenant Improvement Plans within such fourteen (14)
day period, then Landlord shall be deemed to have approved the
Tenant Improvement Plans. If Landlord disapproves of all or any
portion of the Tenant Improvement Plans, Landlord shall give Tenant
a written explanation of the reason(s) for such disapproval and the
corrections or changes that are necessary for Landlord to approve
the Tenant Improvement Plans. Landlord and Tenant shall fully
cooperate with one another to revise the Tenant Improvement Plans
until the Tenant Improvement Plans are acceptable to Landlord and
Tenant. Landlord's contractor shall cooperate with Tenant's
contractor in the review, approval, governmental processing of and
obtaining all requisite permits for the Tenant Improvement Plans. At
the time that the Tenant Improvement Plans, including and
corrections and changes thereto, are approved by Landlord and Tenant
(or deemed approved by Landlord under this Section 13.1), the
approved Tenant Improvement Plans shall be signed and dated by
Landlord and Tenant and shall be known as the "Approved Final Tenant
Improvement Plans."
13.2. Tenant's contractor shall construct the Tenant Improvements
substantially in accordance with the Approved Final Tenant
Improvement Plans and all applicable Laws. Notwithstanding the
foregoing, it is agreed that to the extent Tenant did not know of,
or should not have reasonably discovered a "Building Issue" (as
hereinafter defined) and the existence of such Building Issue is
discovered during construction of the Tenant Improvements and is the
cause of an increase in the cost of construction of the Tenant
Improvements, Landlord shall bear the liability for such increased
costs. For purposes hereof, the term "Building Issue" shall mean
either: (i) a structural defect in the Building in the nature of a
column failure or a slab failure or (ii) defects in the facade,
exterior skin or exterior windows of the Building.
13.3. Prior to Landlord's completion of Landlord's Work, Landlord shall
permit Tenant and its employees, agents and contractors to enter
upon the Premises to commence construction of the Tenant
Improvements, provided, however, that the construction of the Tenant
Improvements shall not unreasonably interfere with the progress of
the completion of Landlord's Work. Landlord shall not be entitled to
impose a charge of any kind for profit, overhead, general conditions
or supervision in connection with the construction of the Tenant
Improvements or charge Tenant or Tenant's contractor, directly or
indirectly, for the use of any elevator, hoist, water, electricity,
heating, ventilation or air conditioning supplied to the Premises,
security services or parking used or consumed in the course of the
construction of the Tenant Improvements.
13.4. Landlord shall apply for any certificate of occupancy required for
Tenant to commence occupancy of the Premises in accordance with the
terms of this Lease.
14. TENANT IMPROVEMENT ALLOWANCE.
14.1. Intentionally omitted.
14.2. Intentionally omitted.
15. OPERATING EXPENSES.
15.1. For purposes of this Lease, Operating Expenses shall mean all direct
costs paid or incurred in connection with the operation, management,
repair, and maintenance, as determined by standard accounting
practices, including, but not limited to: Common Area expenses; real
property taxes and assessments and any taxes or assessments
hereafter imposed in lieu thereof; rent taxes, gross receipt taxes
(whether assessed against Landlord or assessed against Tenant and
paid by Landlord, or both); water and sewer charges; accounting,
audit, verification, legal, and other consulting fees (but excluding
legal fees in connection with a dispute between Landlord and any
tenant); the net cost and expense of insurance for which Landlord is
responsible hereunder or which Landlord or any first mortgagee with
a lien affecting the Building reasonably deems necessary in
connection with the Building, maintenance; repairs; utilities and
utilities surcharge; management fees; pest control, janitorial, and
security services; reserves, any and all assessments Landlord must
pay for the Building pursuant to any covenants, conditions or
restrictions and agreements affecting the Building or the Project,
any costs levied, assessed or imposed by, or at the direction of,
regional, municipal, or local government authority in connection
with the use or occupancy of the Building or the Premises or the
parking facilities serving the Building or the Premises, including
required traffic management and fire safety programs and the
Americans With Disabilities Act; the cost (amortized over such
reasonable period as Landlord shall determine together with interest
at the rate of Landlord's financing of such improvements or at a
rate allowed by Law on the unamortized balance) of any capital
improvements made to the Project or the Common Areas by the Landlord
or replacement of any building equipment (a) needed to operate the
Building or the Common Areas as required by any federal, state,
regional, municipal, or local governmental authority, (b) installed
as a labor-saving device or to effect other economies in the
operation or maintenance of the Building, or (c) needed periodically
to maintain the appearance of the Building and its quality; costs
incurred in the management of the Building including supplies,
wages, salaries, payroll expenses, taxes and similar governmental
charges with respect thereto of employees used in the management,
repair, operation, and maintenance of the Building; Project or
Building management office rental; a market rate management fee; air
conditioning, waste disposal, utility systems, mechanical systems,
heating, ventilating, and elevator maintenance costs; supplies,
materials, equipment, and tools; costs of maintaining the plumbing,
heating, ventilating, air conditioning, and electrical systems
installed or furnished by Landlord; depreciation of the cost of
acquiring or the rental value of personal property used in
maintenance, and all other upkeep of Common Areas; costs and
expenses of gardening, landscaping, and interior plant service;
maintenance of signs (other than Tenant's signs); personal property
taxes levied on or attributable to personal property used in
connection with the Building, including the Common Areas; costs and
expenses of resurfacing, repairing, maintenance, painting, lighting,
cleaning, refuse removal, security, and similar items, including
appropriate reserves for the parking garage; and, appropriate
reserves to provide for maintenance, repair and replacement of
improvements in the Building as determined by Landlord based on
annual projections of such costs.
15.2. Landlord and Tenant acknowledge and agree that if the Building is
not ninety-five percent (95%) occupied during any calendar year, on
a monthly average, Operating Expenses shall be increased to reflect
the Operating Expenses of the Building as though it was ninety-five
(95%) occupied and the additional rent payable by Tenant shall be
based upon the Operating Expenses so adjusted. Operating Expenses
shall not include depreciation on buildings or equipment therein
(other than personal property as provided above), Landlord's
executive salaries or real estate brokers' commissions, utilities
expenses related to the operation of the parking facility,
principal, or interest expense, except to the extent attributable to
the improvements described above, the cost of capital expenditures
not included above, Landlord's general overhead and general
administrative expenses not related to the management and operation
of the Building, any and all costs of selling, exchanging, or
refinancing the Project, including escrow charges, transfer taxes
and load fees and points, costs incurred by Landlord to repair
damage to the Building to the extent Landlord is reimbursed by
insurance proceeds, costs incurred to install, improve, renovate,
decorate, or redecorate space for tenants or vacant space, including
costs incurred by Landlord in connection with any work letter
relating to such space, all items and services for which Tenant or
any other tenant of the Building reimburses Landlord (other than by
pass-throughs of Operating Expenses) or that Landlord provides
selectively to one or more tenants (other than Tenant) without
reimbursement, advertising and promotional expenditures, tax
penalties incurred as a result of Landlord's negligence or inability
or refusal to make payments when due and costs incurred due to
Landlord's violation of any of the terms and conditions of this
Lease or any other lease relating to the Building.
15.3. Tenant shall pay to Landlord, as additional rent, Tenant's Pro Rata
Share of such Operating Expenses in the following manner:
15.3.1. Tenant shall pay to Landlord, as additional rent, on the
first day of each calendar month of the term of this
Lease, an amount equal to Landlord's best estimate (based
on Landlord's budgeted figures) of Tenant's monthly Pro
Rata Share of the Operating Expenses. Landlord estimates
that the Operating Expenses will be approximately
$1,100.00 per month during the first year of the Lease.
The Operating Expense shall not increase more than three
percent (3%) from the previous year's Operating Expenses.
However, when Tenant, occupies Suite C, the Operating
Expenses shall change accordingly.
15.3.2. Within ninety (90) days following the end of each calendar
year, Landlord shall furnish Tenant with a statement
covering the calendar year just expired (certified as
correct by an authorized representative of Landlord, or if
requested by a majority of the tenants in the Building by
a certified public accountant) showing (i) the total
Operating Expenses; (ii) the amount of Tenant's Pro Rata
Share of such Operating Expenses for such calendar year;
and (iii) the payments made by Tenant with respect to such
period as set forth in this Article. If Tenant's payments
exceed Tenant's Pro Rata Share of such Operating Expenses,
Tenant shall be entitled to offset the excess against the
next payments due Landlord as set forth in this Article.
However, if Tenant's Pro Rata Share of such Operating
Expenses exceeds Tenant's payments, Tenant shall pay
Landlord the deficiency within ten (10) days after receipt
of such statement. In addition, Tenant's Pro Rata Share of
the total Operating Expenses for the previous calendar
year shall be used as an estimate for the current year and
paid to Landlord pursuant to the provisions of this
Article.
15.3.3. Landlord may, at its option, by service of written notice
on Tenant, choose to alter any payment periods provided
for by this Lease under the Articles titled "Rent,"
"Operating Expenses," "Taxes; Assessments," "Maintenance,"
"Indemnity and Exculpation" and "Insurance."
15.4. If at any time during the term of this Lease, it shall be determined
by rule, regulation or competent authority of any governmental or
quasi-governmental entity having jurisdiction over the Premises or
the Project, that any material, substance, service equipment, or
system must be installed in or removed from the Premises or the
Building in order to protect or maintain the health or safety of
Tenant or those entering upon or working within the Premises,
Landlord shall make such installation or removal and the cost of
such installation or removal shall be included in Operating
Expenses, provided that the requirement of the installation or
removal of any such material, substance, service or equipment is not
occasioned by the fault of Tenant in which event such cost shall be
borne by Tenant.
16. TAXES, ASSESSMENTS.
16.1. Tenant shall pay, before delinquency, all taxes that are levied and
assessed against Tenant's Personal Property, and that become payable
during the Term. Tenant shall furnish Landlord with reasonably
satisfactory evidence of these payments upon Tenant's receipt of
Landlord's written request therefor. "Taxes" shall include
assessments, license fees, license taxes, business license fees,
commercial rental taxes, levies, charges, penalties, taxes or
similar impositions, imposed by any authority having the direct
power to tax, including any city, county, state, or federal
government, or any school, agricultural, lighting, drainage, or
other improvement or special assessment district thereof, as against
any legal or equitable interest of Landlord in the Project,
including but not limited to, the following:
16.1.1. any tax on Landlord's right to other income from the
Premises or as against Landlord's business of leasing the
Premises;
16.1.2. any assessment, tax, fee, levy, or charge in substitution,
partially or totally, of any assessment, tax, fee, levy,
or charge previously included within the definition of
real estate tax, including but not limited to, any
assessments, taxes, fees, levies, and charges that may be
imposed by governmental agencies for such services as fire
protection, street, sidewalk and road maintenance, refuse
removal and for other governmental services formerly
provided without charge to property owners or occupants.
It is the intention of Tenant and Landlord that all such
new and increased assessments, taxes, fees, levies, and
charges be included in Real Property Taxes for the
purposes of this Lease;
16.1.3. any assessment, tax, fee, levy, or charge allocable to or
measured by the area of the Premises or the rent payable
hereunder, including, without limitation, any gross income
tax or excise tax levied by the State, city, or federal
government, or any political subdivision thereof, with
respect to the receipt of such rent, or upon or with
respect to the possession, leasing, operating, management,
maintenance, alteration, repair, use or occupancy by
Tenant of the Premises, or any portion thereof, and
16.1.4. any assessment, tax, fee, levy, or charge upon this
transaction or any document to which Tenant is a party
creating or transferring an interest or an estate in the
Premises.
16.2. Intentionally omitted.
16.3. Tenant shall pay to Landlord, in the manner provided in the Article
titled "Operating Expenses," Tenant's Pro Rata Share of the
Building, of all real property taxes and general and special
assessments ("real property taxes") levied and assessed against the
Lot, Building, and other improvements of which the Premises are a
part.
16.4. If any general or special assessment is levied and assessed against
the Premises which under the Laws then in force may be evidenced by
improvement or other bonds and may be paid in annual installments,
only the amount of such annual installment, with appropriate
proration for any partial year, and interest thereon, shall be
included within a computation of taxes and assessments levied
against the Premises.
16.5. Tenant shall pay to Landlord any and all excise, privileges and
other taxes (other than net income and estate taxes) levied or
assessed by any federal, state or local authority ("taxing
authority") upon the rent received by Landlord hereunder.
16.6. If at any time during the Term of this Lease, any taxing authority
shall alter the methods and/or standards of taxation and/or
assessment ("tax plan"), in whole or in part, so as to impose a tax
plan in lieu of or in addition to the tax plan in existence as of
the date of this Lease, such taxes or assessments based upon such
altered tax plan including: (i) any tax, assessment, excise,
surcharge, fee, penalty, bond or similar imposition ("impositions")
whether or not in lieu, partially or totally, of any impositions
assessed against the Lot, Building, and other improvements of which
the Premises are a part prior to any alterations in the tax plan;
(ii) any impositions on Landlord's right to rent or other income
from the Premises or against Landlord's business of leasing the
Premises; (iii) any impositions allocable to or measured by the area
of the Premises or the rent payable hereunder, including without
limitation any impositions levied by any taxing authority with
respect to such rental or with respect to the possession, leasing,
operation, management, maintenance, alteration, repair, use or
occupancy by Tenant of the Premises or any portion thereof; and (iv)
any impositions upon this Lease transaction or any document to which
Tenant is a party which creates or transfers any interest or estate
in or to the Premises.
16.7. Tenant's liability to pay real property taxes shall be prorated on
the basis of a 365-day year to account for any fractional portion of
a fiscal year included in the Term at its commencement and
expiration.
16.8. If at any time during the Term of this Lease any of Tenant's Taxes
are levied against Landlord or Landlord's property, or if the
assessed value of the Project is increased by the inclusion therein
of a value placed upon Tenant's Personal Property or Tenant's Trade
Fixtures, Landlord shall not be obligated to pay such Tenant's
Taxes. If Landlord pays such Tenant's Taxes so levied or so based
upon such increased assessment, which Landlord shall have the right
to do regardless of the validity thereof, but only under protest if
requested by Tenant in writing, then Tenant shall, within ten (10)
business days after Tenant's receipt from Landlord of a reasonably
detailed written request for payment thereof, repay to Landlord such
Tenant's Taxes so paid by Landlord, or the portion of such Tenant's
Taxes resulting from such increase in the assessment. However, in
any such event, Tenant shall have the right, in the name of the
Landlord and with Landlord's full cooperation, but without any cost
to Landlord, to bring suit in any court of competent jurisdiction to
recover the amount of any such Tenant's Taxes so paid, any amount so
recovered to belong to Tenant. The portion of any such Tenant's
Taxes to be paid by Tenant pursuant to this Section shall be
determined by Landlord from the respective values assigned in the
assessor's worksheets or from such other best information as may be
reasonably available to Landlord.
17. MAINTENANCE.
17.1. Except as otherwise provided in this Article, and the Articles
titled "Destruction" and "Condemnation," Tenant shall, at its sole
expense, maintain the entire Premises (including, but not limited
to, any and all appurtenances thereto wherever located, including
the interior surfaces of the exterior walls, the exterior and
interior portions of all doors, door frames, door checks, other
entrances, interior portions of windows, window frames, plate glass,
suite fronts, signs, all plumbing and sewage fixtures and equipment,
within and solely serving the Premises; fixtures, walls, floors,
ceiling, carpets, drapes, painted surfaces, wall coverings,
cabinets, shelves, whether any such work or repair, replacement,
renewal, or restoration is interior or exterior to the Premises, is
foreseen or unforeseen, or is ordinary or extraordinary) in good
condition and repair, including without limitation all additions and
improvements made by or for the Tenant as well as all items of
maintenance, alteration, or reconstruction that may be required by a
governmental agency having jurisdiction thereof. Notwithstanding any
provision to the contrary, Tenant's obligations under this Section
17 shall not include making (i) any repair or improvement
necessitated by the negligence or willful misconduct of Landlord,
its agents, employees or servants; (ii) any repair or improvement by
Landlord's failure to perform its obligations under this Lease or
under any other agreement between Landlord and Tenant; or (iii) any
structural or seismic repairs, improvements or alterations to the
Premises or Building except as required to construct and install
Tenant's Improvements.
17.2. If Tenant fails, refuses, or neglects to commence and complete
required repairs promptly and adequately after the giving of any
required notice and the expiration of any applicable cure period
provided in this Lease, Landlord may make or complete any such
repairs at the sole expense of Tenant. Tenant shall promptly
reimburse Landlord for all reasonable expenses of Landlord not
covered by Landlord's insurance thereby incurred within ten (10)
business days after receipt by Tenant from Landlord of a reasonably
detailed statement setting forth the amount of such expenses.
Landlord's rights and remedies pursuant to this Section shall be in
addition to any and all rights and remedies provided under this
Lease or at law and shall not affect a waiver of Tenant's
obligations.
17.3. Except as otherwise expressly set forth in this Lease, Landlord
shall not have any responsibility to maintain the Premises. Tenant,
as a material part of the consideration rendered to Landlord, in
entering into this Lease, hereby waives the provisions of the
California Civil Code with respect to Landlord's obligation for
tenantability of the Premises and Tenant's right to make repairs and
deduct the expenses of such repairs from rent.
17.4. Tenant shall, at its sole cost, keep and maintain all window and
door glass, fixtures and mechanical equipment used by Tenant in good
order, condition and repair.
17.5. Landlord shall, at Tenant's sole expense, arrange for the
maintenance of any heating and/or air conditioning units servicing
the Premises with a reputable maintenance service person or entity
reasonably acceptable to Tenant. Tenant shall pay the costs of said
maintenance as additional Rent. In the event that any heating and/or
air conditioning unit serving the Premises services more than one
tenant, Tenant shall pay a reasonable proportion of the cost of the
maintenance (including labor and parts), which proportion shall be
determined by Landlord based upon Tenant's proportionate share of
the rentable square footage of the area serviced by any such unit.
17.6. Landlord shall keep in good condition and repair and in substantial
accordance with all applicable Laws, the roof, exterior walls,
foundation and other structural portions of the Building, trunk-line
plumbing, gutters, scuppers, downspouts, and structural components
of the Premises except when such maintenance and repair is
necessitated by reason of Tenant's negligence, alteration of or
addition to the Premises, or Tenant's breach of any term or
condition of this Lease. All costs of Landlord's maintenance and
repairs shall be included in "Operating Expenses." Landlord shall
have no obligation to make any repairs to the Premises under this
Section until Landlord has received written notice from Tenant with
respect to the need for such repairs to the Premises, and Landlord
shall not be deemed to be in default with respect to its obligation
to make such repairs to the Premises unless and until Landlord has
(i) received said written notice and (ii) failed to make such
repairs within a reasonable period following the receipt of said
notice. Landlord shall exercise due diligence in making the repairs
which are the obligation of Landlord under this Section. Tenant
hereby waives any provisions of any and all Laws permitting Tenant
to make repairs at Landlord's expense. Landlord shall enforce any
express construction warranties for the benefit of Tenant to the
extent that they are available.
17.7. Subject to Tenant's obligation to pay its pro-rata share of Unit
Common Area Expenses, Project Enhancement Areas Expenses, Unit
Shared Use Area Expenses and Project Common Area Expenses as set
forth in this Lease, Landlord shall repair and maintain the Project
Enhancement Areas And Unit Shared Use Areas in a neat, clean and
orderly condition and repair, properly lighted and landscaped, and
shall operate the Project, in Landlord's sole discretion, as a first
class industrial/office/commercial real property development. All
expenses in connection with the Project Enhancement Areas And Unit
Shared Use Areas shall be charged and prorated in the manner set
forth in the Article titled "Operating Expenses." It is understood
and agreed that the phrase "expenses in connection with said Project
Enhancement Areas And Unit Shared Use Areas" shall include, but
shall not be limited to, all sums expended in connection with said
Project Enhancement Areas And Unit Shared Use Areas for all general
maintenance and repairs, resurfacing, painting, restriping,
cleaning, sweeping and janitorial services; maintenance and repair
of sidewalks, curbs, and Building signs (other than Tenant's sign),
sprinkler systems, planting and landscaping; lighting and other
utilities; painting of all exterior surfaces of the Building or
buildings in the Project; directional signs and other markers and
bumpers; maintenance and repair of any fire protection systems,
automatic sprinkler systems, lighting systems, storm drainage
systems and any other utility systems; personnel to implement such
service, including, if Landlord deems necessary, the cost of
security guards and/or all costs and expenses pertaining to a
security alarm system for the tenants; police and fire protection
services; personal property taxes levied on or attributable to
personal property owned by Landlord which is consumed solely in the
operation or maintenance of the Project Enhancement Areas And Unit
Shared Use Areas; depreciation and maintenance on operating
machinery and equipment used solely in the operation or maintenance
of the Project Enhancement Areas And Unit Shared Use Areas (if
owned) and rental paid for such machinery and equipment (if rented);
any parking charges, surcharges or any other costs levied or
assessed by local, state or federal governmental agencies in
connection with the use of parking facilities within the Project;
fees for required licenses and permits; adequate public liability
and property damage insurance on the Project Enhancement Areas And
Unit Shared Use Areas; and commercially reasonable reserves for
exterior painting and other appropriate reserves. Landlord may,
however, cause any or all of said services to be provided by an
independent contractor or contractors.
17.8. Except as otherwise expressly set forth in this Lease, Landlord's
exercise of any right or obligation to maintain or repair the
Premises, Project Enhancement Areas And Unit Shared Use Areas and/or
other areas of the Project shall not entitle Tenant to any abatement
of rent, compensation or damages for injury, loss or inconvenience
occasioned thereby.
17.9. Tenant waives the right to make repairs at Landlord's expense under
any Law, including, but not limited to, Sections 1932, 1933, 1941,
and 1942 of the California Civil Code.
17.10. Tenant, at its own expense, shall make all repairs to the Project
not covered by insurance carried by Landlord or the Rancho Vista
Business Park Owner's Association, Inc. that are made necessary by
any breach of this Lease or any misuse or neglect by:
17.10.1. Tenant or any of its officers, agents, employees,
contractors, licensees, or subtenants; or
17.10.2. Intentionally omitted.
17.11. All such repairs shall be at least equal in quality to the original
work, shall be made only by a licensed, bonded contractor approved
in advance by Landlord (which approval will not be reasonably
withheld), and shall be made only at such time or times as shall be
approved by Landlord. Landlord may impose reasonable restrictions
and requirements with respect to such repairs.
17.12. Tenant shall, at its own expense, keep and maintain the Premises in
substantial accordance with all Laws.
17.13. Tenant shall, at its own expense, install and maintain such fire
extinguishers and other fire protection devices (other than
sprinkler systems) as may be required in the Premises from time to
time by any agency having jurisdiction and/or by the insurance
underwriters insuring the Building
18. UTILITIES AND SERVICES.
18.1. Except as otherwise provided in this Article, Tenant shall make all
arrangements for and pay for all utilities and services furnished to
or used by it, including, without limitation, gas, electricity,
water, telephone service, and trash collection, and for all
connection charges. If Landlord provides water or electrical power
to the Premises and Tenant requires or utilizes more water or
electrical power than Landlord considers reasonable or normal for
general office use, light manufacturing, or warehousing, Landlord
may at its option (a) require Tenant to pay, as additional rent, the
cost, as fairly determined by Landlord, incurred by such
extraordinary usage and (b) install separate meter(s) or monitors
for the Premises, at Tenant's sole expense.
18.2. Intentionally omitted.
18.3. Intentionally omitted.
18.4. Tenant shall pay to Landlord, as additional rent, the Domestic Water
Fee in the following manner unless Tenant elects to pay such fee
directly:
18.4.1. Tenant shall pay to Landlord, as additional rent, on the
first day of each calendar month of the Term of this
Lease, the Domestic Water Fee. The Domestic Water Fee is
an amount equal to 1/12 of Landlord's best estimate (based
on Landlord's budgeted figures) of the annual cost of all
domestic water furnished to the Premises based upon
Tenant's proportionate share of the occupied square
footage of the Building or buildings serviced by such
meter and any extraordinary uses which may be made by
Tenant. The Domestic Water Fee does not include the cost
of water used in any industrial cooling or washing
processes. Such additional water costs shall be borne by
Tenant.
18.4.2. Within ninety (90) days following the end of each calendar
year, Landlord shall furnish Tenant with a statement
covering the calendar year just expired (certified as
correct by an authorized representative of Landlord or if
requested by a majority of the tenants in the Building, by
a certified public accountant) showing (i) the total cost
of domestic water charges (ii) the amount of Tenant's
proportionate share of the domestic water charges for the
calendar year; and (iii) the payments made by Tenant with
respect to such period as set forth in this Article. If
Tenant's payments exceed Tenant's proportionate share of
such costs, Tenant shall be entitled to offset the excess
against the next payments due Landlord as set forth in
this Article. However, if Tenant's proportionate share of
the domestic water charges exceeds Tenant's payments,
Tenant shall pay Landlord the deficiency within ten (10)
business days after receipt of such statement. In
addition, Tenant's proportionate share of the total
domestic water charges for the previous calendar year
shall be used as an estimate for the current year and paid
to Landlord pursuant to the provisions of Section 18.4.
18.5. Landlord shall not be liable for, and Tenant shall not be entitled
to, any abatement or reduction of rental by reason of Landlord's
failure to furnish any utilities when such failure is caused by:
accident; Act of God; breakage, repairs; strikes; lockouts or other
labor disturbances or labor disputes of any character; any Law,
moratorium, or other action of any federal, state, county, or
municipal authority; inability, despite the exercise of reasonable
diligence by Landlord, to obtain electricity, water, or fuel; or by
any other cause, similar or dissimilar, beyond the reasonable
control of Landlord. No such failure or interruption shall entitle
Tenant to terminate this Lease. Also, no eviction of Tenant shall
result from such failure and Tenant shall not be relieved from the
performance of any covenant or agreement in this Lease because of
such failure. Except when caused by negligence or the willful
misconduct of Landlord, its agents or employees, Landlord shall not
be liable for a loss of or injury to property through or in
connection with or incidental to failure to furnish any of the
foregoing. Wherever heat generating machines or equipment are used
in the Premises which affect the temperature otherwise maintained by
the air conditioning system, Landlord reserves the right to install
supplementary air conditioning units in the Premises and the cost
thereof, including the cost of installation, and the cost of
operation and maintenance thereof shall be paid by Tenant to
Landlord within ten (10) business days of Tenant's receipt from
Landlord of a reasonably detailed statement therefor.
18.6. Tenant may, at its sole expense, elect to install its own meter for
any utilities which are jointly metered by written notice delivered
to Landlord thirty (30) days prior to the initiation by Tenant of
any work to effectuate such change.
18.7. Intentionally omitted.
18.8. Intentionally omitted.
18.9. Landlord reserves the right to temporarily stop providing plumbing,
ventilation, air conditioning, electric, water, or any other service
provided by Landlord under this Lease, when necessary by reason of
accident or emergency or upon at least forty-eight hours notice to
Tenant for repairs, alterations or improvements, which in the
reasonable judgment of Landlord are desirable or necessary to be
made, until said repairs, alterations, or improvements shall have
been completed. In exercising the rights described in this section,
Landlord will take all reasonable steps, in light of any accident or
emergency, to avoid material interference with Tenant's business
operations.
19. INDEMNITY AND EXCULPATION.
19.1. Tenant is liable for, and shall indemnify, protect, defend, and hold
Landlord harmless from and against, any and all loss, claims,
actions, suits, liabilities, judgments, costs, and expenses
(including reasonable attorneys' fees) by reason of the following:
19.1.1. injury to any person or property, all or in part connected
with the condition or use of the Premises or the
improvements or personal property located therein,
including, but not limited to, any liability for injury to
the person or property of Tenant, its agents, officers,
employees, invitees, or trespassers;
19.1.2. any activity, work or thing done, permitted or suffered by
Tenant in or about the Premises or the Building; and
19.1.3. any breach or default in the performance of any obligation
to be performed by Tenant under the terms of this Lease;
and
19.1.4. any act, neglect, fault or omission of Tenant or of its
agents or employees, except to the extent caused by or
resulting from the negligence or willful misconduct of
Landlord, its agents, employees or contractors in the
performance of Landlord's obligations under this Lease or
the operation or maintenance of the Premises, the
Building, or the Project.
Tenant's indemnity obligations under this Section 19.1 shall not
apply to any loss, claim, action, suit, liability, judgment, cost or
expense resulting from the negligence or willful misconduct of
Landlord, its employees, agents or contractors.
19.2. Tenant shall, at Tenant's expense, resist and defend any such
action, suit, or proceeding or cause the same to be resisted or
defended by counsel designated by Tenant and, (unless otherwise
required under the terms of any insurance policy carried by Tenant)
reasonably approved by Landlord in writing. Tenant's obligation
hereunder shall survive the termination of this Lease, if the
incident requiring such defense occurred during the Term.
19.3. Neither Landlord nor any manager, member, partner, director,
officer, agent or employee of Landlord shall be liable to Tenant or
its partners, directors, officers, contractors, agents, employees,
sublessees, licensees for any loss, injury or damage to or death of
Tenant or to any other person, or to its or their property, goods,
wares, and merchandise in, upon, and about the Premises, except to
the extent caused by or resulting from the negligence or willful
misconduct of Landlord, its agents, employees or contractor's in the
operation or maintenance of the Premises, the Building, or the
Project. Further, neither Landlord nor any manager, member, partner,
director, officer, agent or employee of Landlord shall be liable (i)
for any such damage caused by other tenants or persons in or about
the Project, or caused by quasi-public work; or (ii) for
consequential damages arising out of any loss of the use of the
Premises of any equipment or facilities therein by Tenant or any
person claiming through or under Tenant. Tenant, as a material part
of the consideration to Landlord, hereby assumes all risk of all
such damage to property or injury or death to person in, upon or
about the Premises except to the extent caused by the negligence or
willful misconduct of Landlord, its agents, employees or
contractors. Except as provided in this Section, Tenant hereby
waives all its claims in respect thereof against Landlord.
19.4. All of Tenant's releases and indemnification, defense, and hold
harmless obligations under this Lease survive the expiration or
other termination of this Lease, without limitation.
19.5. Any diminution or shutting off of light, air or view by any
structure which may be erected on lands adjacent to the Project
shall in no way affect this Lease or impose any liability on
Landlord.
20. INSURANCE.
20.1. Landlord shall maintain, subject to reimbursement pursuant to
Section 20.2 of this Lease, a policy or policies of insurance, as
Landlord reasonably deems necessary from time to time or is required
by Landlord's lenders, protecting against the following:
20.1.1. Fire and other perils normally included in the extended
coverage insurance with special form, to the extent of at
least one hundred percent (100(degree)/x) of the insurable
value of the Building and other improvements on the
Premises exclusive of Tenant's Trade Fixtures and
equipment, goods and materials belonging to Tenant;
20.1.2. Rent loss insurance to the extent of at least one hundred
percent (100%) of the annual gross rentals from the
Project; and
20.1.3. Public liability and property damage insurance and
products liability insurance with respect to Project
Enhancement Areas And Unit Shared Use Areas for the joint
benefit of Landlord and Tenant: (i) in amounts not less
than $1,000,000 for bodily injury and property damage per
occurrence. Said amounts shall be subject to adjustment
every Three (3) years to the then prevailing limits
normally required for operations of the type conducted by
Tenant on the Premises.
Notwithstanding anything to the contrary contained in this Lease,
the insurance to be carried by Landlord shall at all times comply
with the requirements of Section 4.1.21 of the Declaration.
20.2. Tenant shall pay to Landlord, as additional rent, and in the manner
provided in the Article titled "Operating Expenses," Tenant's Pro
Rata Share of the cost of insurance required in Sections 1 and 6 of
this Article.
20.3. Tenant shall maintain in force and effect at all times during the
Term of this Lease, and at all times during any early entry whereby
Tenant desires to perform any work or store any property in the
Premises, a policy or policies of fire, extended coverage, and
special extended coverage ("all risk") insurance with respect to
Tenant's Trade Fixtures, and Tenant's furniture, personal property,
equipment, goods and materials located in the Premises, sprinkler
leakage, energy systems coverage, coverage for water damage to
contents, and earthquake sprinkler leakage, with vandalism and
malicious mischief endorsements to the extent of at least one
hundred percent (100%) of their insurable value, including all
leasehold improvements and betterments to the Premises installed by
or paid for by Tenant, including, without limitation, the Tenant
Improvements. Coverage shall also include all personal property of
third parties to the extent any such personal property, goods or
materials is used or located in the Premises. During the Term of
this Lease, the proceeds of any such policy or policies of fire
insurance shall be used solely for the repair or replacement of
Tenant's Trade Fixtures or other furniture, personal property,
equipment so insured. Landlord shall have no claim or interest in
said insurance and shall sign all documents necessary to effectuate
the settlement of any claim or loss by Tenant.
20.4. Tenant shall maintain in force and effect at all times during the
Term of this Lease, with an insurance company reasonably acceptable
to Landlord, a commercial general liability insurance policy with
respect to the Premises, for the joint benefit of Landlord and
Tenant for personal injury in amounts of not less than $1,000,000
for bodily injury and for property damage per occurrence. Such
insurance shall also include blanket contractual coverage covering
Tenant's indemnity obligations hereunder, public liability, broad
form property damage, products liability, completed operations,
liquor liability, if Tenant serves liquor in the Premises, and owned
and nonowned automobile coverages. The amounts of such public
liability insurance shall be increased from time to time as Landlord
may reasonably determine (but not more frequently than every three
(3) years) or as required by any lender with an interest in the
Project. Such insurance must include: (a) specific coverage
provisions or endorsements naming Landlord and Property Manager as
additional insureds by an "Additional Insured - Managers or Lessors
of Premises" endorsement (or equivalent coverage or endorsement);
and (b) provisions stating that the insurer has a duty to defend all
insureds under the policy (including additional insureds), and that
defense costs are paid in addition to, and do not deplete, the
policy limits. Tenant shall furnish Landlord with a certificate of
insurance with respect to such policy or policies prior to entry of
the Premises.
20.5. Tenant shall maintain in force and effect at all times during the
Term of this Lease with an insurance company reasonably acceptable
to Landlord, workers' compensation insurance, including employer's
liability coverage, as required by any and all Laws.
20.6. Tenant shall not keep, use, sell or offer for sale in or upon the
Premises any article that may be prohibited by any insurance policy
periodically in force covering the Project.
20.7. Landlord and Tenant hereby mutually release each other from
liability and waive all right to recover against each other (and
against the members, officers, employees, and agents of the other
party) from any loss or damage from perils insured against under
their respective fire insurance policies, including any extended
coverage and endorsements to said policies. However, this Section
shall be inapplicable if it would have the effect, but only to the
extent that it would have the effect, of invalidating any insurance
coverage of Landlord or Tenant. The Parties shall, in obtaining the
policies of insurance that they are required to maintain under this
Lease, give notice to their respective insurance carriers that the
foregoing mutual waiver of subrogation is contained in this Lease,
and each shall obtain, if available, from their respective insurance
companies, a waiver of any right of subrogation which said insurance
company may have against the Landlord or the Tenant, as the case may
be. In the event that the insurance company of Tenant does not waive
the right of subrogation against Landlord and its insurance company,
Tenant shall (i) maintain during the Term of this Lease, fire legal
liability coverage with respect to the Premises and (ii) shall pay
to Landlord within ten (10) business days after Tenant's receipt of
Landlord's reasonably detailed statement therefor, Landlord's cost
incurred in securing fire legal liability protecting Landlord in the
event of the destruction of Tenant's property.
20.8. To the extent not maintained by Tenant, Landlord may maintain, at
the Tenant's expense (pro rated in the manner described in the
Article titled "Operating Expenses"), boiler and machinery insurance
on all boilers, heating equipment, air conditioning equipment, and
other pressure vessels and systems that may be located in, on, or
about the Premises. Tenant shall reimburse Landlord for the
insurance provided by Landlord under this Section in accordance with
the terms set forth in Section 2 of this Article.
20.9. All the insurance required under this Lease shall:
20.9.1. Be issued by insurance companies authorized and licensed
to do business in the State of California, with a General
Policyholders Rating of "A", and a financial rating of at
least superior status as rated in the most recent edition
of Best's Key Rating Guide (or, if Best's Key Rating Guide
is no longer published, a comparable rating by another
national rating service selected by Landlord and approved
by Tenant);
20.9.2. Be issued as a primary policy;
20.9.3. Contain an endorsement requiring thirty (30) days written
notice from the insurance company to both Landlord and
Landlord's lender before cancellation or change in the
coverage, scope, or amount of any policy.
20.9.4. Be issued by a responsible carrier reasonably acceptable
to Landlord.
20.10. Tenant may elect to have (i) reasonable deductibles not to exceed
$20,000 in connection with the policies of insurance (other than
earthquake insurance coverage) required to be maintained by Tenant
under this Section and (ii) the insurance coverage required to be
maintained under this Lease by Tenant provided under "umbrella"
policies of insurance provided that Tenant obtains a "per project,
per location endorsement".
20.11. Tenant shall deliver to Landlord at least ten (10) days prior to the
time such insurance is first required to be carried by Tenant, and
thereafter at least thirty (30) days prior to expiration of each
such policy, certificates of insurance evidencing the above
coverages with limits not less than those specified above and
certified copies of all required endorsements. With the exception of
Workers Compensation, such certificates and the policies they refer
to, shall (i) be endorsed to name Landlord and each of its,
affiliates, lenders and agents so designated by Landlord from
time-to-time as additional insureds (provided, however, that this
requirement shall not apply to any automobile insurance coverage or
property damage insurance coverage carried by Tenant), (ii)
expressly provide that the interests of such persons therein shall
not be affected by any breach by Tenant of any policy provision for
which such certificates or endorsements evidence coverage, (iii) be
on an occurrence basis and (iv) contain a cross-liability
endorsement or severability of interest clause acceptable to
Landlord. A copy of the additional insured endorsement for policies
currently in effect shall be attached to the certificates as
required above. Further, each such certificate and endorsement shall
expressly provide that no less than thirty (30) days' prior written
notice shall be given Landlord in the event of material alteration
or cancellation of the coverage evidenced by such certificate or
endorsement. The words "Carrier agrees to provide such notice" shall
be used on Certificates of Insurance provided to Landlord.
Certificates of insurance containing such phrases as "Carrier shall
endeavor to notify Certificate Holder"..." shall not be considered
acceptable for the purposes of this provision. The insurance which
Tenant is required to maintain in force and effect under this
Agreement shall be the primary insurance as respects Landlord (and
any other additional insureds designated by Landlord) and not
contributory with any other available insurance. The certificates of
insurance evidencing the liability insurance coverage shall contain
an endorsement to such effect.
20.12. If on account of a failure of Tenant to comply with the provisions
of the above Section, Landlord is adjudged a co-insurer by its
insurance carrier, then any loss or damage Landlord shall sustain by
reason thereof shall be borne by Tenant and shall be immediately
paid by Tenant as additional rent upon receipt of a bill therefore
and evidence of such loss or damage.
20.13. In no event shall the limits of any coverage maintained by Tenant
pursuant to this Article be considered as limiting Tenant's
liability under this Lease.
20.14. If Tenant fails to maintain any insurance required hereunder,
Landlord may procure such policies for Tenant's account, and the
cost thereof shall be immediately due and payable by Tenant as
additional rent.
21. ALTERATIONS.
21.1. Tenant shall not make any Alteration to the Premises except as
provided herein. Any Alteration desired by Tenant shall be made, at
Tenant's expense, only after Tenant submits reasonably detailed
final plans and specifications to Landlord and obtains Landlord's
consent to the requested Alteration and approval of such plans and
specifications, which consent and approval shall not be unreasonably
withheld. Landlord shall have a period of fourteen (14) days after
the date on which Landlord receives such plans and specifications in
which to approve such plans and specifications or to request
corrections or changes thereto. If Landlord neither approves nor
disapproves the such plans and specifications within such fourteen
(14) day period, then Landlord shall be deemed to have approved the
such plans and specifications. If Landlord disapproves of all or any
portion of such plans and specifications, Landlord shall give Tenant
a written explanation of the reason(s) for such disapproval and the
corrections or changes that are necessary for Landlord to approve
such plans and specifications. Landlord and Tenant shall fully
cooperate with one another to revise such plans and specifications
until they are acceptable to Landlord and Tenant. The construction
of any Alteration shall be performed only by contractors or
mechanics approved by Landlord, which approval shall not be
unreasonably withheld. Tenant shall construct any such Alteration in
accordance with the plans and specifications approved by Landlord,
and shall not amend or modify such plans and specifications without
Landlord's prior written consent, which consent shall not be
unreasonably withheld. If the proposed change requires the consent
or approval of the holder of a mortgage encumbering the Project,
such consent or approval must be secured prior to the construction
of such Alteration. Tenant agrees that there shall be no
construction of partitions or other obstructions which might
interfere with Landlord's free access to mechanical installations or
service facilities of the Building or interfere with the moving of
Landlord's equipment to or from the enclosures containing said
installations or facilities. All construction work shall be done at
such times and in such manner as Landlord may from time to time
reasonably designate. Any such Alteration shall be in material
conformity with all Laws and in full compliance with the
requirements of any mortgages encumbering the Project and any
insurance policies relating to the Project and excepting movable
furniture, Tenant's Trade Fixtures, machinery and other trade
equipment, shall become part of the realty and belong to Landlord.
Notwithstanding anything to the contrary contained in this Section
21.1, Tenant shall not be required to remove any of the Tenant
Improvements. Tenant shall not be required to remove any Alteration
requiring Landlord's consent unless Landlord shall notify Tenant in
connection with Landlord's approval of the plans and specifications
therefor, whether Tenant shall be required to remove such Alteration
at the expiration of the Term. Landlord agrees that such
determination will be made using its reasonable judgment. Landlord's
consent shall not be required for any Alteration or Alterations
which would cost not more than $10,000 per annum in the aggregate.
21.2. Before commencing any construction work, whether or not Landlord's
consent is required, Tenant shall give Landlord at least ten (10)
days' written notice of the proposed commencement of such work to
allow Landlord to post and record, at Tenant's expense, notices of
non-responsibility. Tenant shall, if required by Landlord, secure at
Tenant's own cost and expense, reasonably appropriate insurance and,
if the cost of the work exceeds $10,000, a completion and lien
indemnity bond reasonably satisfactory to Landlord for any said
work. Tenant further covenants and agrees that any mechanic's lien
or other lien filed against the Premises or against the Building for
work claimed to have been done for, or materials claimed to have
been furnished to, Tenant will be discharged by Tenant as provided
in the Article titled "Mechanics Liens" below. Upon completion of
any work, Tenant shall record a notice of completion sufficient
under applicable mechanic's' lien Laws.
21.3. Tenant may install trade fixtures, machinery, or other trade
equipment in material conformance with all Laws and in full
compliance with the requirements of any mortgages encumbering the
Project and any insurance policies relating to the Project, provided
that Landlord has advised Tenant in writing of any such requirements
of any such mortgage or policies.
21.4. Intentionally omitted.
21.5. Any electrical wiring, conduit, junction boxes and outlets installed
by Tenant shall comply with all Laws and shall become the property
of Landlord upon termination of this Lease.
21.6. Intentionally omitted.
22. MECHANICS' LIENS.
22.1. Tenant shall pay, when due, all costs for construction done by it or
caused to be done by it on the Premises as permitted by this Lease.
Tenant shall keep the Building and the Lot free and clear of all
mechanics' liens resulting from construction or other work done by
or for Tenant. Tenant hereby indemnifies and holds Landlord harmless
against loss, damage, attorney's fees and all other expenses on
account of claims of lien of laborers or materialmen or others for
work performed or materials or supplies furnished for Tenant or
persons claiming under it. If Tenant shall not, within ten (10) days
following the imposition of any such liens, cause such lien to be
released of record by payment or posting of a proper bond reasonably
satisfactory to Landlord, then Landlord shall have, in addition to
all other remedies provided herein or by law, the right to cause
such lien to be released by such reasonable means as Landlord shall
deem proper, including payment and/or defense against the claim
giving rise to such lien. All sums paid by Landlord and all expenses
incurred by it in connection therewith shall create automatically an
obligation of Tenant to pay an equivalent amount to Landlord as
Rent, which rent shall be so payable by Tenant within ten (10)
business days of Tenant's receipt of a reasonably detailed written
statement therefor from Landlord with interest accruing from the
date paid or incurred by Landlord until reimbursed to Landlord by
Tenant.
22.2. Tenant shall have the right to contest the correctness or the
validity of any such lien if, immediately on demand by Landlord,
Tenant procures and records a lien release bond issued by a
corporation authorized to issue surety bonds in California in an
amount equal to one and one-half times the amount of the claim of
lien. The bond shall meet the requirements of the California Civil
Code and shall provide for the payment of any sum that the claimant
may recover on the claim (together with costs of suit, if it
recovers in the action).
23. DESTRUCTION.
23.1. In the event of total or partial destruction of the Building and/or
the Premises, Landlord may elect, as soon as reasonably possible
thereafter, to commence repair, reconstruction and restoration of
the Building and/or the Premises. In that event, this Lease shall
remain in full force and effect. However, within ninety (90) days
after the date of such damage or destruction, Landlord, in
Landlord's sole and absolute discretion, and regardless of the
availability of insurance proceeds, may elect not to so repair,
reconstruct or restore the Building and/or the Premises. In that
event, this Lease shall terminate as of the date of such damage or
destruction.
23.2. In the event of a partial damage to or destruction of the Building
and/or the Premises, to an extent not exceeding twenty-five percent
(25%) of the full insurable value thereof, Landlord shall commence
and proceed with reasonable diligence with the work of repair,
reconstruction and restoration if: (i) the damage thereto is such
that the Building and/or Premises may be repaired, reconstructed or
restored within a period of ninety (90) days from the date of the
happening of such casualty, and (ii) if Landlord receives insurance
proceeds sufficient to cover the cost of such repairs. In that
event, this Lease shall continue in full force and effect.
Otherwise, Landlord, in Landlord's sole and absolute discretion, may
either: (i) elect to so repair, reconstruct or restore, in which
case the Lease shall continue in full force and effect, or (ii)
Landlord may elect not to repair, reconstruct or restore, in which
case the Lease shall terminate as of the date of such partial damage
or destruction. Under any of the conditions of this Section,
Landlord shall give written notice to Tenant of its intention within
said ninety (90) day period.
23.3. If any partial damage or destruction is due to any cause other than
fire or other peril covered by extended coverage insurance, Landlord
may, by written notice to Tenant within ninety (90) days after the
date of such damage or destruction, elect to terminate this Lease as
of the date of such damage or destruction.
23.4. If Landlord determines in Landlord's reasonable opinion that Tenant
cannot be provided with reasonable use of and access to the repaired
Premises or the Building within nine (9) months (or three (3) months
during the last year of the Lease term) after the date of any damage
or destruction thereto, Tenant shall have the right to terminate
this Lease by written notice delivered to Landlord within fifteen
(15) days after the date of Landlord's determination, provided that
the damage or destruction was not due to the negligence or willful
misconduct of Tenant or its agents, employees or invitees.
23.5. Notwithstanding anything to the contrary contained in this Article,
Landlord shall not have any obligation whatsoever to repair,
reconstruct or restore the Premises when the damage or destruction
resulting from any casualty occurs during the last twelve (12)
months of the term of this Lease. Landlord may elect to terminate
this Lease as of the date the damage occurred, regardless of the
sufficiency of any insurance proceeds. However, if Tenant has any
unexpired options to extend the term of this Lease, if Tenant
delivers written notice to Landlord exercising such option within
five (5) days after such termination by Landlord, this Lease shall
remain in effect subject to the remaining terms of this Article.
23.6. Tenant shall not be released from any of its obligations under this
Lease except to the extent and upon the conditions expressly stated
in this Article. Landlord shall not be liable for any failure to
make any such repairs if such failure is caused by any Unavoidable
Delays (as defined below). However, if such failure shall persist
for more than one hundred eighty (180) days, either party may, by
written notice to the other, terminate this Lease as of the date of
the occurrence of such damage.
23.7. Upon any termination of this Lease under any of the provisions of
this Article, the parties shall be released without further
obligation to the other arising after the date possession of the
Premises is surrendered to Landlord.
23.8. If Landlord is required or elects to restore the Premises as
provided in this Article, Landlord shall prosecute the same with
reasonable diligence to completion. However, Landlord shall not be
required to restore alterations or improvements made by Tenant,
Tenant Improvements, Tenant's Trade Fixtures, or Tenant's Personal
Property. Such excluded items are the sole responsibility of Tenant
to restore. Without interfering with Landlord's repair and
restoration process, Tenant shall commence and diligently prosecute
to completion the repair and restoration of such alterations and
improvements and shall replace all Tenant Improvements, Tenant's
Trade Fixtures, or Tenant's Personal Property promptly upon delivery
of the Premises to Tenant.
23.9. If Landlord elects to repair the damage and, if the damage was due
to the negligence or willful misconduct of Tenant, Tenant shall pay
Landlord an amount equal to the difference between the actual cost
of repair and any insurance proceeds received by Landlord. If the
Premises, the Building or the Project is damaged, and such damage is
of the type insured against under the fire and special form property
damage insurance maintained by Landlord hereunder, the cost of
repairing said damage, up to the amount of the deductible under said
insurance policy, shall be included as a part of Operating Expenses.
23.10. Landlord and Tenant hereby waive the provisions of any statutes or
court decisions that relate to the abatement of rent or termination
of leases when leased property is damaged or destroyed and agree
that such event shall be exclusively governed by the terms of this
Lease.
23.11. If the existing laws do not permit the restoration as described in
this Article, either Party may terminate this Lease immediately by
giving notice to the other Party.
23.12. If Landlord is required or elects to restore the Premises as
provided in this Article, Tenant shall continue the operation of its
business on the Premises, during the restoration period, to the
extent reasonably practicable from the standpoint of prudent
business management and to the extent that it will not interfere
with the repair and restoration process.
23.13. Except for abatement of rent as provided in this Article, Tenant
shall have no claim against Landlord for any damage suffered by
reason of any damage, destruction, repair or restoration of the
Premises. Tenant shall not be entitled to any compensation or
damages from Landlord as a result of any partial or total
destruction of the Premises or for any inconvenience, loss, or
damage that Tenant may incur as a result of the restoration process.
23.14. In the event that either Party elects to terminate this Lease under
the enabling provisions of this Article, Tenant shall surrender to
the Landlord all proceeds from the insurance policies described in
the Article titled "Insurance," excluding proceeds for the Tenant's
trade fixtures and equipment.
23.15. In the case of damage or destruction caused from a risk covered by
insurance provided in the Article titled "Insurance," there shall be
no abatement or reduction of rent. However, Tenant shall receive a
credit against its Rent obligations to the extent that Landlord
receives insurance proceeds attributable to Tenant's Rent lost
during the period that the destruction interferes with Tenant's use
of the Premises. In the case of damage or destruction caused from a
risk not covered by the insurance provided in the Article titled
"Insurance," there shall be an abatement or reduction of rent
between the date of destruction and the date of completion of
restoration, based on the extent to which the destruction interferes
with Tenant's use of the Premises.
23.16. In the case of damage or destruction caused from a risk not covered
by the insurance provided in the Article titled "Insurance," if such
damage or destruction is caused by or arises out of Tenant's acts or
omissions, or the acts or omissions of Tenant's agents, employees,
contractors, and/or invitees, Landlord shall not have any obligation
to repair or restore under this Article, and there shall be no
abatement of rent under this Lease. Nothing in this Article shall
relieve or limit any liability of Tenant on account of such acts or
omissions.
24. CONDEMNATION.
24.1. "Condemnation" means (i) the exercise of any governmental power,
whether by legal proceedings or otherwise, by a condemnor and (ii) a
voluntary sale or transfer by Landlord to any condemnor, either
under threat of condemnation or while legal proceedings for
condemnation are pending.
24.2. "Date of taking" means the date the condemnor has the right to
possession of the property being condemned.
24.3. "Award" means all compensation, sums, or anything of value awarded,
paid, or received on a total or partial condemnation.
24.4. "Condemnor" means any public or quasi-public authority, or private
corporation or individual, having the power of condemnation.
24.5. If, during the Term or during the period of time between the
execution of this Lease and the Commencement Date, there is any
taking by condemnation of all or any part of the Lot, the Building
or the Premises, or any interest in this Lease, the rights and
obligations of the Parties shall be determined pursuant to this
Article.
24.6. If the Premises are totally taken by condemnation, this Lease shall
terminate on the date of taking.
24.7. If any portion of the Premises is taken by condemnation, this Lease
shall remain in effect, except that Tenant can elect to terminate
this Lease if the remaining portion of the Premises is rendered
unsuitable for Tenant's continued use of the Premises as permitted
under this Lease. If Tenant elects to terminate this Lease, Tenant
must exercise its right to terminate pursuant to this Section by
giving notice to Landlord within thirty (30) days after the nature
and the extent of the taking have been finally determined. If Tenant
elects to terminate this Lease as provided in this Section, Tenant
also shall notify Landlord of the date of termination, which date
shall not be earlier than thirty (30) days nor later than three (3)
months after Tenant has notified Landlord of its election to
terminate. However, this Lease shall terminate on the date of taking
if the date of taking falls on a date before the date of termination
as designated by Tenant. If Tenant does not terminate this Lease
within the thirty (30) days period, this Lease shall continue in
full force and effect.
24.8. If any portion of the Premises is taken by condemnation and this
Lease remains in full force and effect, on the date of taking the
Base Rent shall be reduced by an amount that is in the same ratio to
Base Rent as the total rentable square feet of the portion of the
Premises taken bears to the total rentable square feet of the
Premises immediately before the date of taking.
24.9. If fifty percent (50%) or more of the parking spaces allocated for
Tenant's use under this Lease is taken by condemnation, Tenant may
terminate this Lease. If fifty percent (50%) or more of the parking
area located on the Lot is taken by condemnation, either Party shall
have the election to terminate this Lease pursuant to this Section.
24.10. If, within thirty (30) days after the date that the nature and
extent of the taking are finally determined, Landlord notifies
Tenant that Landlord at its cost shall add on to the remaining
parking area adjoining the Premises so that the area and the
approximate layout of the Premises and parking area will be
substantially the same after the date of taking as they were before
the date of taking, and Landlord commences the restoration
immediately and completes the restoration within three (3) months
after Landlord notifies Tenant, this Lease shall continue in full
force and effect without any reduction in Base Rent, except the
abatement or reduction made pursuant to Section 12 of this Article.
24.11. Each Party waives the provisions of the California Code of Civil
Procedure allowing either Party to petition the superior court to
terminate this Lease in the event of a partial taking of the
Premises.
24.12. If there is a partial taking of the Premises and this Lease remains
in full force and effect pursuant to Section 7 of this Article,
Landlord at its cost shall use the condemnation award paid to
Landlord as a result of such partial taking to repair and restore
the same as soon as reasonable possible after such partial taking so
that the Premises and the Building are restored to a complete unit
of the same quality, character and utility for Tenant's purposes
existing prior to the condemnation.
24.13. Rent shall be abated or reduced during the period from the date of
taking until the completion of restoration as provided in Section 8
of this Article, but all other obligations of Tenant under this
Lease shall remain in full force and effect.
24.14. The award shall belong to and be paid to Landlord, except that
Tenant shall receive from the award the following:
24.14.1. A sum attributable to Tenant's Improvements or Alterations
made to the Premises by Tenant in accordance with this
Lease, which Tenant's Improvements or Alterations Tenant
has the right to remove from the Premises pursuant to the
provisions of this Lease but elects not to remove; or, if
Tenant elects to remove any such Tenant's Improvements or
Alterations, a sum for reasonable removal and relocation
costs not to exceed the market value of such Tenant's
Improvements or Alterations.
24.14.2. A sum attributable to any excess of the market value of
the Premises (exclusive of Tenant's Improvements or
Alterations for which Tenant is compensated under this
Section) for the remainder of the Term (with the length of
the remainder of the Term calculated as if Tenant had
exercised each Option to Extend granted to Tenant pursuant
to Article 11 of this Lease), over the present value at
the date of taking of the Base Rent payable for the
remainder of the Term (with the length of the remainder of
the Term calculated as if Tenant had exercised each Option
to Extend granted to Tenant pursuant to Article 11 of this
Lease).
24.14.3. A sum attributable to that portion of the award
constituting severance damages for the restoration of the
Premises.
24.15. The taking of the Premises or any part of the Premises by military
or other public authority shall constitute a taking of the Premises.
25. ASSIGNMENT.
25.1. Tenant shall not voluntarily assign or encumber its rights or
interest in this Lease or in the Premises, or sublease all or any
part of the Premises, or allow any other person or entity (except
Tenant's authorized representatives) to occupy or use all or any
part of the Premises, without first obtaining Landlord's written
consent through strict accordance with the following procedure:
25.1.1. Tenant must first give to Landlord a written notice of
intent to sublease or assign (referred to herein as
"Tenant's Notice") at least thirty (30) days prior to the
effective date of any proposed subletting or assignment.
Tenant's Notice must contain the following: (i) whether
Tenant proposes to assign or sublet; (ii) the identity and
trade of the proposed assignee or sublessee (each of which
is referred to herein as the "Transferee") with
accompanying financial statements and background
information for both the individual Transferee and its
business entities; (iii) the nature of the proposed
Transferee's business to be carried on in the Premises;
(iv) a signed statement from both the Tenant and the
proposed Transferee stating all the terms and conditions
of all their transactions concerning the Premises; and (v)
in the case of a subletting, a copy of the proposed
sublease.
25.1.2. Tenant must at all times promptly notify Landlord of any
material change and/or alteration of the items required to
be in Tenant's Notice. If within ten (10) business days
after Tenant receives written notice thereof from
Landlord, Tenant fails to so notify Landlord or fails to
cure any such material misrepresentation or untruth
contained in Tenant's Notice, by either the Tenant or the
proposed Transferee, such failure shall constitute an
Event of Default by Tenant, and Landlord shall have the
right to elect to terminate this Lease.
25.1.3. After receipt of Tenant's Notice, if Tenant has advised
Landlord of Tenant's intent to assign or sublet 25% or
more of the Premises, Landlord may, at any time within ten
(10) business days of said receipt, elect to recapture the
Premises, or the portion Tenant proposes to sublease, and
cancel this Lease as to the amount of the Premises
recaptured, by mailing a written cancellation notice to
Tenant. Such cancellation shall become effective thirty
(30) days after receipt of said notice by Tenant. If only
a portion of the Premises is recaptured, this Lease shall
terminate only as to such portion and Rent payable under
this Lease shall be proportionately reduced.
Notwithstanding the foregoing, Tenant may avoid such
termination by withdrawing its proposed assignment or
sublease by written notice delivered to Landlord within
five (5) days after Landlord's termination notice, and, in
such event, this Lease shall continue in full force and
effect.
25.1.4. If Landlord fails to exercise its right to cancel this
Lease within the before-mentioned fifteen (15) business
day period, said cancellation right on the part of the
Landlord shall be deemed waived, but only with respect to
the assignment or subletting specified in Tenant's Notice.
Tenant may thereafter assign this Lease or sublet the
Premises in accordance with the terms of Tenant's Notice
and the restrictions of this Article. Tenant understands
and acknowledges that Landlord's right, as provided in
this Article, to terminate this Lease rather than approve
the assignment thereof or the subletting of all or any
portion of the Premises is a material inducement for
Landlord's agreeing to lease the Premises to Tenant upon
the terms and conditions herein set forth.
25.2. Tenant agrees to pay Landlord's reasonable costs and expenses
(including reasonable attorneys' fees) in an amount not to exceed
Two Thousand Dollars ($2,000.00) incurred in connection with the
processing and documentation of any requested assignment,
subletting, transfer, change of ownership, or hypothecation of this
Lease or Tenant's interest in and to the Premises, which is
submitted to Landlord for Landlord's consent.
25.3. Any mortgage, pledge or assignment of this Lease, or if Tenant is a
corporation, any transfer of this Lease from Tenant by merger,
consolidation, reorganization or liquidation shall constitute an
assignment for the purposes of this Article. If Tenant is a
corporation (other than a corporation publicly traded stock on a
nationally recognized stock exchange), an unincorporated
association, a limited liability company or a partnership, then the
transfer (including a transfer by means of a merger), assignment or
hypothecation of any stock or interest in such corporation,
association, a limited liability company or partnership in the
aggregate in excess of fifty percent (50%) during any consecutive
twelve (12) month period shall be deemed an assignment within the
meaning and provisions of this Article. However, a transfer or
assignment of any such stock or interest by a shareholder or member
to his spouse, children or grandchildren is excepted from the
foregoing provision. Tenant further acknowledges and understands
that Landlord's consent is required to any change in entity form by
Tenant, including, but not limited to, Tenant's change from a
general partnership to a limited liability partnership or a limited
liability company and that a condition to Landlord's consent to any
such change shall be Tenant's acknowledgment in writing that Tenant
and its constituent partners or owners remain fully liable and
responsible under the Lease subsequent to the date of the change in
entity form.
25.4. Should any transfer, assignment (whether voluntary or involuntary,
by operation of law, under legal process or proceedings, by
mortgage, by security assignment, by receivership, in bankruptcy, or
otherwise), encumbrance, or sublease be made, or any of Tenant's
right under this Lease be sold or otherwise transferred by or under
court order or legal process or otherwise, without obtaining
Landlord's written consent, according to the procedure described
above, such transfer, assignment, encumbrance, or sublease shall be
voidable and ineffective and, at Landlord's election, shall
constitute a default. Landlord's consent to any assignment,
encumbrance, or sublease shall not constitute a further waiver of
the provisions of this Section, including without limitation,
Landlord's recapture right. The same shall apply to each successive
transfer, assignment, or subletting, if any. Landlord shall not
unreasonably withhold consent. It shall not be unreasonable for
Landlord to withhold such consent because it wishes to exercise its
right to recapture all or part of the Premises or because the
proposed Transferee is any governmental agency, federal, state,
local or foreign government, inconsistent with other tenants in the
Project, or for Landlord to condition such consent upon Landlord's
determination that (i) no Event of Default has occurred with respect
to Tenant's performance of any of its obligations (monetary or
nonmonetary) under this Lease, (ii) the proposed Transferee meets
reasonable standards of credit-worthiness then used by Landlord to
assess a prospective tenant's ability to fulfill the obligations of
the Lease; and (iii) the proposed Transferee is likely to conduct on
the Premises a business of a character and quality substantially
equal to that conducted by Tenant and in the entire Project in
general. Consent by Landlord to an assignment or a subletting shall
neither release Tenant from its primary liability under this Lease
nor from its obligations as stated in this Article.
25.5. Without in any way limiting any other rights available to Landlord
at the time of any proposed assignment, Landlord expressly reserves
the right to adjust the Base Rent according to any change in the
Consumer Price Index as may be specified in the Article titled
"Rent," whether or not such an adjustment would otherwise be due at
that time.
25.6. One half (1/2) of any consideration received by Tenant for either
assigning this Lease or from entering into a sublease contract, as
well as one half (1/2) of any continuing rent paid to Tenant from a
Transferee in excess of the rent Tenant was obligated to pay to
Landlord at the time of the assignment or sublease, shall be paid to
the Landlord, within ten (10) business days of Tenant's receipt
thereof, in consideration for Landlord's consent to any assignment
or subletting. Tenant's failure to pay to Landlord said required
consideration shall constitute a default by Tenant and if such
default remains uncured after the giving of the notice and the
expiration of the applicable cure period provided for in Section
26.1.12 of this Lease, Landlord shall have the right to immediately
terminate this Lease in addition to all other remedies.
25.7. Tenant immediately and irrevocably assigns to Landlord, as security
for Tenant's obligations under this Lease, all rent from any
subletting of all or a part of the Premises as permitted by this
Lease, and Landlord, as assignee and as attorney-in-fact for Tenant,
or a receiver for Tenant appointed on Landlord's application, may
collect such rent and apply it toward Tenant's obligations under
this Lease. However, until the occurrence of an Event of Default by
Tenant, Tenant shall have the right to collect such rent.
Notwithstanding any assignment, sublease, or other transfer, Tenant
shall remain fully and primarily liable under this Lease and shall
not be released from performing any of the terms, covenants and
conditions of this Lease. If an Event of Default occurs hereunder,
Landlord may proceed directly against Tenant without pursuing any
assignee or subtenant.
25.8. No interest of Tenant in this Lease shall be assignable by operation
of law including, without limitation, the transfer of this Lease by
testacy or intestacy, or any Event of Default described in the
Section 26.1.4 of the Article titled "Default."
25.9. Intentionally omitted.
25.10. Intentionally omitted.
25.11. Regardless of Landlord's consent, no subletting, assignment,
hypothecation, license or concession shall release Tenant of
Tenant's obligations or alter the primary liability of Tenant to pay
the rent and perform all other obligations to be performed by Tenant
hereunder. The acceptance of rent by Landlord from any other person
shall not be deemed to be a waiver by Landlord of any provision
hereof. Consent to one assignment, subletting, hypothecation,
license or concession agreement shall not be deemed consent to any
subsequent assignment, subletting, hypothecation, license or
concession agreement. In the event of default by any assignee of
Tenant or any successor of Tenant in the performance of any of the
terms hereof, Landlord may proceed directly against Tenant without
the necessity of exhausting remedies against such assignee or
successor. Landlord may consent to subsequent assignments,
subletting, hypothecations, licenses or concession agreements with
assignees or other successors of Tenant without notifying Tenant or
any successor of Tenant, and without obtaining its or their consent
thereto and such action shall not relieve Tenant of liability under
this Lease.
25.12. If Landlord does not elect to recapture pursuant to this Article,
Tenant may enter into a valid assignment or sublease provided that
Landlord consents thereto pursuant to this Article, and provided
that (i) such assignment or sublease is executed within ninety (90)
days after Landlord has given its consent to same, (ii) Tenant pays
(or causes to be paid) Landlord's reasonable costs and expenses
(including attorneys' fees) incurred in connection with the
processing and documentation of any requested assignment,
subletting, transfer, change of ownership, or hypothecation of this
Lease or Tenant's interest in and to the Premises as required
pursuant to Section 25.2 of this Lease, (iii) no Event of Default
exists as of the effective date of the assignment or sublease, (iv)
there have been no material changes (since the date on which
Landlord's consent was given) with respect to the financial
condition or background of the proposed Transferee or the business
which said party plans to conduct on the Premises, and (v) a fully
executed original of such assignment or sublease (either of which
shall state that the assignee or subtenant agrees, for the express
benefit of Landlord, to be bound by all of the terms, covenants, and
conditions of this Lease) is delivered to Landlord prior to the date
the assignee or subtenant takes possession of any portion of the
Premises.
25.13. Tenant agrees to protect, defend and indemnify and hold Landlord
harmless with respect to any and all costs and expenses (including
reasonable attorneys' fees) and liability for compensation claimed
by any broker or agent in connection with any assignment, subletting
or other transfer of Tenant's interest under this Lease.
25.14. Notwithstanding any other provision of this Lease, Tenant shall not,
without Landlord's prior written consent, assign this Lease or
sublet all or any part of the Premises for any purpose which would
violate any negative covenant as to use contained in any then
outstanding lease affecting the Building, in any declaration of
restrictions affecting the Building, or in any mortgage or deed of
trust affecting the Building, provided that the prohibition
contained in this sentence shall only apply to any such negative
covenant of which Tenant receives prior notice in writing from
Landlord. Landlord shall from time to time advise Tenant of any such
negative covenants, upon Tenant's making written request to Landlord
for such information. Moreover, Tenant shall not, without Landlord's
consent (not to be unreasonably withheld), assign or sublet to any
party for a use which is not in compliance with the permitted uses
as specified in the Article titled "Use, Limitations" above.
25.15. If Tenant is a partnership, any new general partner added to the
partnership after the execution of this Lease shall be liable for
the obligations of Tenant. Any general partner who ceases to be a
general partner in Tenant after the execution of this Lease shall
not be relieved of his liability for the obligations of Tenant.
25.16. In addition, Tenant expressly warrants that the rental rate for such
subletting of the Premises shall not be included in any printed
advertising or mailings that Tenant or its agents shall utilize in
seeking to sublet the Premises.
25.17. Notwithstanding the foregoing, no consent of Landlord shall be
required for any assignment, subletting or transfer to a parent
corporation, subsidiary corporation, sister corporation or other
entity related to Tenant, or any such transfers occurring as a
result of a merger or corporate reorganization of Tenant, or any
purchaser of all or substantially all of the assets of Tenant.
26. DEFAULT.
26.1. The occurrence of any of the following shall constitute an "Event of
Default" under this Lease:
26.1.1. The failure of Tenant to pay or cause to be paid any rent,
monies, or charges required by this Lease to be paid by
Tenant within ten (10) days after the date due;
26.1.2. The abandonment of the Premises by Tenant as such term is
defined in the Article titled "Abandonment;"
26.1.3. Tenant causing or permitting, without prior written
consent of Landlord, any act when this Lease requires
Landlord's prior written consent to or prohibits such act;
26.1.4. The making by Tenant of any general assignment for the
benefit of creditors or any similar action for the
protection or benefit of creditors; the filing by or
against Tenant of a petition to have Tenant adjudged a
Chapter 7 debtor or to have debts discharged or of a
petition for reorganization or arrangement under any Law
relating to bankruptcy (unless, in the case of a petition
filed against Tenant, the same is dismissed within sixty
(60) days of the filing of such petition); the appointment
of a trustee or receiver to take possession of
substantially all of Tenant's assets located at the
Premises or of Tenant's interest in this Lease, where
possession is not restored to Tenant within sixty (60)
days); the attachment, execution, or other judicial
seizure of substantially all of Tenant's assets located at
the Premises or of Tenant's interest in this Lease, where
such seizure is not discharged within sixty (60) days; or
Tenant's convening of a meeting of its creditors or any
class thereof for the purpose of effecting a moratorium or
composition of its debts; an involuntary assignment of
this Lease, which includes, but is not limited to, a writ
of attachment or execution levied on this Lease. Any such
involuntary assignment constitutes an Event of Default by
Tenant, which shall give Landlord the right to elect to
terminate this Lease. If Landlord so elects, this Lease
shall not be treated as an asset of Tenant.
26.1.5. If Tenant shall file a voluntary petition in bankruptcy or
shall be adjudicated bankrupt or insolvent, or shall file
any petition or answer seeking any reorganization,
arrangement, composition, readjustment, liquidation,
dissolution or similar relief for itself under any present
or future applicable Law relative to bankruptcy,
insolvency, or other relief for debtors, or shall seek or
consent to or acquiesce in the appointment of any trustee,
receiver, conservator or liquidator of Tenant or of all or
any substantial part of its properties or its interest in
the Premises (the term "acquiesce" as used in this
Section, includes, but is not limited to, the failure to
file a petition or motion to vacate, appeal or discharge
any order, judgment or decree within ten (10) business
days after entry of such order, judgment or decree);
26.1.6. If a court of competent jurisdiction shall enter an order,
judgment or decree approving a petition filed against
Tenant seeking any reorganization, arrangement,
composition, readjustment, liquidation dissolution or
similar relief under any present or future Federal
bankruptcy act, or any other present or future applicable
Law relating to bankruptcy, insolvency, or other relief
for debtors, and Tenant shall acquiesce in the entry of
such order, judgment or decree if such order, judgment or
decree shall remain unvacated and unstayed for an
aggregate of sixty (60) days (whether or not consecutive)
from the date of entry thereof, or any trustee, receiver,
conservator or liquidator of Tenant or of all or any
substantial part of its property or its interest in the
Premises shall be appointed without the consent or
acquiescence of Tenant and such appointment shall remain
unvacated and unstayed for an aggregate of sixty (60) days
(whether or not consecutive);
26.1.7. If Tenant shall admit in writing its inability to pay its
debts as they mature;
26.1.8. If Tenant shall give notice to any governmental body of
insolvency or pending insolvency, or suspension or pending
suspension of operations; or
26.1.9. The occurrence of any of the events described in this
Article by any guarantor of Tenant's obligations under
this Lease or the default by such guarantor under its
guaranty.
26.1.10. The existence of any material misrepresentation or
omission in any financial statements, correspondence or
other information provided to Landlord by or on behalf of
Tenant or any guarantor in connection with (a) Tenant's
negotiation or execution of this Lease; (b) Landlord's
evaluation of Tenant as a prospective tenant at the
Project, (c) any proposed or attempted transfer; or (d)
any consent or approval Tenant requests under this Lease,
which remains uncured within ten (10) business days after
Tenant received written notice thereof from Landlord.
26.1.11. Guarantor's default (beyond any applicable notice and
grace periods) under any guaranty now or after Lease
commencement securing all or any part of Tenant's
obligations under this Lease.
26.1.12. Tenant's failure to perform any other provision of this
Lease which Tenant is required to observe and perform and
such failure shall continue for thirty (30) days (or such
shorter period as may be explicitly specified in this
Lease) after Tenant receives written notice thereof from
Landlord (or such additional reasonable period of time as
may be required to cure such default provided that Tenant
has promptly commenced the cure of such default within
such thirty (30 day period and thereafter diligently
pursues the cure of such default to completion).
26.2. Any such notice provided to Tenant under this Section shall be in
lieu of, and not in addition to, any notice required under Section
1161, et seq., of the California Code of Civil Procedure. Notices
given under this Section shall specify the alleged default and the
applicable Lease provisions, and shall demand that Tenant perform
the provisions of this Lease or pay the Rent that is in arrears, as
the case may be, within the applicable period of time, or quit the
Premises. No such notice shall be deemed a forfeiture or a
termination of this Lease unless Landlord so elects in the notice.
26.3. Upon the occurrence of an Event of Default, Landlord shall have the
following remedies. These remedies are not all inclusive; they are
cumulative in addition to any remedies now or later allowed by law
or other provisions of this Lease. No waiver by Landlord of a breach
of any of the terms, covenants or conditions of this Lease by Tenant
shall be construed or held to be a waiver of any succeeding or
preceding breach of the same or any other term, covenant or
condition therein contained. No waiver of any default of Tenant
hereunder shall be implied from any omission by Landlord to take any
action on account of such default if such default persists or is
repeated and no express waiver shall affect default other than as
specified in said waiver. The consent or approval by Landlord to or
of any act by Tenant requiring Landlord's consent or approval shall
not be deemed to waive or render unnecessary Landlord's consent to
or approval of any subsequent similar acts by Tenant. No statement
on a payment check from Tenant or in a letter accompanying a payment
check is binding on Landlord. Landlord may, with or without notice
to Tenant, negotiate such check without being bound to the
conditions of any such statement. If Tenant pays any amount other
than the actual amount due Landlord, receipt or collection of such
partial payment does not constitute an accord and satisfaction.
Landlord may retain any such partial payment, whether restrictively
endorsed or otherwise, without prejudice to Landlord's right to
collect the balance properly due. If all or any portion of any
payment is dishonored for any reason, payment will not be deemed
made until the entire amount due is actually collected by Landlord.
The foregoing provisions apply in kind to the receipt or collection
of any amount by a lock box agent or other person on Landlord's
behalf.
26.3.1. Landlord may continue this Lease in full force and effect
and shall have the right to collect rent when due. During
the continuance of an Event of Default, if Landlord has
elected to repossess the Premises by legal proceedings
without terminating this Lease, Landlord may relet the
Premises, or any part thereof, to third parties for
Tenant's account. Landlord shall have the right, with or
without terminating this Lease, to re-enter the Premises
and remove all persons and property from the Premises by
legal proceedings. Such property may be removed and stored
in a public warehouse or elsewhere at the cost of and for
the account of Tenant. Tenant waives and releases all
Claims Tenant may have resulting from Landlord's re-entry
and taking possession of the Premises by any lawful means
and removing and storing Tenant's property as permitted
under this Lease, regardless whether this Lease is
terminated and, to the fullest extent allowable under the
Laws, Tenant releases and will indemnify, defend (with
counsel reasonably acceptable to Landlord), protect and
hold harmless the Landlord Parties from and against any
and all Claims occasioned thereby except to the extent any
such Claim arises out of the negligence or willful
misconduct of Landlord. No re-entry or taking possession
of the Premises by Landlord shall be construed as an
election to terminate this Lease unless a written notice
of such intention is given to Tenant. If Landlord shall
elect to re-enter the Premises under the provision of this
Section, Landlord shall not be liable for damages by
reason of such re-entry except to the extent any such
damage is caused by the negligence or willful misconduct
of Landlord, its agents or employees. Tenant shall be
liable immediately to Landlord for all reasonable costs
Landlord incurs in reletting the Premises, including,
without limitation, brokers' commissions, reasonable
expenses of remodeling the Premises required by the
reletting, and like costs. Reletting can be for a period
shorter or longer than the remaining Term of this Lease.
Tenant shall pay to Landlord the rent due under this Lease
on the dates the rent is due, less the rent Landlord
receives from any reletting. After the occurrence of an
Event of Default, and for as long as Landlord does not
terminate Tenant's right to possession of the Premises, if
Tenant obtains Landlord's consent, Tenant shall have the
right to assign or sublet its interest in this Lease
pursuant to the Article titled "Assignment." Tenant
acknowledges that Landlord shall have the remedy described
in California Civil Code Section 1951.4 (Landlord may
continue this Lease in effect after Tenant's breach and
abandonment and recover rent as it becomes due, if Tenant
has the right to sublease or assign, subject only to
reasonable limitations). In the event that Landlord should
elect to relet the Premises or any part thereof on terms
and conditions as Landlord in its sole discretion may deem
advisable with the right to make alterations and repairs
to the Premises, it may execute any new lease in its own
name. Tenant hereunder shall have no right or authority
whatsoever to collect any rent from such tenant. The
proceeds of any such reletting shall be applied as
follows:
26.3.1.1. First, to the payment of any indebtedness (other than
rent) due hereunder from Tenant to Landlord, including but
not limited to storage charges;
26.3.1.2. Second, to the payment of the reasonable costs and
expenses of reletting the Premises, including brokerage
commissions, alterations and repairs which Landlord, in
its sole discretion, deems reasonably necessary and
advisable and reasonable attorneys' fees incurred by
Landlord in connection with the retaking of the. said
Premises and such reletting;
26.3.1.3. Third, to the payment of rent and other charges due and
unpaid hereunder; and
26.3.1.4. Fourth, to the prorated value of the concessions granted
to Tenant upon signing the Lease; and
26.3.1.5. Fifth, to the payment of future rent and other damages
payable by Tenant under this Lease.
26.3.2. Landlord can terminate Tenant's right to possession of the
Premises at any time. Unless Landlord shall have notified
Tenant in writing that it has elected to terminate this
Lease, Landlord shall not be deemed to have terminated
this Lease, Tenant's right to possession of the Leasehold,
the liability of Tenant to pay rent thereafter, or
Tenant's liability for damages under any of the provisions
hereof. Tenant agrees that the service by Landlord of any
notice pursuant to the unlawful detainer statutes of the
State of California and Tenant's surrender of possession
pursuant to such notice shall not be deemed to be a
termination of this Lease or of Tenant's right to
possession thereof (unless Landlord elects to the contrary
at the time of, or at any time subsequent to the service
of, such notice, and such election be evidenced by a
written notice to Tenant). Acts of maintenance, efforts to
relet the Premises, or the appointment of a receiver on
Landlord's initiative to protect Landlord's interest under
this Lease shall not constitute a termination of Tenant's
right to possession. On termination, Landlord has the
right to recover from Tenant:
26.3.2.1. The worth, at the time of the award of the unpaid rent
that had been earned at the time of termination of this
Lease; plus
26.3.2.2. The worth, at the time of the award, of the amount by
which the unpaid rent that would have been earned after
the date of termination of this Lease until the time of
award exceeds the amount of the loss of rent that Tenant
proves could have been reasonably avoided; plus
26.3.2.3. The worth, at the time of the award, of the amount by
which the unpaid rent for the balance of the Term after
the time of the award exceeds the amount of the loss of
rent that Tenant proves could have been reasonably
avoided; plus
26.3.2.4. Any other amount, and court costs, necessary to compensate
Landlord for all detriment proximately caused by Tenant's
default.
The worth at the time of award of the amount referred to in Section
26.3.2. above is to be computed by allowing interest at the rate of
ten percent (10%) per annum or the discount rate of the Federal
Reserve Bank of San Francisco plus five percent (5%), whichever is
less.
26.3.3. Intentionally omitted.
26.3.4. Landlord, at any time after Tenant commits an Event of
Default and during the continuation of such Event of
Default, may cure the applicable Event of Default at
Tenant's costs. If at any time, by reason of any Event of
Default, Landlord pays any sum or does any act that
requires the payment of any sum, the sum paid by Landlord
shall be due immediately from Tenant to Landlord at the
time the sum is paid, and if Tenant pays such sum at a
later date, it shall bear interest at the rate of 10% per
annum from the date the sum is paid by Landlord until
Landlord is reimbursed by Tenant. The sum, together with
accrued interest, shall be additional rent.
26.4. Intentionally omitted.
26.5. Landlord shall be in default of this Lease if it fails or refuses to
perform any provision of this Lease that it is obligated to perform
and such failure to perform is not cured within thirty (30) days
after written notice of the default has been given by Tenant to
Landlord. If the default cannot reasonably be cured within thirty
(30) days, Landlord shall not be in default of this Lease if
Landlord promptly commences to cure the default within the aforesaid
thirty (30) days period and diligently and in good faith continues
to cure the default to completion. Upon the occurrence of any such
default by Landlord, Tenant may remedy such default and charge
Landlord for the reasonable costs thereof or sue for injunctive
relief to recover damages for any loss from such breach or terminate
this Lease.
26.6. In no event is Landlord liable to Tenant or any other person for
consequential, special or punitive damages, including, without
limitation, lost profits. If Landlord is in default of this Lease,
and as a consequence Tenant recovers a money judgment against
Landlord, the judgment shall be satisfied only out of the proceeds
of sale received on execution of the judgment and levy against the
right, title, and interest of Landlord in the Premises, and out of
rent or other income from the Premises receivable by Landlord or out
of the consideration received by Landlord from the sale or other
disposition of all or any part of Landlord's right, title, and
interest in the Premises. The obligations of Landlord under this
Lease do not constitute personal obligations of Landlord or the
individual partners, shareholders, directors, officers, employees or
agents of Landlord. Tenant shall look solely to Landlord's interest
in the Premises and the rent or other income received by Landlord
from the Premises, and to no other assets of Landlord, for
satisfaction of any liability in respect of this Lease, and shall
not seek recourse against the individual partners, shareholders,
directors, officers, employees, or agents of Landlord or any of
their personal assets for such satisfaction.
26.7. If a court of competent jurisdiction determines that any act
described in this Article does not constitute an event of default,
and the court appoints a trustee to take possession of the Premises
(or if Tenant remains a debtor in possession of the Premises) and
such trustee or Tenant transfers Tenant's interest hereunder, then
Landlord is entitled to receive, as additional rent, the amount by
which the Rent (or any other consideration) paid in connection with
the Transfer exceeds the Rent otherwise payable by Tenant under this
Lease.
26.8. Tenant will reimburse and compensate Landlord on demand and as
additional rent for any actual loss Landlord incurs in connection
with, resulting from or related to any Event of Default under this
Lease, regardless of whether suit is commenced or judgment is
entered. Such loss includes all, reasonable legal fees, costs and
expenses (including paralegal fees and other professional fees and
expenses) Landlord incurs investigating, negotiating, settling or
enforcing any of Landlord's rights or remedies or otherwise
protecting Landlord's interests under this Lease. Tenant will also
indemnify, defend (with counsel reasonably acceptable to Landlord),
protect and hold harmless the Landlord Parties from and against all
Claims Landlord or any of the other Landlord Parties incurs if
Landlord or any of the other Landlord Parties becomes or is made a
party to any claim or action: (a) instituted by Tenant or by or
against any person holding any interest in the Premises by, under or
through Tenant; (b) for foreclosure of any lien for labor or
material furnished to or for Tenant or such other person; or (c)
otherwise arising out of or resulting from any act or omission of
Tenant or such other person. In addition to the foregoing, Landlord
is entitled to reimbursement of all of Landlord's fees, expenses and
damages, including, but not limited to, reasonable attorneys' fees
and paralegal and other professional fees and expenses, Landlord
incurs in connection with protecting its interests in any bankruptcy
or insolvency proceeding involving Tenant, including, without
limitation, any proceeding under any chapter of the Bankruptcy Code;
by exercising and advocating rights under Section 365 of the
Bankruptcy Code; by proposing a plan of reorganization and objecting
to competing plans; and by filing motions for relief from stay. Such
fees and expenses are payable on demand, or, in any event, upon
assumption or rejection of this Lease in bankruptcy.
27. ADVERTISING.
27.1. Tenant shall not affix any signs, banners, advertising placards,
names, insignias, "trademarks (collectively referred to in this
Article as "Signs or "Signs") or other descriptive materials on any
window or upon the exterior of the Building, unless Tenant has
received the prior written approval of Landlord as to size, type,
color, location, copy, nature and display qualities of any such
proposed materials, which approval shall not be unreasonably
withheld. Any Sign that is affixed or displayed without Landlord's
written approval shall be subject to a sign removal fee of One
Hundred Dollars ($100.00) per occurrence. All Signs must conform to
the other signs used throughout the Building. Any Sign must meet the
requirements of any Declaration of Restrictions encumbering the
Project and the requirements of the City of Vista. Except for
outside storage permitted under Section 6.10 of this Lease, Tenant
shall not display, store or sell any merchandise outside the defined
exterior walls and permanent doorways of the Premises. Except as
permitted under Section 6.6 of this Lease, Tenant shall not use in
or about the Premises any advertising media which may be heard or
seen outside the Premises, such as flashing lights, search lights,
loudspeakers, phonographs or radio broadcasts.
27.2. Tenant shall pay for the creation and installation of the
appropriate tenant identification signs at the Project.
27.3. Landlord shall have the right to prohibit any advertising by any
tenant which, in Landlord's reasonable opinion, tends to impair the
reputation of the Building or the Project or their desirability; and
upon written notice from Landlord, any tenant shall refrain from or
discontinue such advertising.
28. NO PUBLIC DISCLOSURES.
28.1. The terms and conditions of this Lease constitute proprietary
information of Landlord that Tenant will keep confidential. Tenant's
disclosure of the terms and conditions of this Lease could adversely
affect Landlord's ability to negotiate other leases and impair
Landlord's relationship with other tenants. Accordingly, except for
information regarding this Lease which Tenant may be required to
disclose pursuant to the requirements of applicable Laws, including,
without limitation, the requirements of the Security and Exchange
Commission, Tenant will not, without Landlord's consent (which
consent Landlord may grant or withhold in its sole and absolute
discretion), directly or indirectly disclose the terms and
conditions of this Lease to any other tenant or prospective tenant
of the Building or to any other person or entity other than Tenant's
employees, agents, attorneys and accountants who have a legitimate
need to know such information (and who will also keep the same in
confidence).
28.2. Intentionally omitted.
28.3. Tenant will not record this Lease or a Memorandum of this Lease
without Landlord's prior written consent, which consent Landlord may
grant or withhold in its sole and absolute discretion.
29. LANDLORD'S ENTRY ON PREMISES.
29.1. Upon giving Tenant twenty-four (24) hours notice, Landlord and its
authorized representatives and agents shall have the right to enter
or pass through the Premises during Tenant's normal business hours
for any of the following purposes:
29.1.1. To determine whether the Premises are in good condition
and whether Tenant is complying with its obligations under
this Lease;
29.1.2. To protect the interest therein of Landlord; to make
alterations and additions as permitted under this Lease
and to do any necessary maintenance and repairs; to make
any restoration to the Premises, or the Building, that
Landlord has the right or obligation to perform; to
provide any services in accordance with this Lease; to
perform in accordance with the terms of this Lease any
obligations of Tenant that Tenant fails to perform; and to
take all required materials and equipment into the
Premises and perform all required work therein, including
the erection of scaffolding, props, or other mechanical
devices.
29.1.3. To serve, post, or keep posted any notices required or
allowed under the provisions of this Lease;
29.1.4. To post "for sale" signs at any time during the Term, to
post "for rent" or "for lease" signs during the last three
(3) months of the Term, or during any period while a
material Event of Default exists;
29.1.5. To show the Premises to prospective brokers, agents,
buyers, persons interested in an exchange, holders of
encumbrances on the interest of Landlord under the Lease,
and prospective mortgagees of the Building at any time
during the Term and to show the Premises to prospective
tenants during the last three (3) months of the Term, or
during any period while a material Event of Default
exists; or
29.1.6. To shore the foundations, footings, and walls of the
Premises and to erect scaffolding and protective
barricades around and about the Premises, but not so as to
prevent entry to the Premises or materially and adversely
interfere with the operation of Tenant's business on the
Premises, and to do any other act or thing reasonably
necessary for the safety or preservation of the Premises
if there is any excavation on any adjacent property or
nearby street. With Landlord's consent, Landlord's right
under this Subsection extends to the owner of the adjacent
property on which excavation or construction is to take
place and the adjacent property owner's authorized
representatives provided that such owner and
representatives comply with all of the requirements of
this Lease regarding Landlord's access to the Premises.
29.2. Landlord shall not be liable in any manner for any inconvenience,
disturbance, loss of business, nuisance, loss of quiet enjoyment, or
other damage arising out of Landlord's or Landlord's employee's or
authorized representative's or agent's entry on the Premises as
provided in this Article except damage resulting from the acts or
omissions of Landlord or its employees or authorized representatives
or agents.
29.3. Intentionally omitted.
29.4. For each of the purposes described in this Article, Landlord shall
at all times have and retain a key with which to unlock all the
doors in, upon, or about the Premises, excluding Tenant's vaults and
safes. Landlord shall have the right to use any and all means which
Landlord may deem reasonably proper to open such doors during the
continuance of an emergency in order to obtain entry to the
Premises, and any entry to the Premises obtained by Landlord by any
of such means shall not under any circumstances be construed or
deemed to be a forcible or unlawful entry into, or detainer of, the
Premises, or to be an eviction of Tenant from the Premises or any
portion thereof. All locks and locking devices shall be a part of
the building's master-keying system. Neither Tenant nor any other
person, other than Landlord or its agents, shall change any locks.
29.5. Tenant shall be entitled to an abatement or reduction of rent, if
Landlord exercises any rights reserved in this Article to, the
extent that Landlord's entry and activities interfere with Tenant's
business on the Premises. However, if Landlord's entry and
activities on the Premises result from an Event of Default, Tenant
shall not be entitled to any abatement or reduction of rent.
29.6. When exercising the rights granted Landlord under Section 6.14 and
this Article 29, Landlord, its agents, employees and/or contractors
(a) shall identify themselves to Tenant's personnel immediately upon
entering the Premises, and (b) shall not, in any way, materially or
unreasonably affect, interrupt or interfere with Tenant's use,
business or operations on the Premises or obstruct the visibility of
or access to the Premises. If a substantial, material or
unreasonable interference with Tenant's use, business or operations
on the Premises or obstruction of the visibility of or access to the
Premises shall occur and continue for longer than ninety (90) days
as a result of Landlord's exercise of its rights under Section 6.14
or this Article 29, Tenant shall have the option to terminate this
Lease.
29.7. Nothing in this Article shall prohibit Landlord from entering the
Premises without first giving notice to Tenant, as allowed by law,
in response to an emergency situation. As used in this Lease, the
term "emergency" shall mean an unforeseen event posing imminent and
significant threat to life, safety or property if not immediately
addressed by Landlord in its commercially reasonable judgment.
30. OFFSET STATEMENT ATTORNMENT, SUBORDINATION.
30.1. After request therefore by Landlord, or in the event that upon any
sale, assignment or hypothecation of the Premises by Landlord, an
offset statement and/or estoppel certificate shall be required from
Tenant, Tenant agrees to deliver a certificate, in recordable form,
to any proposed lender or purchaser, or to Landlord, certifying: (1)
The Commencement Date; (2) the fact that this Lease is unmodified
and in full force and effect (or, if there have been modifications
hereto, that this Lease is in full force and effect, and stating the
date and nature of such modifications); (3) the date to which the
rental and other sums payable under this Lease have been paid; (4)
that there are no defenses or offsets thereto, or stating those
claimed by Tenant; (5) that there are no current defaults under this
Lease by either Landlord or Tenant except as specified in Tenant's
statement; and (6) such other reasonable factual statements
requested by Landlord, or any proposed lender and/or purchaser.
Landlord and Tenant intend that any mortgagee, beneficiary,
purchaser or prospective purchaser of the Building, Project or any
interest therein, may rely upon any statement delivered pursuant to
this Article. Tenant shall deliver the certificate, in the form
proposed by the requesting entity, within ten (10) business days
after the request is received by Tenant. Tenant's failure to deliver
such statements within such time shall be conclusive upon the Tenant
that this Lease is in full force and effect, except as and to the
extent any modification has been represented by Landlord, and that
there are no uncured defaults in Landlord's performance and that not
more than one month's rent has been paid in advance. Such failure
also constitutes a default of this Lease. In such event, Tenant is
estopped from denying the truth of the facts contained in the
statement submitted to Tenant.
30.2. Tenant will, within ten (10) business days after Tenant's receipt of
Landlord's request at any time during the Term (but no more
frequently than once in any twelve (12) month period), deliver to
Landlord complete, accurate and up-to-date financial statements
(including the current year and the two years prior to the current
financial statement year) with respect to Tenant and any
Guarantor(s) or other parties obligated upon this Lease, which
financial statements must be (a) prepared according to generally
accepted accounting principles consistently applied, and (b)
certified by an independent certified public accountant or by
Tenant's (or Guarantor's, as the case may be) chief financial
officer that the same are correct in all material respects as of the
date of such financial statements.
30.3. In the event of termination of any underlying lease, or in the event
of foreclosure or exercise of any power of sale wider any mortgage
or deed of trust superior to this Lease or to which this Lease is
subject or subordinate, Tenant, upon demand, shall attorn to the
lessor under said underlying lease or to the purchaser at any
foreclosure sale or sale pursuant to the exercise of any power of
sale under any mortgage or deed of trust, in which event this Lease
shall not terminate and Tenant shall automatically be and become the
tenant of the lessor under said underlying lease or to the purchase
or whichever shall make demand therefore. Tenant waives the
protection of any statute or rule of law that gives or purports to
give Tenant any right to terminate this Lease or surrender
possession of the Premises upon the transfer of Landlord's interest.
No landlord or purchaser at any foreclosure sale pursuant to the
exercise of any power of sale or any successor thereto shall be
liable for any act or omission of any prior landlord (including
Landlord), or subject to any offsets or defenses which Tenant might
have against any prior landlord (including Landlord), or be bound by
any rent or additional rent which Tenant might have paid in advance
to any prior landlord (including Landlord) for a period in excess of
one month, or by any security deposit or other prepaid charge which
Tenant might have paid in advance to any prior landlord (including
Landlord) unless such deposit is transferred to such landlord or
purchaser, or bound by any agreement or modification of this Lease
made without the prior written consent of such material landlord.
30.4. Upon the request of Landlord, Tenant shall subordinate its rights
hereunder to the lien of any deed(s) of trust or the lien resulting
from any other method of financing or refinancing, now or hereafter
in force against the Premises, Building, or Project or any part
thereof, and to all advances made or hereafter to be made upon the
security thereof. This Section shall be self-operative if no further
instrument of subordination is required by any lender, provided that
the mortgagee or beneficiary under such mortgage or deed of trust
agrees in a written instrument in form and substance reasonably
satisfactory to Tenant that Tenant's use and right to possession of
the Premises shall not be disturbed, nor shall its obligations be
enlarged or its rights be abridged hereunder by reason of any
foreclosure, sale or transfer of the Premises under any such
mortgage or deed of trust so long as no Event of Default has
occurred hereunder.
30.5. Upon the request of Landlord or any other Party in interest, Tenant
shall promptly execute such documents, instruments or certificates
that may be reasonably necessary to carry out the intent of this
Article. Tenant's failure to execute any such documents and deliver
them to Landlord within fifteen (15) days after the request of
Landlord to do so, shall be an Event of Default.
30.6. If, in connection, with obtaining construction, interim, or
permanent financing for the Project the lender shall request
reasonable modifications in this Lease as a condition to such
financing, Tenant shall not withhold, delay or defer its consent
thereto, provided that such modifications do not increase the
monetary obligations of Tenant hereunder or materially and adversely
affect the leasehold interest hereby created or Tenant's rights
hereunder.
30.7. Intentionally omitted.
30.8. Tenant will give the holder of any Mortgage, by registered mail, a
copy of any notice of default Tenant serves on Landlord, provided
that Landlord or the holder of the Mortgage previously notified
Tenant in writing (by way of notice of assignment of rents and
leases or otherwise) of the address of such holder. Tenant further
agrees that if Landlord fails to cure such default within the time
provided for in this Lease, then Tenant will provide written notice
of such failure to such holder and such holder will have an
additional thirty (30) days within which to cure the default. If the
default cannot be cured by such holder within additional thirty (30)
day period, then the holder will have such additional time as may be
reasonably necessary to effect the cure if, within such thirty (30)
day period, the holder has commenced and is diligently pursuing the
cure to completion (including without limitation commencing
foreclosure proceedings if necessary to effect the cure).
31. NOTICE.
31.1. Except as otherwise specifically provided herein, any notice,
demand, request, consent approval, or communication that either
Party desires or is required to give the other Party or any other
person, shall be in writing and shall be deemed to have been duly
delivered upon personal delivery, upon delivery by electronic
facsimile transmission (verified by the sending machine), the
following day after sending by overnight courier, or as of the
second business day after mailing by United States registered or
certified mail, return receipt requested, postage prepaid, addressed
to the other Party at the address designated at the beginning of
this Lease. Either Party may change its address by notifying the
other Party of the change of address.
32. WAIVER.
32.1. A delay or omission in the exercise of any right or remedy of
Landlord on the occurrence of any Event of Default shall neither
impair such right or remedy nor be construed as a waiver, nor shall
any custom or practice which may grow up between the parties in the
administration of the terms hereof be deemed a waiver of or in any
way affect the right of Landlord to insist upon the performance by
Tenant in strict accordance with the terms of this Lease.
32.2. The receipt and acceptance by Landlord of delinquent rent shall not
constitute a waiver of any other default; it shall constitute only a
waiver of timely payments for the particular rent payment involved.
No payment by Tenant, or receipt by Landlord, of a lesser amount
than the rent payment herein stipulated shall be deemed to be other
than on account of the rent, nor shall any endorsement or statement
on any check or any letter accompanying any check or payment as rent
by deemed an accord and satisfaction, (unless Landlord expressly
agrees to an accord and satisfaction in a separate writing duly
executed by Landlord). Landlord may accept any such check or payment
without prejudice to Landlord's right to recover the balance of such
rent, including any interest and late charges, or pursue any other
remedy provided in this Lease.
32.3. No act or conduct of Landlord, including, without limitation, the
acceptance of the keys to the Premises, shall constitute an
acceptance of the surrender of the Premises by Tenant before the
expiration of the term. Only a notice from Landlord to Tenant shall
constitute acceptance of the surrender of the Premises and
accomplish a termination of the Lease.
32.4. Landlord's consent to or approval of any act by Tenant requiring
Landlord's consent or approval shall not be deemed to waive or
render unnecessary Landlord's consent to or approval of any
subsequent act by Tenant.
32.5. Any waiver by Landlord of any default must be in writing and shall
not be a waiver of any other default concerning the same or any
other provisions of the Lease.
32.6. Any claim Tenant may have against Landlord for default in
performance of any of Landlord's obligations under this Lease is
deemed waived unless Tenant notifies Landlord of the default within
thirty (30) days after Tenant knew or should have known of the
default.
33. SALE OR TRANSFER OF PREMISES.
33.1. Upon consummation of a sale, exchange, assignment or other transfer
of all or any portion of the Premises, Landlord shall be released
from any liability and all obligations thereafter accruing under
this Lease. Landlord's covenants and obligations in this Lease bind
each successive landlord only during and with respect to its
respective period of ownership. However, notwithstanding any such
transfer, the transferor remains entitled to the benefits of
Tenant's releases and indemnity and insurance obligations (and
similar obligations) under this Lease with respect to matters
arising or accruing during the transferor's period of ownership.
33.2. If Tenant has paid any Security Deposit or prepaid rent, Landlord
shall transfer the Security Deposit or prepaid rent; to Landlord's
successor. Upon such transfer, Landlord shall be discharged from any
further liability in reference to the Security Deposit or prepaid
rent.
34. HOLDING OVER.
34.1. If Tenant, with Landlord's consent, remains in possession of the
Premises after expiration or termination of this Lease, or after the
date in any notice given by Landlord to Tenant terminating this
Lease, such possession by Tenant shall be deemed to be a
month-to-month tenancy terminable on thirty (30) days' notice given
at any time by either Party, and neither a renewal hereof nor an
extension for any further term. During such month-to-month tenancy,
Tenant shall pay all rent required by this Lease. All provisions of
this Lease except those pertaining to term shall apply to the
month-to-month tenancy. Acceptance by Landlord of rent after such
expiration or earlier termination shall not constitute a consent to
a holding over hereunder or result in a renewal of this Lease. The
provisions of this Article are in addition to and do not affect
Landlord's right of re-entry or any other rights of Landlord under
this Lease or as otherwise provided by law.
35. SURRENDER OF PREMISES.
35.1. Upon expiration of the Term or within a reasonable period of time
after termination of this Lease, Tenant shall quit and surrender to
Landlord the Premises and all Tenant's Improvements and Alterations
in good condition and repair except for: (i) ordinary wear and tear
occurring after the last necessary maintenance made by Tenant; (ii)
damage to or destruction of the Premises covered by the Article
titled "Destruction" or by the Article titled "Condemnation;" or
(iii) Alterations that Tenant has the right to remove or is
obligated to remove under the provisions of the Article titled
"Alterations." Tenant shall remove all of debris, rubbish, and
Tenant's personal property from the Premises. Upon such removal,
Tenant shall repair any damage resulting from the removal of
Tenant's Trade Fixtures and Tenant's Personal Property. Prior to
surrendering the Premises to Landlord, Tenant shall restore the
Premises to a condition substantially similar to the condition of
the Premises at the Commencement Date. Failing such, Landlord may so
repair the Premises and charge Tenant for the reasonable costs
thereof incurred by Landlord, or withhold such costs from any
balance of the Security Deposit that may at the time remain. Tenant
shall surrender all keys to the Premises to Property Manager or to
Landlord at the place then fixed for Tenant's payment of Basic Rent
or as Landlord or Property Manager otherwise direct. Tenant will
also inform Landlord of all combinations on locks, safes and vaults,
if any, in the Premises or, on the Project.
35.2. Landlord can elect to retain or dispose of (in any manner) any of
Tenant's Personal Property that Tenant does not remove from the
Premises on expiration or termination of the Lease by giving at
least ten (10) days' notice to Tenant. Title to any items of
Tenants' Personal Property that Landlord elects to retain or dispose
of after expiration of the ten (10) day period shall vest in
Landlord. Tenant waives all claims against Landlord for any damage
to Tenant resulting from Landlord's retention or disposition of any
such Tenant's Personal Property, Tenant shall be liable to Landlord
for Landlord's reasonable costs for storing, removing, and
disposing; of any of Tenant's Personal Property under this Section
35.2. Landlord may store Tenant's Personal Property in a public
warehouse or elsewhere for the account and at the expense and risk
of Tenant. If Tenant shall fail to pay the cost of storing any of
Tenant's Personal Property after it has been stored for a period of
thirty (30) days or more, Landlord may sell any or all of such
Tenant's Personal Property at public or private sale, in such manner
and at such times and places as Landlord, in its sole discretion,
may deem proper, without notice to or demand upon Tenant. Landlord
shall apply the proceeds of such sale as follows:
35.2.1. First, to the costs and expenses of such sale, including
Landlord's reasonable attorneys' fees;
35.2.2. Second, to the payment of the expense of or charges for
removal and storing any such property;
35.2.3. Third, to the payment of any other sum of money which may
then or thereafter be due to Landlord from Tenant under
any of the terms of this Lease; and
35.2.4. Fourth, the balance, if any, to Tenant.
35.3. If Tenant fails to timely surrender the Premises to Landlord upon
expiration or after termination of this Lease as required by this
Article, Tenant shall hold Landlord harmless from all damages
resulting therefrom, including, without limitation, claims made by a
succeeding Tenant resulting from Tenant's failure to surrender the
Premises.
35.4. The voluntary or other surrender by tenant or a mutual cancellation
of this Lease shall not work a merger, and shall, at the election of
Landlord, either terminate all or any existing subleases or
subtenancies or may operate as an assignment to it of any or all of
such subleases or subtenancies. Landlord shall exercise its election
within thirty (30) days of the event so requiring.
36. ABANDONMENT.
36.1. Tenant shall not vacate nor abandon the Premises at any time during
the term of this Lease, nor permit the Premises to remain unoccupied
for a period of longer than ten (10) consecutive days during the
Term of this Lease. If Tenant shall abandon the Premises, any of
Tenant's Personal Property left on the Premises shall be dealt with
or disposed of as provided in the Article titled "Surrender of
Premises."
37. ATTORNEYS' FEES.
37.1. In the event Landlord or Tenant retains an attorney to enforce any
provision of this Lease against the other, the Party which
establishes a breach of this Lease shall be entitled to recover from
the other all expenses incidental to such enforcement incurred in
any legal proceeding whatsoever (including but not limited to
insolvency, bankruptcy, arbitration, declaratory relief, unlawful
detainer or other litigation), regardless of whether or not suit is
brought. Such expenses include, but are not limited to, reasonable
attorneys' fees, appraisers' fees, accountants' fees, service of
process, filing fees, court and court reporter costs, investigative
costs, expert witness fees, and the cost of any bonds, whether
taxable or not. Such reimbursement shall be included in any judgment
or final order issued in any proceeding. If Landlord employs a
collection agency and/or an attorney to recover delinquent charges
or to otherwise enforce this Lease after Tenant's notice and grace
period, if any, expires, Tenant agrees to pay all collection agency
fees and reasonable attorneys' fees (whether or not litigation is
commenced or pursued to final judgment) charged to Landlord in
addition to rent, late charges, interest and other sums payable
under this Lease. Any expenses to which Landlord is entitled shall
be considered as rent and are payable within ten (10) days after
Tenant receives a reasonably detailed statement of the amount due.
37.2. If Landlord is named as a defendant in any suit brought against
Tenant in connection with or arising out of Tenant's occupancy of
the Premises hereunder, Tenant shall pay to Landlord its costs and
expenses incurred in such suit, including without limitation, its
actual professional fees including, but not limited to, the fees of
appraisers, accountants, expert witnesses, and reasonable attorneys
fees.
38. ACCESS; CHANGES IN BUILDING FACILITIES NAME.
38.1. Landlord reserves, for the purpose of operation, maintenance,
decoration, and repair, access to:
38.1.1. All walls, windows, and doors bounding the Premises,
except the inside surfaces thereof (including exterior
building walls, core corridor walls and doors, and any
core corridor entrance); and
38.1.2. All space in or adjacent to the Premises used for shafts,
stacks, pipes, conduits, fan rooms, ducts, electric or
other utilities, sinks, or other Building facilities, and
the use thereof, as well as access thereto through the
Premises.
38.2. Landlord may, at any time before or after completion of the Project,
without incurring any liability to Tenant therefore, make such
changes in or to the Project and the fixtures and equipment thereof
or any other portion of the Project, as well as in or to the street,
entrances, halls, passages, stairways, and other improvements
thereof, as Landlord may deem necessary or desirable.
38.3. Landlord may, at any time before or after completion of the Project,
without incurring any liability to Tenant therefore, adopt or change
any name or address or identity for the Project (or any part
thereof) including roof signs, entrances, signage, and other Project
identification.
39. QUIET ENJOYMENT.
39.1. Notwithstanding any subordination as provided in the Article titled
"Offset Statement, Attornment, Subordination," if no Event of
Default has occurred under this Lease, Landlord covenants that
Tenant shall have peaceful and quiet enjoyment of the Premises
without hindrance on the part of Landlord, and Landlord shall defend
Tenant in the peaceful and quiet enjoyment of the Premises against
claims of all persons claiming by, through or under Landlord.
40. FORCE MAJEUR
40.1. Any prevention, delay or stoppage due to strikes, lockouts, labor
disputes, acts of God, inability to obtain labor or materials or
reasonable substitutes therefore, governmental restrictions,
regulations, or controls, enemy or hostile governmental action,
civil commotion, fire or other casualty, and other causes; or, any
failure or defect in the supply, quantity or character of gas,
electricity or water furnished to the Premises, by reason of any
requirement, act or omission of the public utility or others
furnishing the Project with gas, electricity or water, or for any
other reason, whether similar or dissimilar to the above beyond the
reasonable control of the Party obligated to perform, shall excuse
the performance by such Party for a period equal to that resulting
from such prevention, delay or stoppage, except those obligations of
Tenant to make payment for rental and other charges pursuant to the
terms of this Lease.
41. RELATIONSHIP OF PARTIES.
41.1. The relationship of the Parties hereto is that of Landlord and
Tenant, and it is expressly understood and agreed that Landlord is
not in any way or for any purpose a partner of Tenant, or a joint
venturer with Tenant in the conduct of Tenant's business or
otherwise.
42. GENERAL PROVISIONS.
42.1. Unless the context otherwise indicates, whenever used in this
Agreement the word "Party" or "Parties" means Landlord and/or
Tenant, as the context may require.
42.2. All pronouns and any variations thereof shall be deemed to refer to
the masculine, feminine or neuter, singular or plural, as the
identity of the person, persons, entity or entities may require.
42.3. Titles and captions in this Agreement are inserted for convenience
of reference only and do not define, describe, amplify or limit the
scope of the intent of this Agreement or any of the terms hereof.
42.4. References in this Agreement to Articles, Sections,
Subsections, and Exhibits are to Articles, Sections, Subsections and
Exhibits herein and hereto unless otherwise indicated.
42.5. Any exhibits, schedules or descriptions referred to in this
Agreement are expressly incorporated herein by reference as if set
forth in full, whether or not attached hereto.
42.6. The representations, warranties, covenants, agreements and
indemnities set forth in or made pursuant to this Agreement, or in
any instrument, certificate, opinion, or other writing provided for
in it, shall remain operative, shall be deemed made upon execution
of this Agreement and shall not be merged therein.
42.7. This Agreement contains the entire agreement between the parties
relating the transactions contemplated hereby. All prior or
contemporaneous agreements, understandings, representations and
statements, oral or written, are merged herein. Except as expressly
provided herein, there are no representations or warranties between
the parties.
42.8. Each party has relied upon its own examination of this Agreement,
and the warranties, representations, and covenants expressly
contained in this Agreement itself. The failure or refusal of either
party to inspect this Agreement or other documents, or to obtain
legal advice relevant to this transaction, constitutes a waiver of
any objection, contention, or claim that might have been based upon
such reading, inspection or advice.
42.9. The parties acknowledge that this Agreement, in its final form, is
the result of the combined efforts of the parties hereto and any
counsel who may have advised the parties, neither of which has acted
under any duress or compulsion, whether legal, economic, or
otherwise. Should any provision of this Agreement be found to be
ambiguous in any way, such ambiguity shall not be resolved by
construing this Agreement in favor of or against any party herein,
but rather by construing the terms of this Agreement fairly and
reasonably in accordance with their generally accepted meaning and
the purposes for which this Agreement is made. The parties agree
that, regardless of which party provided the initial form of this
Lease, drafted or modified one or more provisions of this Lease, or
compiled, printed or copied this Lease, this Lease is to be
construed solely as an offer from Tenant to lease the Premises,
executed by Tenant and provided to Landlord for acceptance on the
terms set forth in this Lease, which acceptance and the existence of
a binding agreement between Tenant and Landlord may then be
evidenced only by Landlord's execution of this Lease.
42.10. No modification, waiver, amendment, discharge or change of this
Agreement shall be valid unless the same is in writing and signed by
the party, or their successor in interest, against which the
enforcement of such modification, waiver, amendment, discharge or
change is or may be sought.
42.11. In the event any term, covenant,, condition, provision or agreement
herein contained is held to be invalid or void by any court of
competent jurisdiction, the invalidity of any such term, covenant,
condition, provision or agreement shall in no way affect any other
term, covenant, condition, provision or agreement herein contained.
42.12. Each of the Parties shall full, cooperate with the other in
connection with the requirements imposed by this Agreement and each
agree to take such further actions and to execute and deliver such
further documents, with acknowledgment or affidavit, if required, as
may be reasonably necessary to carry out the purposes of this
Agreement and to facilitate the satisfaction of any conditions set
forth herein.
42.13. This Agreement, and any dispute arising hereunder, shall be
construed and enforced in accordance with, and be governed by,
California Laws. The parties hereto agree that proper jurisdiction
and venue for any suit brought to interpret or enforce any term or
provision of this Agreement shall be in San Diego County,
California. The reference in this Lease to any legislation or any
portion thereof shall be read as though the words "or any statutory
modifications or re-enactment thereof or any statutory provisions
substituted thereof were added to such reference.
42.14. This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument. Facsimile
transmission of any signed original document, and retransmission of
any signed facsimile transmission, shall be the same as transmission
of an original. At the request of Landlord or Tenant, the parties
will confirm facsimile transmitted signatures by signing an original
document.
42.15. Whenever consent or approval of either Party is required, that Party
shall not unreasonably withhold such consent or approval.
42.16. If Tenant is a corporation, partnership, a limited liability
company, or other entity, execution of this Lease by Tenant
constitutes a representation by Tenant and the officers, partners,
members, managers, or other agents of Tenant executing this Lease
that this Lease has been duly authorized by Tenant, corporation,
partnership, or other entity. Tenant shall provide to Landlord a
certified copy of a duly adopted resolution of its partners or the
Board of Directors of Tenant (or other appropriate evidence of
authority) authorizing the execution and delivery of this Lease and
naming the officers that are authorized to execute this Lease on
behalf of Tenant.
42.17. If Tenant is an entity, Tenant will, within ten (10) days after
Landlord's written request, deliver to Landlord: (a) Certificate(s)
of Good Standing from the state of formation of Tenant and, if
different, the State of California, confirming that Tenant is in
good standing under the laws governing formation and qualification
to transact business in such state(s); and (b) a copy of Tenant's
organizational documents and any amendments or modifications
thereof, certified as true and correct by an appropriate official of
Tenant. Tenant and each individual signing this Lease on behalf of
Tenant represents and warrants that they are duly authorized to sign
on behalf of and to bind Tenant and that this Lease is a duly
authorized, binding and enforceable obligation of Tenant.
42.18. All parties signing this Lease as Tenant and any Guarantor(s) of
this Lease are jointly and severally liable for the keeping,
observing and performing of all of the terms, covenants, conditions,
provisions and agreements of this Lease to be kept, observed and
performed by Tenant. The act of, or notice from, or notice or refund
to, or the signature of any one or more of them, with respect to the
tenancy of this Lease, including, but not limited to any renewal,
extension, expiration, termination or modification of this Lease,
shall be binding upon each and all of the persons executing this
Lease as Tenant with the same force and effect as if each and all of
them had so acted or so given or received such notice or refund or
so signed.
42.19. This Lease shall be binding on and inure to the benefit of the
Parties and their successors and assigns, except as provided in the
Articles titled "Assignment" and "Sale or Transfer of the Premises."
Notwithstanding the immediately preceding sentence or any other
provision of this Lease, this Lease shall not be assigned or
assignable by operation of law. In no event shall this Lease be an
asset of Tenant in any receivership, bankruptcy, insolvency, or
reorganization proceeding.
42.20. All provisions, whether covenants or conditions, on the part of
Tenant shall be deemed to be both covenants and conditions.
42.21. The definitions contained in this Lease shall be used to interpret
this Lease.
42.22. Rent and all other sums payable under this Lease shall be paid in
lawful money of the United States of America.
42.23. Except as may otherwise be expressly stated, each payment required
to be made by Tenant shall be in addition to and not in substitution
for other payments to be made by Tenant.
42.24. Tenant's execution of this Lease; is conditioned upon Landlord's
execution on or before the thirtieth (30th) day following the date
of this Lease.
42.25. Tenant recognizes that the General Partner of Landlord (i) is
licensed as an attorney in the State of California; (ii) is acting
entirely on behalf of Landlord in this Lease; and (iii) has no
fiduciary relationship with Tenant.
42.26. Time is of the essence with respect to the performance of every
provision of this Lease in which time of performance is a factor.
42.27. All of Tenant's obligations under this Lease (together with interest
on payment obligations at the rate of 10% per annum or the maximum
amount allowed by law if that rate is higher than 10%) accruing
prior to expiration or other termination of this Lease survive the
expiration or other termination of this Lease. Further, all of
Tenant's releases and indemnification, defense and hold harmless
obligations under this Lease survive the expiration or other
termination of this Lease, without limitation.
42.28. With the exception of the real estate brokerage commission, if any,
payable to the party/parties identified in the Definitions section,
pursuant to separate written agreement with Landlord, and which
commission Landlord hereby agrees to pay, each of the Parties
represents to the other Party that it has not incurred, and agrees
to protect, defend, indemnify and hold harmless the other Party from
and against, any real estate commission, finder's fee or other
compensation arising out of or in connection with this Lease or the
transaction of which this Lease is a part.
EXECUTED as of the day and year first above written, at San Diego
County, California.
LANDLORD TENANT
NONAR ENTERPRISES, VERSAFORM CORPORATION,
a California general partnership a California corporation
By: /s/ Michael P. Cafagria By: /s/ Ronald S. Saks
- -------------------------------- --------------------------------
Michael P. Cafagria, Ronald S. Saks,
General Partner President
RIDER TO NET INDUSTRIAL LEASE DATED September 12, 2003 (THE "PRIMARY LEASE",
AND, TOGETHER WITH THIS RUDER, THE "LEASE"), BY AND BETWEEN NONAR ENTERPRISES, A
CALIFORNIA GENERAL PARTNERSHIP ("LANDLORD"), AND VERSAFORM CORPORATION, A
CALIFORNIA CORPORATION ("TENANT") FOR CERTAIN PREMISES LOCATED AT 1377 SPECIALTY
DRIVE, VISTA, CALIFORNIA.
ANY OTHER TERM OR PROVISION IN THE PRIMARY LEASE TO THE CONTRARY
NOTWITHSTANDING, TO THE EXTENT THAT THE TERMS AND PROVISIONS OF THIS RIDER ARE
INCONSISTENT WITH THE TERMS AND PROVISIONS OF THE PRIMARY LEASE, THE TERMS AND
PROVISIONS OF THIS RIDER SHALL CONTROL AND GOVERN.
1. Tenant shall have the right to contest any tax, fee or assessment to
be wholly or partially paid or reimbursed by Tenant and Landlord agrees to use
reasonable efforts to cooperate with such efforts of Tenant. Tenant shall have
the option of paying such obligations under protest, on the condition that
Tenant provides Landlord with reasonable security in connection therewith.
2. All rights and privileges of the Parties hereto shall be subject to
the condition that the same may be exercised by them only in a good faith and
commercially reasonable manner.
3. In no event shall either Party hereto have any remedy against the
other for damages, or for equitable relief of any kind, which exceeds the damage
or injury actually sustained by such Party, it being the intent of the Parties
hereto that neither Party may obtain double or multiple recovery or any recovery
in excess of such actual damage or injury.
4. In no event shall exemption, indemnification or hold harmless
obligations of either Party contained in the Primary Lease be construed as
requiring one Party (the "Protecting Party") to exempt, indemnify or hold
harmless the other Party (the "Protected Party") or any other person or entity
except for damages or injuries actually sustained by the Protected Party and
proximately caused by the acts or omissions of the Protecting Party or its
employees, agents or invitees. In no event shall any waiver of claims by the
Protecting Party against the Protected Party or limitations on liability in the
Primary Lease be construed to waive or limit any claims for damage or injury
proximately caused by an act or omission, or any negligence or misconduct, of
the Protected Party or its employees, agents or invitees
5. No sale or conveyance by Landlord of the Lot, the Building or the
Premises or any interest therein shall relieve Landlord of its obligations under
this Lease accruing on or prior to such sale or conveyance.
6. Tenant reserves the right, without Landlord's approval, to sublet or
assign the Premises or any part thereof to any affiliate of Tenant, to any
successor of Tenant resulting from a merger, consolidation or other corporate
restructuring, to any entity under the common control of Tenant, and to any
partner or joint venturer of Tenant. However, Tenant shall provide Landlord with
all information required by Article 25 of this Lease about any successor in
interest. In the event Tenant undertakes the foregoing assignment or subletting,
such assignee or subtenant shall have all rights of Tenant under this Lease,
including, but not limited to, options to extend the Term of this Lease.
7. The text of Article 23 of this Lease shall be replaced with the
following:
"In the event the Premises or Building shall be partially or totally
destroyed by fire or other casualty, the damage to the Premises or Building
shall be promptly repaired and restored by Landlord, at its sole cost and
expense, unless Landlord or Tenant shall elect to terminate this Lease as
hereinafter provided. In the event the Premises are partially or totally
destroyed, then Tenant's obligation to pay rental shall be abated: (i) to the
extent that Landlord receives proceeds from loss of rents insurance, and in
proportion to the amount of the Premises rendered unusable for the conduct of
Tenant's business, until the Premises are repaired and restored. In no event
shall Landlord be required to repair or replace Tenant's Personal Property. If
more than thirty-five percent (35%) of the floor area of the Premises or more
than thirty-five percent (35%) of the floor area of the Building shall be
destroyed by fire or other casualty, then Landlord or Tenant may elect to
terminate this Lease by giving written notice to the other Party of its election
to so terminate, such notice to be given within sixty (60) days after the
occurrence of such damage or destruction.
In the event of any damage or destruction to the Premises which cannot
be repaired and restored by Landlord within one hundred twenty (120) days from
the occurrence of such damage or casualty (as reasonably determined by Tenant),
or in the event that Landlord fails to commence (and diligently complete) repair
and restoration of any such damage or casualty within thirty (30) days of the
occurrence of such damage or casualty, then Tenant shall have the further option
to terminate this Lease effective immediately by providing written notice to
Landlord.
Nothing herein shall obligate Landlord to restore or repair the
Premises in the event damage or destruction to the Premises is not covered by
insurance required to be carried by Landlord hereunder."
8. Landlord shall not discriminate against Tenant in the enforcement of
any Rules and Regulations. Furthermore, notwithstanding anything contained in
this Lease to the contrary, Tenant shall abide by and observe the Rules and
Regulations as may be promulgated from time to time by Landlord, provided the
same are in conformity with common practice and usage in similar buildings, are
not inconsistent with the provisions of this Lease, and apply to all tenants and
occupants of the Building, and provided further that a copy thereof is received
by Tenant.
9. Tenant may, without the prior written consent of Landlord, subject
the leasehold estate created by this Lease as amended from time to time, and its
personal property, equipment and trade fixtures to a leasehold mortgage and/or
security agreement to secure financing or other obligations which Tenant may
obtain or incur from time to time. In connection with any such leasehold
mortgage and/or security agreement, Landlord will, promptly following receipt of
written request therefor, provide to Tenant's lender(s) an estoppel agreement
confirming whether or not this Lease has been amended, whether or not there are
any uncured defaults under this Lease, and such other matters pertaining to the
Lease as such lender(s) may reasonably require.
10. Landlord (i) acknowledges that as of the date of this Lease, the
insurance required to be carried by Tenant under this Lease is currently issued
by Kemper Insurance Company and/or its affiliates and (ii) agrees that the
policies issued to Tenant by such companies in effect as of the date hereof are
acceptable for the purposes of satisfying the requirements of Section 20.9 of
this Lease only through the expiration date of such policies (January 4, 2004)
after which time Tenant will arrange for insurance coverage by one or more
companies that will meet the requirements set forth in the Lease.
11. After request therefore by Tenant, or in the event that upon any
assignment or hypothecation of the Premises by Tenant, an estoppel certificate
shall be required from Landlord, Landlord agrees to deliver a certificate to any
proposed lender or assignee, or to Tenant, certifying: (1) the Commencement
Date; (2) the fact that this Lease. is unmodified and in full force and effect
(or, if there have been modifications hereto, that this Lease is in full force
and effect, and stating the date and nature of such modifications); (3) the date
to which the rental and other sums payable under this Lease have been paid; (4)
that there are no current defaults under this Lease by either Landlord or Tenant
except as specified in Landlord's statement; and (5) such other reasonable
factual statements requested by Tenant, or any proposed lender and/or assignee.
Landlord and Tenant intend that any mortgagee, beneficiary, assignee or
prospective assignee of the Tenant's interest in the Premises or any interest
therein, may rely upon any statement delivered pursuant to this paragraph.
Landlord shall deliver the certificate, in the form proposed by the requesting
entity, within fifteen (15) business days after the request is received by
Landlord. Landlord's failure to deliver such statement within such time shall be
conclusive upon Landlord that this Lease is in full force and effect, except as
and to the extent any modification has been represented by Tenant, and that
there are no uncured defaults in Tenant's performance and that not more than one
month's rent has been paid in advance. Such failure also constitutes a default
of this Lease. In such event, Landlord is estopped from denying the truth of the
facts contained in the statement submitted to Landlord.
12. Intentionally omitted.
13. Tenant may from time to time discontinue business operations in all
or any portion of the Premises as Tenant, in its discretion, may deem necessary
to accommodate the needs of Tenant's business and in such event, provided that
Tenant continues to perform all of its obligations under this Lease, Tenant
shall not be deemed to have abandoned the Premises under Section 36 of this
Lease.
14. Landlord shall maintain complete and accurate records of all
Operating Expenses incurred in connection with the Premises, the Building, the
Lot, the Unit Shared Use Areas and the Project. Tenant shall have the right to
inspect such records at Tenant's sole cost and expense, at the office of the
property manager for the Building during said property manager's normal business
hours, upon five (5) days prior written notice. Landlord shall not be obligated
to provide Tenant with detailed summaries or receipts for any Operating Expenses
incurred by or on behalf Landlord; but Landlord shall provide Tenant with one or
more statements setting forth (i) Landlord's actual costs for such expenses,
categorized by class and amount; (ii) the actual amount due from Tenant for
Tenant's pro rata share of such expenses and (iii) the sum of the estimated
monthly installments paid by Tenant during the applicable calendar year or
property fiscal year. Notwithstanding the aforesaid, unless Tenant asserts
specific errors within ninety (90) days after receipt of any invoice, or
year-end statement, it shall be deemed that said invoice, or year-end statement,
is correct. If Tenant disputes any Operating Expense billed to Tenant and such
dispute has not been resolved prior to the time any disputed amount is due to
Landlord under this Lease, Tenant's payment of any such disputed amount will not
affect Tenant's rights with regard to such disputed amount. If such dispute
cannot be resolved by good faith negotiations between Landlord and Tenant within
sixty (60) days after Tenant gives Landlord notification of such dispute, then
Tenant may request an audit of the disputed matter from an independent certified
public accountant acceptable to Landlord and Tenant whose decision shall be
based on commercial real estate practices in the San Diego County area,
including utilizing GAAP if applicable, and shall be final and binding upon the
parties. If there is a variance of ten percent (10%) or more in the aggregate
between said decision and Landlord's determination regarding the disputed
amount, Landlord shall pay the cost of said audit. If the variance is less than
ten percent (10%), Tenant shall pay the cost of said audit. If such dispute is
resolved in Tenant's favor, Landlord shall credit any overpayment (together with
interest from the time of such overpayment at the annual rate of 5 %) toward the
next installment of Base Rent and/or installment of additional rent falling due
or pay such overpayment to Tenant within thirty (30) days. of the date on which
such dispute is resolved.
15. "Taxes" shall not include any municipal, state or federal income or
excess property taxes assessed against Landlord, or any municipal, state or
federal capital levy, estate, succession, inheritance or transfer taxes of
Landlord, or corporation franchise taxes imposed upon the owner of the fee of
the Property, any taxes that may be levied upon or against any personal property
of Landlord, and any tax that may be levied on account of any real property of
Landlord other than the Property, any franchise, capital stock, excise, social
security, unemployment, sales, use or withholding tax or any other tax,
assessment, imposition, levy or charge levied or assessed against Landlord and
which has no direct relation to the Property, and which would not become a lien
against the Property, except for the failure of Landlord or someone else to pay
the same.
16. Sections 6.18 through 6.31 of this Lease are deleted in their
entirety and the following is substituted in lieu thereof:
"6.18. Tenant shall not use, store, manufacture, dispose of or
discharge any "Hazardous Materials" (as hereinafter defined)
from or on the Premises or any other portion of the Premises;
provided, however, that, as part of Tenant's operations in the
Premises, Tenant may use, store, dispose of or discharge the
Hazardous Materials (and related materials) including without
limitation those materials listed on Exhibit E attached hereto
and made a part hereof (the "Permitted Tenant Materials"), so
long as Tenant complies with all Laws in doing so.
6.19. Subject to the provisions of Section 6.21 of this Lease,
Tenant agrees to defend, indemnify and hold harmless Landlord
and Landlord's agents and employees, from and against any and
all claims, demands, costs and expenses of every kind and
nature (including, without limitation, expert fees, penalties,
fines, removal, clean-up, transportation, disposal and
restoration expenses, reasonable consultants' fees and
reasonable attorneys' fees), arising out of any injury or
damage to any person, property or business, including that of
Landlord, resulting from any use, storage, disposal, discharge
or existence of Hazardous Materials (including, without,
limitation, any Permitted Tenant Materials) upon the Premises
by Tenant or Tenant's agents, employees, contractors or
invitees, unless and to the extent the placement thereof upon
the Premises was caused by Landlord, its agents, employees or
contractors. Further, upon the expiration or earlier
termination of this Lease, Tenant shall remove all Permitted
Tenant Materials from the Premises and return the Premises to
Landlord in conformance with all Laws related to Hazardous
Materials, subject to the provisions of Section 6.21 of this
Lease and unless and to the extent the placement of any
Hazardous Materials upon the Premises was caused by Landlord,
its agents, employees or contractors.
6.20. If Tenant receives an order or other direction from any
federal, state or local court, governmental entity, unit,
department or agency having jurisdiction over the Premises
("Regulatory Agency") to take any corrective action with
respect to the Premises (any such order or direction being
hereinafter referred to as an "Order") under any environmental
law regarding the use, storage, disposal, discharge or
existence of Hazardous Materials upon the Premises by Tenant
or Tenant's agents, employees, contractors and invitees,
Tenant shall provide Landlord a copy of the Order within
fifteen (15) business days following Tenant's receipt of the
Order. Prior to Tenant's compliance with any such Order,
Tenant shall have the right, at Tenant's cost and expense, to
challenge or contest the validity or application of any such
Order and Tenant may delay compliance therewith until final
determination of such proceeding. Landlord, at Tenant's cost
and expense, shall reasonably cooperate with Tenant and
deliver any appropriate papers or other documents which may be
necessary or proper to permit Tenant so to contest the
validity or application of any such Order. Promptly following
Tenant's receipt of any such Order, or if Tenant shall
challenge or contest any such Order, promptly following the
final determination of any such proceeding, Tenant shall
commence and diligently and in good faith pursue the
completion of any corrective action required by the Order, as
the same may be revised in any such final proceeding. If
Landlord shall receive any such Order, directly from a
Regulatory Agency, Landlord shall provide Tenant a copy of the
Order received by Landlord within fifteen (15) business days
following Landlord's receipt of the Order. The obligations of
Tenant under this Section 6.20 with respect to any matter
covered by an Order received by Landlord are conditioned on
Landlord timely providing a copy of the Order received by
Landlord to Tenant as provided herein.
6.21. If Tenant receives an Order to take any corrective action
under any environmental law regarding the use, storage,
disposal, discharge or existence of Hazardous Materials upon
the Premises by Landlord or any third party other than Tenant
or Tenant's agents, employees, contractors and invitees,
Tenant shall provide Landlord a copy of the Order received by
Tenant within fifteen (15) business days following Tenant's
receipt of the Order. Prior to Landlord's compliance with any
such Order, Landlord shall have the right, at Landlord's cost
and expense, to challenge or contest the validity or
application of any such Order and Landlord may delay
compliance therewith until final determination of such
proceeding. Tenant, at ]Landlord's cost and expense, shall
reasonably cooperate with Landlord and deliver any appropriate
papers or other documents which may be necessary or proper to
permit Landlord so to contest the validity or application of
any such Order. Promptly following Landlord's receipt of a
copy of such Order from Tenant, or if Landlord shall challenge
or contest any such Order, promptly following the final
determination of any such proceeding, Landlord shall commence
and diligently and in good faith pursue the completion of any
corrective action required by the Order, as the same may be
revised in any such final proceeding. The obligations of
Landlord under this Section 6.21 with respect to any matter
covered by an Order are conditioned on Tenant timely providing
a copy of the Order received by Tenant to Landlord; provided,
however, that if Landlord should receive an Order directly
from a Regulatory Agency, Landlord shall comply with any, such
Order in accordance with the provisions of this Section 6.21
(including Landlord's right to challenge or contest the
validity or application of any such Order as provided herein).
6.22. For purposes of this Lease, the term "Hazardous Materials"
shall be defined as all substances presently designated or
hereafter designated as being hazardous substances under any
Laws, and all other wastes and substances, now or hereafter
defined as hazardous, toxic, dangerous or otherwise regulated
under federal, state or local environmental law or regulation,
including (but not limited to) explosives, radioactive
materials, polychlorinated biphenyls (PCBs), petroleum
products, asbestos, asbestos containing materials and radon
gas."
17. Sections 11.1 and 11.2 of this Lease are deleted in their entirety
and the following is substituted in lieu thereof
"11.1. Tenant shall have Two (2), Five (5)-year option(s) to extend
the Term of this Lease (each such option to extend is
hereinafter referred to as an "Option to Extend" and each such
additional extension period of five (5) years is hereinafter
referred to as an "Extension Term"), subject to the following
conditions precedent: (i) no Event of Default exists at the
time Tenant exercises the applicable Option to Extend; and
(ii) Tenant shall give Landlord notice in writing at least six
(6) months prior to the expiration of the initial Term or the
first Extension Term, as the case may be, that Tenant intends
to extend the Term (each such notice is hereinafter referred
to as an "Option Notice"). Each Extension Term shall be
subject to all of the terms and conditions of this Lease,
except that the amount of Base Rent to be paid by Tenant
during each such Extension Term shall be adjusted to 95% of
the then "Prevailing Market Rate" (as hereinafter defined).
11.2. "Prevailing Market Rate" shall mean the prevailing market rent
per rentable square foot per month as of the date of the
Option Notice for comparable space in the Building or any
other comparable building located in the Project, and for a
lease term comparable to the applicable Extension Term. If
there is no such comparable space in the Project being offered
to prospective tenants for a comparable lease term during the
six (6) months immediately preceding the date of the Option
Notice, the Prevailing Market Rate shall be based upon the
prevailing market, rent being charged for comparable space and
lease term in buildings comparable to the Building in the
Vista, California metropolitan area ("Market Area") with
similar amenities and taking into consideration location,
leasehold improvements, the term of the lease required, the
total amount of space within the Premises, the extent of all
services to be provided and such other factors generally used
by MAI appraisers in determining rental values for properties
similar to the Premises. Regardless of whether the applicable
proposed new Base Rent to be charged for the Premises during
the applicable Extension Term is based upon the then
Prevailing Market Rate for comparable space and lease term for
a building in the Project, or based upon the then Prevailing
Market Rate for comparable space and lease term in comparable
buildings in the Market Area, in no event will rent which has
not been set or adjusted during the six (6) months immediately
preceding the date of the Option Notice be considered
"prevailing" or "current".
11.3. Within thirty (30) days of Landlord's receipt of the Option
Notice for an applicable Extension Term, Landlord shall notify
Tenant in writing of the then Prevailing Market Rate, as
determined by Landlord and the proposed amount of Base Rent to
be paid during the applicable Extension Term. Tenant shall
have until thirty (30) days after Tenant's receipt from
Landlord of such proposed Base Rent adjustment to notify
Landlord in writing as to whether Tenant accepts or rejects
the proposed Base Rent adjustment. If Tenant fails to respond
to Landlord's proposed Base Rent adjustment within said thirty
(30) day period or Tenant timely notifies Landlord in writing
that Tenant accepts the proposed Base Rent adjustment, then
the proposed Base Rent adjustment shall be the Base Rent
payable by Tenant during the applicable Extension Term. If
Tenant timely notifies Landlord that Tenant rejects the
proposed Base Rent adjustment submitted to Tenant by Landlord,
then the Base Rent for the applicable Extension Term shall be
determined according to the following procedure:
11.3.1. Within ten (10) days after the expiration of the
thirty (30) day period provided for above, each of
Tenant and Landlord shall appoint, by written notice
to the other, an MAI appraiser (A) having at least
ten (10) years experience in appraising commercial
property comparable to the Premises in the Market
Area, and (B) currently certified under the
continuing education program of The Appraisal
Institute, or its successors or assigns (any such
appraiser meeting the foregoing requirements to be
hereinafter called an "Appraiser"). If Tenant or
Landlord fails to appoint an Appraiser during such
ten (10) day period, then the Appraiser appointed by
the party not failing to make such appointment shall
determine the Base Rent payable during the
applicable Extension Term. Otherwise, the Appraisers
appointed as aforesaid shall, for a period of thirty
(30) days following their appointment, attempt to
agree upon the. Base Rent for the applicable
Extension Term using the standards set forth above.
If said Appraisers are unable to agree upon the such
Base Rent within such thirty (30) day period, then
within ten (10) days after the expiration of said
thirty (30) day period, said Appraisers shall
appoint a third Appraiser. In case said Appraisers
shall refuse or are unable to agree upon a third
Appraiser, then such third Appraiser shall be
appointed by the then acting president of the San
Diego Chapter of The Appraisal Institute, or its
successors or assigns, or if such president shall be
unwilling to make such appointment;, then such third
appraiser shall be selected by drawing from a pool
of two (2) or more Appraisers, which such president
deems qualified. For a period of thirty (30) days
after the appointment of such third Appraiser, each
of the three (3) Appraisers shall independently
determine the amount of Base Rent to be paid during
the applicable Extension Term, using the standards
set forth above, and the Base Rent determination
which is neither the highest nor lowest of the
determinations of the Base Rent determinations made
by such three (3) Appraisers shall be the Base Rent
payable during the applicable Extension Term.
11.3.2. Each party shall bear the cost of the Appraiser
appointed by or on behalf of it and if the third
Appraiser is appointed, the cost of such third
Appraiser shall be divided equally between the
parties. In performing their work hereunder, the
Appraisers shall (i) employ all of those techniques
and approaches used by MAI appraisers in the
ordinary course of their work to complete an
appraisal in accordance with the standards of
professional practice and code of professional
ethics of The Appraisal Institute, or its successors
or assigns, and (ii) conform to the uniform
standards of professional appraisal practice.
11.4 If Tenant properly exercises the Option to Extend, Landlord
and Tenant shall execute an amendment to this Lease reflecting
the terms and conditions of the applicable Extension Term,
within thirty (30) days after the determination of the Base
Rent to be paid by Tenant during said Extension Term.
18. Landlord and Tenant acknowledge that, in accordance with the
provisions of the Americans with Disabilities Action (the "ADA"), responsibility
for compliance with the terms and conditions of Title III of the ADA may be
allocated as between Landlord and Tenant. Notwithstanding anything to the
contrary contained in this Lease, Landlord and Tenant agree that the
responsibility for compliance with the ADA shall be allocated as follows: (i)
Tenant shall be responsible for compliance with the provisions of Title III of
the ADA with respect to the construction by Tenant of any Tenant Improvements or
Alterations, (ii) Landlord shall be responsible for compliance with the
provisions of Title III of the ADA in providing all of Landlord's Work required
under this Lease, exclusive, however, of any improvements to the Premises
constructed by Landlord strictly in accordance with Tenant generated plans and
specifications; and (iii) Landlord the portions of the Building, the Lot, the
Unit Shared Use Areas and the Project which Landlord is obligated to repair,
maintain or replace. Landlord and Tenant each agree to indemnify and hold each
other harmless from and against any claims, damages, costs, and liabilities
arising out of Landlord's or Tenant's failure, or alleged failure, as the case
may be, to comply with Title III of the ADA as set forth above, which
indemnification obligation shall survive the expiration or termination of this
Lease. Landlord and Tenant each agree that the allocation of responsibility for
ADA compliance shall not require Landlord or Tenant to supervise, monitor, or
otherwise review the compliance activities of the other with respect to its
assumed responsibilities for ADA compliance as set forth herein. The allocation
of responsibility for ADA compliance between Landlord and Tenant, and the
obligations of Landlord and Tenant established by such allocations, shall
supersede any other provisions of the Lease that may contradict or otherwise
differ from the requirements of this section.
19. Sections 15.1 through 15.4 of this Lease are deleted in their
entirety and the following is substituted in lieu thereof:
15.1. The schedule attached to this Lease as Exhibit "F" sets forth
Landlord's and Tenant's agreements as to how the "Building
Operating Expenses", "Unit Common Area Expenses" and "Project
Common Area Expenses" listed on such schedule are to be billed
and paid during the Term. With respect to those Building
Operating Expenses, Unit Common Area Expenses and Project
Common Area Expenses which Landlord shall bill Tenant for
reimbursement, the total of such expenses billed to Tenant for
each calendar year (as prorated for any period less than a
calendar year) shall not exceed an amount equal to 103% of the
total amount of such expenses billed to Tenant for the
immediately preceding calendar year (as prorated for any
period less than a calendar year). However, when Tenant,
occupies Suite C, the Operating Expenses shall change
accordingly.
15.2. With respect to those expenses designated on Exhibit "F" as
being expenses which Landlord shall bill Tenant for Tenant's
pro-rata share during the first year of the Lease, such
expenses shall be paid monthly on the first day of each
calendar month. The monthly amount to be paid by Tenant shall
be an amount equal to Landlord's best estimate (based on
Landlord's budgeted figures) of Tenant's monthly pro rata
share of each such expense. Landlord estimates that the
Tenant's monthly pro rata share of such expenses will be
approximately $1,100.00 per month during the first year of the
Lease. Within ninety (90) days following the end of the first
year of the Lease, Landlord shall furnish Tenant with a
statement covering such year (certified as correct by an
authorized representative of Landlord, or if requested by
Tenant by a certified public accountant, at Tenant's expense)
showing (i) the total amount of such expenses paid by Landlord
during such year; (ii) the amount of Tenant's pro rata share
of such expense; and (iii) the payments made by Tenant with
respect to such year. If Tenant's payments exceed the actual
amount of Tenant's pro rata share of such expenses, Tenant
shall be entitled to offset the excess against the next
payments due Landlord as set forth in this Article. However,
if Tenant's pro rata share of such expenses exceeds the total
amount of Tenant's payments to Landlord for such year, Tenant
shall pay Landlord the deficiency within ten (10) days after
receipt of such statement.
15.3. The "Building Operating Expenses", "Unit Common Area Expenses"
and "Project Common Area Expenses" billed to Tenant by
Landlord shall not include the following (the cost of which
shall be borne by Landlord): (1) real estate brokerage and
leasing commissions; (2) cost of alterations of any other
tenant's premises; (3) marketing or advertising costs to
solicit new tenants; (4) wages, salaries, fees, and fringe
benefits paid to administrative or executive personnel or
officers or partners of Landlord not having direct day to day
responsibility for operating or providing services to the
Building; (5) cost of repairs or other work occasioned by
fire, windstorm or other casualty of an insurable nature or by
the exercise of eminent domain, or any expense for which
Landlord is compensated by another source including without
limitation proceeds of insurance or agreements of indemnity or
surety bonds or guaranties; (6) Landlord's general overhead;
(7) costs for sculptures, paintings or other objects of art;
(8) ground lease rentals, principal or interest: payments,
refinancing charges or points, or penalties resulting from
late payments by the Landlord, or depreciation; (9) costs
incurred in connection with the cure or correction of latent
defects at the Building and costs incurred in connection with
the removal or clean-up of Hazardous Substances by Landlord
pursuant to the terms of this Lease; (10) costs incurred in
connection with renovating or otherwise improving or
decorating, painting or redecorating leased space for other
tenants or other occupants or vacant tenant space, other than
common areas; (11) any costs, fines or penalties incurred due
to actual or alleged violations by Landlord of any
governmental rule or authority; (12) cost of legal, accounting
and other professional services incurred by Landlord, and
costs of audits of any kind; (13) costs incurred to make major
repairs or replacements of any defective initial construction
of the Building and related appurtenances regardless of how
such costs are characterized under generally accepted
accounting principles and (14) costs of capital improvements.
20. Landlord agrees to, and hereby does, indemnify, defend and save
harmless Tenant, its officers, agents and employees from all claims, actions,
demands, damages, costs, expenses and liabilities whatsoever, including
reasonable attorneys' fees, on account of any real or claimed loss, damage or
liability arising out of Landlord's activities in, on or at the Premises, the
Building, the Lot and the Unit Shared Use Areas or any repairs or alterations
which may be made to the Premises, the Building, the Lot and the Unit Shared Use
Areas by Landlord, its agents, contractors or employees or occasioned in whole
or in part by the act or omission of Landlord, its agents, contractors,
employees or invitees, or any breach of this Lease by Landlord, except to the
extent directly attributable to the negligence or willful misconduct of Tenant.
IN WITNESS WHEREOF, the parties hereto have caused this Rider to be
executed on the date first above written.
LANDLORD:
NONAR ENTERPRISES, a California general
partnership
By: /s/ Michael Cafagna
------------------------------------------
Name: Michael Cafagna
Title: General Partner
TENANT:
VERSAFORM CORPORATION, a California
corporation
By: /s/ Ronald S. Saks
------------------------------------------
Name: Ronald S. Saks
Title: President