Exhibit 10.12
[Net Lease]
LEASE AGREEMENT
THIS LEASE AGREEMENT is made this 13th day of July, 2000, between
ProLogis Trust, a Maryland real estate investment trust ("Landlord"), and the
Tenant named below.
Tenant: Kinetics Fluid Systems, a California corporation
Tenant's representative, Xxxxx Xxxxxx
address, and phone no.: 000 X Xxxxxx Xxx
Xxxxxx, XX 00000
Phone: 000.000.0000
FAX: 000.000.0000
Premises: That portion of the building commonly known as
Suite _____, containing approximately 72,000
rentable square feet, as determined by Landlord,
as shown on Exhibit A.
Project: Corridor Park Corporate Center
Building: Corridor Park Corporate Center, Building #11
Xxxxxx Drive, Austin, Texas 78754
Tenant's Proportionate Share ______%
of Project:
Tenant's Proportionate Share _______%
of Building:
Lease Term: Beginning on the Commencement Date and ending on
the last day of the 84th full calendar month
thereafter.
Commencement Date: February 1, 2001
Initial Monthly Base Rent: $28,800.00
Initial Estimated Monthly 1. Common Area Changes: $1,996.80
Operating Expense Payments: 2. Taxes $6,712.20
(estimates only and subject 3. Insurance $ 210.00
to adjustment to actual 4. Management Fee $1,131.58
---------
costs and expenses according
to the provisions of this
Lease)
$10,050.58
----------
Initial Estimated Monthly
Operating Expense Payments: $38,850.58
Security Deposit: None.
Broker: Xxx Xxxx
Addenda: Addendum One-Base Rent Adjustments, Addendum
Two-Construction (Allowance Amortized); Addendum
Three-One Renewal Option at Market; Addendum
Four-Move-Out Conditions; Addendum 5-Sign
Specifications; Addendum 6-HVAC Maintenance
Agreement; Addendum 7-Special Provisions; Exhibit
A-Site Plan.
1. GRANTING CLAUSE. In consideration of the obligation of Tenant to pay
rent as herein provided and in consideration of the other terms, covenants, and
conditions hereof, Landlord leases to Tenant, and Tenant takes from Landlord,
the Premises, to have and to hold for the Lease Term, subject to the terms,
covenants and conditions of this Lease.
2. ACCEPTANCE OF PREMISES. Tenant shall accept the Premises in its
condition as of the Commencement Date, subject to all applicable laws,
ordinances, regulations, covenants and restrictions. Landlord has made no
representation or warranty as to the suitability of the Premises for the conduct
of Tenant's business, and Tenant waives any implied warranty that the Premises
are suitable for Tenant's intended purposes. Except as provided in Paragraph 10,
in no event shall Landlord have any obligation for any defects in the Premises
or any limitation on its use. The taking of possession of the Premises shall be
conclusive evidence that Tenant accepts the Premises and that the Premises were
in good condition at the time possession was taken except for items that are
Landlord's responsibility under Paragraph 10 and any punchlist items agreed to
in writing by Landlord and Tenant. Landlord represents that as of the
Commencement Date, all building and mechanical systems servicing the Premises
shall be in good working order, including, without limitation, the heating,
ventilation and air conditioning system.
3. USE. The Premises shall be used only for the purpose of receiving,
storing, shipping and selling (but limited to wholesale sales) products,
materials and merchandise made and/or distributed by Tenant and for such other
lawful purposes as may be incidental thereto; provided, however, with Landlord's
prior written consent, Tenant may also use the Premises for light manufacturing.
Tenant shall not conduct or give notice of any auction, liquidation, or going
out of business sale on the Premises. Tenant will use the Premises in a careful,
safe and proper manner and will not commit waste, overload the floor or
structure of the Premises or subject the Premises to use that would damage the
Premises. Tenant shall not permit any objectionable or unpleasant odors, smoke,
dust, gas, noise, or vibrations to emanate from the Premises, or take any other
action that would constitute a nuisance or would disturb, unreasonably interfere
with, or endanger Landlord or any tenants of the Project. Outside storage,
including without limitation, storage of trucks and other vehicles, is
prohibited without Landlord's prior written consent. Tenant, at its sole
expense, shall use and occupy the Premises in compliance with all laws,
including, without limitation, the Americans With Disabilities Act, orders,
judgments, ordinances, regulations, codes, directives, permits, licenses,
covenants and restrictions now or hereafter applicable to the Premises
(collectively, "Legal Requirements"). The Premises shall not be used as a place
of public accommodation under the Americans With Disabilities Act or similar
state statutes or local ordinances or any regulations promulgated thereunder,
all as may be amended from time to time. Tenant shall, at its expense, make any
alterations or modifications, within or without the Premises, that are required
by Legal Requirements related to Tenant's use of the Premises. Tenant will not
use or permit the Premises to be used for any purpose or in any manner that
would void Tenant's or Landlord's insurance, increase the insurance risk, or
cause the disallowance of any sprinkler credits. If any increase in the cost of
any insurance on the Premises or the Project is caused by Tenant's use or
occupation of the Premises, or because Tenant vacates the Premises, then Tenant
shall pay the amount of such increase to Landlord. Any occupation of the
Premises by Tenant prior to the Commencement Date shall be subject to all
obligations of Tenant under this Lease.
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Tenant's obligations hereunder shall relate only to the interior of the
Premises and any changes to the Project that relate solely to the specific
manner of use of the Premises by Tenant; and Landlord shall make all other
additions to or modifications of the Project required from time to time by Legal
Requirements. The cost of such additions or modifications made by Landlord shall
be included in Operating Expenses pursuant to Paragraph 6 of this Lease, except
for those additions or modifications which are Landlord's sole responsibility
pursuant to Paragraph 10 of this Lease.
4. BASE RENT. Tenant shall pay Base Rent in the amount set forth above.
The first month's Base Rent and the fast monthly installment of estimated
Operating Expenses (as hereafter defined) shall be due and payable on the date
hereof, and Tenant promises to pay to Landlord in advance, without demand,
deduction or set-off, monthly installments of Base Rent on or before the first
day of each calendar month succeeding the Commencement Date. Payments of Base
Rent for any fractional calendar month shall be prorated. All payments required
to be made by Tenant to Landlord hereunder shall be payable at such address as
Landlord may specify from time to time by written notice delivered in accordance
herewith. The obligation of Tenant to pay Base Rent and other sums to Landlord
and the obligations of Landlord under this Lease are independent obligations.
Tenant shall have no right at any time to xxxxx, reduce, or set-off any rent due
hereunder except as may be expressly provided in this Lease. If Tenant is
delinquent in any monthly installment of Base Rent or of estimated Operating
Expenses for more than 5 days, Tenant shall pay to Landlord on demand a late
charge equal to 5 percent of such delinquent sum. The provision for such late
charge shall be in addition to all of Landlord's other rights and remedies
hereunder or at law and shall not be construed as a penalty.
5. SECURITY DEPOSIT. Intentionally deleted.
6. OPERATING EXPENSE PAYMENTS. During each month of the Lease Term, on
the same date that Base Rent is due, Tenant shall pay Landlord an amount equal
to 1/12 of the annual cost, as estimated by Landlord from time to time, of
Tenant's Proportionate Share (hereinafter defined) of Operating Expenses for the
Project. Payments thereof for any fractional calendar month shall be prorated.
The term "Operating Expenses" means all costs and expenses incurred by Landlord
with respect to the ownership, maintenance, and operation of the Project
including, but not limited to costs of: Taxes (hereinafter defined) and fees
payable to tax consultants and attorneys for consultation and contesting taxes;
insurance; utilities; maintenance, repair and replacement of all portions of the
Project, including without limitation, paving and parking areas, roads, roofs,
alleys, and driveways, mowing, landscaping, exterior painting, utility lines,
heating, ventilation and air conditioning systems, lighting, electrical systems
and other mechanical and building systems; amounts paid to contractors and
subcontractors for work or services performed in connection with any of the
foregoing; charges or assessments of any association to which the Project is
subject; property management fees payable to a property manager, including any
affiliate of Landlord, or if there is no property manager, an administration fee
of 15 percent of Operating Expenses payable to Landlord; security services, if
any; trash collection, sweeping and removal; and additions or alterations made
by Landlord to the Project or the Building in order to comply with Legal
Requirements (other than those expressly required herein to be made by Tenant)
or that are appropriate to the continued operation of the Project or the
Building as a bulk warehouse facility in the market area, provided
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that the cost of additions or alterations that are required to be capitalized
for federal income tax purposes shall be amortized on a straight line basis over
a period equal to the lesser of the useful life thereof for federal income tax
purposes or 10 years. Operating Expenses do not include costs, expenses,
depreciation or amortization for capital repairs and capital replacements
required to be made by Landlord under Paragraph 10 of this Lease; debt service
under mortgages or ground rent under ground leases; costs of restoration to the
extent of net insurance proceeds received by Landlord with respect thereto;
leasing commissions; the costs of renovating space for tenants; costs incurred
in connection with the construction or remodeling of the Project or any other
improvements now or hereafter located thereon, correction of defects in design
or construction; interest, principal, or other payments on account of any
indebtedness that is secured by any incumbrance on any part of the Project, or
rental or other payments under any ground lease, or any payments in the nature
of returns on or of equity of any kind; costs of selling, syndicating,
financing, mortgaging or hypothecating any part of or interest in the Project;
taxes on the income of Landlord or Landlord's franchise taxes (unless any of
said taxes are hereafter instituted by applicable taxing authorities in
substitution for ad valorem real property taxes); depreciation, reserves of any
kind, including replacement reserves and reserves for bad debt or lost rent, or
any other charge not involving the payment of money to third parties; Landlord's
overhead costs, including equipment, supplies, accounting and legal fees, rent
and other occupancy costs or any other costs associated with the operation or
internal organization and function of Landlord as a business entity (but this
provision does not prevent the payment of a management fee to Landlord as
provided in this Paragraph 6); fees or other costs for professional services
provided by space planners, architects, engineers, and other similar
professional consultants, real estate commissions, and marketing and advertising
expenses; costs of defending or prosecuting litigation with any party, unless a
favorable judgment would reduce or avoid an increase in Operating Expenses, or
unless the litigation is to enforce compliance with Rules and Regulations of the
Project, or other standards or requirements for the general benefit of the
tenants in the Project; costs incurred as a result of Landlord's violation of
any lease, contract, law or ordinance, including fines and penalties; late
charges, interest or penalties of any kind for late or other improper payment of
any public or private obligation, including ad valorem taxes; costs of removing
Hazardous Materials or of correcting any other conditions in order to comply
with any environmental law or ordinance (but this exclusion shall not constitute
a release by Landlord of Tenant for any such costs for which Tenant is liable
pursuant to Paragraph 30 of this Lease); costs for which Landlord is reimbursed
from any other source; costs related to any building or land not included in the
Project, including any allocation of costs incurred on a shared basis, such as
centralized accounting costs, unless the allocation is made on a reasonable and
consistent basis that fairly reflects the share of costs actually attributable
to the Project; and the part of any costs or other sum paid to any affiliate of
Landlord that may exceed the fair market price or cost generally payable for
substantially similar goods or services in the area of the Project.
Landlord shall provide Tenant within 90 days following the final day of
the calendar year Landlord's itemized year-end common area maintenance
reconciliation reports. Upon Tenant's written request (which request shall be
limited to once in a calendar year), Landlord shall provide photocopies of
invoices, bills and other verification to substantiate such costs. If Tenant's
total payments of Operating Expenses for any year are less than Tenant's
Proportionate Share of actual Operating Expenses for such year, then Tenant
shall pay the difference to Landlord within 30 days after demand, and if more,
then Landlord shall retain such excess and credit it against Tenant's next
payments. For purposes of calculating Tenant's Proportionate Share of Operating
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Expenses, a year shall mean a calendar year except the first year, which shall
begin on the Commencement Date, and the last year, which shall end on the
expiration of this Lease. With respect-to Operating Expenses which Landlord
allocates to the entire Project, Tenant's "Proportionate Share" shall be the
percentage set forth on the first page of this Lease as Tenant's Proportionate
Share of the Project as reasonably adjusted by Landlord in the future for
changes in the physical size of the Premises or the Project; and, with respect
to Operating Expenses which Landlord allocates only to the Building, Tenant's
"Proportionate Share" shall be the percentage set forth on the first page of
this Lease as Tenant's Proportionate Share of the Building as reasonably
adjusted by Landlord in the future for changes in the physical size of the
Premises or the Building. Landlord may equitably increase Tenant's Proportionate
Share for any item of expense or cost reimbursable by Tenant that relates to a
repair, replacement, or service that benefits only the Premises or only a
portion of the Project or Building that includes the Premises or that varies
with occupancy or use. The estimated Operating Expenses for the Premises set
forth on the first page of this Lease are only estimates, and Landlord makes no
guaranty or warranty that such estimates will be accurate.
7. UTILITIES. Tenant shall pay for all water, gas, electricity, heat,
light, power, telephone, sewer, sprinkler services, refuse and trash collection,
and other utilities and services used on the Premises, all maintenance charges
for utilities, and any storm sewer charges or other similar charges for
utilities imposed by any governmental entity or utility provider, together with
any taxes, penalties, surcharges or the like pertaining to Tenant's use of the
Premises. Landlord may cause at Tenant's expense any utilities to be separately
metered or charged directly to Tenant by the provider. Tenant shall pay its
share of all charges for jointly metered utilities based upon consumption, as
reasonably determined by Landlord. No interruption or failure of utilities shall
result in the termination of this Lease or the abatement of rent. Tenant agrees
to limit use of water and sewer for normal restroom use.
8. TAXES. Landlord shall pay all taxes, assessments and governmental
charges (collectively referred to as "Taxes") that accrue against the Project
during the Lease Term, which shall be included as part of the Operating Expenses
charged to Tenant. Landlord may contest by appropriate legal proceedings the
amount, validity, or application of any Taxes or liens thereof. All capital
levies or other taxes assessed or imposed on Landlord upon the rents payable to
Landlord under this Lease and any franchise tax, any excise, transaction, sales
or privilege tax, assessment, levy or charge measured by or based, in whole or
in part, upon such rents from the Premises and/or the Project or any portion
thereof shall be paid by Tenant to Landlord monthly in estimated installments or
upon demand, at the option of Landlord, as additional rent; provided, however,
in no event shall Tenant be liable for any net income taxes imposed on Landlord
unless such net income taxes are in substitution for any Taxes payable
hereunder. If any such tax or excise is levied or assessed directly against
Tenant, then Tenant shall be responsible for and shall pay the same at such
times and in such manner as the taxing authority shall require. Tenant shall be
liable for all taxes levied or assessed against any personal property or
fixtures placed in the Premises, whether levied or assessed against Landlord or
Tenant.
9. INSURANCE. Landlord shall maintain all risk property insurance
covering the full replacement cost of the Building. Landlord may, but is not
obligated to, maintain such other insurance and additional coverages as it may
deem necessary, including, but not limited to, commercial liability insurance
and rent loss insurance. All such insurance shall be included as
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part of the Operating Expenses charged to Tenant. The Project or Building may be
included in a blanket policy (in which case the cost of such insurance allocable
to the Project or Building will be determined by Landlord based upon the
insurer's cost calculations). Tenant shall also reimburse Landlord for any
increased premiums or additional insurance which Landlord reasonably deems
necessary as a result of Tenant's use of the Premises.
Tenant, at its expense, shall maintain during the Lease Term: all risk
property insurance covering the full replacement cost of all property and
improvements installed or placed in the Premises by Tenant at Tenant's expense;
worker's compensation insurance with no less than the minimum limits required by
law; employer's liability insurance with such limits as required by law; and
commercial liability insurance, with a minimum limit of $1,000,000 per
occurrence and a minimum umbrella limit of $1,000,000, for a total minimum
combined general liability and umbrella limit of $2,000,000 (together with such
additional umbrella coverage as Landlord may reasonably require) for property
damage, personal injuries, or deaths of persons occurring in or about the
Premises. Landlord may from time to time require reasonable increases in any
such limits. The commercial liability policies shall name Landlord as an
additional insured, insure on an occurrence and not a claims-made basis, be
issued by insurance companies which are reasonably acceptable to Landlord, not
be cancelable unless 30 days' prior written notice shall have been given to
Landlord, contain a hostile fire endorsement and a contractual liability
endorsement and provide primary coverage to Landlord (any policy issued to
Landlord providing duplicate or similar coverage shall be deemed excess over
Tenant's policies). Such policies or certificates thereof shall be delivered to
Landlord by Tenant upon commencement of the Lease Term and upon each renewal of
said insurance.
The all risk property insurance obtained by Landlord and Tenant shall
include a waiver of subrogation by the insurers and all rights based upon an
assignment from its insured, against Landlord or Tenant, their officers,
directors, employees, managers, agents, invitees and contractors, in connection
with any loss or damage thereby insured against. Neither party nor its officers,
directors, employees, managers, agents, invitees or contractors shall be liable
to the other for loss or damage caused by any risk coverable by all risk
property insurance, and each party waives any claims against the other party,
and its officers, directors, employees, managers, agents, invitees and
contractors for such loss or damage. The failure of a party to insure its
property shall not void this waiver. Landlord and its agents, employees and
contractors shall not be liable for, and Tenant hereby waives all claims against
such parties for, business interruption and losses occasioned thereby sustained
by Tenant or any person claiming through Tenant resulting from any accident or
occurrence in or upon the Premises or the Project from any cause whatsoever,
including without limitation, damage caused in whole or in part, directly or
indirectly, by the negligence of Landlord or its agents, employees or
contractors.
Tenant and its subtenants, assignees, invitees, employees, contractors
and agents shall not be liable for, and Landlord hereby waives all claims
against Tenant and its subtenants, assignees, invitees, employees, contractors
and agents for damage to property sustained by Landlord or any person claiming
through Landlord resulting from any accident or occurrence in or upon the
Premises or in or about the Project from any cause whatsoever, including,
without limitation, damage caused in whole or in part, directly or indirectly,
by the negligence of Tenant or its subtenants, assignees, invitees, employees,
contractors or agents; provided, however, such
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waiver shall only apply to claims in excess of the commercially reasonable
deductible under Landlord's insurance policy.
10. LANDLORD'S REPAIRS. Landlord shall maintain, at its expense, the
structural soundness of the roof, foundation, and exterior walls of the Building
in good repair, reasonable wear and tear and uninsured losses and damages caused
by Tenant, its agents and contractors excluded. The term "walls" as used in this
Paragraph 10 shall not include windows, glass or plate glass, doors or overhead
doors, special store fronts, dock bumpers, dock plates or levelers, or office
entries. Tenant shall promptly give Landlord written notice of any repair
required by Landlord pursuant to this Paragraph 10, after which Landlord shall
have a reasonable opportunity to repair.
11. TENANT'S REPAIRS. Landlord, at Tenant's expense as provided in
Paragraph 6, shall maintain in good repair and condition the parking areas and
other common areas of the Building, including, but not limited to driveways,
alleys, landscape and grounds surrounding the Premises. Subject to Landlord's
obligation in Paragraph 10 and subject to Paragraphs 9 and 15, Tenant, at its
expense, shall repair, replace and maintain in good condition all portions of
the Premises and all areas, improvements and systems exclusively serving the
Premises including, without limitation, dock and loading areas, truck doors,
plumbing, water and sewer lines up to points of common connection, fire
sprinklers and fire protection systems, entries, doors, ceilings and roof
membrane, windows, interior walls, and the interior side of demising walls, and
heating, ventilation and air conditioning systems. Such repair and replacements
include capital expenditures and repairs whose benefit may extend beyond the
Term, and such capital expenditures and repairs shall be fully amortized in
accordance with the Formula (defined hereafter) over the remainder of the Lease
Term, without regard to any extension or renewal option not then exercised. The
"Formula" shall mean that number, the numerator of which shall be the number of
months of the Lease Term remaining after the replacement of any such capital
expenditures, and the denominator of which shall be the maximum amortization
period (in months) allowable for determining depreciation of such capital
expenditures for federal income tax purposes, but not to exceed 10 years. Tenant
shall reimburse Landlord for the cost of such repairs and replacements in equal
monthly installments in the same manner as the payment by Tenant to Landlord of
the Operating Expenses. Heating, ventilation and air conditioning systems and
other mechanical and building systems serving the Premises shall be maintained
at Tenant's expense pursuant to maintenance service contracts entered into by
Tenant or, at Landlord's election, by Landlord. The scope of services and
contractors under such maintenance contracts shall be reasonably approved by
Landlord. At Landlord's request, Tenant shall enter into a joint maintenance
agreement with any railroad that services the Premises. If Tenant fails to
perform any repair or replacement for which it is responsible, Landlord may
perform such work and be reimbursed by Tenant within 10 days after demand
therefor. Subject to Paragraphs 9 and 15, Tenant shall bear the full cost of any
repair or replacement to any part of the Building or Project that results from
damage caused by Tenant, its agents, contractors, or invitees and any repair
that benefits only the Premises.
12. TENANT-MADE ALTERATIONS AND TRADE FIXTURES. Any alterations,
additions, or improvements made by or on behalf of Tenant to the Premises
("Tenant-Made Alterations") shall be subject to Landlord's prior written consent
which shall not be unreasonably withheld provided that such alteration does not
materially affect the structure or the roof of the Building, or modify
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the utility systems of the Project. Tenant shall cause, at its expense, all
Tenant-Made Alterations to comply with insurance requirements and with Legal
Requirements and shall construct at its expense any alteration or modification
required by Legal Requirements as a result of any Tenant-Made Alterations. All
Tenant-Made Alterations shall be constructed in a good and workmanlike manner by
contractors reasonably acceptable to Landlord and only good grades of materials
shall be used. All plans and specifications for any Tenant-Made Alterations
shall be submitted to Landlord for its approval. Landlord shall not unreasonably
withhold its approval of such plans and specifications, and shall notify Tenant
within 10 days of its receipt of such plans and specifications of any changes
needed to obtain Landlord's approval thereof. Landlord may monitor construction
of the Tenant-Made Alterations. Tenant shall reimburse Landlord for its costs in
reviewing plans and specifications and in monitoring construction. Landlord's
right to review plans and specifications and to monitor construction shall be
solely for its own benefit, and Landlord shall have no duty to see that such
plans and specifications or construction comply with applicable laws, codes,
rules and regulations. Tenant shall provide Landlord with the identities and
mailing addresses of all persons performing work or supplying materials, prior
to beginning such construction, and Landlord may post on and about the Premises
notices of non-responsibility pursuant to applicable law. Tenant shall furnish
security or make other arrangements satisfactory to Landlord to assure payment
for the completion of all work free and clear of liens and shall provide
certificates of insurance for worker's compensation and other coverage in
amounts and from an insurance company satisfactory to Landlord protecting
Landlord against liability for personal injury or property damage during
construction. Upon completion of any Tenant-Made Alterations, Tenant shall
deliver to Landlord sworn statements setting forth the names of all contractors
and subcontractors who did work on the Tenant-Made Alterations and final lien
waivers from all such contractors and subcontractors. Upon surrender of the
Premises, all Tenant-Made Alterations and any leasehold improvements constructed
by Landlord or Tenant shall remain on the Premises as Landlord's property,
except to the extent Landlord requires removal at Tenant's expense of any such
items or Landlord and Tenant have otherwise agreed in writing in connection with
Landlord's consent to any Tenant-Made Alterations. Tenant shall repair any
damage caused by such removal.
Tenant, at its own cost and expense and without Landlord's prior
approval, may erect such shelves, bins, machinery and trade fixtures
(collectively "Trade Fixtures") in the ordinary course of its business provided
that such items do not alter the basic character of the Premises, do not
overload or damage the Premises, and may be removed without injury to the
Premises, and the construction, erection, and installation thereof complies with
all Legal Requirements and with Landlord's requirements set forth above. Tenant
shall remove its Trade Fixtures and shall repair any damage caused by such
removal.
13. SIGNS. Tenant shall not make any changes to the exterior of the
Premises, install any exterior lights, decorations, balloons, flags, pennants,
banners, or painting, or erect or install any signs, windows or door lettering,
placards, decorations, or advertising media of any type which can be viewed from
the exterior of the Premises, without Landlord's prior written consent. Upon
surrender or vacation of the Premises, Tenant shall have removed all signs and
repair, paint, and/or replace the building facia surface to which its signs are
attached. Tenant shall obtain all applicable governmental permits and approvals
for sign and exterior treatments. All signs, decorations, advertising media,
blinds, draperies and other window treatment or bars or
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other security installations visible from outside the Premises shall be subject
to Landlord's approval and conform in all respects to Landlord's requirements.
14. PARKING. Tenant shall be entitled to park in common with other
tenants of the Project in those areas designated for nonreserved parking.
Landlord may allocate parking spaces among Tenant and other tenants in the
Project if Landlord determines that such parking facilities are becoming
crowded. Landlord shall not be responsible for enforcing Tenant's parking rights
against any third parties.
15. RESTORATION. If at any time during the Lease Term the Premises are
damaged by a fire or other casualty, Landlord shall notify Tenant within 60 days
after such damage as to the amount of time Landlord reasonably estimates it will
take to restore the Premises. If the restoration time is estimated to exceed 6
months, either Landlord or Tenant may elect to terminate this Lease upon notice
to the other party given no later than 30 days after Landlord's notice. If
neither party elects to terminate this Lease or if Landlord estimates that
restoration will xxxx 0 months or less, then, subject to receipt of sufficient
insurance proceeds, Landlord shall promptly restore the Premises excluding the
improvements installed by Tenant or by Landlord and paid by Tenant, subject to
delays arising from the collection of insurance proceeds or from Force Majeure
events. Tenant at Tenant's expense shall promptly perform, subject to delays
arising from the collection of insurance proceeds, or from Force Majeure events,
all repairs or restoration not required to be done by Landlord and shall
promptly re-enter the Premises and commence doing business in accordance with
this Lease. Notwithstanding the foregoing, either parry may terminate this Lease
if the Premises are damaged during the last year of the Lease Term and Landlord
reasonably estimates that it will take more than one month to repair such
damage. Tenant shall pay to Landlord with respect to any damage to the Premises
the amount of the commercially reasonable deductible under Landlord's insurance
policy (currently $10,000) within 10 days after presentment of Landlord's
invoice. If the damage involves the premises of other tenants, Tenant shall pay
the portion of the deductible that the cost of the restoration of the Premises
bears to the total cost of restoration, as determined by Landlord. Base Rent and
Operating Expenses shall be abated for the period of repair and restoration in
the proportion which the area of the Premises, if any, which is not usable by
Tenant bears to the total area of the Premises. Such abatement shall be the sole
remedy of Tenant, and except as provided herein, Tenant waives any right to
terminate the Lease by reason of damage or casualty loss.
16. CONDEMNATION. If any part of the Premises or the Project should be
taken for any public or quasi-public use under governmental law, ordinance, or
regulation, or by right of eminent domain, or by private purchase in lieu
thereof (a "Taking" or "Taken"), and the Taking would prevent or materially
interfere with Tenant's use of the Premises or in Landlord's judgment would
materially interfere with or impair its ownership or operation of the Project,
then upon written notice by Landlord this Lease shall terminate and Base Rent
shall be apportioned as of said date. If part of the Premises shall be Taken,
and this Lease is not terminated as provided above, the Base Rent payable
hereunder during the unexpired Lease Term shall be reduced to such extent as may
be fair and reasonable under the circumstances. In the event of any such Taking,
Landlord shall be entitled to receive the entire price or award from any such
Taking without any payment to Tenant, and Tenant hereby assigns to Landlord
Tenant's interest, if any, in such award. Tenant shall have the right, to the
extent that same shall not diminish Landlord's award, to make a separate claim
against the condemning authority (but
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not Landlord) for such compensation as may be separately awarded or recoverable
by Tenant for moving expenses and damage to Tenant's Trade Fixtures, if a
separate award for such items is made to Tenant.
17. ASSIGNMENT AND SUBLETTING. Without Landlord's prior written consent,
which Landlord shall not unreasonably withhold, Tenant shall not assign this
Lease or sublease the Premises or any part thereof or mortgage, pledge, or
hypothecate its leasehold interest or grant any concession or license within the
Premises and any attempt to do any of the foregoing shall be void and of no
effect. For purposes of this paragraph, a transfer of the ownership interests
controlling Tenant shall be deemed an assignment of this Lease unless such
ownership interests are publicly traded. Notwithstanding the above, Tenant may
assign or sublet the Premises, or any part thereof, to any entity controlling
Tenant, controlled by Tenant or under common control with Tenant (a "Tenant
Affiliate"), without the prior written consent of Landlord. Tenant shall
reimburse Landlord for all of Landlord's reasonable out-of-pocket expenses in
connection with any assignment or sublease. Upon Landlord's receipt of Tenant's
written notice of a desire to assign or sublet the Premises, or any part thereof
(other than to a Tenant Affiliate), Landlord may, by giving written notice to
Tenant within 30 days after receipt of Tenant's notice, terminate this Lease
with respect to the space described in Tenant's notice, as of the date specified
in Tenant's notice for the commencement of the proposed assignment or sublease.
If Landlord so terminates the Lease, Landlord may enter into a lease directly
with the proposed sublessee or assignee. Tenant may withdraw its notice to
sublease or assign by notifying Landlord within 10 days after Landlord has given
Tenant notice of such termination, in which case the Lease shall not terminate
but shall continue.
Provided no default has occurred and is continuing under this Lease,
upon 10 days prior written notice to Landlord, Tenant may, without Landlord's
prior written consent, assign this Lease to an entity into which Tenant is
merged or consolidated or to an entity to which substantially all of Tenant's
assets are transferred, provided (x) such merger, consolidation, or transfer of
assets is for a good business purpose and not principally for the purpose of
transferring Tenant's leasehold estate, and (y) the assignee or successor entity
has a net worth at least equal to the net worth of Tenant immediately prior to
such merger, consolidation, or transfer.
It shall be reasonable for the Landlord to withhold its consent to any
assignment or sublease in any of the following instances: (i) an Event of
Default has occurred and is continuing that would not be cured upon the proposed
sublease or assignment; (ii) the assignee or sublessee does not have a net worth
calculated according to generally accepted accounting principles at least equal
to $10 million immediately prior to such assignment or sublease or the net worth
of the Tenant at the time it executed the Lease; (iii) the intended use of the
Premises by the assignee or sublessee is materially different in comparison to
Tenant's use of the Premises; (iv) the intended use of the Premises by the
assignee or sublessee would materially increase the pedestrian or vehicular
traffic to the Premises or the Project; (v) occupancy of the Premises by the
assignee or sublessee would, in Landlord's opinion, violate an agreement binding
upon Landlord or the Project with regard to the identity of tenants, usage in
the Project, or similar matters; (vi) the identity or business reputation of the
assignee or sublessee will, in the good faith judgment of Landlord, tend to
damage the goodwill or reputation of the Project; (vii) the assignment or sublet
is to another tenant in the Project, other than another tenant occupying the
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adjacent space to the Premises, and is at rates which are below those charged by
Landlord for comparable space in the Project; (viii) in the case of a sublease,
the subtenant has not acknowledged that the Lease controls over any inconsistent
provision in the sublease or (ix) the proposed assignee or sublessee is a
governmental agency. Tenant and Landlord acknowledge that each of the foregoing
criteria are reasonable as of the date of execution of this Lease. The foregoing
criteria shall not exclude any other reasonable basis for Landlord to refuse its
consent to such assignment or sublease. Any approved assignment or sublease
shall be expressly subject to the terms and conditions of this Lease. Tenant
shall provide to Landlord all information concerning the assignee or sublessee
as Landlord may reasonably request.
Notwithstanding any assignment or subletting, Tenant and any guarantor
or surety of Tenant's obligations under this Lease shall at all times remain
fully responsible and liable for the payment of the rent and for compliance with
all of Tenant's other obligations under this Lease (regardless of whether
Landlord's approval has been obtained for any such assignments or sublettings).
In the event that the rent due and payable by a sublessee or assignee (or a
combination of the rental payable under such sublease or assignment plus any
bonus or other consideration therefor or incident thereto) exceeds the rental
payable under this Lease, then Tenant shall be bound and obligated to pay
Landlord as additional rent hereunder all such excess rental and other excess
consideration within 10 days following receipt thereof by Tenant.
If this Lease be assigned or if the Premises be subleased (whether in
whole or in part) or in the event of the mortgage, pledge, or hypothecation of
Tenant's leasehold interest or grant of any concession or license within the
Premises or if the Premises be occupied in whole or in part by anyone other than
Tenant, then upon a default by Tenant hereunder Landlord may collect rent from
the assignee, sublessee, mortgagee, pledgee, party to whom the leasehold
interest was hypothecated, concessionee or licensee or other occupant and,
except to the extent set forth in the preceding paragraph, apply the amount
collected to the next rent payable hereunder; and all such rentals collected by
Tenant shall be held in trust for Landlord and immediately forwarded to
Landlord. No such transaction or collection of rent or application thereof by
Landlord, however, shall be deemed a waiver of these provisions or a release of
Tenant from the further performance by Tenant of its covenants, duties, or
obligations hereunder.
18. INDEMNIFICATION. Except for the negligence or breach of Landlord,
its agents, employees or contractors, and to the extent permitted by law, Tenant
agrees to indemnify, defend and hold harmless Landlord, and Landlord's agents,
employees and contractors, from and against any and all losses, liabilities,
damages, costs and expenses (including attorneys' fees) resulting from claims by
third parties for injuries to any person and damage to or theft or
misappropriation or loss of property occurring in or about the Project and
arising from Tenant's use and Tenant's occupancy of the Premises or from any
activity, work, or thing done, permitted or suffered by Tenant in or about the
Premises or due to any other act or omission of Tenant, its subtenants,
assignees, invitees, employees, contractors and agents. The furnishing of
insurance required hereunder shall not be deemed to limit Tenant's obligations
under this Paragraph 18.
19. INSPECTION AND ACCESS. Landlord and its agents, representatives, and
contractors may enter the Premises at any reasonable time to inspect the
Premises and to make such repairs as may be required or permitted pursuant to
this Lease and for any other business purpose. Landlord and Landlord's
representatives may enter the Premises during business hours for the
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purpose of showing the Premises to prospective purchasers and, during the last
year of the Lease Term, to prospective tenants. Landlord may erect a suitable
sign on the Premises stating the Premises are available to let or that the
Project is available for sale. Landlord may grant easements, make public
dedications, designate common areas and create restrictions on or about the
Premises, provided that no such easement, dedication, designation or restriction
materially interferes with Tenant's use or occupancy of the Premises. At
Landlord's request, Tenant shall execute such instruments as may be necessary
for such easements, dedications or restrictions.
20. QUIET ENJOYMENT. If Tenant shall perform all of the covenants and
agreements herein required to be performed by Tenant, Tenant shall, subject to
the terms of this Lease, at all times during the Lease Term, have peaceful and
quiet enjoyment of the Premises against any person claiming by, through or under
Landlord.
21. SURRENDER. Upon termination of the Lease Term or earlier termination
of Tenant's right of possession, Tenant shall surrender the Premises to Landlord
in the same condition as received, broom clean, ordinary wear and tear and
casualty loss and condemnation covered by Paragraphs 15 and 16 excepted. Any
Trade Fixtures, Tenant-Made Alterations and property not so removed by Tenant as
permitted or required herein shall be deemed abandoned and may be stored,
removed, and disposed of by Landlord at Tenant's expense, and Tenant waives all
claims against Landlord for any damages resulting from Landlord's retention and
disposition of such property. All obligations of Tenant hereunder not fully
performed as of the termination of the Lease Term shall survive the termination
of the Lease Term, including without limitation, indemnity obligations, payment
obligations with respect to Operating Expenses and obligations concerning the
condition and repair of the Premises.
22. HOLDING OVER. If Tenant retains possession of the Premises after the
termination of the Lease Term, unless otherwise agreed in writing, such
possession shall be subject to immediate termination by Landlord at any time,
and all of the other terms and provisions of this Lease (excluding any expansion
or renewal option or other similar right or option) shall be applicable during
such holdover period, except that Tenant shall pay Landlord from time to time,
upon demand, as Base Rent for the holdover period, an amount equal to 150 % of
the Base Rent in effect on the termination date, computed on a monthly basis for
each month or part thereof during such holding over. All other payments shall
continue under the terms of this Lease. In addition, Tenant shall be liable for
all damages incurred by Landlord as a result of such holding over. No holding
over by Tenant, whether with or without consent of Landlord, shall operate to
extend this Lease except as otherwise expressly provided, and this Paragraph 22
shall not be construed as consent for Tenant to retain possession of the
Premises.
23. EVENTS OF DEFAULT. Each of the following events shall be an event of
default ("Event of Default") by Tenant under this Lease:
(i) Tenant shall fail to pay any installment of Base Rent
or any other payment required herein when due, and such failure shall continue
for a period of 5 days after notice from Landlord to Tenant that such payment
was due; provided, however, that Landlord shall not be obligated to provide
written notice of such failure more than 2 times in any consecutive 12-month
period, and the failure of Tenant to pay any third or subsequent installment of
Base Rent or any other payment required herein when due in any consecutive 12-
12
month period shall constitute an Event of Default by Tenant under this Lease
without the requirement of notice or opportunity to cure.
(ii) Tenant or any guarantor or surety of Tenant's
obligations hereunder shall (A) make a general assignment for the benefit of
creditors; (B) commence any case, proceeding or other action seeking to have an
order for relief entered on its behalf as a debtor or to adjudicate it a
bankrupt or insolvent, or seeking reorganization, arrangement, adjustment,
liquidation, dissolution or composition of it or its debts or seeking
appointment of a receiver, trustee, custodian or other similar official for it
or for all or of any substantial part of its property (collectively a
"proceeding for relief"); (C) become the subject of any proceeding for relief
which is not dismissed within 60 days of its filing or entry; or (D) die or
suffer a legal disability (if Tenant, guarantor, or surety is an individual) or
be dissolved or otherwise fail to maintain its legal existence (if Tenant,
guarantor or surety is a corporation, partnership or other entity).
(iii) Any insurance required to be maintained by Tenant
pursuant to this Lease shall be cancelled or terminated or shall expire or shall
be reduced or materially changed, except, in each case, as permitted in this
Lease.
(iv) Tenant shall not occupy or shall vacate the Premises
or shall fail to continuously operate its business at the Premises for the
permitted use set forth herein, whether or not Tenant is in monetary or other
default under this Lease. Tenant's vacating of the Premises shall not constitute
an Event of Default if, prior to vacating the Premises, Tenant has trade
arrangements reasonably acceptable to Landlord to (a) insure that Tenant's
insurance for the Premises will not be voided or cancelled with respect to the
Premises as a result of such vacancy, (b) insure that the Premises are secured;
and (c) insure that the Premises will be properly maintained after such
vacation. If Tenant vacates, Tenant shall inspect the Premises at least once
each month and provide Landlord with an informal report on a quarterly basis as
to the condition of the Premises.
(v) Tenant shall attempt or there shall occur any
assignment, subleasing or other transfer of Tenant's interest in or with respect
to this Lease except as otherwise permitted in this Lease.
(vi) Tenant shall fail to discharge any lien placed upon
the Premises in violation of this Lease within 30 days after any such lien or
encumbrance is filed against the Premises.
(vii) Tenant shall fail to comply with any provision of
this Lease other than those specifically referred to in this Paragraph 23, and
except as otherwise expressly provided herein, such default shall continue for
more than 30 days after Landlord shall have given Tenant written notice of such
default, unless such default cannot be cured within 30 days provided Tenant
commences and diligently pursues said cure and completes the cure within 90
days.
24. LANDLORD'S REMEDIES. Upon each occurrence of an Event of Default and
so long as such Event of Default shall be continuing, Landlord may at any time
thereafter at its election:
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terminate this Lease or Tenant's right of possession, (but Tenant shall remain
liable as hereinafter provided) and/or pursue any other remedies at law or in
equity. Upon the termination of this Lease or termination of Tenant's right of
possession, it shall be lawful for Landlord, without formal demand or notice of
any kind, to re-enter the Premises by summary dispossession proceedings or any
other action or proceeding authorized by law and to remove Tenant and all
persons and property therefrom. If Landlord re-enters the Premises, Landlord
shall have the right to keep in place and use, or remove and store, all of the
furniture, fixtures and equipment at the Premises.
Except as otherwise provided in the next paragraph, if Tenant breaches
this Lease and abandons the Premises prior to the end of the term hereof, or if
Tenant's right to possession is terminated by Landlord because of an Event of
Default by Tenant under this Lease, this Lease shall terminate. Upon such
termination, Landlord may recover from Tenant the following: (i) the worth at
the time of award of the unpaid Base Rent and other charges under this Lease
that had been earned at the time of termination; (ii) the worth at the time of
award of the amount by which the reasonable value of the unpaid Base Rent and
other charges under this Lease which would have been earned after termination
until the time of award exceeds the amount of such rental loss that Tenant
proves could have been reasonably avoided; (iii) the worth at the time of the
award by which the reasonable value of the unpaid Base Rent and other charges
under this Lease for the balance of the term of this Lease after the time of
award exceeds the amount of such rental loss that Tenant proves could have been
reasonably avoided; and (iv) any other amount necessary' to compensate Landlord
for all the detriment proximately caused by Tenant's failure to perform its
obligations under this Lease or that in the ordinary course of things would be
likely to result therefrom. As used herein, the following terms are defined: (a)
the "worth at the time of award" of the amounts referred to in Sections (i) and
(ii) is computed by allowing interest at the lesser of 18 percent per annum or
the maximum lawful rate. The "worth at the time of award" of the amount referred
to in Section (iii) is computed by discounting such amount at the discount rate
of the Federal Reserve Bank of San Francisco at the time of award plus one
percent; (b) the "time of award" as used in clauses (i), (ii), and (iii) above
is the date on which judgment is entered by a court of competent jurisdiction;
(c) The "reasonable value" of the amount referred to in clause (ii) above is
computed by determining the mathematical product of (1) the "reasonable annual
rental value" (as defined herein) and (2) the number of years, including
fractional parts thereof, between the date of termination and the time of award.
The "reasonable value" of the amount referred to in clause (iii) is computed by
determining the mathematical product of (1) the annual Base Rent and other
charges under this Lease and (2) the number of years including fractional parts
thereof remaining in the balance of the term of this Lease after the time of
award.
Even though Tenant has breached this Lease and abandoned the Premises,
which such abandonment of the Premises would constitute an Event of Default
under Paragraph 23(iv) of this Lease, this Lease shall continue in effect for so
long as Landlord does not terminate Tenant's right to possession, and Landlord
may enforce all its rights and remedies under this Lease, including the right to
recover rent as it becomes due. Any such payments due Landlord shall be made
upon demand therefor from time to time and Tenant agrees that Landlord may file
suit to recover any sums falling due from time to time. Notwithstanding any such
reletting without termination, Landlord may at any time thereafter elect in
writing to terminate this Lease for such previous breach.
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Notwithstanding anything contained herein to the contrary, if Landlord
terminates Tenant's right to possession without terminating the Lease after an
Event of Default, Landlord shall use commercially reasonable efforts to relet
the Premises; provided, however, (a) Landlord shall not be obligated to accept
any tenant proposed by Tenant, (b) Landlord shall have the right to lease any
other space controlled by Landlord first, and (c) any proposed tenant shall meet
all of Landlord's leasing criteria.
Exercise by Landlord of any one or more remedies hereunder granted or
otherwise available shall not be deemed to be an acceptance of surrender of the
Premises and/or a termination of this Lease by Landlord, whether by agreement or
by operation of law, it being understood that such surrender and/or termination
can be effected only by the written agreement of Landlord and Tenant. Any law,
usage, or custom to the contrary notwithstanding, Landlord shall have the right
at all times to enforce the provisions of this Lease in strict accordance with
the terms hereof, and the failure of Landlord at any time to enforce its rights
under this Lease strictly in accordance with same shall not be construed as
having created a custom in any way or manner contrary to the specific terms,
provisions, and covenants of this Lease or as having modified the same. Tenant
and Landlord further agree that forbearance or waiver by Landlord to enforce its
rights pursuant to this Lease or at law or in equity, shall not be a waiver of
Landlord's right to enforce one or more of its rights in connection with any
subsequent default. A receipt by Landlord of rent or other payment with
knowledge of the breach of any covenant hereof shall not be deemed a waiver of
such breach, and no waiver by Landlord of any provision of this Lease shall be
deemed to have been made unless expressed in writing and signed by Landlord. To
the greatest extent permitted by law, Tenant waives the service of notice of
Landlord's intention to re-enter as provided for in any statute, or to institute
legal proceedings to that end, and also waives all right of redemption in case
Tenant shall be dispossessed by a judgment or by warrant of any court or judge.
The terms "enter," "re-enter," "entry" or "re-entry," as used in this Lease, are
not restricted to their technical legal meanings. Any reletting of the Premises
shall be on such terms and conditions as Landlord in its sole discretion may
determine (including without limitation a term different than the remaining
Lease Term, rental concessions, alterations and repair of the Premises, lease of
less than the entire Premises to any tenant and leasing any or all other
portions of the Project before reletting the Premises). Landlord shall not be
liable, nor shall Tenant's obligations hereunder be diminished because of,
Landlord's failure to relet the Premises or collect rent due in respect of such
reletting.
25. TENANT'S REMEDIES/LIMITATION OF LIABILITY. Landlord shall not be in
default hereunder unless Landlord fails to perform any of its obligations
hereunder within 30 days after written notice from Tenant specifying such
failure (unless such performance will, due to the nature of the obligation,
require a period of time in excess of 30 days, then after such period of time as
is reasonably necessary). All obligations of Landlord hereunder shall be
construed as covenants, not conditions; and, except as may be otherwise
expressly provided in this Lease, Tenant may not terminate this Lease for breach
of Landlord's obligations hereunder. All obligations of Landlord under this
Lease will be binding upon Landlord only during the period of its ownership of
the Premises and not thereafter. The term "Landlord" in this Lease shall mean
only the owner, for the time being of the Premises, and in the event of the
transfer by such owner of its interest in the Premises, such owner shall
thereupon be released and discharged from all obligations of Landlord thereafter
accruing, but such obligations shall be binding during the Lease Term upon each
new owner for the duration of such owner's ownership. Any liability of
15
Landlord under this Lease shall be limited solely to its interest in the
Project, and in no event shall any personal liability be asserted against
Landlord in connection with this Lease nor shall any recourse be had to any
other property or assets of Landlord.
26. WAIVER OF JURY TRIAL. TENANT AND LANDLORD WAIVE ANY RIGHT TO TRIAL
BY JURY OR TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING
IN CONTRACT, TORT, OR OTHERWISE, BETWEEN LANDLORD AND TENANT ARISING OUT OF THIS
LEASE OR ANY OTHER INSTRUMENT, DOCUMENT, OR AGREEMENT EXECUTED OR DELIVERED IN
CONNECTION HEREWITH OR THE TRANSACTIONS RELATED HERETO.
27. SUBORDINATION. This Lease and Tenant's interest and rights hereunder
are and shall be subject and subordinate at all times to the lien of any first
mortgage, now existing or hereafter created on or against the Project or the
Premises, and all amendments, restatements, renewals, modifications,
consolidations, refinancing, assignments and extensions thereof, without the
necessity of any further instrument or act on the part of Tenant. Tenant agrees,
at the election of the holder of any such mortgage, to attorn to any such
holder. Tenant agrees upon demand to execute, acknowledge and deliver such
instruments, confirming such subordination and such instruments of attornment as
shall be requested by any such holder. Tenant hereby appoints Landlord attorney
in fact for Tenant irrevocably (such power of attorney being coupled with an
interest) to execute, acknowledge and deliver any such instrument and
instruments for and in the name of the Tenant and to cause any such instrument
to be recorded. Notwithstanding the foregoing, any such holder may at any time
subordinate its mortgage to this Lease, without Tenant's consent, by notice in
writing to Tenant, and thereupon this Lease shall be deemed prior to such
mortgage without regard to their respective dates of execution, delivery or
recording and in that event such holder shall have the same rights with respect
to this Lease as though this Lease had been executed prior to the execution,
delivery and recording of such mortgage and had been assigned to such holder.
The term "mortgage" whenever used in this Lease shall be deemed to include deeds
of trust, security assignments and any other encumbrances, and any reference to
the "holder" of a mortgage shall be deemed to include the beneficiary under a
deed of trust.
Tenant shall not be obligated to subordinate the Lease or its interest
therein to any future mortgage, deed of trust or ground lease on the Project
unless concurrently with such subordination the holder of such mortgage or deed
of trust or the ground lessor under such ground lease agrees not to disturb
Tenant's possession of the Premises under the terms of the Lease and agrees to
assume Landlord's obligations under this Lease in the event such holder or
ground lessor acquires title to the Premises through foreclosure, deed in lieu
of foreclosure or otherwise.
28. MECHANIC'S LIENS. Tenant has no express or implied authority to
create or place any lien or encumbrance of any kind upon, or in any manner to
bind the interest of Landlord or Tenant in, the Premises or to charge the
rentals payable hereunder for any claim in favor of any person dealing with
Tenant, including those who may furnish materials or perform labor for any
construction or repairs. Tenant covenants and agrees that it will pay or cause
to be paid all sums legally due and payable by it on account of any labor
performed or materials furnished in connection with any work performed on the
Premises at Tenant's request and that it will save
16
and hold Landlord harmless from all loss, cost or expense based on or arising
out of asserted claims or liens against the leasehold estate or against the
interest of Landlord in the Premises or under this Lease. Tenant shall give
Landlord immediate written notice of the placing of any lien or encumbrance
against the Premises and cause such lien or encumbrance to be discharged within
30 days of the filing or recording thereof; provided, however, Tenant may
contest such liens or encumbrances as long as such contest prevents foreclosure
of the lien or encumbrance and Tenant causes such lien or encumbrance to be
bonded or insured over in a manner satisfactory to Landlord within such 30 day
period.
29. ESTOPPEL CERTIFICATES. Tenant agrees, from time to time, within 10
days after request of Landlord, to execute and deliver to Landlord, or
Landlord's designee, any estoppel certificate requested by Landlord, stating
that this Lease is in full force and effect, the date to which rent has been
paid, that Landlord is not in default hereunder (or specifying in detail the
nature of Landlord's default), the termination date of this Lease and such other
matters pertaining to this Lease as may be requested by Landlord. Tenant's
obligation to furnish each estoppel certificate in a timely fashion is a
material inducement for Landlord's execution of this Lease. No cure or grace
period provided in this Lease shall apply to Tenant's obligations to timely
deliver an estoppel certificate.
30. ENVIRONMENTAL REQUIREMENTS. Except for Hazardous Material contained
in products used by Tenant in de minimis quantities for ordinary cleaning and
office purposes, Tenant shall not permit or cause any party to bring any
Hazardous Material upon the Premises or transport, store, use, generate,
manufacture or release any Hazardous Material in or about the Premises without
Landlord's prior written consent. Tenant, at its sole cost and expense, shall
operate its business in the Premises in strict compliance with all Environmental
Requirements and shall remediate in a manner satisfactory to Landlord any
Hazardous Materials released on or from the Project by Tenant, its agents,
employees, contractors, subtenants or invitees. Tenant shall complete and
certify to disclosure statements as requested by Environmental Requirements from
time to time relating to Tenant's transportation, storage, use, generation,
manufacture or release of Hazardous Materials on the Premises. The term
"Environmental Requirements" means all applicable present and future statutes,
regulations, ordinances, rules, codes, judgments, orders or other similar
enactments of any governmental authority or agency regulating or relating to
health, safety, or environmental conditions on, under, or about the Premises or
the environment, including without limitation, the following: the Comprehensive
Environmental Response, Compensation and Liability Act; the Resource
Conservation and Recovery Act; and all state and local counterparts thereto, and
any regulations or policies promulgated or issued thereunder. The term
"Hazardous Materials" means and includes any substance, material, waste,
pollutant, or contaminant listed or defined as hazardous or toxic, under any
Environmental Requirements, asbestos and petroleum, including crude oil or any
fraction thereof, natural gas or synthetic gas usable for fuel (or mixtures of
natural gas and such synthetic gas). As defined in Environmental Requirements,
Tenant is and shall be deemed to be the "operator" of Tenant's "facility" and
the "owner" of all Hazardous Materials brought on the Premises by Tenant, its
agents, employees, contractors or invitees, and the wastes, by-products, or
residues generated, resulting, or produced therefrom.
Tenant shall indemnify, defend, and hold Landlord harmless from and
against any and all losses (including, without limitation, diminution in value
of the Premises or the Project and loss
17
of rental income from the Project), claims, demands, actions, suits, damages
(including, without limitation, punitive damages), expenses (including, without
limitation, remediation, removal, repair, corrective action, or cleanup
expenses), and costs (including, without limitation, actual attorneys' fees,
consultant fees or expert fees and including, without limitation, removal or
management of any asbestos brought into the property by Tenant, its agents,
employees, contractors, subtenants, assignees or invitees, or disturbed by
Tenant, its agents, employees, contractors, subtenants, assignees or invitees,
in breach of the requirements of this Paragraph 30, regardless of whether such
removal or management is required by law) which are brought or recoverable
against, or suffered or incurred by Landlord as a result of any release of
Hazardous Materials by Tenant, its agents, employees, contractors, subtenants,
assignees or invitees, or any other breach of the requirements under this
Paragraph 30 by Tenant, its agents, employees, contractors, subtenants,
assignees or invitees, regardless of whether Tenant had knowledge of such
noncompliance. The obligations of Tenant under this Paragraph 30 shall survive
any termination of this Lease.
Landlord shall have access to, and a right to perform inspections and
tests of, the Premises to determine Tenant's compliance with Environmental
Requirements, its obligations under this Paragraph 30, or the environmental
condition of the Premises. Access shall be granted to Landlord upon Landlord's
prior notice to Tenant and at such times so as to minimize_ so far as may be
reasonable under the circumstances, any disturbance to Tenant's operations. Such
inspections and tests shall be conducted at Landlord's expense, unless such
inspections or tests reveal that Tenant has not complied with any Environmental
Requirement, in which case Tenant shall reimburse Landlord for the reasonable
cost of such inspection and tests. Landlord's receipt of or satisfaction with
any environmental assessment in no way waives any rights that Landlord holds
against Tenant.
Notwithstanding anything to the contrary in this Paragraph 30, Tenant
shall have no liability of any kind to Landlord as to Hazardous Materials on the
Premises caused or permitted by: (i) Landlord, its agents, employees,
contractors or invitees; or (ii) any other tenants in the Project or their
agents, employees, contractors, subtenants, assignees or invitees; or (iii) any
other person or entity located outside of the Premises or the Project.
31. RULES AND REGULATIONS. Tenant shall, at all times during the Lease
Term and any extension thereof, comply with all reasonable rules and regulations
at any time or from time to time established by Landlord covering use of the
Premises and the Project. The current rules and regulations are attached hereto.
In the event of any conflict between said rules and regulations and other
provisions of this Lease, the other terms and provisions of this Lease shall
control. Landlord shall not have any liability or obligation for the breach of
any rules or regulations by other tenants in the Project, and shall uniformly
enforce such rules and regulations throughout the Project.
32. SECURITY SERVICE. Tenant acknowledges and agrees that, while
Landlord may patrol the Project, Landlord is not providing any security services
with respect to the Premises and that Landlord shall not be liable to Tenant
for, and Tenant waives any claim against Landlord with respect to, any loss by
theft or any other damage suffered or incurred by Tenant in connection with any
unauthorized entry into the Premises or any other breach of security with
respect to the Premises.
18
33. FORCE MAJEURE. Except for monetary obligations, neither Landlord nor
Tenant shall be held responsible for delays in the performance of its
obligations hereunder when caused by strikes, lockouts, labor disputes, acts of
God, inability to obtain labor or materials or reasonable substitutes therefor,
governmental restrictions, governmental regulations, governmental controls,
delay in issuance of permits, enemy or hostile governmental action, civil
commotion, fire or other casualty, and other causes beyond the reasonable
control of Landlord or Tenant ("Force Majeure").
34. ENTIRE AGREEMENT. This Lease constitutes the complete agreement of
Landlord and Tenant with respect to the subject matter hereof. No
representations, inducements, promises or agreements, oral or written, have been
made by Landlord or Tenant, or anyone acting on behalf of Landlord or Tenant,
which are not contained herein, and any prior agreements, promises,
negotiations, or representations are superseded by this Lease. This Lease may
not be amended except by an instrument in writing signed by both parties hereto.
35. SEVERABILITY. If any clause or provision of this Lease is illegal,
invalid or unenforceable under present or future laws, then and in that event,
it is the intention of the parties hereto that the remainder of this Lease shall
not be affected thereby. It is also the intention of the parties to this Lease
that in lieu of each clause or provision of this Lease that is illegal, invalid
or unenforceable, there be added, as a part of this Lease, a clause or provision
as similar in terms to such illegal, invalid or unenforceable clause or
provision as may be possible and be legal, valid and enforceable.
36. BROKERS. Tenant represents and warrants that it has dealt with no
broker, agent or other person in connection with this transaction and that no
broker, agent or other person brought about this transaction, other than the
broker, if any, set forth on the first page of this Lease, and Tenant agrees to
indemnify and hold Landlord harmless from and against any claims by any other
broker, agent or other person claiming a commission or other form of
compensation by virtue of having dealt with Tenant with regard to this leasing
transaction.
37. MISCELLANEOUS.
(a) Any payments or charges due from Tenant to Landlord hereunder
shall be considered rent for all purposes of this Lease..
(b) If and when included within the term "Tenant," as used in
this instrument, there is more than one person, firm or corporation, each shall
be jointly and severally liable for the obligations of Tenant.
(c) All notices required or permitted to be given under this
Lease shall be in writing and shall be sent by registered or certified mail,
return receipt requested, or by a reputable national overnight courier service,
postage prepaid, or by hand delivery addressed to the parties at their addresses
below, and with a copy sent to Landlord at 00000 Xxxx 00xx Xxxxx, Xxxxxx,
Xxxxxxxx 00000. Either party may by notice given aforesaid change its address
for all subsequent notices. Except where otherwise expressly provided to the
contrary, notice shall be deemed given upon delivery.
19
(d) Except as otherwise expressly provided in this Lease or as
otherwise required by law, Landlord's right to withhold any consent or approval
shall not be unreasonably withheld.
(e) At Landlord's request from time to time Tenant shall furnish
Landlord with true and complete copies of its most recent annual and quarterly
financial statements prepared by Tenant or Tenant's accountants and any other
financial information or summaries that Tenant typically provides to its lenders
or shareholders.
(f) Neither this Lease nor a memorandum of lease shall be filed
by or on behalf of Tenant in any public record. Landlord may prepare and file,
and upon request by Landlord Tenant will execute, a memorandum of lease.
(g) The normal rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall not be employed
in the interpretation of this Lease or any exhibits or amendments hereto.
(h) The submission by Landlord to Tenant of this Lease shall have
no binding force or effect, shall not constitute an option for the leasing of
the Premises, nor confer any right or impose any obligations upon either party
until execution of this Lease by both parties.
(i) Words of any gender used in this Lease shall be held and
construed to include any other gender, and words in the singular number shall be
held to include the plural, unless the context otherwise requires. The captions
inserted in this Lease are for convenience only and in no way define, limit or
otherwise describe the scope or intent of this Lease, or any provision hereof,
or in any way affect the interpretation of this Lease.
(j) Any amount not paid by Tenant within 5 days after its due
date in accordance with the terms of this Lease shall bear interest from such
due date until paid in full at the lesser of the highest rate permitted by
applicable law or 15 percent per year. It is expressly the intent of Landlord
and Tenant at all times to comply with applicable law governing the maximum rate
or amount of any interest payable on or in connection with this Lease. If
applicable law is ever judicially interpreted so as to render usurious any
interest called for under this Lease, or contracted for, charged, taken,
reserved, or received with respect to this Lease, then it is Landlord's and
Tenant's express intent that all excess amounts theretofore collected by
Landlord be credited on the applicable obligation (or, if the obligation has
been or would thereby be paid in full, refunded to Tenant), and the provisions
of this Lease immediately shall be deemed reformed and the amounts thereafter
collectible hereunder reduced, without the necessity of the execution of any new
document, so as to comply with the applicable law, but so as to permit the
recovery of the fullest amount otherwise called for hereunder.
(k) Construction and interpretation of this Lease shall be
governed by the laws of the state in which the Project is located, excluding any
principles of conflicts of laws.
(l) Time is of the essence as to the performance of Tenant's and
Landlord's obligations under this Lease.
20
(m) All exhibits and addenda attached hereto are hereby
incorporated into this Lease and made a part hereof. In the event of any
conflict between such exhibits or addenda and the terms of this Lease, such
exhibits or addenda shall control.
(n) ATTORNEY'S FEES. If either party commences in action against
the other arising out of or in connection with the Lease, the prevailing party
shall be entitled to recover from the losing party reasonable attorneys' fees
and costs of suit.
38. LANDLORD'S LIEN/SECURITY INTEREST. Intentionally deleted.
39. LIMITATION OF LIABILITY OF TRUSTEES, SHAREHOLDERS, AND OFFICERS OF
PROLOGIS TRUST. Any obligation or liability whatsoever of ProLogis Trust, a
Maryland real estate investment trust, which may arise at any time under this
Lease or any obligation or liability which may be incurred by it pursuant to any
other instrument, transaction, or undertaking contemplated hereby shall not be
personally binding upon, nor shall resort for the enforcement thereof be had to
the property of, its trustees, directors, shareholders, officers, employees or
agents, regardless of whether such obligation or liability is in the nature of
contract, tort, or otherwise.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of
the day and year first above written.
TENANT: LANDLORD:
KINETICS FLUID SYSTEMS, PROLOGIS TRUST, a Maryland
a California corporation real estate investment trust
By: /s/ Xxx Xxxxxxx By: /s/ Xxxxxx X. Xxxxx
--------------------------- -----------------------------
Xxx Xxxxxxx Xxxxxx X. Xxxxx
Senior Vice President Managing Director
Address: Address:
0000 Xxxxxxx Xxxxxxx Xxxxxxxxx 0000 XXX Xxxxxxx, Xxxxx 000
Xxxxx Xxxxx, XX 00000 Xxxxxx, XX 00000
Phone: 000.000.0000 Phone: 000.000.0000
FAX: 000.000.0000 FAX: 000.000.0000
21
RULES AND REGULATIONS
1. The sidewalk, entries, and driveways of the Project shall not be
obstructed by Tenant, or its agents, or used by them for any purpose other than
ingress and egress to and from the Premises.
2. Tenant shall not place any objects, including antennas, outdoor
furniture, etc., in the parking areas, landscaped areas or other areas outside
of its Premises, or on the roof of the Project.
3. Except for seeing-eye dogs, no animals shall be allowed in the
offices, halls, or corridors in the Project.
4. Tenant shall not disturb the occupants of the Project or adjoining
buildings by the use of any radio or musical instrument or by the making of loud
or improper noises.
5. If Tenant desires telegraphic, telephonic or other electric
connections in the Premises, Landlord or its agent will direct the electrician
as to where and how the wires may be introduced; and, without such direction, no
boring or cutting of wires will be permitted. Any such installation or
connection shall be made at Tenant's expense.
6. Tenant shall not install or operate any steam or gas engine or
boiler, or other mechanical apparatus in the Premises, except as specifically
approved in the Lease. The use of oil, gas or inflammable liquids for heating,
lighting or any other purpose is expressly prohibited. Explosives or other
articles deemed extra hazardous shall not be brought into the Project.
7. Parking any type of recreational vehicles is specifically prohibited
on or about the Project. Except for the overnight parking of operative vehicles,
no vehicle of any type shall be stored in the parking areas at any time. In the
event that a vehicle is disabled, it shall be removed within 48 hours. There
shall be no "For Sale" or other advertising signs on or about any parked
vehicle. All vehicles shall be parked in the designated parking areas in
conformity with all signs and other markings. All parking will be open parking,
and no reserved parking, numbering or lettering of individual spaces will be
permitted except as specified by Landlord.
8. Tenant shall maintain the Premises free from rodents, insects and
other pests.
9. Landlord reserves the right to exclude or expel from the Project any
person who, in the judgment of Landlord, is intoxicated or under the influence
of liquor or drugs or who shall in any manner do any act in violation of the
Rules and Regulations of the Project.
10. Tenant shall not cause any unnecessary labor by reason of Tenant's
carelessness or indifference in the preservation of good order and cleanliness.
Landlord shall not be responsible to Tenant for any loss of property on the
Premises, however occurring, or for any damage done to the effects of Tenant by
the janitors or any other employee or person.
11. Tenant shall give Landlord prompt notice of any defects in the
water, lawn sprinkler, sewage, gas pipes, electrical lights and fixtures,
heating apparatus, or any other service equipment affecting the Premises.
12. Tenant shall not permit storage outside the Premises, including
without limitation, outside storage of trucks and other vehicles, or dumping of
waste or refuse or permit any harmful materials to be placed in any drainage
system or sanitary system in or about the Premises.
13. All moveable trash receptacles provided by the trash disposal firm
for the Premises must be kept in the trash enclosure areas, if any, provided for
that purpose.
14. No auction, public or private, will be permitted on the Premises or
the Project.
15. No awnings shall be placed over the windows in the Premises except
with the prior written consent of Landlord.
16. The Premises shall not be used for lodging, sleeping or cooking or
for any immoral or illegal purposes or for any purpose other than that specified
in the Lease. No gaming devices shall be operated in the Premises.
17. Tenant shall ascertain from Landlord the maximum amount of
electrical current which can safely be used in the Premises, taking into account
the capacity of the electrical wiring in the Project and the Premises and the
needs of other tenants, and shall not use more than such safe capacity.
Landlord's consent to the installation of electric equipment shall not relieve
Tenant from the obligation not to use more electricity than such safe capacity.
18. Tenant assumes full responsibility for protecting the Premises from
theft, robbery and pilferage.
19. Tenant shall not install or operate on the Premises any machinery or
mechanical devices of a nature not directly related to Tenant's ordinary use of
the Premises and shall keep all such machinery free of vibration, noise and air
waves which may be transmitted beyond the Premises.
2
ADDENDUM ONE
BASE RENT ADJUSTMENTS
ATTACHED TO AND A PART OF THE LEASE AGREEMENT
DATED 7/13/2000,
BETWEEN
PROLOGIS TRUST
and
KINETICS FLUID SYSTEMS
Base Rent shall equal the following amounts for the respective periods
set forth below:
PERIOD MONTHLY BASE RENT
------ -----------------
3 Months 1 to 36 02/01/01 - 02/01/04 $28,800.00
2 Months 37 to 60 02/01/04 - 02/01/06 $31,680.00
2 Months 61 to 84 02/01/06 - 02/01/08 $34,560.00
ADDENDUM TWO
CONSTRUCTION
(ALLOWANCE AMORTIZED)
ATTACHED TO AND A PART OF THE LEASE AGREEMENT
DATED 7/13/2000,
BETWEEN
PROLOGIS TRUST
and
KINETICS FLUID SYSTEMS
(a) Landlord agrees to furnish an allowance of up to $432,000.00 for
Tenant's use for the installation of its Tenant Improvements, and in no event
shall Landlord have any obligation to pay for any costs of the Tenant
Improvements in excess of such amount. If the cost of the Tenant Improvements
exceeds such amount, such overage shall be borne by Tenant, and repaid to
Landlord, together with interest at 13% per annum, in equal monthly installments
over the Lease Term; provided, however, in no event shall Landlord be obligated
to amortize any portion of such overage in excess of $144,000 and any overage in
excess of such amount shall be paid by Tenant. As security for a portion of the
amortized costs of the Tenant Improvements, Tenant shall provide Landlord with
an unconditional, irrevocable letter of credit in the amount of $72,000 a bank
reasonably acceptable to Landlord and in form substantially similar to the
sample attached hereto. The letter of credit shall either provide that it does
not expire until the end of the Lease Term or, if it is for less than the full
term of the Lease, shall be renewed by Tenant at least 30 days prior to its
expiration during the term of the Lease. The letter of credit shall provide for
20% annual reductions ($14,400) such that the total amount of the letter of
credit required shall be reduced to $57,600 of the first anniversary of its
issuance, $43,200 on the second anniversary of its issuance, $28,800 on the
third anniversary of its issuance, and $14,400 on the fourth anniversary of its
issuance. The letter of credit shall provide that it may be drawn down upon by
Landlord at any time Landlord deliver its site draft to the bank. If Landlord
sells or conveys the Premises, Tenant shall, at Landlord's request, cooperate in
having the letter of credit transferred to the purchaser. If the letter of
credit is ever drawn upon by Landlord pursuant to the terms of the Lease and
this Addendum, Tenant shall within ten (10) days thereafter cause the letter of
credit to be restored to its original amount.
(b) Subject to applicable ordinances and building codes governing
Tenant's right to occupy or perform in the Premises, Tenant and its contractors
shall have access to the Premises for a period of ninety (90) days from the
Landlord's contractor declares the Building to be shell complete, or such
earlier date as Landlord, its contractor, Tenant and Tenant's contractor shall
unanimously agree is appropriate, free of any obligation to pay Base Rent or
estimated Operating Expenses, in order to install the Tenant Improvements,
provided that Tenant does not thereby interfere with the completion of
construction of the Building or cause any labor dispute as a result of such
installations, and provided further that Tenant does hereby agree to indemnify,
defend, and hold Landlord harmless from any loss or damage to such property, and
all liability, loss, or damage arising from any injury to the Project or the
property of Landlord, its contractors, subcontractors, or materialmen, and any
death or personal injury to any person or persons arising out of such
installations, unless any such loss, damage, liability, death, or personal
injury was caused by Landlord's negligence.
(c) Tenant's installation of the Tenant Improvements in the Premises
shall be performed in accordance with the provisions governing Tenant-Made
Alterations and Trade Fixtures in the Lease, and shall be subject to Tenant
providing to Landlord satisfactory evidence of insurance for personal injury and
property damage related to such installations and satisfactory payment
arrangements with respect to installations permitted hereunder. Delay in putting
Tenant in possession of the Premises shall not serve to extend the term of this
Lease or to make Landlord liable for any damages arising therefrom.
2
ATTACHMENT ONE TO ADDENDUM TWO
FORM OF LETTER OF CREDIT FOR AMORTIZED TENANT IMPROVEMENT COSTS
ATTACHED TO AND A PART OF THE LEASE AGREEMENT
DATED ________ , 2000,
BETWEEN
PROLOGIS TRUST
and
KINETICS FLUID SYSTEMS
[LETTERHEAD OF LETTER OF CREDIT BANK]
[DATE]
PROLOGIS TRUST
_____________________________
_____________________________
_____________________________
ATTENTION:___________________
RE: IRREVOCABLE TRANSFERABLE LETTER OF CREDIT NO. __________________
BENEFICIARY:
By order of our client, Kinetics Fluid Systems (the "Applicant"), we
hereby establish this Irrevocable Transferable Letter of Credit No.
___________in your favor for an amount up to but not exceeding the aggregate sum
of Seventy Two Thousand and No/100 Dollars ($72,000) (as reduced from time to
time in accordance with the terms hereof, the "Letter of Credit Amount"),
effective immediately, and expiring on the close of business at our office at
the address set forth above one year from the date hereof unless renewed as
hereinafter provided.
Funds under this Letter of Credit are available to you on or prior to
the expiry date against presentation by you of your (i) sight drafts drawn on us
in the form of Annex 1 hereto, indicating this Letter of Credit number and (ii)
request in the form of Annex 2 hereto (such sight draft and request, together
referred to as a "Drawing Request"), sight draft(s), completed and
signed by one of your officers. Presentation of your Drawing Requests may be
made by you to us at the address set forth above or may be made by facsimile
transmission, to the following facsimile number _____________. You may present
to us one or more Drawing Requests from time to time prior to the expiry date in
an aggregate amount not to exceed the Letter of Credit Amount then in effect (it
being understood that the honoring by us of each Drawing Request shall reduce
the Letter of Credit Amount then in effect).
This Letter of Credit will be automatically renewed for a one-year
period upon the expiration date set forth above and upon each anniversary of
such date, unless at least sixty (60) days prior to such expiration date, or
prior to any anniversary of such date, we notify both you and the Applicant in
writing by certified mail that we elect not to so renew the Letter of Credit;
provided, however, that the total amount of the Letter of Credit shall be
reduced by 20% ($14,400) upon each renewal.
This Letter of Credit sets forth in full the terms of our undertaking
and such undertaking shall not in any way be modified, amended or amplified by
reference to any-document or instrument referred to herein or in which this
Letter of Credit is referred to or to which this Letter of Credit relates, and
no such reference shall be deemed to incorporate herein by reference any
document or instrument.
All bank charges and commissions incurred in this transaction are for
the Applicant's account.
This Letter of Credit is transferable by you and your successors and
assigns any number of times in its entirety and not in part, but only by
delivery to us of a Notice of Assignment in the form of Annex 3 hereto.
2
We hereby agree with the drawers, endorsers, and bona fide holders of
drafts drawn under and in compliance with the terms of this Letter of Credit
that such drafts will be duly honored upon presentation to the drawee from our
own funds and not the funds of the Applicant and shall be available to such
drawers, endorsers, and bona fide holders, as the case may be, on or before
noon, New York time, on the Business Day (defused below) next following the date
on which such drafts are received by us. "Business Day" shall mean any day which
is not a Saturday, Sunday or day on which we are required or authorized by law
to be closed in New York, New York.
To the extent not inconsistent with the express terms hereof, this
Letter of Credit shall be governed by, and construed in accordance with, the
terms of the Uniform Customs and Practice for Commercial Documentary Credits
(1993 Revision), I.C.C. Publication No. 500 (the "UCP 500") and as to matters
not governed by the UCP 500, this Letter of Credit shall be governed by and
construed in accordance with the laws of the State of New York.
Very truly yours,
[NAME OF LETTER OF CREDIT BANK]
By:__________________________________
Name:________________________________
Title:_______________________________
3
ANNEX 1
SIGHT DRAFT
__________________, 200___
For value received, at sight pay to the order of ProLogis Trust, the sum
of [Amount in words] [Amount in Figures] United States Dollars drawn under [Name
of Letter of Credit Bank] Irrevocable Transferable Letter of Credit No.
_________________ dated ___________, 200___.
PROLOGIS TRUST
By:____________________________________
Name:
Title:
ANNEX 2
DRAWING REQUEST
__________________, 200___
[NAME AND ADDRESS OF LETTER OF CREDIT BANK]
_________________________________
_________________________________
Re: Irrevocable Transferable Letter of Credit No. (the "Letter of
Credit")
The undersigned (the "Beneficiary"), hereby certifies to [Name of Letter
of Credit Bank] (the "Issuer") that:
(a) The Beneficiary is making a request for payment in lawful currency
of the United States of America under Irrevocable Transferable Letter of Credit
No. _____________ (the "Letter of Credit") in the amount of
$______________________
(b) The Letter of Credit Amount (as defined in the Letter of Credit) as
of the date hereof and prior to payment of the amount demanded in this Drawing
Request is $_______________________________. The amount requested by this
Drawing Request does not exceed the Letter of Credit Amount.
[(c) Demand is trade for payment under the Letter of Credit as a result
of the occurrence and continuation of an Event of Default (as defined in the
Lease Agreement).]
Please wire transfer the proceeds of the drawing to the following
account of the Beneficiary at the financial institution indicated below:
_______________________
_______________________
Unless otherwise defined, all capitalized terms used herein have the
meanings provided in, or by reference in, the Letter of Credit.
IN WITNESS WHEREOF, the undersigned has duly executed and delivered this
Drawing Request as of the _______ day of 200____
PROLOGIS TRUST
By:______________________________
Name:
Title:
ANNEX 3
NOTICE OF ASSIGNMENT
__________________, 200___
[NAME AND ADDRESS OF LETTER OF CREDIT BANK]
__________________________
__________________________
Re: Irrevocable Transferable Letter of Credit No. ___________________
The undersigned (the "Beneficiary"), hereby notifies [Name of Letter of
Credit Bank] (the "Issuer") that it has irrevocably assigned the
above-referenced Letter of Credit to _________ (the "Assignee") with an address
at _______________________________________ effective as of the date the Issuer
receives this Notice of Assignment. The Assignee acknowledges and agrees that
the Letter of Credit Amount may have been reduced pursuant to the terms thereof,
and that the Assignee is bound by any such reduction.
IN WITNESS WHEREOF, the undersigned has duly executed and delivered this
Notice of Assignment as of this ___________ day of ________________, 200_____
PROLOGIS TRUST
By:______________________________
Name:
Title:
Agreed:
[Assignee]
_______________________________
ADDENDUM THREE
ONE RENEWAL OPTION AT MARKET
ATTACHED TO AND A PART OF THE LEASE AGREEMENT
DATED JULY 13, 2000,
BETWEEN
PROLOGIS TRUST
and
KINETICS FLUID SYSTEMS
(a) Provided that as of the time of the giving of the Extension
Notice and the Commencement Date of the Extension Term, (x) Tenant is the Tenant
originally named herein, (y) Tenant actually occupies all of the Premises
initially demised under this Lease and' any space added to the Premises, and (z)
no Event of Default exists or would exist but for the passage of time or the
giving of notice, or both; then Tenant shall have the right to extend the Lease
Term for an additional term of 5 years (such additional term is hereinafter
called the "Extension Term") commencing on the day following the expiration of
the Lease Term (hereinafter referred to as the "Commencement Date of the
Extension Term"). Tenant shall give landlord notice (hereinafter called the
"Extension Notice") of its election to extend the term of the Lease Term at
least 6 months, but not more than 9 months, prior to the scheduled expiration
date of the Lease Term.
(b) The Base Rent payable by Tenant to Landlord during the
Extension Term shall be the greater of (i) the Base Rent applicable to the last
year of the initial Lease Term and (ii) the then prevailing market rate for
comparable space in the Project and comparable buildings in the vicinity of the
Project, taking into account the size of the Lease, the length of the renewal
term, market escalations and the credit of Tenant. The Base Rent shall not be
reduced by reason of any costs or expenses saved by Landlord by reason of
Landlord's not having to find a new tenant for such premises (including, without
limitation, brokerage commissions, costs of improvements, rent concessions or
lost rental income during any vacancy period). In the event Landlord and Tenant
fail to reach an agreement on such rental rate and execute the Amendment
(defined below) at least 4 months prior to the expiration of the Lease, then
Tenant's exercise of the renewal option shall be deemed withdrawn and the Lease
shall terminate on its original expiration date.
(c) The determination of Base Rent does not reduce the Tenant's
obligation to pay or reimburse Landlord for Operating Expenses and other
reimbursable items as set forth in the Lease, and Tenant shall reimburse and pay
Landlord as set forth in the Lease with respect to such Operating Expenses and
other items with respect to the Premises during the Extension Term without
regard to any cap on such expenses set forth in the Lease.
(d) Except for the Base Rent as determined above, Tenant's
occupancy of the Premises during the Extension Term shall be on the same terms
and conditions as are in effect immediately prior to the expiration of the
Tenant Lease Term; provided, however, Tenant shall have no further right to any
allowances, credits or abatements or any options to expand, contract, renew or
extend the Lease.
(e) If Tenant does not give the Extension Notice within the
period set forth in paragraph (a) above, Tenant's right to extend the Lease Term
shall automatically terminate. Time is of the essence as to the giving of the
Extension Notice.
(f) Landlord shall have no obligation to refurbish or otherwise
improve the Premises for the Extension Term. The Premises shall be tendered on
the Commencement Date of the Extension Term in "as-is" condition.
(g) If the Lease is extended for the Extension Term, then
Landlord shall prepare and Tenant shall execute an amendment to the Lease
confirming the extension of the Lease Term and the other provisions applicable
thereto (the "Amendment").
(h) If Tenant exercises its right to extend the term of the Lease
for the Extension Term pursuant to this Addendum, the term "Lease Term" as used
in the Lease, shall be construed to include, when practicable, the Extension
Term except as provided in (d) above.
2
ADDENDUM FOUR
MOVE-OUT CONDITIONS
ATTACHED TO AND A PART OF THE LEASE AGREEMENT
DATED JULY 13, 2000,
BETWEEN
PROLOGIS TRUST
and
KINETICS FLUID SYSTEMS
Per Paragraph 21, Tenant is obligated to check and address prior to
move-out of the Premises the following items. Landlord expects to receive the
Premises in a well maintained condition, with normal wear and tear of certain
areas acceptable. The following list is designed to assist Tenant in the
move-out procedures but is not intended to be all inclusive.
1. All lighting is to be placed into good working order. This includes
replacement of bulbs, ballasts, and lenses as needed.
2. All truck doors, and dock levelers should be serviced and placed in
good operating order. This would include the necessary replacement of any dented
truck door panels and adjustment of door tension to insure proper operation. All
door panels which are replaced need to be painted to match the Building
standard.
3. All structural steel columns in the warehouse and office should be
inspected for damage. Repairs of this nature should be pre-approved by the
Landlord prior to implementation.
4. Heating/air-conditioning systems should be placed in good working
order, including the necessary replacement of any parts to return the unit to a
well maintained condition. This includes warehouse heaters and exhaust fans.
Upon moveout, Landlord will have an exit inspection performed by a certified
mechanical contractor to determine the condition.
5. All holes in the sheet rock walls should be repaired prior to
move-out.
6. The carpets and vinyl tiles should be in a reasonably clean condition
and should not have any holes or chips in them. Landlord will accept normal wear
on these items provided they appear to be in a maintained condition.
7. Facilities should be returned in a clean condition, which would
include cleaning of the coffee bar, restroom areas, windows, and other portions
of the space.
8. The warehouse should be in broom clean condition with all inventory
and racking removed. There should be no protrusion of anchors from the warehouse
floor and all holes
should be appropriately patched. If machinery/equipment is removed, the
electrical lines should be properly terminated at the nearest junction box.
9. All exterior windows with cracks or breakage should be replaced.
10. The Tenant shall provide keys for all locks on the Premises,
including front doors, rear doors, and interior doors.
11. Items that have been added by the Tenant and affixed to the Building
will remain the property of Landlord, unless agreed otherwise. This would
include but is not limited to mini-blinds, air conditioners, electrical, water
heaters, cabinets, flooring, etc. Please note that if modifications have been
made to the space, such as the addition of office areas, Landlord retains the
right to have the Tenant remove these at Tenant's expense.
12. All electrical systems should be left in a safe condition that
conforms to code. Bare wires and dangerous installations should be corrected
prior to move-out.
13. All plumbing fixtures should be in good working order, including the
water heater. Faucets and toilets should not leak.
14. All dock bumpers must be left in place and well secured.
2
ADDENDUM FIVE
SIGN SPECIFICATIONS
ATTACHED TO AND A PART OF THE LEASE AGREEMENT
DATED JULY 13, 2000,
BETWEEN
PROLOGIS TRUST
and
KINETICS FLUID SYSTEMS
Per Paragraph 13, signage at the Project is subject to restrictions as
noted below. This is controlled to maintain a consistent overall visual appeal
of the building. Tenant may install white vinyl lettering on your front door, or
the glass next to the front door, with Tenant's company name only. The lettering
may not exceed 4" in height. No other storefront graphics are allowed.
Alternatively, Tenant may install one exterior sign which meets the standard
sign specifications for the Project.
I. INTRODUCTION
The intent of these sign criteria is to establish and maintain
guidelines consistent with the signage policies of the Landlord and the City or
County, as appropriate. Further, the purpose is to assure a standard conformance
for the design, size, fabrication techniques, and materials for signage for the
project and for tenant identification.
II. GENERAL REQUIREMENTS
A. Each Tenant will be supplied a copy of the sign criteria
prior to lease agreement.
B. Each Tenant sign shall be designed, fabricated and
installed in accordance with this sign criteria and
consistent with the Sign Code of the City or County as
amended from time to time by the governing authority.
C. Landlord's written approval of Design Drawings, and
Working Shop Drawings is required prior to the
commencement of Tenant construction.
D. Sign permits must be obtained from the City or County
prior to installation of signage.
E. Signs installed without written approval of the Landlord
or the appropriate city permit may be subject to removal
and proper reinstallation at Tenant's expense. Damage
may be assessed to cover costs of repairs to sign band
or removal of signage resulting from unapproved
installations.
F. Tenant and his sign contractor shall repair any damage
caused during installation of signage.
G. No labels shall be permitted on the exposed surface of
signs, except those required by local ordinance. Those
required must be installed in an inconspicuous location.
H. Flashing, strobing, moving or audible signs are not
permitted.
I. No window signs with the exception of suite numbers are
permitted without the express approval of Landlord.
J. No portable signs are to be displayed on site.
K. No secondary exterior signs are to be placed on building
wall elevations.
L. No freestanding and/or pylon type exterior signs will be
permitted without Landlord's prior approval.
III. TENANT RESPONSIBILITIES
Each Tenant shall, at its own expense, provide and maintain its own
identification sign in accordance with specifications noted herein.
IV. FASCIA-MOUNTED EXTERIOR SIGN
A. A sign fascia area will be provided for each Tenant at
the panels above the storefront lease line. Each Tenant
sign and/or logo sign shall be mounted in this space in
conformance with the attached sign exhibits.
B. Each Tenant will be allowed to have only one
wall-mounted sign. Any variance to the quantity, size,
mounting method will be allowed only upon Landlord's
written approval.
C. The sign panel shall be a .080 aluminum pan type sign
with an acrylic urethane finish. The specified size of
the sign shall be:
(1) 4' x 10' (on 12' face panel)
(2) 4' x 12' (on 18' & 20' face panels)
The Tenant I.D. sign cannot exceed 80% of the building wall panel space
available.
D. The sign panel shall have 90 degree corners and 1"
flanges. The sign background color will be painted to
match the accent band on the building. The background
color of the sign will be visible on at least one-half
of the sign or as approved by ProLogis.
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E. The program allows for the use of a corporate logo and
letter styles at the discretion of the Tenant. Final
approval of logo and letter style will be by the
Landlord. The logo colors are optional, however care
must be taken to select colors and images that will be
comparable and legible on the specified background. The
color of the lettering identifying the Tenant will be
PMS 343 (green) or as approved by the Landlord.
F. Sign layouts and colors must have written approval by
the Landlord prior to fabrication. The logo, when
applicable, will not exceed more than 50% of the sign
face.
G. There are two approved methods for applying the copy to
the sign background:
(1) Acrylic urethane
(2) Vinyl (high performance - seven year grade)
H. A margin equal to at least one-half of the height of the
type should appear to the left, right, top and bottom of
the Tenant name. Margin parameters will not apply to the
logo area of the sign. Neutral space between a two line
sign shall be a minimum of one-third the height of the
letter type. The sign panel will be mounted on the
building face in conformance with Landlord standards;
mounting clips (minimum 1/8" x 1" x 1" x 2" long
aluminum angle w/ red head anchors - no Kwick bolts
allowed), no exposed fasteners through the face of the
sign panel. The correct design, construction and
mounting of the sign panel. The correct design,
construction and mounting of the sign is the
responsibility of the Tenant and the sign contractor.
Any signage that is constructed/installed improperly
shall be removed and corrected and reinstalled by the
Tenant/Contractor at their expense.
I. All signs erected within the City of Austin and the
extra territorial jurisdiction that describe the
location of a business will require a sign permit. Sign
permits will require payment for:
(1) Site Inspection
(2) Construction Permit
(3) Application Fee
These costs are the responsibility of the Tenant. Licensed sign
contractors/companies are required to acquire these permits prior to
installation of the sign. Failure to acquire permits will not release the Tenant
from responsibility to acquire a permit for the sign.
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J. All Copy shall be installed vertically and horizontally,
centered on sign band fascia, and shall not exceed a
horizontal length of 80 percent of allowable fascia
panel.
V. MONUMENT SIGN
Monument sign will be provided by the Landlord. Tenant shall pay to
provide Tenant sign letters to match Landlord standards.
VI. MISCELLANEOUS SIGNAGE
A. Front Door Signage: Business name, address and operating
hours shall be white vinyl in Landlord approved letter
style. Landlord to approve all front door signage prior
to installation.
B. Dock Door Numbers: Provided by Landlord.
C. Suite Signs: Provided by Landlord.
D. Building Address: Provided by Landlord.
VII. TENANT SIGN SUBMISSIONS
A. Tenant sign contractors shall submit all Working Shop
Drawings to the Landlord or his appointed representative
for approval. Allow a minimum of ten working days, or
two weeks, for Landlord review and approval.
B. All submissions to include two (2) blueline prints. An
approved copy will be returned.
C. Shop Drawings must include:
(1) Full and complete dimensions
(2) Letter style, face (color, material and
thickness), returns (color, material and
thickness).
VII. APPROVALS
No sign shall be installed without first securing the necessary permits
from the appropriate governing jurisdiction. Artwork and sign location are to be
approved in writing by the Landlord or its appointed representative prior to
installation. Landlord reserves the right to reject any sign that does not
comply with the intent and spirit of these sign criteria.
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ADDENDUM SIX
HVAC MAINTENANCE CONTRACT
ATTACHED TO AND A PART OF THE LEASE AGREEMENT
DATED JULY, 13 2000,
BETWEEN
PROLOGIS TRUST
and
KINETICS FLUID SYSTEMS
Paragraph 11, captioned "TENANT REPAIRS," is revised to include the
following:
Tenant agrees to enter into and maintain through the term of the Lease,
a regularly scheduled preventative maintenance/service contract for servicing
all hot water, heating and air conditioning systems and equipment within the
Premises. Landlord requires a qualified HVAC contractor perform this work. A
certificate must be provided to the Landlord upon occupancy of the leased
Premises.
The service contract must become effective within thirty (30) days of
occupancy, and service visits should be performed on a quarterly basis. Landlord
suggests that Tenant send the following list to a qualified HVAC contractor to
be assured that these items are included in the maintenance contract:
1. Adjust belt tension;
2. Lubricate all moving parts, as necessary;
3. Inspect and adjust all temperature and safety controls;
4. Check refrigeration system for leaks and operation;
5. Check refrigeration system for moisture;
6. Inspect compressor oil level and crank case heaters;
7. Check head pressure, suction pressure and oil pressure;
8. Inspect air filters and replace when necessary;
9. Check space conditions;
10. Check condensate drains and drain pans and clean, if necessary;
11. Inspect and adjust all valves;
12. Check and adjust dampers;
13. Run machine through complete cycle.
ADDENDUM SEVEN
SPECIAL PROVISIONS
ATTACHED TO AND A PART OF THE LEASE AGREEMENT
DATED _________________, 2000,
BETWEEN
PROLOGIS TRUST
and
KINETICS FLUID SYSTEMS
1. TERMINATION OF EXISTING LEASES. Provided that no Event of Default
shall then exist and no condition shall then exist which with the passage of
time or giving of notice, or both, would constitute an Event of Default, upon
Tenant's written request, Landlord agrees to terminate the remaining Term of
either or both of the Lease Agreements by and between Landlord and Tenant for
22,400 square feet of space occupied by Tenant in Walnut Creek Corporate Center
#9 ("WCCC #9) and 16,000 square feet of space occupied by Tenant in Corridor
Park Corporate Center #5 ("CPCC #5), effective upon the occurrence of the last
of the following events: (i) Tenant's payment to Landlord of the then remaining
balance of the costs of the unamortized tenant. improvements installed for
Tenant's benefit at WCCC #9 and/or CPCC #5, if any; (ii) the Commencement Date
of this Lease; and (iii) Tenant's surrender to Landlord of the premises at WCCC
#9 and/or CPCC #5 in accordance with the terms of the Move-Out Conditions
Addendum attached to this Lease.
2. FREE MOVING PERIOD. Upon the earlier to occur of the expiration of
the 90-day period provided for Tenant's installation of its Tenant Improvements
(as provided in the Construction Addendum) or the Commencement Date, Tenant
shall commence payment of Base Rent and Operating Expenses at the Premises, and
shall have fourteen (14) days to move its property to the Premises from WPCC #9
and/or CPCC #5. Tenant shall have no obligation to
pay Base Rent and estimated Operating Expenses for the space(s) from which it is
moving during such 14-day period.
3. DELAYS IN COMMENCEMENT DATE: IN THE EVENT THE TENANT IMPROVEMENT DATE
IS DELAYED BEYOND NOVEMBER 2, 2000, THE LEASE COMMENCEMENT DATE SHALL BE
EXTENDED ONE DAY FOR EACH DAY THE TENANT IMPROVEMENT COMMENCEMENT DATE IS
DELAYED.
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EXHIBIT A
SITE PLAN
ATTACHED TO AND A PART OF THE LEASE AGREEMENT
DATED _____________ 2000,
BETWEEN PROLOGIS TRUST and KINETICS FLUID SYSTEMS
FIRST AMENDMENT TO LEASE AGREEMENT
BY AND BETWEEN
PROLOGIS INDUSTRIAL PROPERTIES INCORPORATED
(successor in interest to ProLogis Trust)
and
KINETICS FLUID SYSTEMS
This First Amendment To Lease Agreement is made and effective this 16th
of May, 2001, by and between ProLogis Industrial Properties Incorporated,
successor in interests ProLogis Trust, (hereinafter, "Landlord") and Kinetics
Fluid Systems (hereinafter, "Tenant").
W I T N E S S E T H:
WHEREAS, Landlord and Tenant previously entered into that certain Lease
Agreement dated the 13th of July, 2000, (the "Lease"), providing for the leasing
by Landlord to Tenant of that certain office/warehouse space containing 72,000
square feet known as Xxxxxxxx Xxxx Xxxxxxxxx Xxxxxx, Xxxxxxxx 00, 000 Xxxxxx
Xxxxx, Xxxxxx, Xxxxx 00000 (the "Premises"); and
WHEREAS, Landlord and Tenant desire to modify certain terms and
conditions set out in the Lease;
NOW, THEREFORE, pursuant to the foregoing, and in consideration of
mutual covenants and agreements contained herein, the Lease is modified and
amended as set out below:
1. The Lease Term shall commence on May 15, 2001 ("Commencement
Date") and end on May 31, 2008.
2. With respect to "Initial Monthly Base Rent" the Lease shall be
amended to reflect the following: Pursuant to Addendum Two,
"Construction (Allowance Amortized)" of the Lease, the
amortization of the Tenant Construction Overages ($144,000.00),
Tenants Monthly Base Rent shall be amended as follows:
May 15, 2001 to May 31, 2001 $15,793.55
June 1, 2001 to May 31, 2004 $31,419.64
June 1, 2004 to May 31, 2006 $34,299.64
June 1, 2006 to May 31, 2008 $37,179.64
IT IS HEREBY AGREED BY THE PARTIES HERETO, that with the exception of
those terms and conditions specifically modified and amended herein, the herein
referenced Lease shall remain in full force and effect in accordance with all
its terms and conditions.
In witness whereof, the parties hereto have executed this First
Amendment To Lease Agreement as of the day and year as first above written.
LANDLORD: TENANT:
ProLogis Industrial Properties Kinetics Fluid Systems
Incorporated
By: ProLogis Management Incorporated,
as Agent
By: By: /s/ Xxxxx Xxxxx
--------------------------------- --------------------------------
Name: Xxxxxx X. Xxxxx Name: Xxxxx Xxxxx
Title: Managing Director Title: Corporate Director Facilities
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