Exhibit 10.1
LEASE AGREEMENT
This Lease, executed in duplicate at Palo Alto, California, this 6th day of December 1996,
by and between:
PARTIES Zappettini Investment Co.
and
IRIDEX Corporation
hereinafter called respectively Lessor and Lessee, without regard to
number or gender,
PREMISES 1. WITNESSETH: That Lessor hereby leases to Lessee, and
Lessee hires from Lessor, those certain premises, hereinafter in this
lease designated as "the Premises", with the appurtenances, situated in
the City of Mountain View, County of Santa Clara, State of California,
and more particularly described as follows, to-wit:
An appropriate 37,166 square foot industrial building located on 2.69
acre lot and commonly referred to as 1212 Terra Bella, Mountain View,
California.
USE 2. The Premises shall be used and occupied by Lessee for design,
testing, manufacturing, assembly, sales, office, administration, research
and development and other legal uses ancillary thereto and for no other
purpose without the prior written consent of Lessor.
TERM 3. The term shall be for 5 (five) years, commencing on the 1st day
of March, 1997, (the "Commencement Date") and ending on the 28th
day of February, 2002.
RENTAL 4. Rent shall be payable to the Lessor without deduction or offset
at such place or places as may be designated from time to time by the
Lessor as follows:
Thirty Three Thousand One Hundred Eighty Two and 60/100ths
Dollars ($33,182.60) upon execution of this Lease representing rental
due March 1, 1997. $33,182.60 shall be due on April 1, 1997 and on
the 1st day of each and every succeeding month through August 1st
1997. Forty Thousand Eight Hundred Eighty Two and 60/100ths
($40,882.60) shall be due on September l, 1997 and on the 1st day of
each and every succeeding month through February 1, 1999. Forty
Two Thousand Seven Hundred Forty and 90/100ths Dollars
($42,740.90) shall be due on March 1, 1999 and on the 1st day of each
and every succeeding month through February 1, 2000. Forty Four
Thousand Five Hundred Ninety Nine and 20/100ths dollars
($44,599.20) shall be due on March 1, 2000 and on the 1st day of each
and every succeeding month through February 1, 2001. Forty Six
Thousand Four Hundred Fifty Seven and 50/100ths Dollars
($46,457.50) shall be due on March 1, 2001 and on the 1st day of each
and every succeeding month through February 1, 2002.
SECURITY DEPOSIT 5. Lessee has deposited with Lessor $46,457.50 as security for
the full and faithful performance of each and every term, provision,
covenant and condition of this Lease. In the event Lessee defaults in
respect of any of the terms, provisions, covenants or conditions of this
Lease, including, but not limited to the payment of rent, Lessor may
use, apply or retain the whole or any part of such security for the
payment of any rent in default or for any other sum which Lessor may
spend or be required to spend by reason of Lessee's default. Should
Lessee faithfully and fully comply with all of the terms, provisions,
covenants and conditions of this Lease, the security of any balance
thereof shall be returned to Lessee or, at the option of Lessor, to the last
assignee of Lessee's interest in this Lease at the expiration of the term
hereof. Lessee shall not be entitled to any interest on said security
deposit.
POSSESSION 6. If Lessor, for any reason whatsoever, cannot deliver
possession of the Premises to Lessee at the commencement of the said
term, as hereinbefore specified, this Lease shall not be void or voidable,
nor shall Lessor, or Lessor's agents, be liable to Lessee for any loss or
damage resulting therefrom; but in that event the commencement and
termination dates of the Lease and all other dates affected thereby shall
be revised to conform to the date of Lessor's delivery possession.(*)
(*) See Addendum attached
ACCEPTANCE OF 7. By entry hereunder, the Lessee accepts the Premises as being
PREMISES AND in good and satisfactory condition, unless within forty-five (45) days
CONSENT TO after such entry Lessee shall give Lessor written notice specifying in
SURRENDER reasonable detail the respects in which the Premises were not in
satisfactory condition.(*) The Lessee agrees on the last day of the term
hereof, or on sooner termination of this Lease, to surrender the
premises, together with all alterations, additions, and improvements
which may have been made in, to, or on the Premises by Lessor or
Lessee, unto Lessor in the same good condition as at Lessee's entry into
the Premises excepting for such wear and tear as would be normal for
the period of the Lessee's occupancy and
casualty. The Lessee, on or before the end of the term or sooner
termination of this Lease, shall remove all Lessee's personal
property and trade fixtures from the premises and all property not
so removed shall be deemed to be abandoned by the Lessee. If the Premises
be not surrendered at the end of the term or sooner termination of this
Lease, the Lessee shall indemnify the Lessor against loss or liability
resulting from delay by the Lessee in so surrendering the Premises including,
without limitation, any claims made by any succeeding tenant founded
on such delay. (*)
(*) See Addendum attached
USES PROHIBITED 8. Lessee shall not commit, or suffer to be committed, any waste
upon the Premises, or any nuisance, or other act or thing which may
disturb the quiet enjoyment of any other tenant in or around the
buildings in which the Premises may be located, or allow any sale by
auction upon the Premises, or allow the Premises to be used for any
improper, immoral, unlawful or objectionable purpose, or place any
loads upon the floor, walls, or roof which endanger the structure, or
place any harmful liquids in the drainage system of the building. No
waste materials or refuse shall be dumped upon or permitted to remain
upon any part of the Premises outside of the building proper. No
materials, supplies, equipment, finished products or semi-finished
products, raw materials or articles of any nature shall be stored upon or
permitted to remain on any portion of the Premises outside of the
buildings proper.
ALTERATIONS AND 9. The lessee shall make no alternations, additions or
ADDITIONS improvements to the Premises or any part thereof without first
obtaining the prior written consent of the Lessor, which consent shall
not be unreasonably withheld or delayed. The Lessor may impose as a
condition to the aforesaid consent such requirements as Lessor may
deem necessary in Lessor's sole discretion including without limitation
thereto, a right of approval of the contractor by whom the work is to be
performed which approval shall not be unreasonably withheld or
delayed, the times during which it is to be accomplished, and the
requirement that upon written request of Lessor prior to the expiration
or earlier termination of the Lease, Lessee will remove any or all
improvements or additions to the Premises installed at Lessee's
expense.(*) All such alterations, additions or improvements not
specified to be removed shall at the expiration of earlier termination of
the lease become the property of the Lessor and remain upon and be
surrendered with the Premises. All movable furniture, business and
trade fixtures, and machinery and equipment shall remain the property
of the Lessee and may be removed by the Lessee at any time during the
Lease term when Lessee is not in default hereunder. Items which are
not to be deemed as movable
furniture, business and trade fixtures, or machinery and equipment shall
include heating, lighting, electrical systems, air conditioning, permanent
partitioning, carpeting, or any other installation which has become
an integral part of the Premises.(**) The Lessee will at all times permit
notices of non- responsibility to be posted and to remain posted until the
completion of alterations or additions which have been approved by the
Lessor.
(*) & (**) SEE ADDENDUM ATTACHED
MAINTENANCE OF 10. Lessee shall, at Lessee's sole cost, keep and maintain the
PREMISES Premises and appurtenances and every part thereof, including but not
limited to, glazing, sidewalks, parking areas, including resealing the
parking lot approximately every three (3) years, plumbing, electrical
systems, heating and air conditioning installations, any store front, roof
covering - unless it is not feasible to repair the existing roof covering
and a new roof covering is required, and the interior of the Premises in
good order, condition, and repair. Lessor at Lessor's sole cost and
expense shall maintain the exterior of the walls, and structural portions
of the roof, foundations, walls, and floors except for any repairs caused
by the wrongful act of the Lessee and Lessee's agents. The Lessor will
replace the roof covering if repairs to said covering are no longer
economically feasible in the judgment of roofing experts, and provided
that said replacement is not made necessary by acts of the Lessee and
Lessee's agents. The Lessee shall water, maintain and replace, when
necessary, any shrubbery and landscaping provided by the Lessor on
the Premises. 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 Lessor's expense or to terminate this lease
because of Lessor's failure to keep the Premises in good order,
conditions or repair. (***)
(***) SEE ADDENDUM ATTACHED
INSURANCE 11. Lessee shall not use, or permit the Premises, or any part
thereof, to be used, for any purposes other than that for which the
Premises are hereby leased; and no use shall be made or permitted to be
made on the Premises, nor acts done, which will cause a cancellation of
any insurance policy covering said building, or any part thereof, nor
shall Lessee sell or permit to be kept, used or sold, in or about the
Premises, any article which may be prohibited by the standard form of
fire insurance policies. Lessee shall, at his sole cost and expense,
comply with any and all requirements, pertaining to the Premises, of
any insurance organization or company, necessary for the maintenance
of reasonable fire and public liability insurance, covering said building
and appurtenances.
11.1 Lessee shall, at its expense, obtain and keep in force during
the term of this Lease a policy of comprehensive public liability
insurance insuring Lessee, Lessor, and any third parties named by
Lessor which may include Lessor's lender, against liability for personal
injury, bodily injury, death and damage to property arising out of the
condition, use, occupancy or maintenance of the Premises. Such
insurance policy shall have a combined single limit for both bodily
injury and property damage in an amount not less than One Million
Dollars ($1,000,000.00). The limits of said insurance shall not limit the
liability of Lessee hereunder.
11.2 Lessee shall, at its expense, keep in force during the term of
this Lease, a policy of fire and property damage insurance in an "all
risk" form with a sprinkler leakage endorsement, insuring Lessee's
inventory, fixtures, equipment and personal property within the
Premises for the full replacement value thereof.
11.3 Lessor shall maintain a policy or policies of fire and property
damage insurance in an "all risk" form, with sprinkler and, at the option
of the Lessor, earthquake endorsements, covering loss or damage to the
building, including Lessee's leasehold improvements installed with the
written consent of the Lessor for the full replacement cost thereof.
11.4 Lessee shall pay to Lessor as additional rent, during the term
hereof, upon receipt of an invoice therefore, 100 percent of the
premiums for any insurance obtained by Lessor pursuant to 11.3 above.
Lessor may obtain such insurance for the Building separately, or
together with other buildings and improvements which Lessor elects to
insure together under blanket policies of insurance. In such case Lessee
shall be liable for only such portion of the premiums for such blanket
policies as are allocable to the Premises. It is understood and agreed
that Lessee's obligation under this paragraph shall be prorated to reflect
the Commencement Date and Expiration Date of the Lease. If Lessor
carries earthquake insurance, Lessee's obligation to reimburse Lessor
for premiums shall not exceed $20,000.00 annually.
11.5 Notwithstanding anything to the contrary in this Lease,
Lessee and Lessor each hereby waives any and all rights of recovery
against the other, or against the officers, directors, employees, partners,
agents and representatives of the other, for loss of or damage to the
property of the waiving party or the property of others under its control,
to the extent such loss or damage is insured against under any insurance
policy carried by Lessor or Lessee hereunder. Each party shall notify
their respective insurance carriers of this waiver.
ABANDONMENT 12. Lessee shall not abandon the Premises at any time during the
term; and if Lessee shall abandon, or surrender the premises, or be
dispossessed by process of law, or otherwise, any personal property
belonging to Lessee and left on the Premises shall be deemed to be
abandoned, at the option of Lessor.
FREE FROM LIENS 13. Lessee shall keep the Premises and the property in which the
premises are situated, free from any liens arising out of any work
performed, materials furnished, or obligations incurred by Lessee.
COMPLIANCE WITH 14. Lessee shall, at his sole cost and expense, comply with all of
GOVERNMENTAL the requirements of all Municipal, State and Federal authorities now in
REGULATIONS force, or which may hereafter be in force, pertaining to the Premises,
and shall faithfully observe in the use of the Premises all Municipal
ordinances and State and Federal statutes now in force or which may
hereafter be in force. The judgment of any court of competent
jurisdiction, or the admission of Lessee in any action or proceeding
against Lessee, whether Lessor be a party thereto or not, that Lessee has
violated any such ordinance or statute in the use of the Premises, shall
be conclusive of that fact as between Lessor and Lessee.(*) SEE
ADDENDUM ATTACHED.
INDEMNIFICATION 15. The Lessee, as a material part of the consideration to be
OF LESSOR AND rendered to the Lessor, hereby waives all claims against the Lessor for
LESSEE'S LIABILITY damages to goods, wares and merchandise, and all other personal
INSURANCE property in, upon, or about the Premises and for injuries to persons in or
about the Premises, from any cause arising at any time, excepting
claims arising from the Lessor's negligence and willful misconduct or
breach of this Lease and the Lessee will hold the Lessor exempt and
harmless from any damage or injury to any person, or to the goods,
wares and merchandise and all other personal property of any person,
arising from the use of the Premises by the Lessee, or from the failure
of the Lessee to keep the Premises in good condition and repair, as
herein provided.
ADVERTISEMENTS 16. Lessee will not place or permit to be placed, in, upon or about
AND SIGNS the Premises any unusual or extraordinary signs, or any signs not
approved by the city or other governing authority. The Lessee will not
place, or permit to be placed, upon the Premises, any signs,
advertisements or notices without the written consent of the Lessor first
had and obtained.(*) Any sign so placed on the Premises shall be so
placed upon the understanding and agreement that Lessee will remove
same at the termination of the tenancy herein created and repair any
damage or injury to the Premises caused thereby, and if not so removed
by Lessee then Lessor may have same so removed at
Lessee's expense.
(*) SEE ADDENDUM ATTACHED
UTILITIES 17. Lessee shall pay for all water, gas, heat, light, power,
telephone service and all other service supplied to the Premises.
ATTORNEY'S FEES 18. In case suit should be brought for the possession of the
Premises, for the recovery or any sum due hereunder, or because of the
breach of any other covenant herein, the losing party shall pay to the
prevailing party a reasonable attorney's fee, which shall be deemed to
have accrued on the commencement of such action and shall be
enforceable, whether or not such action is prosecuted to judgment.
DEFAULT 19. In the event of any breach of this Lease by the Lessee, or an
abandonment of the Premises by the Lessee, the Lessor has the option
of 1) removing all persons and property from the Premises and
repossessing the Premises in which case any of the Lessee's property
which the Lessor removes from the Premises may be stored in a public
warehouse or, elsewhere at the cost of, and for the account of Lessee, or
2) allowing the Lessee to remain in full possession and control of the
Premises. If the Lessor chooses to repossess the Premises, the Lease
will automatically terminate in accordance with provisions of the
California Civil Code, Section 1951.2. In the event of such termination
of the Lease, the Lessor may recover from the Lessee: 1) the worth at
the time of award of the unpaid rent which had been earned at the time
of termination including interest at 7% per annum; 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 including interest at 7% per annum; 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 his
obligations under the Lease or which in the ordinary course of things
would be likely to result therefrom. If the Lessor chooses not to
repossess the Premises, but allows the Lessee to remain in full
possession and control of the Premises, then in accordance with
provisions of the California Civil Code, Section 1951.4, the Lessor may
treat the Lease as being in full force and effect, and may collect from
the Lessee all rents as they become due through the termination date of
the lease as specified in the lease. For the purposes of this paragraph,
the following do not constitute a termination of Lessee's
right to possession:
a) Acts of maintenance or preservation or efforts to relet the property.
b) The appointment of a receiver on the initiative of the Lessor to
protect his interest under this Lease. (*)
(*) SEE ADDENDUM ATTACHED
LATE CHARGES 20. Lessee hereby acknowledges that late payment by Lessee to
Lessor of rent and other sums due hereunder will cause 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 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 Lessee shall not be received by Lessor or Lessor's designee
within ten (10) days after such amount shall be due, Lessee shall pay to
Lessor a late charge equal to seven and one half percent (7.5%) of such
overdue amount. The parties hereby agree that such late charge
represents a fair and reasonable estimate of the costs Lessor will incur
by reason of late payment by Lessee. Acceptance of such late charge
by Lessor shall in no event constitute a waiver of Lessee's default with
respect to such overdue amount, nor prevent Lessor from exercising
any of the other rights and remedies granted hereunder.
SURRENDER OF 21. The voluntary or other surrender of this Lease by Lessee, or a
LEASE mutual cancellation thereof, shall not work a merger, and shall, at the
option of Lessor, terminate all or any existing subleases or
subtenancies, or may, at the option of Lessor, operate as an assignment
to him of any or all such subleases or subtenancies.
TAXES 22. The Lessee shall be liable for all taxes levied against personal
property and trade or business fixtures. The Lessee also agrees to pay,
as additional rental, during the term of this Lease and any extensions
thereof, all real estate taxes plus the yearly installments of any special
assessments which are of record or which may become of record during
the term of this lease. If said taxes and assessments are assessed against
the entire building and building site, and this Lease does not cover the
entire building or building site, the taxes and assessment installments
allocated to the Premises shall be prorated on a square footage or other
equitable basis, as calculated by the Lessor. It is understood and agreed
that the Lessee's obligation under his paragraph will be pro-rated to
reflect the commencement and termination dates of this Lease. Real
estate taxes shall not include taxes assessed on the net income of Lessor
or any gift, franchise or inheritance taxes.
NOTICES 23. All notices to be given to Lessee may be given in writing
personally or by depositing the same in the United States mail, postage
prepaid, and addressed to Lessee at the said Premises, whether or not
Lessee has departed from, abandoned or vacated the Premises.
ENTRY BY LESSOR 24. Lessee shall permit Lessor and his agents to enter into and
upon the Premises at all reasonable times for the purpose of inspecting
the same or for the purpose of maintaining the building in which the
Premises are situated, or for the purpose of making repairs, alterations
or additions to any other portion of said building, including the erection
and maintenance of such scaffolding, canopies, fences and props as
may be required without any rebate of rent and without any liability to
Lessee for any loss of occupation or quiet enjoyment of the Premises
thereby occasioned; and shall permit Lessor and his agents, at any time
within ninety days prior to the expiration of this Lease, to place upon
the Premises any usual or ordinary "For Sale" or "To Lease" signs and
exhibit the Premises to prospective tenants at reasonable hours.
DESTRUCTION OF 25. In the event of a partial destruction of the Premises during the
PREMISES said term from any cause, Lessor shall forthwith repair the same,
provided such repairs can be made within one hundred twenty (120)
days under the laws and regulations of State, Federal, County or
Municipal authorities, but such partial destruction shall in no way annul
or void this Lease, except that Lessee shall be entitled to a
proportionate reduction of rent while such repairs are being made, such
proportionate reduction to be based upon the extent to which the
making of such repairs shall interfere with the business carried on by
Lessee in the Premises. If such repairs cannot be made in one hundred
twenty (120) days, Lessor may, at his option, make same within a
reasonable time, this Lease continuing in full force and effect and the
rent to be proportionately reduced as aforesaid in this paragraph
provided. In the event that Lessor does not so elect to make such
repairs which cannot be made in one hundred twenty (120) days, or
such repairs cannot be made under such laws and regulations, this
Lease may be terminated at the option of either party. In respect to any
partial destruction which Lessor is obligated to repair or may elect to
repair under the terms of this paragraph, the provision of Section 1932,
Subdivision 2, and of section 1933, Subdivision 4, of the Civil Code of
the State of California are waived by Lessee. In the event that the
building in which the Premises may be situated be destroyed to the
extent of not less than fifty percent (50%) of the replacement cost
thereof, Lessor may elect to terminate this Lease, whether the Premises
be injured or not. A total destruction of the building in which the
Premises may be situated shall terminate this Lease. In the event of any
dispute between Lessor and Lessee relative to the provisions of this
paragraph, they shall each select an arbitrator, the two arbitrators so
selected shall select a third arbitrator and the three arbitrators so
selected shall hear and determine the controversy and their decision
thereon shall be final and binding upon both Lessor and Lessee, who
shall bear the cost of such arbitration equally between them.
ASSIGNMENT AND 26. The Lessee shall not assign, transfer, or hypothecate the
SUBLETTING leasehold estate under this Lease, or any interest therein, and shall not
sublet the Premises, or any part thereof, or any right or privilege
appurtenant thereto, or suffer any other person or entity to occupy or
use the Premises, or any portion thereof, without, in each case, the prior
written consent of the Lessor. Lessor agrees not to unreasonably
withhold consent to sublet or assign. As a condition for granting its
consent to any subletting the Lessor may require the Lessee to agree to
pay to the Lessor, as additional rental, 50% of all rents received by the
Lessee from its Sublessee after deductions for brokerage commissions
which are in excess of the amount payable by the Lessee to the Lessor
hereunder. The Lessee shall, by thirty (30) days written notice, advise
the Lessor of its intent to sublet the Premises or any portion thereof for
any part of the term hereof. Within thirty (30) days after receipt of
Lessee's notice, Lessor shall either give approval or disapproval to
Lessee to sublease the portion of the Premises described in Lessee's
notice. If the Lessor approves a subletting, the Lessee may sublet
immediately after receipt of the Lessor's written approval. In the event
Lessee is allowed to assign, transfer or sublet the whole or any part of
the Premises, with the prior written consent of Lessor, no assignee,
transferee or sublessee shall assign or transfer this Lease, either in
whole or in part, or sublet the whole or any part of the Premises,
without also having obtained the prior written consent of the Lessor. A
consent of Lessor to one assignment, transfer, hypothecation,
subletting, occupation or use by any other person shall not release
Lessee from any of Lessee's obligations hereunder or be deemed to be a
consent to any subsequent similar or dissimilar assignment, transfer,
hypothecation, subletting, occupation or use by any other person. Any
such assignment, transfer, hypothecation, subletting, occupation or use
without such consent shall be void and shall constitute a breach of this
Lease by Lessee and shall, at the option of Lessor exercised by written
notice to Lessee, terminate this Lease. The leasehold estate under this
Lease shall not, nor shall any interest therein, be assignable for any
purpose by operation of law without the written consent of Lessor. As
a condition to its consent, Lessor may require Lessee to pay all expense
in connection with the assignment, and Lessor may require Lessee's
assignee or transferee (or other assignees or transferees) to assume in
writing all of the obligations under this Lease. (*)
(*) SEE ADDENDUM ATTACHED
CONDEMNATION 27. If any part of the premises shall be taken for any public or
quasi-public use, under any statute or by right of eminent domain or
private purchase in lieu thereof, and a part thereof remains which is
susceptible of occupation hereunder, this Lease shall, as to the part so
taken, terminate as of the date title shall vest in the condemnor or
purchaser, and the rent payable hereunder shall be adjusted so that the
Lessee shall be required to pay for the remainder of the term only such
portion of such rent as the value of the part remaining after such taking
bears to the value of the entire Premises prior to such taking; but in
such event Lessor shall have the option to terminate this Lease as of the
date when title to the part so taken vests in the condemnor or purchaser.
If all of the premises, or such part thereof be taken so that there does
not remain a portion susceptible for occupation hereunder, this Lease
shall thereupon terminate. If a part or all of the Premises be taken, all
compensation awarded upon such taking shall go to the Lessor and the
Lessee shall have no claim thereto, except that Lessee shall have the
right to receive that portion of the condemnation proceeds based upon
the value of all personal property that Lessee shall have the right to
remove from the Premises.
EFFECT OF 28. The term "Lessor" as used in this Lease, means only the owner
CONVEYANCE for the time being of the land and building containing the Premises, so
that, in the event of any sale of said land or building, or in the event of a
lease of said building, the Lessor shall be and hereby is entirely freed
and relieved of all covenants and obligations of the Lessor hereunder,
provided that Lessor transfers the security deposit to the transferee and
the transferee assumes in writing Lessor's obligations hereunder, and it
shall be deemed and construed, without further agreement between the
parties and the purchaser at any such sale, or the Lessee of the building,
that the purchaser or lessee of the building has assumed and agreed to
carry out any and all covenants and obligations of the Lessor hereunder.
If any security be given by the Lessee to secure the faithful
performance of all or any of the covenants of this Lease on the part of
the Lessee, the Lessor may transfer and deliver the security, as such, to
the purchaser at any such sale or the lessee of the building, and
thereupon the Lessor shall be discharged from any further liability In
reference thereto.
SUBORDINATION 29. Lessee agrees that this Lease may, at the option of Lessor, be
subject and subordinate to any mortgage, deed of trust or other
instrument of security which has been or shall be placed on the land and
building or land or building of which the Premises form a part, and thus
subordination is hereby made effective without any further act of
Lessee. The Lessee shall, at any time hereinafter, on demand, execute
any instruments, releases, or other documents that may be required by
any mortgagee, mortgagor, or trustor or beneficiary under any deed of
trust for the purpose of subjecting and subordinating this Lease to the
lien of any such mortgage, deed of trust or other instrument of security,
and the failure of the Lessee to execute any such instruments, releases
or documents, shall constitute a default hereunder. Lessee shall not be
required to execute any documents subordinating this Lease unless the
holder of any such Lien executes a Non-Disturbance Agreement in
favor of Lessee.
WAIVER 30. The waiver by Lessor of any breach of any term, covenant or
condition, herein contained shall not be deemed to be a waiver of such
term, covenant or condition or any subsequent breach of the same or
any other term, covenant or condition therein contained. The
subsequent acceptance of rent hereunder by Lessor shall not be deemed
to be a waiver of any preceding breach by Lessee of any term, covenant
or condition of this Lease, other than the failure of Lessee to pay the
particular rental so accepted, regardless of Lessor's knowledge of such
preceding breach at the time or acceptance of such rent.
HOLDING OVER 31. Any holding over after the expiration of the said term, with the
consent of Lessor, shall be construed to be a tenancy from month to
month, at a rental to be negotiated by Lessor and Lessee prior to the
expiration of said term, and shall otherwise be on the terms and
conditions herein specified, so far as applicable.
SUCCESSORS AND 32. The covenants and conditions herein contained shall, subject
ASSIGNS to the provisions as to assignment, apply to and bind the heirs,
successors, executors, administrators and assigns of all of the parties
hereto; and all of the parties hereto shall be jointly and severally liable
hereunder.
TIME 33. Time is of the essence of this Lease.
MARGINAL 34. The marginal headings or titles to the paragraphs of this
CAPTIONS Lease are not a part of this Lease and shall have no effect upon the
construction or interpretation of any part thereof. This instrument
contains all of the agreements and conditions made between the
parties hereto and may not be modified orally or in any other manner
than by an agreement in writing signed by all of the parties hereto or
their respective successors in interest.
PARAGRAPHS #35 AND #36 AND ADDENDUM ATTACHED
HERETO ARE HEREBY MADE A PART OF THIS LEASE.
THIS LEASE HAS BEEN PREPARED FOR SUBMISSION TO
YOUR ATTORNEY WHO WILL REVIEW THE DOCUMENT
AND ASSIST YOU TO DETERMINE WHETHER YOUR LEGAL
RIGHTS ARE ADEQUATELY PROTECTED. RENAULT &
HANDLEY IS NOT AUTHORIZED TO GIVE LEGAL AND TAX
ADVICE. NO REPRESENTATION OR RECOMMENDATION IS
MADE BY RENAULT & HANDLEY OR ITS AGENTS OR
EMPLOYEES AS TO THE LEGAL SUFFICIENCY, LEGAL
EFFECT OR TAX CONSEQUENCES OF THIS DOCUMENT OR
ANY TRANSACTION RELATING THERETO. THESE ARE
QUESTIONS FOR YOUR ATTORNEY WITH WHOM YOU
SHOULD CONSULT BEFORE SIGNING THIS DOCUMENT.
IN WITNESS WHEREOF, Lessor and Lessee have executed these presents, the day
and year first above written.
LESSOR LESSEE
ZAPPETTINI INVESTMENT CO. IRIDEX CORPORATION
/s/GEORGE O. MCKEE /s/THEODORE A. BOUTACOFF
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ADDITIONAL PARAGRAPHS
These additional paragraphs are hereby made apart of that certain Lease dated
December 6, 1996 by and between Zappettini Investment Co., Lessor, and Iridex
Corporation, Lessee, covering premises at 1212 Terra Bella, Mountain View,
California.
35. Options to Renew. Lessor grants to Lessee two successive two year
options to renew this Lease. The first two year option shall commence, if at
all, on the termination date of this Lease and will terminate on February 29,
2004. The second option period shall commence, if at all, on March 1, 2004
providing that the first option has been exercised and shall terminate on
February 28, 2006. In no event can the 2nd option to renew be exercised unless
the 1st option to renew has been exercised. The option terms shall be governed
by all the terms and conditions as are contained in the Lease excepting that
there shall be no additional options and also excepting the basic monthly
rental. The basic monthly rent for each of the option terms shall be negotiated
by Lessor and Lessee at the time each option is exercised and shall be based on
98 percent of the then market rent for the Premises based on similar space
within a 1 mile radius of the subject property. In no event however, shall the
monthly rental for the first option term be less than $46,457.50 nor shall the
rental amount for the 2nd option term be less than that amount being paid for
the 1st option term. In order to exercise each option, the Lessee must give the
Lessor written notice a minimum of 90 days and a maximum of 120 days prior to
the termination of the immediately preceding term. At the option of the Lessor,
any of the above options to renew may be declared null and void if the Lessee is
in default under any of the terms or conditions of the Lease when said option is
exercised.
36. Lessor will indemnify, defend and hold Lessee harmless from and
against all costs of response, corrective action, remedial action, claims,
demands, losses and liabilities arising from any pre-existing environmental
contamination which may have occurred prior to the Lessee taking possession of
the Premises.
Lessee will only be responsible for contamination of the Premises or the soils
or ground water thereon or thereunder in violation of Hazardous Materials Laws,
that is caused by Lessee or Lessee's agents, contractors or invitees during the
term as may be extended. All hazardous materials and toxic wastes that Lessee
brings on the Premises shall be stored according to Hazardous Materials Law.
All hazardous materials and toxic wastes that Lessee brings on the site shall be
stored according to all local, state and national government regulations.
Hazardous Materials shall be defined as those substances that are recognized as
posing a risk of injury to health or safety by the Santa Clara Fire Department,
the Santa Clara County Health Department, the Regional Water Quality Control
Board, the State of California or the Federal Government.
For purposes of this Lease, "Hazardous Materials Law" shall mean all local,
state and federal laws, statutes, ordinances, rules, regulations, judgements,
injunctions, stipulations, decrees, orders, permits, approvals, treaties or
protocols now or hereafter enacted, issued or promulgated by any governmental
authority which relate to any Hazardous Material or the use, handling,
transportation,
production, disposal, discharge, release, emission, sale or storage of, or the
exposure of any person to, a Hazardous Material.
Lessor hereby releases Lessee from and waives all claims, costs, losses, damages
and liabilities ("Claims") against Lessee, arising out of or in connection with
any Hazardous Material present at any time on, in, under or about the Premises
except to the extent that any such Claims results from the release, disposal,
emission or discharge of Hazardous Materials on or about the Premises by Lessee
by its agent, contractors or employees. In this regard, Lessor hereby waives
the benefits of California Civil Code Section 1542 which provides as follows: "A
general release does not extend to claims which the creditor does not know or
suspect to exist in his favor at the time of executing the release which if
known by him must have materially have affected his settlement with debtor."
ADDENDUM
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ADDED TO THE END OF PARAGRAPH 6: *Notwithstanding anything to the contrary in
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this Lease, (i) if possession of the Premises has not been delivered to Lessee
for any reason whatsoever on or before March 1, 1997, Lessee shall not be
obligated to pay rent for that period of time after the Rent Commencement Date
equal to the number of days that possession of the Premises is delayed beyond
March 1, 1997, and (ii) if possession of the Premises is not delivered to Lessee
for any reason whatsoever on or before April 30, 1997 then Lessee may terminate
this Lease by written notice to Lessor, whereupon any monies previously paid to
Lessor by Lessee shall be reimbursed to Lessee and neither party shall have any
further obligation to each other.
ADDITION TO PARAGRAPH 7:
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*If Lessee notifies Lessor within such 45 day period that there are structural
defects in the Premises, Lessor shall, at its cost, repair such structural
defects.
ADDITIONS TO PARAGRAPH 9:
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*Upon request, Lessor shall advise Lessee in writing whether it reserves the
right to require Lessee to remove any such alterations, additions or
improvements from the Premises upon expiration or sooner termination of this
Lease. If Lessor elects not to reserve such right, then Lessee shall not be
required to remove the initial tenant improvements which Lessee intends to
construct in the Premises.
** ;provided however, that Lessee shall have the right to remove at any time any
special purpose improvements installed in the Premises by Lessee at Lessee's
cost including, without limitation, supplementary heating, ventilation and air
conditioning systems and chillers for laboratory bench heat exchange. Lessee
shall, upon removal of such special purpose improvements, return the Promises to
its condition prior to their installation including all patching, cleaning and
repainting if necessary.
ADDITION TO PARAGRAPH 10:
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***In the event of fire or other casualty, paragraph 25, rather than this
paragraph 10, shall govern the obligations of the parties with respect to the
repair, maintenance and replacement of the Premises. Notwithstanding anything
to the contrary in this Lease, Lessor, at its cost and expense, shall make any
repair, maintenance or improvement (i) required as a result of a construction
defect in the Premises as of the Commencement Date, and (ii) for which Lessor
has a right of reimbursement from others (including, without limitation,
insurers). Lessee shall have the benefit of any construction and/or equipment
warranties existing in favor of Lessor that would assist Lessee in discharging
Its obligations under this Lease.
1. If Lessee is required to replace an HVAC unit, plumbing line, main
electrical panel or generator, it may instead elect to require Lessor to perform
such Capital Repair.
2. The cost of any of the above replacements performed by Landlord,
which is reimbursable by Lessee, shall be amortized over the useful life of the
Capital Repair determined in accordance with generally accepted accounting
principles with interest on the unamortized balance at the then prevailing
market rate Lessor would pay if it borrowed funds to replace these units from an
institutional lender. Lessor shall inform Lessee of the monthly amortization
payment required to so amortize such costs, and shall also provide Lessee with
the information upon which such determination is made. Tenant shall pay such
amortized payment for each month during the term of the Lease after such
improvement is completed until the first to occur of (i) the resetting of rent
or the end of the term over which such costs were amortized. Such amortized
amount shall be due at the same time that rent is due.
3. The cost of any Capital Repair performed by Lessor shall be shared
by Lessee and Lessor as follows. Upon completion of the Capital Repair, Lessor
shall notify Lessee of the total cost incurred by Lessor to complete the work
and shall deliver to Lessee documentary support for such costs and lien waivers
(or lien release bonds) for such work. Lessee shall be responsible for that
portion of the cost incurred by Lessor for the Capital Repair times a fraction,
the numerator of which shall be equal to the lesser of the months in the Lease
term (a) until the resetting of monthly rent for the Premises based upon the
fair market value of the Premises as so repaired or improved, or (b) the useful
life of the capital repairs and the denominator shall be the months on the
useful life of the capital repair.
4. For the purposes of this paragraph, a Capital Repair shall not
include the resealing of the parking lot.
ADDITION TO PARAGRAPH 16:
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*which consent shall not be unreasonably withheld or delayed. Lessee shall have
the right to place signs displaying the name and logo of Lessee in the present
sign locations and on the entry doorways.
ADDITION TO PARAGRAPH 19:
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*Notwithstanding anything to the contrary in this Lease, (i) Lessee shall not be
deemed to be in default or breach of this Lease on account of Lessee's failure
to pay money to Lessor unless Lessee's failure to pay continues for ten (10)
days after the first day of each month, and (ii) Lessee shall not be in default
or breach of this Lease for failing to perform any covenant of this Lease (other
than a covenant to pay money to Lessor) unless Lessee's failure to perform such
covenant continues for a period of thirty (30) days after Lessee's receipt of
written notice of such failure, or such longer time as may be reasonably
required to cure the default so long as Lessee commences to cure such failure
within thirty (30) day period and diligently prosecutes such cure to completion.
ADDITION TO PARAGRAPH 24:
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Lessor shall provide to Lessee twenty-four (24) hours' notice prior to its entry
onto the Premises (except in the event of an emergency) and such entry shall be
subject to Lessee's right to accompany Lessor at all times and Lessee's
reasonable security precautions. Lessor shall ensure that reasonable
access to the Premises is available to Lessee at all times and shall use
reasonable efforts to mitigate any interference with Lessee's business caused by
Lessor's entry and work.
ADDITION TO PARAGRAPH 25:
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Landlord shall have the additional right to terminate the Lease in the
event of a casualty which is not required hereunder to be covered by insurance
or where insurance proceeds are not available to pay at least eighty percent
(80%) of the replacement cost of the Building. Tenant shall have the additional
right to terminate the Lease if restoration or repair of the Building would take
longer than one hundred twenty (120) days.
ADDITION TO PARAGRAPH 26:
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*arising after the effective date of the transfer in question. Notwithstanding
anything to the contrary in this Lease, Lessee may, without Lessor's prior
written consent and without being subject to the terms of this paragraph 26
including, without limitation, Lessor's right to recapture the Premises and
participate in assignment and subletting proceeds, sublease the Premises or
assign the Lease to: (i) a corporation controlling, controlled by or under
common control with Lessee; (ii) a successor corporation related to Tenant by
merger, consolidation or nonbankruptcy reorganization; or (iii) a purchaser of
substantially all of the assets of Lessee.
ADDITION TO PARAGRAPH 14:
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If Lessee is required to make any capital repairs to this paragraph 14 then the
provisions of paragraph 10 with regard to capital repairs shall apply. The
paragraph 14 shall not apply to any requirement regarding any Hazardous
Material.
[LETTERHEAD OF IRIDEX CORPORATION]
May 7, 1997
Mr. George McKee
Zappettini Investment Co.
2500 El Camino Real
Palo Alto, CA 94306
Re: 1212 Terra Bella, Mountain View; waiver of part of paragraph 26 of the
Lease
Dear George:
Per our phone conversation on Wednesday, April 30, you agreed to waive the
second sentence of paragraph 26 of the Lease (between Zappettini Investment Co.
and Iridex Corporation, dated the 6th day of December, 1996) and not require
Iridex Corporation to make any payments to Zappettini Investment Co. on account
of rents collected from a subtenant. The second sentence of Paragraph 26
states:
"As a condition for granting its consent to any subletting, the Lessor
may require the Lessee to agree to pay to Lessor, as additional
rental, 50% of all rents received by the Lessee from its Sublessee
after deductions for brokerage commissions which are in excess of the
amount payable by the Lessee to the Lessor hereunder."
Please document your waiver of this sentence from the aforementioned Lease
by signing below* and returning a signed original of this letter to our offices
at 340 Pioneer Way, Mountain View CA 94041.
Thank you for your attention to this matter.
Yours sincerely,
/s/ROBERT KAMENSKI
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Robert Kamenski
Vice President of Finance and Administration
*Agreement to Waiver:
/s/GEORGE O. MCKEE
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George McKee
General Partner
Zappettini Investment Co.
November 26, 2001
EXERCISE OF OPTION
Re: Paragraph 35 (Additional Paragraphs) of that certain Lease dated
December 6th 1996 by and between Zappettini Investment Co., Lessor, Iridex
Corporation, Lessee, for an approximately 37,166 square foot industrial building
commonly referred to as 1212 Terra Bella Avenue, Mountain View, California.
Lessee hereby exercises its option to renew the above described Lease for
an additional two (2) year term commencing March 1st 2002 and terminating on
February 29th 2004. All the terms and conditions of the original Lease shall be
in full force and effect excepting the rental amount which shall be as follows:
March 1, 2002 through February 28, 2003. . . . Fifty Five Thousand Seven Hundred Forty
Nine and No/100ths Dollars ($55,749.00).
March 1, 2003 through February 29th 2004 . . . Fifty Seven Thousand Six Hundred Seven and
30/100ths Dollars ($57,607.30).
LESSOR: LESSEE:
ZAPPETTINI INVESTMENT CO. IRIDEX CORPORATION
/s/GEORGE O. MCKEE /s/ROBERT KAMENSKI
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/s/ALLEN M. KARING
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Date: November 26, 2001 Date: November 26, 2001
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September 15, 2003
LEASE AMENDENT AND EXTENSION
Re: That certain Lease for 1212 Terra Bella Avenue, Mountain View, California
dated December 6th, 1996 by and between Zappettini Investment Co., Lessor and
Iridex Corporation, Lessee, as amended by the Letter dated May 7, 1997 regarding
Paragraph 26, and that certain Exercise of Option dated November 26th 2001.
The above referenced Lease and Exercise of Option is hereby amended and extended
as follows:
Paragraph 3 Term. The termination dated shall be February 28th 2009
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rather than February 29th 2004.
Paragraph 4 Rent. Commencing October 1st 2003 the monthly rental
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shall be as follows:
October 1, 2003 - February 28, 2005 $31,591.10/mo net
March 1, 2005 - February 28, 2006 $32,633.60/mo net
March 1, 2006 - February 28, 2007 $33,710.51/mo net
March 1, 2007 - February 28, 2008 $34,822.96/mo net
March 1, 2008 - February 28, 2009 $35,972.12/mo net
Paragraph 10
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Maintenance
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Of Premises. Lessor shall, at its sole cost, be responsible for the
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maintenance of the roof, A/C system, landscaping and
parking lot. All the other provisions of this Paragraph
10 in the Lease shall be in full force and effect.
In consideration of the above, Lessee agrees to pay to
Lessor the additional sum of $2,000.00/mo.
Paragraph 35
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Option to Renew. The option paragraph shall read as follows:
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Lessor grants to Lessee a five (5) year option to renew
this lease. The option period shall commence on the
termination date of this lease and terminate on
February 28th 2014. The option terms shall be governed
by all the terms and conditions as are contained in the
above described lease excepting that there shall be no
additional options and also excepting the basic monthly
rental. The basic monthly rental amount for the option
term shall be negotiated
between Lessor and Lessee at the time the option is
exercised and shall be based on 98% of the then market
rent for the premises based on similar space within a
one mile radius of the subject property. In no event,
however, shall the monthly rental for the option term
be less than $35,972.12. In order to exercise the
option, the Lessee must give Lessor written notice a
minimum of 90 days and a maximum of 120 days prior to
the termination of the above described Lease Addendum
and Extension period. At the option of the Lessor, any
of the above terms to renew may be declared null and
void if the Lessee is in default under any of the terms
or conditions of the Lease when said option was
exercised.
Except as amended hereby, all terms and conditions of the Lease shall remain in
full force and effect.
LESSOR: ZAPPETTINI INVESTMENT CO. LESSEE: IRIDEX CORPORATION
By: /s/ GEORGE O. MCKEE By: /s/ A. LARRY TANNENBAUM
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Its: GENERAL MANAGING PARTNER Its: CFO
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Date: September 29, 2003 Date: September 26, 2003
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By: /s/ ALLEN M. KARING
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Its:
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Date: September 29, 2003
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