EXHIBIT 10.9
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Net, Net, Net
LEASE
THIS LEASE dated January 20, 1998, for reference purposes only is made
between the Lessor and the Lessee named below, effective on the later of the
dates set forth under their respective signatures.
BASIC LEASE PROVISIONS
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1. Premises: As depicted on Exhibit A.
Building Name: GRC International
Premises Address: 5383 Hollister Avenue
Santa Barbara, California 93111
Use of Premises: Offices.
2. Leased Area: As depicted on Exhibit A
Square Feet: 5878 rentable square feet/5319 useable square feet
3. Lessee's Percentages:
Building: 7.18%
Common Area: 7.18%
4. Initial Annual Rent: $93,460.20 ($1.325 per rentable sq.ft. per month).
Rental Deposit: $7,788.35. (First month's rent)
Rent Adjustment: Annual adjustments to Initial Annual Rent as
provided in Paragraph 3.5 subject to a minimum
annual increase of 2% and a maximum annual
increase of 7% over the rent payable during the
prior lease year.
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5. Initial Monthly Rental $7,788.35 commencing on the Rent Commencement
Installments: Date.
6. Term: Five (5) years subject to early termination right
as described in Paragraph 2.4. One three (3) year
renewal option.
7. Commencement
Date: The date of Lessor's notice to Lessee that the
Tenant Improvements for the Premises are
substantially complete as described in Paragraph
18.3. Substantial completion is estimated to be
April 1, 1998 (the "Estimated Commencement Date").
8. Rent Commencement Two months after the Commencement Date.
Date:
9. Security Deposit: $7,788.35.
10 Broker(s): Blair-Hayes Commercial
11 Parking Spaces Provided: 18 on-site undesignated spaces in common with
other tenants of Building.
12. Submission of this instrument for examination or signature by the Lessee
does not constitute a reservation of or option for space and it is not
effective as a lease or otherwise until execution by both the Lessee and
the Lessor. This document will be deemed withdrawn by the Lessor if not
executed by the Lessee and delivered to the Lessor by ____________________.
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IN WITNESS WHEREOF, the parties hereto have executed this Lease, consisting
of the foregoing Basic Lease Provisions, Articles 1 through 19 which follow, and
any attached Exhibits or Addendums, as of the date first above written.
LESSOR:
Date: _____________, 1998 SANTA BARBARA CORPORATE CENTER, LLC, a
California limited liability company
By:______________________________________
Jeffrey C. Bermant, Manager
Address:
-------
5383 Hollister Avenue, Suite 150
Santa Barbara, California 93111
LESSEE:
Date: _____________, 1998 SOMERA COMMUNICATIONS, LLC
By:
Name and Title:__________________________
Address:
_________________________________________
_________________________________________
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1. LEASE OF PREMISES
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The Lessor hereby leases to the Lessee and the Lessee leases from the
Lessor for the term, at the rental, and upon all of the conditions set forth in
this Lease, the Premises identified in Item 1 of the Basic Lease Provisions,
together with the non-exclusive use, in common, with the Lessor and other
tenants of the Building and their respective invitees, of common areas in or
about the Building and the parking garage (if any) or parking areas adjoining
the Building. The Lessee and the Lessor have agreed on the square footage set
forth in item 2 of the Basic Lease Provisions and each party will be bound by
item 2 through the term of this Lease or any extension thereof. The approximate
anticipated configuration of the Project and the location of the Building,
Premises and associated common and parking areas is indicated on Exhibit "B".
The size, location and function of the buildings and related structures depicted
here are approximate. The configuration of the development, the design, size,
function and location of all other improvements, and the identity and location
of other tenants to the extent depicted are subject to change without notice for
any reason deemed sufficient by the owner. The Lessor reserves the right to
alter the configuration of the Project to construct additional improvements
thereon, to withdraw areas therefrom from time to time and alter the
configuration of the associated common and parking areas, provided that the
number of parking spaces intended for the Lessee's use shall not thereby be
materially diminished. The Lessee shall be allocated the number of parking
spaces set forth in item 10 of the Basic Lease Provisions and the Lessee
acknowledges that the Lessor shall have no responsibility to supervise or police
the usage of the parking lot by the tenants of the Building. Nothing in this
Lease shall cause the Lessor in any way to be construed as an employer,
employee, fiduciary, a partner, a joint venturer or otherwise associated in any
way with the Lessee in the operation of the Premises, or to subject the Lessor
to any obligation, loss, charge or expense connection with or arising from the
Lessee's operation or use of the Premises.
Pursuant to Section 1652 of the California Civil Code, it is
understood and agreed that the general intent and purpose of this Lease is that
this Lease shall be an absolute triple net lease with respect to the Lessor.
The Lessee shall pay its pro rata share of all insurance, utilities, all
operating costs for the Premises, the common areas of the Building, the Building
and the land on which it is situated. It is intended that the rental return to
the Lessor shall not be reduced, offset or diminished directly or indirectly by
any cost, charge, or expense due from the Lessee and others in connection with
the Premises, Building or land upon which it is situated, nor subject to
suspension or termination for any reason. It is acknowledged and agreed that
all provisions of this Lease shall be interpreted in a manner consistent with
and subordinate to such general intent and purpose.
2. TERM
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2.1. Commencement of Term
(a) The term of the Lease shall be as shown in item 6 of the
Basic Lease Provisions, commencing on the Commencement Date, which the Lessor
and the Lessee expect to be the Estimated Commencement Date as shown in item 7
of the Basic Lease Provisions, but which may be such other date as herein
provided, and ending on the Termination Date, unless sooner terminated pursuant
to any provision hereof.
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(b) Notwithstanding the foregoing, the term of this Lease shall
commence upon delivery of possession of the Premises and the payment of rent
shall commence two (2) months thereafter. Delivery of possession of the Premises
shall occur upon written tender of the same by the Lessor.
(c) If delivery of possession occurs prior to the Estimated
Commencement Date, the term of this Lease shall commence on such date of
delivery of possession, but the Termination Date shall not be advanced.
2.2. Delay in Commencement. Notwithstanding the Estimated
Commencement Date, if for any reason the Lessor cannot deliver possession of the
Premises to the Lessee on or before said date, the Lessor shall not be subject
to any liability therefor, nor shall such failure affect the validity of this
Lease or the obligations of the Lessee hereunder or extend the term hereof
provided, however, that if the Lessor shall not have delivered possession of the
Premises within three (3) months after the Estimated Commencement Date, the
Lessee may, at the Lessee's option by notice in writing to the Lessor, within
ten (10) days thereafter, cancel this Lease, in which event the parties shall be
discharged from all obligations hereunder. The Lessee shall not be obligated to
pay rent until delivery of possession of the Premises has occurred.
2.3. Option to Renew. The Lessor hereby grants to the Lessee the right
to renew this Lease, solely as to the space then occupied, for one (1)
additional three-year period, upon the same terms, covenants and conditions as
are provided in this Lease (including the rental adjustment provisions contained
in Section 3.5), except as provided in this Paragraph.
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(a) The Lessee shall give notice to the Lessor in writing of the
Lessee's election to exercise such option no less than six (6) months' prior to
the expiration of the Term. The Lessee shall not be entitled to exercise the
option if, at the time of such exercise, (i) the Lessee is in default of any
provision of this Lease and such default is not cured by the Lessee, either
before or after exercise of the option, within thirty (30) days after written
notice of such default from the Lessor to the Lessee or (ii) if the Lessor has
delivered to the Lessee more than two (2) notices of default under this Lease
within the previous twelve (12) months.
(b) The rights contained in this Paragraph 2.3 may be exercised
by the originally named Lessee or by any assignee of the Lessee's interest in
the Lease if the assignment has been approved by the Lessor under Article 11 of
this Lease. Such rights may not be exercised by any sublessee of all or any
portion of the Premises.
2.4. Early Termination Right. The Lessor hereby grants to the Lessee
the right to terminate this Lease at the end of any calendar month after the
thirty-sixth (36th) month of the term on the following conditions:
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(a) The Lessee is not in default hereunder.
(b) The Lessee shall give notice to the Lessor in writing of the
Lessee's election to terminate this Lease six (6) months prior to the proposed
effective termination date.
(c) As consideration for the exercise of the early termination right,
the Lessee shall pay to the Lessor an amount equal to three (3) months of the
total monthly rent then payable, which payment shall be paid to the Lessor
concurrently with the delivery of notice of termination. If the Lessor
subsequently agrees to re-lease the Premises to a prospective tenant located by
the Lessee on such terms and conditions as the Lessor may determine appropriate,
in the exercise of its sole discretion, and the new tenant has executed a
binding Lease for the Premises under which the rent commences upon the effective
date of the termination of this Lease, the Lessor shall refund the termination
payment upon the commencement of the new tenant's lease and the receipt of the
first month's rent.
3. RENT
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3.1. Initial Annual Rent. The Lessee shall pay to the Lessor as rent
for the Premises an Initial Annual Rent in the amount specified in item 4 of the
Basic Lease Provisions in equal monthly installments in the amount specified in
item 5 of the Basic Lease Provisions in advance on the first day of each month
commencing on the Rent Commencement Date.
3.1.1 Rental Deposit. Upon Lease execution, the Lessee shall
deposit with the Lessor an amount equivalent to the first and last month's rent
as provided in item 4 of the Basic Lease Provisions.
3.2. Additional Rent. The Lessee shall reimburse the Lessor, as
additional rent, in the manner and at the times provided, for the Lessee's
proportionate share of all Building Operating Expenses and Common Area Operating
Expenses (as hereinafter defined) incurred by the Lessor. The Lessee's
proportionate share of such Building Operating Expenses and Common Area
Operating Expenses shall be based upon the Lessee's Building Percentage in the
case of Building Operating Expenses, and upon the Lessee's Common Area
Percentage in the case of Common Area Operating Expenses, all as defined herein.
3.3. No Reduction or Offset. All Rent due under this Lease shall be
payable without deduction, abatement or offset.
3.4. Definitions: For purposes of this Article 3:
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(a) The Lessee's Building Percentage is a percentage calculated by
dividing the Leased Area of the Premises by the leasable area of the Building,
and is stipulated to be as shown in item 3 of the Basic Lease Provisions.
(b) Building Operating Expenses shall mean the sum of all expenses
incurred by the Lessor in connection with the operation, repair and maintenance
of the Building, including, but not limited to, heating and air conditioning;
all real property taxes (as hereinafter defined) imposed upon or with respect to
the Building and related improvements (exclusive of the land underlying all such
improvements); all fire and extended coverage, earthquake, loss of rents,
vandalism, malicious mischief and other insurance covering the Building and
losses suffered which fall below the insurance deductible; utilities; materials
and supplies; salaries, wages and other expenses incurred with respect to the
operation, repair and maintenance of the Building, the cost of repainting, wall
covering or recarpeting Common Areas of the Building; the cost of an on site
manager or office manager; security and fire protection; amortization of capital
investments for improvements which are designed to reduce operating costs,
improve operations or comply with governmental conservation or safety programs
over such reasonable period as the Lessor shall determine (together with
interest at five (5) percentage points above the discount rate of the Federal
Reserve Bank of San Francisco on the unamortized amount); and an amount equal to
fifteen percent (15%) of all such expenses to cover the Lessor's administrative
and overhead expenses. Building Operating Expenses attributable to the utilities
and services furnished pursuant to Article 10 shall be apportioned among the
tenants of the Building receiving such services (excluding those tenants
furnishing or paying for their own utilities and janitorial services) based on
the respective leased areas occupied by such tenants.
(c) Lessee's Common Area Percentage is a percentage figure calculated
by the project architect by dividing the Leased Area of the Premises by the
average leasable area in all improvements, including the Building and other
buildings, shown on Exhibit "B", during such year as is initially stipulated to
be as shown in item 3 of the Basic Lease Provisions. Should the Building and/or
landscape area become a separate legal lot, or should additional improvements or
common area be added to or deleted from Exhibit "B", the Lessor may, at its
option, calculate the Lessee's Common Area Percentage by comparing the common
area attributable to the Premises with the common area on such legal lot or
otherwise within Exhibit "B" as so revised.
(d) Common Area Operating Expenses shall mean the sum of all expenses
incurred by the Lessor in connection with the operation and maintenance of
driveways, landscaping, walkways, plazas, parking facilities, and perimeter
property including, but not limited to: all items described in Section 6.1
hereof; all real property taxes (as hereinafter defined) imposed upon or with
respect to the land included within Exhibit "B"; all public liability insurance
covering Exhibit "B", and losses suffered which fall below the insurance
deductible; security and fire protection; salaries, wages and other expenses
incurred with respect to maintenance of the common areas, gardening,
landscaping, repaving, repainting and trash removal; depreciation of equipment
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used in such maintenance; amortization of capital investments for improvements
which comply with governmental conservation or safety programs over such
reasonable period as the Lessor shall determine (together with interest at five
(5) percentage points above the discount rate of the Federal Reserve Bank of San
Francisco on the unamortized amount); and an amount equal to fifteen percent
(15%) of all such expenses to cover the Lessor's administrative and overhead
expenses. General overhead and depreciation of improvements shall not be
included in the expenses except as specifically set forth in the foregoing. Any
governmental surcharge, fee or assessment imposed with respect to the parking
facilities within Exhibit "B" shall, to the extent paid by the Lessor and not
passed on to the users of said parking facilities, be included in Common Area
Operating Expenses.
(e) Real Property Taxes shall mean all real and personal
property taxes and assessments incurred during any calendar year, including, but
not limited to: special and extraordinary assessments, meter and sewer rates and
charges, occupancy taxes or similar taxes imposed on or with respect to the real
or personal property, whether or not imposed on or measured by the rent payable
by the Lessee, and other governmental levies and charges, general and special,
ordinary and extraordinary, unforeseen as well as foreseen, of any kind and
nature whatsoever relating to the real or personal property, and any gross
rental, license or business tax measured by or levied on rent payable or space
occupied. If, by law, any property taxes are payable, or may at the option of
the taxpayer be paid, in installments (whether or not interest shall accrue on
the unpaid balance of such property taxes), the Lessor may, at the Lessor's
option, pay the same and, in such event, any accrued interest on the unpaid
balance of such property taxes shall be deemed to be Real Property Taxes as
defined herein. Real Property Taxes shall also include all expenses reasonably
incurred by the Lessor in seeking a reduction by the taxing authorities of Real
Property Taxes applicable to the Project. Real Property Taxes shall not include
any capital levy, franchise, estate, inheritance, succession, gift or transfer
tax of the Lessor, or any income, profits or excess profits tax, assessment,
charge or levy upon the income of the Lessor; provided, however, that if at any
time during the term of this Lease under the laws of the United States or the
State of California, or any political subdivision of either, a tax or excise on
rents, space or other aspects of real property, is levied or assessed against
the Lessor, the same shall be deemed to be Real Property Taxes. If any such
property taxes upon the income of the Lessor shall be imposed on a graduated
scale, based upon the Lessor's aggregate rental income, Real Property Taxes
shall include only such portion of such property taxes as would be payable if
the rent payable with respect to the Building and Common Areas were the only
rental income of the Lessor subject thereto.
3.5. Rent Adjustment for Consumer Price Index. As specified in item 4
of the Basic Lease Provisions, the annual rent shall be increased as of the
expiration of each full or partial calendar year of the Lease term (the
"Adjustment Date") to reflect any increase in the United States Department of
Labor, Bureau of Labor Statistics, Consumer Price Index, "Urban Wage Earners and
Clerical Workers (Revised) Series) All Items - Los Angeles - Anaheim Riverside
Average (1982-1984=100)". The index for said subgroup applicable for the month
of December (or the month preceding the Commencement Date for the first full or
partial calendar year of the lease term) preceding each Adjustment Date shall be
considered the "base", and the annual rent following each
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Adjustment Date shall be computed by adjusting the annual rent payable for the
preceding calendar year thereof by the percentage change in the index as of the
adjustment date over the "base"; provided, however, in no event shall the rent
payable for any year be less than the rent payable for the preceding period on
account of the adjustment pursuant to this Section 3.5, notwithstanding the fact
that the index may, as of some Adjustment Date, be less than the "base". If as
of any Adjustment Date there shall not exist the Consumer Price Index in the
same format as set forth above, the parties shall substitute any official index
published by the Bureau of Labor Statistics or any successor or similar
Governmental agency as may then be in existence and shall be most nearly
equivalent thereto. If the parties shall be unable to agree upon a successor
index, the parties shall refer the choice to arbitration in accordance with the
rules of the American Arbitration Association. This provision shall not apply to
the Building Operating Expenses or Common Area Operating Expenses.
Notwithstanding anything herein to the contrary, the minimum annual increase
shall be 2% and the maximum annual increase shall be 7%.
3.6. Calculation and Payment
(a) Annual rent shall be payable to the Lessor without deduction
or offset, in lawful money of the United States at the Lessor's address herein
or to such other persons or at such other places as the Lessor designates in
writing. Rent payable for any period for less than one (1) month shall be
prorated based upon a thirty (30) day month.
Prior to the commencement of the lease term and of each December
thereafter, the Lessor shall give the Lessee a written estimate of the Lessee's
share of Building and Common Area Operating Expenses for the ensuing year or
portion thereof. The Lessee shall pay such estimated amount to the Lessor in
equal monthly installments, in advance. Within ninety (90) days after the end
of each calendar year, the Lessor shall furnish to the Lessee a statement
showing in reasonable detail the actual Building and Common Area Operating
Expenses incurred by the Lessor during such period, and the parties shall within
thirty (30) days make any payment or allowance necessary to adjust the Lessee's
estimated payment to the Lessee's actual proportionate share as shown by such
annual statement. Any amount due the Lessee shall be credited against
installments next coming due under this paragraph.
(b) Within ninety (90) days after each Adjustment Date, the
Lessor shall furnish the Lessee with a written statement showing the percentage
change in the index for the period ending on the Adjustment Date and specifying
the increase, if any, in the annual rent subsequent to the Adjustment Date,
taking into account all prior adjustments to annual rent for the period
preceding the Adjustment Date pursuant to this paragraph above and applying any
percentage increase in the index to the annual rent as previously adjusted. At
the rental payment date next following the Lessee's receipt of such statement,
the Lessee shall pay to the Lessor an amount equal to one-twelfth (1/12th) of
the adjustment pursuant to this Paragraph (b) multiplied by the number of rent
payment
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dates (including the current one) since the relevant Adjustment Date. Subsequent
rental payments shall be increased by one-twelfth (1/12th) of the adjustment
pursuant to this Paragraph (b).
3.7. End of Term. Upon the expiration or earlier termination of this
Lease, the Lessee shall pay the Lessor, as additional rent, the aggregate rental
increase which would have been payable by the Lessee pursuant to this Article 3,
except for such expiration or termination, for the portion of the year in which
termination or expiration occurs through the Termination Date. The amount of
such payment shall be calculated by the Lessor based upon Sections 3.2, 3.3 and
3.5 (using the expiration or Termination Date as the Adjustment Date for Section
3.5) and the best information then available to the Lessor, and shall give
effect to all prior adjustments and payments on account by Lessee pursuant to
this Article 3.
4. SECURITY DEPOSIT
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Concurrently with the Lessee's execution of this Lease, the Lessee
shall deposit with the Lessor the sum specified in item 8 of the Basic Lease
Provisions as security for the faithful performance by the Lessee of all
covenants and conditions of this Lease. If the Lessee shall breach or default
in the performance of any covenants or conditions of this Lease, including the
payment of rent, the Lessor may use, apply or retain the whole or any part of
such security deposit for the payment of any rent in default or for any other
sum which the Lessor may spend or be required to spend by reason of the Lessee's
default. If the Lessor so uses or applies all or any portion of said deposit,
the Lessee shall, within ten (10) days after written demand therefor, deposit
cash with the Lessor in an amount sufficient to restore said deposit to the full
amount hereinabove stated and the Lessee's failure to do so shall be a material
breach of this Lease. Should the Lessee comply with all covenants and
conditions of this Lease, the security deposit or any balance thereof shall be
returned to the Lessee (or at the option of the Lessor, to the last assignee of
the Lessee's interest in this Lease) at the expiration of the term. The Lessee
shall not be entitled to interest on the security deposit and the Lessor shall
have the right to commingle said security deposit with other funds of the
Lessor. Should the Lessor sell its interest in the Premises, the Lessor may
transfer to the purchaser thereof the then unexpended or unappropriated deposit
and thereupon the Lessor shall be discharged from any liability for such funds.
5. USE
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5.1. Use. The Premises shall be used and occupied for the purposes
described in item 1 of the Basic Lease Provisions, permitted under applicable
ordinances and other Governmental requirements, the covenants, conditions and
restrictions affecting the Project, as the same may be amended from time to
time, and the Rules and Regulations as the Lessor may from time to time
reasonably adopt for the safety, care and cleanliness of the Building and the
Project or the preservation of good order. The Rules and Regulations presently
in effect are attached hereto as
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Exhibit "C". The Lessor shall not be responsible to the Lessee for the non-
performance of any of said Rules and Regulations, or non-compliance with said
covenants, conditions and restrictions, by any other tenant of the Building.
5.2. Compliance with Law; Nuisance. The Lessee, at the Lessee's sole
cost and expense, shall comply promptly and at all times with all laws,
requirements, ordinances, statutes, and regulations of all municipal, state or
federal authorities, or any board of fire insurance underwriters, or other
similar bodies, now in force or which may hereafter be in force, pertaining to
the Building and the Premises and the occupancy thereof, including any law that
requires alteration, maintenance or restoration of the Premises as the result of
the Lessee's use thereof. The judgment of any court of competent jurisdiction,
or the admission of the Lessee in any action or proceeding against the Lessee,
whether the Lessor is a party thereto or not, that the Lessee violated any such
ordinances or statutes in the use of the Premises shall be conclusive of that
fact as between the Lessor and the Lessee. The Lessee, at its sole expense,
shall also comply with all requirements for fire extinguishers or fire
extinguisher systems required in the Premises.
The Lessee shall not commit, or suffer to be committed, any waste of
the Premises, or any nuisance, annoyance or other unreasonable annoyance which
may disturb the quiet enjoyment of adjoining premises or of the Building by the
owners or occupants thereof.
5.3. Insurance Cancellation. Notwithstanding the provisions of
Paragraph 5.1 above, the Lessee shall not do or permit anything to be done in or
about the Premises nor bring or keep anything therein, including all uses
permitted under Section 5.1 above, which will in any way increase the existing
rate of or affect any fire or other insurance upon the Building, or any other
part thereof, or any of its contents, and if the Lessee's use of the Premises
causes an increase in said insurance rates, the Lessee shall pay as additional
rent the amount of such increase. The Lessee shall be in default under this
Lease should the Lessee cause the cancellation of fire or other insurance upon
the Building or Property or should the Lessee fail to pay any increased
insurance rate attributable to the Lessee's use of the Premises. In determining
whether increased premiums are a result of the Lessee's use or occupancy of the
Premises or Building, a schedule issued by the Lessor's insurer computing the
insurance rate on the Premises or Building, or the leasehold improvements
showing the various components of such rate, shall be conclusive evidence of the
several items and charges which make up such rate. The Lessee shall promptly
comply with all reasonable requirements of the insurance authority or of any
insurer now or hereafter in effect relating to the Premises.
5.4. Hazardous Substances. Any corrosive, flammable, hazardous or
other special waste or materials shall be handled or disposed of as directed by
applicable state, Federal, County and City regulations. The Lessee shall
handle, store or dispose of such materials in a careful and prudent manner. At
the termination of the Lease, or any option period thereof, the Lessee shall
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fully clean the Premises in such a manner that no residue of such materials or
waste shall remain on the Premises. The Lessee shall notify the appropriate
governmental authority of the presence and amount of any such material or waste,
and shall comply with all conditions imposed by such authority. The Lessee
shall contact the appropriate governmental authority prior to occupancy to
determine the existence of any records for the Building and/or Premises.
Specifically thirty (30) days prior to occupancy, the Lessee shall submit a
Hazardous Materials Management Plan (HMMP) and a Hazardous Materials Floor Plan
(HMF) to the Lessor and the appropriate governmental authority for approval.
These plans shall be attached in full to this Lease.
The HMMP shall include the following:
(a) The company name, address and contact person.
(b) General facility description with map showing location of all
buildings and structures.
(c) Facility hazardous material storage map showing the location
of each proposed hazardous material storage area and access to such facilities.
The map shall be updated annually by the occupant and submitted by January 1
each year.
(d) A floor plan showing the location of each hazardous material
storage area, storage area access, and the location of emergency equipment.
The HMF shall include the following:
(a) Hazardous Materials Handling Report describing the safe
handling of hazardous materials to prevent accidents.
(b) Separation or Hazardous Material Report outlining the methods
to be utilized to insure separation and protection of hazardous materials from
such factors that could cause fire, explosion, spills, etc.
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(c) Inspection and Record Keeping Plan indicating the procedures
for inspecting each storage facility. An authorized record of inspection shall
be maintained by the Lessee.
(d) Employee Training Program to insure that employees know how
to safety handle hazardous materials.
(e) Hazardous Materials Contingency Plan that clearly describes
appropriate response procedures and measures in case of an accident.
(f) A floor plan identifying the location and quantity of each
hazardous material, including the chemical name and quantity limit for each
class.
The Lessee shall pay inspection fees, based on the hourly inspection
rate, for an environmental audit to be conducted by the appropriate governmental
authority, or the Lessor at the termination of the Lease and prior to
reoccupation of the Building and/or the Premises, if hazardous materials were in
use on the Building and/or Premises. The appropriate governmental authority
shall perform or the Lessee shall arrange for such an audit in a timely manner
to prevent economic hardship to the Lessor and shall certify that the Premises
are available for reoccupation, or shall specify clean-up measures that will
render the Premises safe for reoccupation. The Lessee shall be responsible for
any clean-up that may be required as a result of the audit.
Should the Lessee fail to comply with any duty set forth in this
Section 5.4, the Lessor may, in addition to all other remedies now or hereafter
provided by this Lease, or by law, perform such duty or make good such default,
and any amounts which the Lessor shall advance pursuant thereto shall be repaid
by the Lessee to the Lessor on demand.
5.5. Environmental Laws.
(a) Compliance with Environmental Laws. The Lessee, in its
conduct of business on or in any activity, work, thing done, permitted or
suffered by the Lessee, its agents, contractors, employees or invitees on the
Premises, shall at all times and in all respects comply with all federal, state
and county laws, ordinances and regulations (the "Hazardous Materials Laws")
relating to industrial hygiene, environmental protection or the use, analysis,
generation, manufacture, storage, disposal or transportation of any oil,
flammable explosives, asbestos, radioactive materials or waste, or other
hazardous, toxic, contaminated or polluting materials, substances, or wastes,
including, without limitation, any "hazardous substances," "hazardous wastes,"
"hazardous
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materials," or "toxic substances" under any such laws, ordinances or regulations
(collectively, the "Hazardous Materials"). Such laws, ordinances or regulations
shall include, but not be limited to, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 U.S.C. Section 9601, et
seq; the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et seq;
the Resource Conservation and Recovery Act of 1976, 42 U.S.C. Section 6901 et
seq; the Clean Water Act, 33 U.S.C. Section 466, et seq; the Safe Drinking Water
Act, 14 U.S.C. Section 1401, et seq; the Superfund Amendment and Reauthorization
Act of 1986; Public Law 99-499, 100 Stat. 1613; the Toxic Substances Control
Act, 15 U.S.C. Section 2601, et seq, as amended; those substances defined as
"hazardous waste", "extremely hazardous waste", "restricted hazardous waste" or
"hazardous substance" in the Hazardous Waste Control Act, Section 25100 et seq
of the California Health & Safety Code; and those materials and substances
similarly described in the Federal Insecticide, Fungicide and Rodenticide Act, 7
U.S.C. Section 136, et seq., as amended; the Atomic Energy Act of 1954, 42
U.S.C. Section 2011, et seq., as amended; the Porter Cologne Water Quality
Control Act, Section 1300 et seq. of the California Health & Safety Code; and
any regulations adopted and publications promulgated pursuant to said Laws.
(b) Hazardous Materials Handling. The Lessee shall, at its own
expense, procure, maintain in effect and comply with all conditions of any and
all permits, licenses and other governmental and regulatory approvals required
for the Lessee's use of the Premises, including, without limitation, discharge
of (appropriately treated) materials or wastes into or through any sanitary
sewer serving the Premises. Except as discharged into the sanitary sewer in
strict accordance and conformity with all applicable Hazardous Materials Laws,
the Lessee shall cause any and all Hazardous Materials removed from the Premises
to be removed and transported solely by duly licensed haulers to duly licensed
facilities for final disposal of such materials and wastes. The Lessee shall in
all respects handle, treat, deal with and manage any and all Hazardous Materials
in, on, under or about the Premises in total conformity with all applicable
Hazardous Materials Laws and prudent industry practices regarding management of
such Hazardous Materials. Upon expiration or earlier termination of the term of
the Lease, the Lessee shall cause all Hazardous Materials to be removed from the
Premises and transported for use, storage or disposal in accordance and
compliance with all applicable Hazardous Materials Laws. The Lessee shall not
take any remedial action in response to the presence of any Hazardous Materials
in or about the Premises or the Building, nor enter into any settlement
agreement, consent, decree or other compromise in respect to any claims relating
to any Hazardous Materials in any way connected with the Premises or the
Building, without first notifying the Lessor of the Lessee's intention to do so
and affording the Lessor ample opportunity to appear, intervene or otherwise
appropriately assert and protect the Lessor's interest with respect thereto.
(c) Notices. The Lessee shall immediately notify the Lessor in
writing of any of the following activities relating to the Lessee's operations
on the Premises: (i) any enforcement, clean-up, removal or other governmental
or regulatory action instituted, completed or threatened pursuant to any
Hazardous Materials Laws; (ii) any claim made or threatened by any
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person against the Lessee, the Premises or the Building relating to damage,
contribution, cost recovery compensation, loss or injury resulting from or
claimed to result from any Hazardous Materials in, on or removed from the
Premises or the Building; and (iii) any reports made to any environmental agency
arising out of or in connection with any Hazardous Materials in or removed from
the Premises or the Building, including any complaints, notices, warnings or
asserted violations in connection therewith. The Lessee shall also supply to the
Lessor as promptly as possible, and in any event within five (5) business days
after the Lessee first receives or sends the same, with copies of all claims,
reports, complaints, notices, warnings or asserted violations relating in any
way to the Premises, the Building or the Lessee's use thereof. The Lessee shall
promptly deliver to the Lessor copies of hazardous waste manifests reflecting
the legal and proper disposal of all Hazardous Materials removed from the
Premises.
(d) Indemnification of Lessor. The Lessee shall indemnify, defend,
protect, and hold the Lessor, and each of the Lessor's partners, employees,
agents, attorneys, successors and assigns, free and harmless from and against
any and all claims, liabilities, penalties, forfeitures, losses or expenses
(including attorneys' fees) for death of or injury to any person or damage to
any property whatsoever arising from or caused in whole or in part, directly or
indirectly, by (A) the presence in, on, under or about the Premises or the
Building, or discharge in or from the Premises or the Building of any Hazardous
Materials or the Lessee's use, analysis, storage, transportation, disposal,
release, threatened release, discharge or generation of Hazardous Materials to,
in, on, under, about or from the Premises or the Building, but only to the
extent such Hazardous Materials are present as a result of actions of the
Lessee, its officers, employees, invitees, assignees, contractors, or agents, or
(B) the Lessee's failure to comply with any Hazardous Materials Law. The
Lessee's obligations hereunder shall include, without limitation, and whether
foreseeable or unforeseeable, all costs of any required or necessary repair,
clean-up or detoxification or decontamination of the Premises or the Building,
and the preparation and implementation of any closure, remedial action or other
required plans in connection therewith, and shall survive the expiration or
earlier termination of the term of the Lease. For purposes of the release and
indemnity provisions hereof, any acts or omissions of the Lessee, or by
officers, invitees, employees, agents, assignees, contractors or subcontractors
of the Lessee or others acting for or on behalf of the Lessee (to the extent any
such individual is acting within the scope of his relationship with the Lessee),
whether or not such acts or omissions are negligent, intentional, willful or
unlawful, shall be strictly attributable to the Lessee.
60 MAINTENANCE, REPAIRS AND ALTERATIONS
------------------------------------
6.1. Lessor's Obligations. The Lessor shall cause to be maintained,
in good order, condition and repair, the roof structure and membrane, and
exterior walls, common windows and doors of the Building (excluding the interior
surface thereof), heating, venting and air conditioning systems, and any public
and common areas in the Building, as well as all parking areas, driveways,
sidewalks, private roads or streets, landscaping and all other areas located
within the
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Project other than areas occupied by other buildings (such non-building areas
being herein referred to as "Common Areas"). The costs of such maintenance are a
Building Operating Expense and/or a Common Area Operating Expense and are
chargeable to the Lessee on a prorata basis pursuant to Section 3.2 hereof.
6.2. Lessee's Obligations. The Lessee shall, during the term of this
Lease, keep in good order, condition and repair, the interior of the Premises
and every part thereof, including, but not limited to, all interior windows and
doors in and to the Premises. The Lessor shall incur no expense nor have any
obligation of any kind whatsoever in connection with the maintenance of the
interior of the Premises and the Lessee expressly waives the benefits of any
statute now or hereafter in effect which would otherwise afford the Lessee the
right to make repairs at the Lessor's expense or to terminate this Lease because
of any failure to keep the interior of the Premises in good order, condition and
repair. Notwithstanding the foregoing, the Lessor shall be liable for
maintenance or repairs which are caused by the Lessor's gross negligence. The
Lessee shall be responsible for interior janitorial services.
6.3. Alterations and Additions.
(a) The Lessee shall not, without the Lessor's prior written
consent, make any alterations, improvements, additions or utility installations
in, on or about the Premises unless such work is non-structural and does not
exceed TEN THOUSAND DOLLARS ($10,000). For all work, the Lessee will provide the
Lessor with as-built drawings reflecting any changes to the Premises. As used in
this Paragraph 6.3, the term "utility installations" shall include bus ducting,
power panels, fluorescent fixtures, space heaters, conduits and wiring. As a
condition to giving such consent, the Lessor may require that the Lessee (i)
agree to remove any such alterations, improvements, additions or utility
installations at the expiration or sooner termination of the term, and to
restore the Premises to their prior condition and/or (ii) provide the Lessor, at
the Lessee's sole cost and expenses, a lien and completion bond in an amount
equal to one and one-half (1 1/2) times the estimated cost of such improvements,
to insure the Lessor against any liability for mechanics' and materialmen's
liens and to insure completion of work.
(b) All alterations, improvements and additions to the Premises
shall be performed by the Lessor's contractor for the Project or other licensed
contractor approved by the Lessor, which approval shall not be unreasonably
withheld. The Lessee shall pay, when due, all claims for labor or materials
furnished to or for the Lessee at or for use in the Premises, which claims are
or may be secured by any mechanics' or materialmen's lien against the Premises
or any interest therein, and the Lessor shall have the right to post notices of
non-responsibility in or on the Premises as provided by law.
6.4. Surrender. On the last day of the term hereof, or on any sooner
termination, the Lessee shall surrender to the Lessor the Premises and, subject
to the provisions of Paragraph 6.3(a) hereof, all alterations, additions and
improvements thereto, in the same condition as when
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received or made, ordinary wear and tear excepted; provided, however, that the
Lessee's machinery, equipment and trade fixtures (including utility
installations) which may be removed without irreparable or material damage to
the Premises, shall remain the property of the Lessee and be removed by the
Lessee. The Lessee shall repair any damage to the Premises occasioned by the
removal of the Lessee's furnishings, machinery, equipment and trade fixtures,
which repair shall include the patching and filing of holes and repair of
structural damage.
6.5. Lessor's Rights. If the Lessee fails to perform the Lessee's
obligations under this Article 6, the Lessor may, at its option (but shall not
be required to), and with a five (5) day written notice to the Lessee, perform
such obligations on behalf of the Lessee, and the cost thereof, together with
interest thereon at the rate specified in Paragraph 12.2(a) hereof, shall
immediately become due and payable as additional rent to the Lessor.
7. INSURANCE
---------
The Lessee, at its sole cost and expense, shall, commencing on the
date the Lessee is given access to the Premises for any purpose, and during the
entire term hereof, procure, pay for and keep in full force and effect:
7.1. Lessee's Liability Insurance. Comprehensive general liability
insurance with respect to the Premises and the operations of or on behalf of the
Lessee in, on or about the Premises, including, but not limited to, personal
injury, product liability (if applicable), blanket contractual, owner's
protective, broad form property damage liability coverage, host liquor liability
and owned and non-owned automobile liability in an amount not less than TWO
MILLION DOLLARS ($2,000,000) Combined Single Limit. Such policy shall contain
(i) severability of interest, (ii) cross liability, and (iii) an endorsement
stating in substance that "such insurance as is afforded by this policy for the
benefit of the Lessor shall be primary as respects any liability or claims
arising out of the occupancy of the Premises by the Lessee, or out of the
Lessee's operations, and any insurance carried by the Lessor shall be excess and
non-contributory."
7.2. Lessee's Worker's Compensation Insurance. Worker's Compensation
coverage as required by law, together with Employer Liability coverage.
7.3. Lessee's Fire and Extended Coverage Insurance. Insurance against
fire, vandalism, malicious mischief and such other additional perils as now are
or hereafter may be included in a standard "All Risks" coverage, insuring all
improvements and betterments made to the Premises, the Lessee's trade fixtures,
furnishings, equipment, stock, loss of income or extra expense, and other items
of personal property in an amount not less than 100% of replacement value. Such
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insurance shall contain (i) no coinsurance or contribution clauses, (ii) a
Replacement Cost Endorsement, and (iii) deductible amounts acceptable to the
Lessor.
7.4. Policy Requirements. All policies of insurance required to be
carried by the Lessee pursuant to these requirements shall be written by
responsible insurance companies authorized to do business in the State of
California. Any such insurance required by the Lessee hereunder may be furnished
by the Lessee under any blanket policy carried by it or under a separate policy
therefor. A true and exact copy of each paid up policy evidencing such insurance
or a certificate of the insurer, certifying that such policy has been issued,
providing the coverage required and containing the provisions specified herein,
shall be delivered to the Lessor prior to the date the Lessee is given the right
to possession of the Premises, and upon renewals, not less than thirty (30) days
prior to the expiration of such coverage. The Lessor may, at any time, and from
time to time, inspect and/or copy any and all insurance policies required
hereunder. In no event shall the then limits of any policy be considered as
limiting the liability of the Lessee under this Lease.
Each policy evidencing insurance required to be carried by the Lessee
pursuant to these requirements shall contain, in form and substance satisfactory
to the Lessor: (i) a provision including the Lessor and any other parties in
interest designated by the Lessor as an additional insured; (ii) a waiver by the
Lessee's insurer of any right to subrogation against the Lessor, its agents,
employees and representatives which arise or might arise by reason of any
payment under such policy or by reason of any act or omission of the Lessor, its
agents, employees or representatives, and (iii) a provision that the insurer
will not cancel or materially change the coverage provided by such policy
without first giving the Lessor thirty (30) days' prior written notice.
7.5. Lessor's Rights. If the Lessee fails to procure, maintain and/or
pay for at the times and for the durations specified in this Lease, the
insurance required hereunder, or fails to carry insurance required by any
governmental requirement, the Lessor may (but without obligation to do so), and
with twenty-four (24) hours advance notice to the Lessee, perform such
obligations on behalf of the Lessee, and the cost thereof, together with
interest thereon at the rate specified in Paragraph 12.2(a) hereof, shall
immediately become due and payable as additional rent to the Lessor.
7.6. Lessor's Insurance. The Lessor shall maintain during the term of
this Lease such insurance against physical damage to the Building, comprehensive
liability insurance and other insurance as the Lessor may, from time to time,
determine. The Lessor will determine the limits of coverage, deductibles and
specific perils insured against. The Lessor may, but shall not be obliged to,
take out and carry any other form or forms of insurance as it or the mortgagees
of the Lessor may reasonably determine advisable. Notwithstanding any
contributions by the Lessee to the cost of insurance premiums, with respect to
the Building or any alterations of the Premises as may be
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provided herein, the Lessee acknowledges that it has no right to receive any
proceeds from any such insurance policies carried by the Lessor.
7.7. Indemnification. To the fullest extent permitted by law, the
Lessee shall defend, indemnify and hold harmless the Lessor from and against any
and all claims arising from the Lessee's use of the Premises or the conduct of
its business or from any activity, work or thing done, permitted or suffered by
the Lessee, its agents, contractors, employees or invitees in or about the
Premises or elsewhere, and shall further indemnify and hold harmless the Lessor
from and against any and all claims arising from any breach or default in the
performance of any obligation on the Lessee's part to be performed hereunder, or
arising from any act, neglect, fault or omission of the Lessee, or of its
agents, employees, or invitees, and from and against all costs, attorney's fees,
expenses and liabilities incurred in or about such claim or any action or
proceeding brought thereon. In case any action or proceeding be brought against
the Lessor by reason of any such claim, the Lessee, upon notice from the Lessor,
shall defend the same at the Lessee's expense by counsel approved in writing by
the Lessor. The Lessee, as a material part of the consideration to the Lessor
hereunder, hereby assumes all risk of damage to property or injury to persons
in, upon or about the Premises from any cause whatsoever, except that which is
caused by the failure of the Lessor to observe any of the terms and conditions
of this Lease and such failure has persisted for an unreasonable period of time
after written notice of such failure, and the Lessee hereby waives all of its
claims in respect thereof against the Lessor.
7.8. Exemption of Lessor from Liability. The Lessor shall not be
liable for injury to the Lessee's business or any loss of income therefrom or
for damage to the property of the Lessee, the Lessee's employees, invitees,
customers or any other person in or about the Premises, nor shall the Lessor be
liable for injury to the person of the Lessee, the Lessee's employees, agents or
contractors, whether such damage or injury is caused by or results from fire,
explosion, falling plaster, electricity, gas, water or rain, or from the
breakage, leakage, obstruction or other defects of pipes, sprinklers, wires,
appliances, plumbing, air conditioning or lighting fixtures, or from any other
cause, whether such damage or injury results form conditions arising upon the
Premises or upon other portions of the Building, or from other sources or places
and regardless of whether the cause of such damage or injury or the means of
repairing the same is inaccessible. The Lessor shall not be liable for
incorporeal hereditaments including interference or obstruction of light, air or
view. The Lessor shall not be liable for any damages arising from any act or
neglect of any other tenant of the Building or the other portions of the
Project.
8. DAMAGE OR DESTRUCTION
---------------------
8.1. Partial Damage. If the Premises, or so much of the Building as
to cause the Premises to be uninhabitable, are damaged by any casualty, and the
damage (exclusive of any
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property or improvements installed by the Lessee in the Premises) can be
repaired within ninety (90) days without the payment of overtime, the Lessor
shall, at the Lessor's expense, repair such damage (exclusive of any property of
the Lessee or improvements installed by the Lessee in the Premises) as soon as
practicable and this Lease shall continue in full force and effect. If the
Premises, or so much of the Building as to cause the Premises to be
uninhabitable, are damaged by any casualty, and the damage (exclusive of any
property of the Lessee or improvements installed by the Lessee in the Premises)
cannot be repaired within ninety (90) days without the payment of overtime or
other premiums, the Lessor may, at the Lessor's option, either (i) repair such
damage as soon as practicable at the Lessor's expense, in which event this Lease
shall continue in full force and effect, or (ii) give written notice to Lessor
within thirty (30) days after the date of the occurrence of such damage of the
Lessor's intention to terminate this Lease, in which event this Lease shall
terminate as of the date of the occurrence of such damage.
8.2. Damage Near End of Term. If the Premises, or so much of the
Building as to cause the Premises to be uninhabitable, are damaged during the
last six (6) months of the term of this Lease, or any renewal thereof, the
Lessor may, at the Lessor's option, terminate this Lease as of the date of
occurrence of such damage by giving written notice to Lessee of the Lessor's
election to do so within thirty (30) days after the date of occurrence of such
damage; provided, however, that if the term of this Lease has been extended for
any reason whatsoever, the Lessor's right to terminate this Lease shall only
apply during the last six (6) months of the then current term of this Lease.
8.3. Abatement of Rent; Lessee's Remedies.
(a) If the Lessor is obligated or elects to repair the Premises
as provided above, the rent payable for the period during which such repair
continues shall be abated, in proportion to the degree to which the Lessee's use
of the Premises is impaired; provided, however, that the aggregate period of
abatement hereunder shall not exceed six (6) months. Except for such abatement,
if any, the Lessee shall have no claim against the Lessor for any damage
suffered by reason of any such damage, destruction, repair or restoration.
(b) If the Lessor is obligated or elects to repair the Premises
as provided above, but does not commence such repair within ninety (90) days
after such obligation shall occur, subject to any extension or up to another
sixty (60) days for delays beyond the reasonable control of the Lessor, the
Lessee may, at the Lessee's option, terminate this Lease by giving the Lessor
written notice of the Lessee's election to do so at any time prior to the
commencement of such repair or restoration, in which event this Lease shall
terminate as of the date of such destruction.
8.4. Insurance Proceeds Upon Termination. If this Lease is terminated
pursuant to any right given the Lessee or the Lessor to do so under this Article
8, all insurance proceeds
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payable under Section 7.6 with respect to the damage giving rise to such right
of termination shall be paid to the Lessor and any encumbrances of the Premises,
as their interests may appear.
8.5. Restoration. The Lessor's obligation to restore shall not
include the restoration or replacement of the Lessee's furnishings, machinery,
equipment, trade fixtures or other personal property or any improvements or
alterations made by the Lessee to the Premises.
9. PERSONAL PROPERTY TAXES
-----------------------
The Lessee shall pay prior to delinquency all Real Property Taxes and
other taxes assessed against, levied upon or attributable to its furnishings,
machinery, equipment, trade fixtures or other personal property contained in the
Premises or elsewhere and, if required, all improvements to the Premises in
excess of the Lessor's "building standard" improvements, provided, however, that
nothing contained herein shall require the Lessor to insure the accuracy of any
segregation of the same for purposes of Section 3.4(b) hereof. When
practicable, the Lessee shall cause said furnishings, machinery, equipment,
trade fixtures and all other personal property to be assessed and billed
separately from the real property of the Lessor.
10. UTILITIES
---------
The Lessee shall pay for all water, gas, heat, light, power,
janitorial services and other utilities and services supplied to the Premises,
together with any taxes thereon. If any such services are not separately
metered or charged to the Lessee, the Lessee shall pay a pro rata proportion, as
part of operating expenses, based on leasable area, of all charges jointly
metered or charged with other premises. The Lessor shall not be liable in
damages or otherwise unless due to the Lessor's gross negligence for any failure
or interruption of any utility services being furnished to the building and no
such failure or interruption shall entitle the Lessee to terminate this Lease.
In no event shall the Lessor be liable for any such failure or interruption
caused by the exercise of governmental authority, strikes, riots, acts of God,
war, adverse weather conditions, fire, flood or casualties or acts of third
parties beyond the Lessor's control. The operation and control of utilities,
air conditioning and any other energy system is subject to compliance with any
government authority governing the regulation and use of energy systems within
the commercial office or industrial building structure. The Lessee shall not
subject any of the mechanical, electrical, plumbing, sewer or other utility or
service systems or equipment to exercise or use which causes damage to said
systems or equipment. Any such damages to equipment caused by the Lessee
overloading such equipment shall be rectified by the Lessee, or may, at the
Lessor's option, be rectified by the Lessor, at the Lessee's sole cost and
expense.
11. ASSIGNMENT AND SUBLETTING
-------------------------
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11.1. The Lessee shall not voluntarily or by operation of law sublet,
assign, transfer, mortgage or otherwise encumber, or grant concessions, licenses
or franchises with respect to all or any part of the Lessee's interest in this
Lease or the Premises without the prior written consent of the Lessor, which
shall not be unreasonably withheld. If the Lessee desires at any time to assign
this Lease or to sublet the Premises or any portion thereof, it shall first
notify the Lessor of its desire to do so and shall submit in writing to the
Lessor (i) the name of the proposed sublessee or assignee; (ii) the nature of
the proposed sublessee or assignee; (iii) the nature of the proposed sublessee's
or assignee's business to be carried on in the Premises; (iv) the terms and
provisions of the proposed sublease or assignment; (v) such reasonable financial
information as the Lessor may request concerning the proposed sublessee or
assignee, including, but not limited to, a balance sheet as of a date within
ninety (90) days of the request for the Lessor's consent, statements of income
or profit and loss for the two (2) year period preceding the request for the
Lessor's consent, and a written statement in reasonable details as to the
business experience of the proposed sublessee or assignee during the five (5)
years preceding the request for the Lessor's consent; and (vi) the name and
address of sublessee's or assignee's present or previous landlord. The Lessor
may, as a condition to granting such consent, require that the obligations of
any assignee which is a subsidiary or affiliate of another corporation be
guaranteed by the parent or controlling corporation. Any sublease, license,
concession, franchise or other permission to use the Premises shall be expressly
subject and subordinate to all applicable terms and conditions of this Lease.
Any purported or attempted assignment, transfer, mortgage, encumbrance,
subletting, license, concession, franchise or other permission to use the
Premises contrary to the provisions of this paragraph shall be void and, at the
option of the Lessor, shall terminate this Lease.
11.2. If the Lessee is a corporation, any transfer of its stock, or
any dissolution, merger or consolidation which results in a change in the
control of the Lessee from the person or persons owning a majority of its voting
stock immediately prior thereto, or the sale or other transfer of all or
substantially all of the assets of the Lessee shall constitute an assignment of
the Lessee's interest in this Lease within the meaning of this Article 11 and
the provisions requiring consent contained herein. The Lessor may require, as a
condition to giving such consent, that the new controlling person(s) execute a
guaranty of this Lease. If the Lessee is a corporation which, under then
current guidelines published by the California Commissioner of Corporations, is
not deemed to be a public corporation, the transfer, assignment or hypothecation
of any interest in such corporation in the aggregate in excess of twenty-five
percent (25%) (other than a transfer occurring by operation of law upon the
death of the holder of such interest) shall be deemed an assignment within the
provisions of this Article.
11.3. No subletting, assignment, license, concession, franchise or
other permission to use the Premises shall relieve the Lessee of its obligations
to pay the rent or to perform all of the other obligations to be performed by
the Lessee hereunder. The acceptance of rent by the Lessor from any other
person shall not be deemed to be a waiver by the Lessor of any provisions of
this Lease.
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11.4. At any time within ten (10) days after the Lessor's receipt of
the information specified in Section 11.1 above, the Lessor may by written
notice to the Lessee elect (a) to sublease the Premises or the portion thereof
so proposed to be subleased by the Lessee, or to take an assignment of the
Lessee's leasehold estate hereunder, upon the same terms as those offered to the
proposed sublessee or assignee, as the case may be; or (b) to terminate this
Lease as to the portion (including all) of the Premises so proposed to be
subleased or assigned, with a proportionate abatement in the rent payable
hereunder; or (c) disapprove such assignment or subletting. If the Lessor does
not act within the ten (10) days, such failure to act is deemed a disapproval of
such request for assignment or subletting.
11.5. Each assignee or transferee, other than the Lessor, shall
assume all obligations of the Lessee under this Lease and shall be and remain
liable jointly and severally with the Lessee for the payment of the rent, and
for the due performance of all the terms, covenants, conditions and agreements
to be performed by the Lessee hereunder; provided, however, that a transferee
other than an assignee shall be liable to the Lessor for rent only in the amount
set forth in the assignment or transfer. No assignment shall be binding on the
Lessor unless such assignee or Lessee shall deliver to the Lessor a counterpart
of such assignment and an instrument in recordable form which contains a
covenant of assumption by such assignee satisfactory in substance and form to
the Lessor, consistent with the requirements of this Section 11.5, but the
failure or refusal of such assignee to execute such instrument of assumption
shall not release or discharge such assignee from its liability as set forth
above.
11.6. Consent by the Lessor to any subletting or assignment shall be
conditioned upon payment by the Lessee to the Lessor of one-half of any
"Transfer Consideration" (as hereafter defined) received or to be received,
directly or indirectly, by the Lessee on account of such assignment or
subletting. Transfer Consideration shall be paid to the Lessor at the same time
or times as the same is due to the Lessee. Failure to pay the Lessor the
Transfer Consideration, or any portion or installment thereof, shall be deemed a
default under this Lease, entitling the Lessor to exercise all remedies
available to it under law including, but not limited to, those specified in
Article 12 of this Lease. "Transfer Consideration" shall mean a) in the case of
a subletting, any consideration paid or given, directly or indirectly, by the
sublessee to the Lessee pursuant to the sublease for the use of the Premises, or
any portion thereof, over and above the rent and any additional rent, however
denominated, in this Lease, payable by the Lessee to the Lessor for the use of
the Premises (or portion thereof), prorating as appropriate the amount payable
by the Lessee to the Lessor under this Lease, if less than all of the Premises
is sublet, and (b) in the case of an assignment or a sublease, any consideration
paid or given, directly or indirectly, by the sublessee or assignee to the
Lessee in exchange for entering into the sublease or assignment, but shall not
include reimbursement for any security deposit, reimbursement of any
improvements, fixtures or furnishings installed in the Premises by the Lessee or
any payment for personal property of the Lessee not in excess of the Lessee's
book value thereof. As used herein, consideration shall include consideration
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in any form, including, but not limited to, money, property, assumption of
liabilities other than those arising under this Lease, discounts, services,
credits or any other item or thing of value. Irrespective of the form of such
consideration, the Lessor shall be entitled to be paid in cash in an amount
equivalent to the aggregate of the cash portion of the Transfer Consideration
and the value of any non-cash portion of the Transfer Consideration. If any
Transfer Consideration is to be paid or given in installments, the Lessee shall
pay each such installment at the time the same is to be paid or given.
11.7. The Lessee shall reimburse the Lessor for the Lessor's
reasonable costs and attorneys' fees incurred in conjunction with the processing
and documentation of any assignment, subletting, transfer, change of ownership
or hypothecation of this Lease or the Lessee's interest in the Premises.
12. DEFAULTS; REMEDIES
------------------
12.1. Default by Lessee. The occurrence of any one or more of the
following events shall constitute a default of this Lease by the Lessee:
(a) The vacating or abandonment of the Premises by the Lessee
combined with the failure to pay rent;
(b) The failure of the Lessee to make any payment of rent or
any other payment required to be made by the Lessee hereunder, as and when due,
where such failure shall continue for a period of three (3) days after written
notice thereof from the Lessor to the Lessee; provided, however, that any such
notice shall be in lieu of, and not in addition to, any notice required under
California Code of Civil Procedure Section 1161;
(c) The failure by the Lessee to observe or perform any of the
covenants, conditions or provisions of this Lease (or the covenants, conditions
and restrictions governing the Project) to be observed or performed by the
Lessee, other than described in Paragraph 12.1(b) hereof, where such failure
shall continue for a period of thirty (30) days after written notice thereof
from the Lessor to the Lessee; provided, however, that any such notice shall be
in lieu of, and not in addition to, any notice required under California Code of
Civil Procedure Section 1161; provided, further, that if the nature of the
Lessee's default is such that more than thirty (30) days are reasonably required
for its cure, then the Lessee shall not be deemed to be in default if the Lessee
commences such cure within said thirty (30) day period and thereafter diligently
prosecutes such cure to completion; or
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(d) The making by the Lessee of any general assignment or
general arrangement for the benefit of creditors; the filing by or against the
Lessee of a petition to have the Lessee adjudged a bankrupt or a petition for
reorganization or arrangement under any law relating to bankruptcy (unless, in
the case of a petition filed against the Lessee, the same is dismissed within
sixty (60) days); the appointment of a trustee or receiver to take possession of
substantially all of the Lessee's assets located at the Premises, or of the
Lessee's interest in this Lease, where possession is not restored to the Lessee
within thirty (30) days; or the attachment, execution or other judicial seizure
of substantially all of the Lessee's assets located at the Premises or of the
Lessee's interest in this Lease, where such seizure is not discharged within
thirty (30) days.
12.2. Remedies for Default by Lessee. In the event of any such
default, the Lessor may at any time thereafter, upon notice and demand and
without limiting the Lessor in the exercise of any other right or remedy which
the Lessor may have by reason of such default or breach:
(a) Terminate the Lessee's right to possession of the Premises
by any lawful means, in which case this Lease shall terminate and the Lessee
shall immediately surrender possession of the Premises to the Lessor. In such
event, the Lessor shall be entitled to recover from the Lessee:
(1) The worth at the time of award of the unpaid rent which
has been earned at the time of termination;
(2) The worth at the time of award of the amount by which
the unpaid rent which would have been earned after termination until the time of
award exceeds the amount of such rental loss that the Lessee proves could have
been reasonably avoided;
(3) The worth at the time of award of the amount by which
the unpaid rent for the balance of the term after the time of award exceeds the
amount of such rental loss that the Lessee proves could be reasonably avoided;
and
(4) Any other amount necessary to compensate the Lessor for
all the detriment proximately caused by the Lessee's failure to perform its
obligations under this Lease or which in the ordinary course of things would be
likely to result therefrom, including, but not limited to: the cost of
recovering possession of the Premises, expenses of releasing including necessary
renovation and alteration of the Premises, reasonable attorneys' fees and any
other reasonable cost. The "worth at the time of award" of the amounts referred
to in subparagraphs (1) and (2) above shall be computed by allowing interest at
five (5) percentage points above the discount
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rate of the Federal Reserve Bank of San Francisco at the time of the award. The
"worth at the time of award" of the amount referred to in subparagraph (3) above
shall be computed by discounting such amount at one (1) percentage point above
such discount rate.
(b) Suspend or discontinue the services specified in Article 10
above, or any thereof, during the continuance of any such default and any such
suspension or discontinuance shall not be deemed or construed to be an eviction
or ejection of the Lessee.
(c) Require the Lessee to make payment of all rental
obligations in cash or by certified cashier's check.
(d) Pursue any other remedy now or hereafter available to the
Lessor under the laws or judicial decisions of the Sate of California,
including, but not limited to, the remedy provided in California Civil Code
Section 1951.4 to continue this Lease in effect.
(e) The Lessor, in addition to the rights hereinbefore given in
the case of the Lessee's breach or default, may pursue any other remedy
available to the Lessor at law or in equity.
(f) The Lessor shall have, and the Lessee hereby grants to the
Lessor, a present security interest in the furniture, fixtures, equipment,
improvements and other personal property of the Lessee presently, or which may
hereinafter be located on the leased Premises, and all proceeds therefrom in
accordance with the Uniform Commercial Code of the State of California. The
security interest granted by the Lessee to the Lessor hereunder shall secure the
full and prompt performance and observance by the Lessee of all of the Lessee's
obligations under this Lease, and the Lessee will execute any financing
statement required by the Lessor, or any other document necessary to perfect
such security interest, and should the Lessee fail to do so, the Lessee
authorizes the Lessor to execute such financing statements or other documents to
perfect such security interest.
12.3. Default by Lessor. The Lessor shall not be in default of any
of the obligations of the Lessor under the Lease, unless the Lessor fails to
perform such obligations within a reasonable time, but in no event less than
thirty (30) days after written notice by the Lessee to the Lessor specifying
wherein the Lessor has failed to perform such obligations; provided, however,
that if the nature of the Lessor's default is such that more than thirty (30)
days are required for its cure, the Lessor shall not be in default if the Lessor
commences such cure within such thirty (30) day period and thereafter diligently
prosecutes the same to completion. In the event of any such default by the
Lessor, the Lessee may pursue any remedy now or hereafter available to the
Lessee under the laws of judicial decisions of the State of California, except
that the Lessee shall not have the right to terminate this Lease except as
expressly provided herein nor to set off against any payments due under this
Lease. The Lessee waives any right to deduct the expenses of repairs done by
the Lessor on the Lessor's behalf from the rent and waives, except as herein
provided, any of the Lessor's obligations for tenantability of the Building or
the Premises.
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12.4. Late Charges. The Lessee acknowledges that the late payment by
the Lessee to the Lessor of rent and other sums due hereunder will cause the
Lessor to incur costs not contemplated by this Lease, the exact amount of which
will be extremely difficult to ascertain. Such costs include, but are not
limited to, processing and accounting charges and late charges which may be
imposed on the Lessor by the terms of any mortgage or trust deed covering the
Premises. Accordingly, if any installment of rent or any other sum due from the
Lessee shall not be received by the Lessor, or the Lessor's designee, within ten
(10) days after the same is due, the Lessee shall pay to the Lessor a late
charge equal to five percent (5%) of such overdue amount, monthly, until such
overdue amount is paid. The Lessee acknowledges that such late charge
represents a fair and reasonable estimate of the cost that the Lessor will incur
by reason of a late payment by the Lessee. Acceptance of such late charge by
the Lessor shall in no event constitute a waiver of the Lessee's default with
respect to such overdue amounts nor prevent the Lessor from exercising any of
the other rights and remedies granted hereunder.
13. CONDEMNATION OR RESTRICTION ON USE
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13.1. Eminent Domain. If the whole of the Premises, or so much
thereof as to render the balance unusable by the Lessee, shall be taken under
power of eminent domain, this Lease shall automatically terminate as of the date
of such condemnation, or as of the date possession is taken by the condemning
authority, whichever is earlier. No award for any partial or entire taking
shall be apportioned, and the Lessee hereby assigns to the Lessor any award
which may be made in such taking or condemnation, together with any and all
rights of the Lessee now or hereafter arising in or to the same or any part
thereof; provided, however, that nothing contained herein shall be deemed to
give the Lessor any interest in or to require the Lessee to assign to the Lessor
any award made to the Lessee for its relocation expenses, the taking of personal
property and fixtures belonging to the Lessee, the interruption of or damage to
the Lessee's business and/or for the Lessee's unamortized cost of leasehold
improvements. The unamortized portion of the Lessee's expenditures for
improving the Premises shall be determined by multiplying such expenditures by a
fraction, the numerator of which shall be the number of years of the term of
this Lease which shall not have expired at the time of such appropriation or
taking and the denominator of which shall be the number of years of the term of
this Lease which shall not have expired at the time of improving the Premises.
In no event shall options to renew or extend be taken into consideration in
determining the payment to be made to the Lessee. The Lessee's right to receive
compensation or damages for its fixtures and personal property shall not be
affected in any manner thereby.
13.2. Abatement of Rent. In the event of a partial taking which does
not result in a termination of this Lease, rent shall be abated in proportion to
that part of the Premises so made unusable by the Lessee.
13.3. Temporary Taking. No temporary taking of the Premises and/or
of the Lessee's rights therein or under this Lease shall terminate this Lease or
give the Lessee any right to any abatement of rent hereunder; and any award made
to the Lessee by reason of any such temporary taking shall belong entirely to
the Lessee and the Lessor shall not be entitled to share therein.
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13.4. Voluntary Sale as Taking. A voluntary sale by the Lessor to
any public body or agency having the power of eminent domain, either under
threat of condemnation while condemnation proceedings are pending, shall be
deemed to be a taking under the power of eminent domain for the purpose of this
Article 13.
14. BROKERS
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The Lessor acknowledges its obligation to pay a single commission to
the broker(s) specified in item 9 of the Basic Lease Provisions, if any. The
Lessee represents and warrants that it has neither incurred nor is aware of any
other broker's, finder's, or similar fee in connection with the origin,
negotiation, execution or performance of this Lease and agrees to indemnify and
hold harmless the Lessor from any loss, liability, damage, cost or expense
incurred by reason of a breach of this representation.
15. LESSOR'S LIABILITY
------------------
The term "Lessor" as used herein shall mean only the owner or owners
at the time in question of the fee title or a Lessee's interest in a ground
lease of the Building. In the event of any transfer of such title or interest,
the Lessor herein named (and in case of any subsequent transfers, the then
grantor) shall be relieved from, and after the date of such transfers of all
liability for the Lessor's obligations thereafter to be performed; provided,
however, that any funds in the hands of the Lessor or the then grantor at the
time of such transfer in which the Lessee has an interest shall be delivered to
the grantee. The obligations contained in this Lease to be performed by the
Lessor shall, subject as aforesaid, be binding on the Lessor's successors and
assigns only during their respective periods of ownership.
16. PARKING
-------
During the term of this Lease, the Lessee shall have the right in
common with other tenants of the Building (if any) and any adjacent buildings,
to use the parking area available to tenants of the Building. The Lessee's use
of such parking facilities or that of its invitees shall be limited to a maximum
of the number of parking spaces shown in item 10 of the Basic Lease Provisions
(but such space will not be separately identified and the Lessor shall have no
obligation to monitor the use of such parking facility), and shall be subject to
such rules and regulations as may be established, from time to time, by the
Lessor for the effective use of such parking facilities. Such rules and
regulations may include, but shall not be limited to, designation of specific
areas for use by invitees of the Lessee and the Lessor; hours during which
parking shall be available for use; parking attendants; a parking validation or
other control system to prevent parking abuse; and such other matters affecting
the parking operation to the end that said facilities shall be utilized to
maximum efficiency and in the best interest of the Lessor, the Lessee and their
respective invitees. The Lessor may temporarily close any part of the Common
Area for such periods of time as may be necessary to prevent the public from
obtaining prescriptive rights or to make repair or alterations.
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The Lessor shall not have any express or implied obligation to enforce or police
the parking lot usage. The Lessee's right to use any area for parking purposes
shall be subject to restrictions or other limitations resulting from any laws,
statutes, ordinances and governmental rules, regulations or requirements now in
force or which may hereafter be in force, and no such event shall in any way
affect this Lease, abate rent, relieve the Lessee of any liabilities or
obligations under this Lease, or give rise to any claim whatsoever against the
Lessor; specifically, the Lessee's right to use any area for parking purposes
shall be subject to any preferential parking program for participants in any
ridesharing program established by the Lessor. If the Lessor reasonably
determines that the Lessee is regularly using in excess of the number of parking
spaces specified in item 10 of the Basic Lease Provisions, the Lessor may, in
addition to any other remedy, impose a reasonable charge for such excess usage,
payable by the Lessee upon demand.
17. GENERAL PROVISIONS
------------------
17.1. Estoppel Certificate
(a) The Lessee shall at any time, and from time to time, upon
not less than ten (10) days' prior written notice from the Lessor, execute,
acknowledge and deliver to the Lessor a statement in writing (i) certifying that
this Lease is unmodified and in full force and effect (or, if modified, stating
the nature of such modification and certifying that this Lease, as so modified,
is in full force and effect) and the date to which the rent and other charges
are paid in advance, if any, and (ii) acknowledging that there are no, to the
Lessee's knowledge, uncured defaults on the part of the Lessor hereunder, or
specifying such defaults if any are claimed. Any such statement may be
conclusively relied upon by any prospective purchaser or encumbrancer of the
Premises.
(b) The Lessee's failure to deliver such statement within such
time shall be conclusive upon the Lessee that (i) this Lease is in full force
and effect without modification except as may be represented by the Lessor, (ii)
there are no uncured defaults in the Lessor's performance, and (iii) not more
than one (1) month's rent has been paid in advance.
(c) If the Lessor desires to finance or refinance the Premises,
or any part thereof, the Lessee shall deliver to any lender designated by the
Lessor such financial statements of the Lessee as may be reasonably required by
such lender. All such financial statements shall be received by the Lessor in
confidence and shall be used only for the purposes herein set forth.
17.2. Severability. The invalidity of any provision of this Lease as
determined by a court of competent jurisdiction shall in no way affect the
validity of any other provision hereof.
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17.3. Time of Essence. Time is of the essence in the performance of
all terms and conditions of this Lease in which time is an element.
17.4. Captions. Article and paragraph captions have been inserted
solely as a matter of convenience and such captions in no way define or limit
the scope or intent of any provision of this Lease.
17.5. Notices. Any notice required or permitted to be given
hereunder shall be in writing and may be served personally or by regular mail,
addressed to the Lessor and the Lessee respectively at the addresses set forth
before their signatures in item 11 of the Basic Lease Provisions, or to such
other or additional persons or at such other addresses as may, from time to
time, be designated in writing by the Lessor or the Lessee by notice pursuant
hereto.
17.6. Waivers. No waiver of any provision hereof shall be deemed a
waiver of any other provision hereof. Consent to or approval of any act by one
of the parties hereto shall not be deemed to render unnecessary the obtaining of
such party's consent to or approval of any subsequent act. The acceptance of
rent hereunder by the Lessor shall not be a waiver of any preceding breach by
the Lessee of any provision hereof, other than the failure of the Lessee to pay
the particular rent so accepted, regardless of the Lessor's knowledge of such
preceding breach at the time of acceptance of such rent.
17.7. Holding Over. If the Lessee holds over after the expiration or
earlier termination of the term hereof without the express written consent of
the Lessor, the Lessee shall become a tenant at sufferance only at one hundred
fifty percent (150%) of the monthly rent for the Premises then in effect for the
space, in effect upon the date of such expiration or earlier termination
(subject to adjustment as provided in Article 3 hereof and prorated on a daily
basis), and otherwise upon the terms, covenants and conditions herein specified,
so far as applicable. Acceptance by the Lessor of rent after such expiration or
earlier termination shall not constitute a consent to a holdover hereunder or
result in a renewal. The foregoing provisions of this paragraph are in addition
to and do not affect the Lessor's right of re-entry or any other rights of the
Lessor hereunder or as otherwise provided by law.
17.8. Cumulative Remedies. No remedy or election hereunder shall be
deemed exclusive but shall, wherever possible, be cumulative with all other
remedies at law or in equity.
17.9. Inurement. Subject to any provisions hereof restricting
assignment or subletting by the Lessee and subject to the provisions of Article
15 hereof, the terms and conditions contained in this Lease shall bind the
parties, their personal representatives, successors and assigns.
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17.10. Choice of Law. This Lease shall be governed by the laws of the
State of California.
17.11. Subordination. This Lease shall, at the Lessor's option, be
either superior or subordinate to mortgages or deeds of trust on the Premises,
whether now existing or hereinafter created. The Lessee shall, upon written
demand by the Lessor, execute such instruments as may be required, from time to
time, to subordinate the rights and interest of the Lessee under this Lease to
the lien of any mortgage or deed of trust on the Building. Notwithstanding any
such subordination, so long as the Lessee is not in default hereunder, this
Lease shall not be terminated or the Lessee's quiet enjoyment of the Premises
disturbed in the event such mortgage or deed of trust is foreclosed. In the
event of such foreclosure, the Lessee shall thereupon become a Lessee of, and
attorn to, the successor in interest to the Lessor on the same terms and
conditions as are contained in this Lease.
17.12. Attorneys' Fees. If any action at law or equity, including an
action for declaratory relief, is brought to enforce the provisions of this
Lease, the prevailing party shall be entitled to recover actual attorneys' fees
incurred in bringing such action and/or enforcing any judgment granted therein,
all of which shall be deemed to have accrued upon the commencement of the action
and shall be paid whether or not such action is prosecuted to judgment. The
attorneys' fees to be awarded the prevailing party may be determined by the
court in the same action or in a separate action brought for that purpose. Any
judgment or order entered in such action shall contain a specific provision
providing for the recovery of actual attorneys' fees and costs incurred in
enforcing such judgment. The award of attorneys' fees shall not be computed in
accordance with any court schedule, but shall be made so as to fully reimburse
the prevailing party for all attorneys' fees, paralegal fees, costs and expenses
actually incurred in good faith, regardless of the size of the judgment, it
being the intention of the parties to fully compensate the prevailing party for
all attorneys' fees, paralegal fees, costs and expenses paid or incurred in good
faith. For purposes of this section, attorneys' fees shall include, without
limitation, attorneys' fees, paralegal fees, costs and expenses incurred in
relation to any of the following: post-judgment motions; contempt proceedings,
garnishment, levy and debtor or third party examinations; discovery; and
bankruptcy litigation.
17.13. Lessor's Access. The Lessor and the Lessor's agents shall have
the right to enter the Premises at reasonable times for the purpose of
inspecting the same, showing the same to prospective purchasers, lessees, or
lenders, and making such alterations, repairs, improvements or additions to the
Premises or to the Building as the Lessor may deem necessary or desirable. The
Lessor may at any time place on or about the Building any ordinary "For Sale"
signs and the Lessor may, at any time during the last one hundred eighty (180)
days of the term hereof (or during any period in which the Lessee is in default
under this Lease), place on or about the Building any ordinary "For Sale", "For
Lease" or similar signs, all without rebate of rent or liability to the Lessee.
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17.14. Corporate Authority. If the Lessee is a corporation, the
Lessee shall, at the Lessor's request, require that each individual executing
this Lease on behalf of said corporation represent and warrant that he is duly
authorized to execute and deliver this Lease on behalf of said corporation in
accordance with a duly adopted resolution of the Board of Directors of said
corporation or in accordance with the Bylaws of said corporation, and that this
Lease is binding upon said corporation in accordance with its terms. The Lessee
shall also, at the Lessor's request, within thirty (30) days after execution of
this Lease, deliver to the Lessor a certified copy of a resolution of the Board
of Directors of said corporation authorizing or ratifying the execution of this
Lease.
17.15. Surrender or Cancellation. The voluntary or other surrender of
this Lease by the Lessee, or a mutual cancellation thereof, shall not work a
merger, and shall terminate all or any existing subleases, unless the Lessor
elects to treat such surrender or cancellation as an assignment to the Lessor of
any or all of such subleases.
17.16. Entire Agreement. This Lease, the exhibits hereto which by
this reference are incorporated herein as though set forth in full herein,
covers in full each and every agreement of every kind or nature whatsoever
between the parties hereto concerning the Premises and the Building, and all
preliminary negotiations and agreements of whatsoever kind or nature are merged
herein. The Lessor has made no representations or promises whatsoever with
respect to the Premises or the Building, or the design configuration of the
Project, except those contained herein, and no other person, form or corporation
has at any time had any authority from the Lessor to make nay representations or
promises on behalf of the Lessor. If any such representations or promises have
been made by others, the Lessee hereby waives all right to rely thereon. No
verbal agreement or implied covenant shall be held to vary the provisions
hereof, any statute, law or custom to the contrary notwithstanding.
Except as otherwise provided herein, nothing expressed or implied
herein is intended or shall be construed to confer upon or grant any person any
rights or remedies under or by reason of any term or condition contained in this
Lease.
17.17. Signs. No sign, placard, picture, advertisement, name or
notice shall be inscribed, displayed, printed or affixed to or near any part of
the outside or inside of the Building without the written consent of the Lessor
first had and obtained and without full compliance with all governmental
requirements and with the Project Signage Plan and any other required consents.
The Lessor shall have the right to remove any such sign, placard, picture,
advertisement, name or notice without notice to and at the expense of the
Lessee. All approved signs shall be installed at the Lessee's sole cost and
expense. The Lessee further agrees to maintain any such approved signs, as may
be approved by the Lessor, in good condition and repair at all times. The
Lessee shall not
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place any sign on a vehicle or movable or non-movable object in or on the street
adjacent to the Project.
17.18. Interest on Past Due Obligations. Any amount due from the
Lessee to the Lessor hereunder which is not paid when due shall bear interest at
five (5) percentage points above the discount rate of the Federal Reserve Bank
of San Francisco at the time of the award or the maximum allowable under the
law, whichever is greater, from the date due until paid, but the payment of such
interest shall not excuse or cure any default by the Lessee.
17.19. Gender; Number. Whenever the context of this Lease requires,
the masculine gender includes the feminine or neuter, and the singular number
includes the plural.
17.20. Recording of Lease. The Lessee shall not record this Lease
without the express written consent of the Lessor. If such permission is
granted, at the expiration or sooner termination of this Lease, the Lessee shall
execute, acknowledge and deliver to the Lessor, within ten (10) days after
written demand from the Lessor, any quitclaim deed or other document reasonably
required by any reputable title company to remove the cloud of this Lease from
the title of the real property subject to the Lease.
17.21. Waiver of Subrogation. The Lessor and the Lessee each hereby
waive any and all rights of recovery against the other, or against the officers,
employees and agents and representatives of the other, for loss of or any damage
to such waiving party or its property, or the property of others under its
control, to the extent that such loss or damage is insured against under any
valid and collectible insurance policy in force at the time of such loss or
damages. The Lessee shall, upon obtaining the policies of insurance required
hereunder, give notice to the insurance carrier or carriers that the foregoing
mutual waiver of subrogation is contained in this Lease.
17.22. Confidentiality of Lease. The Lessee acknowledges and agrees
that the terms of this Lease are confidential and constitute proprietary
information of the Lessor. Disclosure of the terms hereof could adversely
affect the ability of the Lessor to negotiate other leases with respect to the
Building and impair the Lessor's relationship with other tenants of the
Building. The Lessee agrees that it, its partners, officers, directors,
employees and attorneys, shall not disclose the terms and conditions of this
Lease to any other person without the prior written consent of the Lessor. It
is understood and agreed that damages would be an inadequate remedy for the
breach of this provision by the Lessee, and the Lessor shall have the right to
specific performance of this provision and to injunctive relief to prevent its
breach or continued breach.
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17.23. Quiet Enjoyment. Provided the Lessee has performed all of the
terms, covenants, agreements and conditions of this Lease, including the payment
for rent and all other sums due hereunder, the Lessee shall peaceably and
quietly hold and enjoy the Premises for the term hereof, but subject to the
provisions and conditions of this Lease against the Lessor and all persons
claiming by, through or under the Lessor. The Lessee's right to use the
Premises and the Common Area as herein provided shall be subject to restrictions
or other limitations or prohibitions resulting from any laws, statutes,
ordinances and governmental rules, regulations or requirements now in force or
which may hereafter be in force and no such event shall in any way affect this
Lease, abate rent, relieve the Lessee of any liabilities or obligations under
this Lease or give rise to any claim whatsoever against the Lessor.
17.24. Window Coverage. The Lessor shall select a standard mini-blind
type and color for all windows to be covered by the Lessee. No window covering,
including, but not limited to, coatings or draperies, shall be used by the
Lessor without the Lessor's written approval.
17.25. Materials Storage Restrictions. The Lessee agrees to conduct
its business so as not to violate or exceed the design standards of the fire
protection system or any insurance policies maintained by the Lessor pursuant to
Article 7.
17.26. No Agency. Neither party is the agent or partner of the other,
and the legal relationship between the parties hereto shall be governed solely
by the terms of this Lease when duly executed by both parties with respect to
the transactions contemplated hereby.
17.27. Force Majeure. Notwithstanding any of the items set forth
above, the Lessor shall bear no liability of whatever kind to the Lessee if,
despite the Lessor's exercise of due diligence, the Lessor's carrying out of its
obligations, as defined herein, prevented or delayed by legal action, nor by the
exercise of governmental authority, whether Federal, State of County, or other
or by force majeure, strikes, riots, acts of God, war, adverse weather
conditions, fire, unavoidable casualties, or acts of third parties beyond the
Lessor's control.
17.28. Accord and Satisfaction. No payment by the Lessee or receipt
by the Lessor of a lesser amount than the rent herein stipulated shall be deemed
to be other than on account of the earliest stipulated rent, nor shall any
endorsement or statement on any check or any letter accompanying any check or
payment as rent be deemed an accord and satisfaction, and the Lessor may accept
such check or payment without prejudice to the Lessor's right to recover the
balance of such rent or pursue any other remedy provided in this Lease.
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17.29. Financial Statements. The Lessee shall deliver to the Lessor,
prior to the execution of this Lease, its financial statement, and the annual
financial statements of the Lessee within ninety (90) days after the end of the
Lessee's fiscal year, which shall be certified by the Lessee as true and
correct. The Lessee shall also provide financial statements of any guarantor of
this Lease, which shall be certified as true and correct by such guarantor.
Such financial statements shall be based upon generally accepted accounting
principles applied on a consistent basis. The financial statements shall
clearly show sufficient information to accurately depict the financial condition
of the Lessee as of the date thereof. Any misrepresentations in the Lessee's or
the Guarantor's financial statements will be considered, at the Lessor's option,
as a breach of a material provision of this Lease. If the Lessee is a
partnership or joint venture, such financial statements shall, upon the Lessor's
request, be accompanied by similar financial statements of each general partner
or joint venture of the Lessee. Such similar statements shall be certified to
be true and correct by the subject thereof. Within five (5) days following
written request by the Lessor delivered after any default by the Lessee in the
payment of any sums owing under this Lease, whether or not any time period
allowed for the cure of such default has expired, the Lessee shall provide the
Lessor with copies of the Lessee's financial statement for the end of the most
recent quarter of the Lessee's fiscal year, and the Lessee's financial statement
(including year to date information) for the end of the month preceding such
default. In each case, such financial statement shall meet all of the preceding
requirements for annual financial statements. The Lessee's failure to deliver
the financial statements contemplated hereby within the time specified shall
constitute a material default by the Lessee under this Lease.
17.30. Supersedes Proposal to Lease. This Lease supersedes any
proposals regarding the leasing of the Premises, whether written or oral, and
any such proposals will be terminated, and of no force or effect, effective upon
the execution of this Lease.
17.31. Intentionally Omitted.
17.32. Construction. The provisions of this Lease should be liberally
construed to effectuate its purposes. The language of all parts of this Lease
shall be construed simply according to its plain meaning and shall not be
construed for or against either party, as each party has participated in the
drafting of this Lease and had the opportunity to have their counsel review it.
Whenever the context and construction so requires, all words used in the
singular shall be deemed to be used in the plural, all masculine shall include
the feminine and neuter, and vice versa.
17.33. Non-Disturbance Agreement. The parties shall execute,
concurrently with the execution of this Lease, the Non-Disturbance and
Attornment Agreement attached as Exhibit "D", which is incorporated by this
reference. The Lessor shall obtain its lender's execution of said
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agreement as soon as reasonably practical after execution by the parties, and
furnish the Lessee with a fully executed copy.
18. CONSTRUCTION OF TENANT IMPROVEMENTS
-----------------------------------
18.1. Tenant Improvements. The Lessee shall have the right to design
and select the tenant improvements for the Premises, subject to the review and
approval of the Lessor. All tenant improvements shall be constructed, supplied,
and installed according to the standard specifications of the Lessor for tenant
improvements which are described on Exhibit E, attached hereto, unless otherwise
approved in writing by the Lessor, which approval may be given or withheld in
the Lessor's reasonable discretion. The Lessee shall use POLIQUIN KELLOGG
DESIGN GROUP (the "Architect") for the purpose of designing the tenant
improvements and preparing plans and specifications for the construction
thereof. Tenant improvements shall include all improvements serving or located
within the Premises, including without limitation, framing of demising walls for
the Premises, drywalling, taping and painting of the interior surfaces of such
demising walls, interior drywall partitions and walls, flooring and carpeting,
interior doors and glass, cabinets, built-in fixtures and furnishings,
electrical or other utilities, a proportionate share (based on useable area) of
the building's VAV-HVAC system, VAV-HVAC mixing boxes, distribution ducting,
vents and outlets, surface mounted electrical and plumbing fixtures and
electrical outlets, acoustical tile, drop ceilings and all other improvements
made to the Premises (the "Tenant Improvements").
The Lessee shall, at its sole cost and expense, cause the space plan
for the Premises showing the design, layout and location of the Tenant
Improvements (the "Space Plan") to be prepared, prosecuted and delivered on the
following schedule:
(a) Concurrently with the execution of this Lease, the Lessee shall
deliver its final Space Plan to the Lessor.
(b) Within five (5) days following the Lessor's receipt of the final
Space Plan, the Lessor shall review and approve the final Space Plan. Upon the
Lessor's approval, the Lessor shall cause the Architect to prepare working
drawings for the Tenant Improvements based upon the final Space Plan and, upon
completion of such working drawings, shall submit the same to TRABUCCO
COMMERCIAL CONSTRUCTION (the "Contractor") for a fixed lump sum bid. Upon
receipt of the bid for the construction of the Tenant Improvements, the Lessor
shall deliver the same to the Lessee. If the estimate exceeds the Tenant
Improvement Allowance, as defined below, the Lessee shall, within five (5) days
of its receipt of the bid, either (i) accept the working drawings or (ii)
request the Architect to make changes to the working drawings to reduce the cost
of the Tenant Improvements. Failure by Lessee to respond within five (5) days
of its receipt of the bid shall constitute Lessee's approval and acceptance of
the working drawings.
(c) If changes are made by the Lessee, the Lessee shall deliver
revised working drawings to the Lessor within 5 days of the Lessee's receipt of
the original bid. The Lessor shall then
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submit the revised working drawings to the Contractor for rebid. The Lessor
shall deliver the new bid to the Lessee upon its receipt thereof.
(d) In the event that the bid or rebid for the Tenant Improvements
per the original working drawings, if the same are accepted by the Lessee, or
any revised working drawings exceeds the Tenant Improvement Allowance, not later
than fifteen (15) days prior to the date scheduled by the Lessor for the
commencement of construction of the Tenant Improvements, the Lessee shall
deposit into a Tenant Improvement escrow account cash equal to the entire
difference between the estimated cost of the Tenant Improvements and the Tenant
Improvement Allowance. Except as specifically provided below, the Lessee shall
have no further right to modify or amend the working drawings.
No changes shall be made in the mutually-approved working
drawings without the prior written consent of the Lessor and the Lessee. The
Lessee shall have the right, following completion of the mutually-approved
working drawings, to propose changes to the Tenant Improvements. Any proposed
change shall be delivered in writing to the Lessor. The Lessor shall cause the
Contractor to prepare a change order describing the increase or decrease in the
cost of the Tenant Improvements which would result from the requested change,
the additional time, if any, required to complete the requested change and any
Tenant Delay Penalty (as defined in Section 18.6(b)) that will be imposed. The
change order shall be delivered to the Lessee and the Lessee shall accept or
reject the Change Order within five (5) days of delivery. The failure by the
Lessee to sign the change order and return it to the Lessor within such time
period shall be deemed a rejection of the proposed change reflected in the
change order.
Any such changes or additions requested or caused by the
Lessee that result in the aggregate cost of the Tenant Improvements exceeding
the Tenant Improvement Allowance shall be made at the sole cost of the Lessee.
The cost of complying with governmental requirements that relate to the Tenant
Improvements shall also be paid out of the Tenant Improvement Allowance.
Provided that the Lessor notifies the Lessee in writing of its belief that a
delay has been caused by the Lessee shortly following the occurrence of the
alleged delay, any delays caused by the Lessee or its agents which delay or
postpone the substantial completion of the Tenant Improvements shall constitute
a delay caused by the Lessee under Section 18.6 and shall result in the
imposition of a Tenant Delay Penalty as defined in Section 18.6(b).
18.2. Construction of Tenant Improvements. The Tenant Improvements
shall be constructed by the Lessor using the Contractor in accordance with the
final working drawings. The construction contract will provide for 5% overhead
and 4% profit on all construction performed under the contract. The Contractor
shall obtain at least three subcontractor bids for each trade performing work on
the Tenant Improvements for which the cost is estimated to be in excess of
$10,000.00. The Lessee shall have the right to specify subcontractors from whom
the Contractor will solicit bids. The Lessee and the Lessor shall jointly agree
on the subcontractors to be engaged by the Contractor for the purpose of
performing the Tenant Improvement work. The Lessee and the Lessor shall consider
all factors relating to subcontractor bids for purpose of selecting appropriate
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subcontractors, including without limitation expertise, availability, price,
efficiencies and harmonization that would result from using the same
subcontractor who worked on the Building shell and core.
The Lessor, at its expense, shall promptly correct all items
not conforming with the plans and specifications of which the Lessor is notified
by the Lessee in writing within thirty (30) days after the Lessee takes
possession of the Premises.
The Lessor warrants that the Tenant Improvements are free from
defects in materials and workmanship of which the Lessor is notified by the
Lessee in writing within one (1) year after the date of substantial completion
of the Tenant Improvements. The Lessor further warrants that the construction of
the Tenant Improvements upon completion will comply with all applicable
statutes, ordinances, rules, regulations, orders and requirements of
governmental authorities in effect on the date of the issuance of the building
permits therefor. The Lessor shall repair any such defects within thirty (30)
days following notification of the same or, if the corrective work cannot be
completed within such period, commence and diligently prosecute the work to
completion.
18.3. Substantial Completion of Tenant Improvements. The Tenant
Improvements shall be deemed to be substantially complete as of the date all of
the following conditions are satisfied:
(a) The Tenant Improvements have been completed pursuant to
the mutually approved working drawings (except for "punchlist" items that do not
materially interfere with the Lessee's occupancy and the Lessee can reasonably
conduct its business;
(b) All permits required for occupancy of the Premises by
the Lessee have been issued;
(c) The Lessor has given the Lessee the notice described in
Section 18.5 hereof; and
(d) The Lessee has been given access to the Premises
following completion of subparagraphs (a) through (c) above.
18.4. Tenant Improvement Allowance. The Lessor agrees to provide to
the Lessee a tenant improvement allowance of $33.00 per useable square foot of
the Premises (the "Tenant Improvement Allowance"). The Tenant Improvement
Allowance shall be applied to the Tenant Improvements and all fees, charges and
expenses for architectural and engineering services, permits and governmental or
quasi-governmental fees necessary or appropriate in connection with the Tenant
Improvements (the "Tenant Improvement Expenses").
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In the event that, during the course of constructing the
Tenant Improvements, changes requested by the Lessee in the Tenant Improvements
which have been the subject of an approved change order result in the Tenant
Improvement Expenses exceeding the Tenant Improvement Allowance and any amounts
previously deposited by the Lessee, the Lessor shall give written notice of the
estimated shortfall to the Lessee and the Lessee shall deposit, within fifteen
(15) days of execution of such a change order, the amount of the increase shown
on the change order. The Lessor shall have no obligation to proceed with the
construction of the items or modifications described in such change order until
such deposit has been made. Any amount which is not paid by the Lessee within
such fifteen (15) days shall bear interest at the highest rate allowed by law.
In the event that the amount deposited by the Lessee is
greater than the amount of the actual shortfall, the difference shall be
refunded to the Lessee by the Lessor upon the earlier of (i) completion of the
Tenant Improvements, the payment of all retentions to subcontractors and
contractors, the expiration of all lien periods, and the payment of all Tenant
Improvement Expenses or (ii) sixty (60) days following substantial completion of
the Tenant Improvements as described in Section 18.3.
18.5. Tenant's Work. The Lessor shall give the Lessee at least
fifteen (15) days prior written notice of the estimated date of substantial
completion of the Tenant Improvements for the Premises to enable the Lessee to
enter onto the Premises for the purpose of completing cabling, wiring, telephone
installation, etc. (the "Tenant's Work"). During such thirty (30) day period the
Lessor shall use reasonable efforts to provide the Lessee with clear and
unobstructed access to the space for the Tenant's Work, providing that such work
does not unreasonably interfere with the Lessor's work or the installation of
the Tenant Improvements. All of the Tenant's Work shall be contracted for by the
Lessee and shall be completed at its sole cost and expense. In the event that
the Tenant's Work requires the use of a general contractor, the Lessee agrees
that it will coordinate with the Lessor's contractor for purposes of
facilitating an orderly completion of the Premises. All construction and work
shall be in compliance with all applicable building codes and insurance
requirements. The Lessee shall have in place all of the insurance required under
the terms of this Lease and shall provide evidence thereof to the Lessor prior
to commencing any of the Tenant's Work. The Lessee shall cause all of the
Tenant's Work to be diligently prosecuted and completed and shall not delay
substantial completion of the Premises.
18.6. Construction Delays.
(a) Construction Delays Attributable to the Lessor.
----------------------------------------------
In the event that the Tenant Improvements are not
substantially completed on or before October 1, 1998 and (a) the delay is not
caused by the Lessee as provided in Section 18.6(b) and (b) the delay is not
attributable to factors outside the control of the Lessor, including, without
limitation, delays in receiving approvals, permits or final tenant improvement
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plans, strikes, labor or materials shortages or acts of God, the Lessee shall
not have a right to terminate the Lease nor shall the Lessee have any claim for
damages.
(b) Delay Caused by Lessee.
----------------------
A delay caused by the Lessee shall be considered to exist
in the event that there is any delay in the (a) completion of the Tenant's Work
caused by the Lessee or (b) any delay in the substantial completion of any
portion of the Tenant Improvements which is caused by (i) any change,
modification, or additional work requested or initiated by the Lessee, which is
shown on a change order executed in connection therewith, (ii) any non-standard
or above-standard Tenant Improvements requested by the Lessee which, as a result
of delays in obtaining materials or special installation/construction
requirements, extend the construction time for the Tenant Improvements, (iii)
the Lessee's failure to provide timely delivery or approval of the Space Plan or
working drawings or any other matter relating to the plans and specifications
for or construction of the Tenant Improvements, (iv) any delay caused by the
Lessee in obtaining any necessary appropriate governmental permits or approvals
for the Tenant Improvements, or (v) any other act or omission of the Lessee that
delays construction provided that the Lessor gives notice thereof to the Lessee
within five (5) days of the occurrence.
In the event of a delay caused by the Lessee, the Lessor
shall notify the Lessee within ten (10) days after the occurrence of such delay
as to the nature and estimated length of the delay. If the Lessor reasonably
believes that any such delay can be mitigated or eliminated by the payment of
additional money and/or the performance of overtime work, the Lessor shall so
notify the Lessee and the Lessee shall have the right, at its sole cost and
expense, to pay or provide for such additional expenditure and/or overtime work
and the delay shall be reduced or eliminated accordingly.
The parties hereto acknowledge that delays caused by the
Lessee will have the effect of postponing the substantial completion of the
Tenant Improvements and the Term Commencement Date of the Lease. As compensation
to the Lessor for any the Lessee-caused delay, the Lessee agrees to pay to the
Lessor an amount equal to the rent which would have been payable hereunder (the
"Tenant Delay Penalty") for each day of delay in completion of the Tenant's Work
or substantial completion of the Tenant's Improvements which is caused by the
Lessee. The Tenant Delay Penalty shall be calculated by using the size of the
Premises as shown on the working drawings. The Tenant Delay Penalty shall be
imposed for each delay as well as any delay caused by the Lessee as described
hereunder provided that the Lessor notifies the Lessee in writing of its belief
that a delay has been caused by the Lessee shortly following the occurrence of
the alleged delay. The accrued Tenant Delay Penalty shall be due and payable
upon substantial completion of the Tenant Improvements and, if not paid on such
date, shall earn interest at the highest rate allowed by law.
19. RIGHT TO LEASE ADDITIONAL SPACE.
-------------------------------
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In the event that additional space in the Building becomes available
for lease and GRC International, another tenant of the Building, does not elect
to lease such space (the "Additional Space"), the Lessor shall offer to the
Lessee the right to lease such additional space on the same terms as this Lease,
including the rental then payable and the remaining term then existing under
this Lease, subject to the following terms and conditions:
(a) The Lessee is not in default of any provision of Lease.
(b) The Lessor has not delivered to the Lessee more than two
(2) notices of default under this Lease.
(c) The Lessee shall have executed an amendment or addendum
to this Lease incorporating the Additional Space and delivered the same to the
Lessor within ten (10) days of the date that the Lessor delivers written notice
to the Lessee that Additional Space is available for lease by the Lessee.
(d) The rights contained in this Article 19 may be exercised
by the originally-named Lessee or by any assignee of the Lessee's interest in
the Lease if the assignment has been approved by the Lessor under Article 11 of
this Lease. Such rights may not be exercised by any sublessee of all or any
portion of the Premises.
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EXHIBIT A
PREMISES
EXHIBIT B
CONFIGURATION OF PROJECT,
LOCATION OF BUILDING(S), PREMISES
AND ASSOCIATED COMMON AND PARKING AREAS
EXHIBIT C
RULES AND REGULATIONS
EXHIBIT D
PERSONAL GUARANTY
EXHIBIT E
NON-DISTURBANCE AND ATTORNMENT AGREEMENT