EXHIBIT 10.4
LEASE AGREEMENT
FORM
OPUS WEST CORPORATION,
A MINNESOTA CORPORATION ("LANDLORD")
PETCO ANIMAL SUPPLIES, INC.
A DELAWARE CORPORATION ("TENANT")
DATED: NOVEMBER 24, 1997
TABLE OF CONTENTS
Page
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ARTICLE 1 LEASE OF PREMISES AND LEASE TERM 4
1.1 Premises 4
1.2 Term of Lease 4
1.2.1 Acknowledgment of Commencement Date 4
1.2.2 Early Occupancy 4
1.3 Delivery of Premises 5
1.3.1 Acknowledgment of Delivery Date 5
ARTICLE 2 RENTAL AND OTHER PAYMENTS 5
2.1 Basic Rent 5
2.1.1 Free Rent Periods 5
2.2 Additional Rent 5
2.3 Rental Deposit 6
ARTICLE 3 PAYMENT OF PROPERTY TAXES AND ASSESSMENTS 6
3.1 Payment of Property Taxes 6
3.2 Property Taxes 6
3.3 Tenant's Right to Contest Property Taxes 6
3.4 Landlord's Right to Contest Property Taxes 7
ARTICLE 4 USE 7
4.1 Permitted Use 7
4.2 Acceptance of Premises 7
4.3 Rules and Regulations 7
4.4 Tenant's Obligations 7
4.5 Condition of Premises 7
ARTICLE 5 HAZARDOUS MATERIALS 8
5.1 Hazardous Materials 8
5.2 Hazardous Materials Laws 8
5.2.1 Federal 8
5.2.2 California 8
5.2.3 Other Laws and Regulations 8
5.2.4 Phase I Environmental Analysis 8
5.3 Compliance with Hazardous Materials Laws 8
5.4 Notice of Actions 9
5.5 Disclosure and Warning Obligations 9
5.6 Tenant Indemnification 9
5.7 Landlord Indemnification 10
5.8 Environmental Audits 10
5.9 Assignment and Subletting 10
ARTICLE 6 SERVICES AND UTILITIES 10
ARTICLE 7 MAINTENANCE, REPAIR AND ALTERATION OF PREMISES 10
7.1 Construction Warranty and Landlord Obligations 10
7.2 Tenant's Maintenance 11
7.3 Tenant's Waiver of Claims Against Landlord 11
ARTICLE 8 CHANGES AND ALTERATIONS 11
8.1 Tenant's Changes and Alterations 11
8.2 Liens 12
8.3 Compliance with Laws 12
ARTICLE 9 RIGHTS RESERVED BY LANDLORD 13
9.1 Landlord's Entry 13
9.2 Landlord's Cure 13
ARTICLE 10 INDEMNITY AND INSURANCE 13
10.1 Tenant's Insurance Obligations 13
10.2 Insurance Coverage 13
10.3 Insurance Provisions 14
10.4 Waiver of Subrogation 14
10.5 Rental Abatement Insurance 14
10.6 Indemnification by Tenant 14
10.7 Indemnification by Landlord 15
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TABLE OF CONTENTS
(CONTINUED)
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ARTICLE 11 ASSIGNMENT AND SUBLETTING 15
11.1 Restriction on Other Transfers 15
11.2 Permitted Transfers 15
11.3 Sublease Requirements 16
11.4 No Merger 16
11.5 Profits on Transfer 16
11.5.1 Tenant's Profit Statement 16
ARTICLE 12 DAMAGE OR DESTRUCTION 16
12.1 Destruction and Restoration 16
12.2 Application of Insurance Proceeds 16
12.3 Continuance of Tenant's Obligations 16
12.4 Damage or Destruction at End of Lease Term 17
12.5 Waiver of California Statutes 17
ARTICLE 13 CONDEMNATION 17
13.1 Condemnation of Entire Premises 17
13.2 Partial Condemnation/Termination of Lease 17
13.3 Partial Condemnation/Continuation of Lease 17
13.4 Continuance of Obligations 18
13.5 Tenant's Waiver 18
ARTICLE 14 DEFAULTS; REMEDIES 18
14.1 Events of Default 18
14.1.1 Failure to Pay 18
14.1.2 Failure to Perform 18
14.1.3 Other Defaults 18
14.2 Remedies 19
14.3 Right of Landlord to Re-Enter 19
14.4 Cumulative Remedies 19
14.5 Mitigation 19
14.6 Limitation on Remedies 19
14.7 Legal Costs 19
14.8 No Waiver 19
14.9 Waiver by Tenant 20
14.9.1 Delinquent Rental Payments 20
ARTICLE 15 PROTECTION OF CREDITORS 20
15.1 Subordination 20
15.2 Attornment 21
15.3 Estoppel Certificates 21
15.4 Mortgagee Protection Clause 21
15.5 Non-Disturbance 21
ARTICLE 16 TERMINATION OF LEASE 21
16.1 Surrender of Premises 21
16.2 Holding Over 22
ARTICLE 17 RENEWAL OPTIONS 22
17.1 Options to Renew 22
17.1.1 No Event of Default 22
17.1.2 Fair Market Rent 22
17.1.3 Exercise of Renewal Term(s) 22
17.1.4 Determination of Fair Market Rent 22
17.1.5 Arbitration 23
ARTICLE 18 EXPANSION OPTION 23
18.1 Option to Expand 23
18.2 No Event of Default 23
18.3 Exercise of Expansion Option 23
18.4 Expansion Terms 23
18.5 Expansion Space Basic Rent 24
18.6 Free Rent Period 24
18.7 Failure to Exercise Expansion Option 24
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TABLE OF CONTENTS
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ARTICLE 19 MISCELLANEOUS PROVISIONS 24
19.1 Notices 24
19.2 Landlord's Continuing Obligations 25
19.3 Net Lease 25
19.4 Successors 25
19.5 Memorandum of Lease 25
19.6 Captions and Interpretation 25
19.7 Relationship of Parties 25
19.8 Entire Agreement 25
19.9 Severability 25
19.10 Landlord's Limited Liability 25
19.11 Survival 25
19.12 Attorneys' Fees 25
19.13 Broker 26
19.14 Governing Law 26
19.15 Time is of the Essence 26
19.16 Joint and Several Liability 26
19.17 Delivery of Corporate Documents 26
19.18 Tenant's Financial Condition 26
19.19 Provisions are Covenants and Conditions 26
19.20 Business Days 26
19.21 Force Majeure 26
19.22 No Continuous Operation 26
19.23 Waiver of Landlord's Lien 27
19.24 Submission of Lease 27
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LEASE AGREEMENT
SUMMARY OF BASIC LEASE INFORMATION
1. Lease Date: November 24, 1997
2. Landlord: Opus West Corporation
3. Address of Landlord Opus West Management Corporation
for Payment of Rent: 0000 Xxxx Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, XX 00000-0000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
4. Address of Landlord Opus West Corporation
for Notices: 0000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attn: Xxxx X. Xxxxxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
With a copy to: Opus U.S. Corporation
0000 Xxxx Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, XX 00000-0000
Attn: Xxxxxx X. Xxxx, Esq.
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
With another copy to: Opus West Corporation
0000 Xxxx Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, XX 00000-0000
Attn: Xx. Xxxxxx X. Xxxxxxx, President
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
5. Tenant: PETCO Animal Supplies, Inc., a Delaware corporation
6. Address of Tenant PETCO Animal Supplies, Inc.
for Notices: 0000 Xxxxx Xxxx
Xxx Xxxxx, XX 00000-0000
Attn: Xxxx Xxxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
With a copy to: Xxxxxx Xxxxxxxx, Esq.
Attorney at Law
0000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxx Xxxxx, XX 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
7. Premises The parcel of land situated in the County of
Riverside, State of
California, described on
Exhibit "A," together with all Improvements thereon
(as defined in Section 1.1).
8. Landlord's The Landlord's Improvements to be constructed by
Improvements Landlord as described in the Work Letter (See
Exhibit "B").
9. Lease Term Initial Lease Term: 86 months from the
Commencement Date
Renewal Terms: Two (2) Renewal Terms each for
five (5) years.
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10. Rent: Basic Rent:
Lease Months: 1-2:
MONTHLY RENT FOR PREMISES: Basic
Rent is abated for first two (2)
months. Additional Rent is not abated.
Lease Months: 3-62:
MONTHLY RENT FOR PREMISES:
$89,991.00 ($.2727 per square foot)
MONTHLY RENT FOR EXPANSION LAND:
PRIOR TO EXPANSION LAND COMMENCEMENT DATE:
$4,125 ($.0125 per square foot of the
Building)
AFTER EXPANSION LAND COMMENCEMENT DATE:
Calculated pursuant to Article 18
Lease Months: 63-86 (and Lease months 87-122 if
Extension Election under Article 18 is exercised):
MONTHLY RENT FOR THE PREMISES:
$100,782 ($.3054 per square foot)
MONTHLY RENT FOR EXPANSION LAND:
PRIOR TO EXPANSION LAND COMMENCEMENT DATE:
$4,125 ($.0125 per square foot of the
Building)
AFTER EXPANSION LAND COMMENCEMENT DATE:
Calculated pursuant to Article 18
Lease Months: 123-146: (if Extension
Election under Article 18 is exercised):
MONTHLY RENT FOR THE PREMISES:
$112,860 ($.3420 per square foot)
MONTHLY RENT FOR EXPANSION LAND:
Calculated pursuant to Article 18
RENEWAL TERMS:
Calculated pursuant to Article 17.
The Basic Rent is subject to adjustment pursuant
to the provisions of Section 2.1 and 2.1.1 of
this Lease.
The term "Basic Rent" as used in this Lease
includes the portion of the rent for the
Expansion Land.
Maximum Rate of Interest: Prime plus two percent
(2%) per annum. For purposes of this Lease, the
term "Prime" shall mean the rate announced from
time to time by Bank of America, N.A., as its
prime or reference rate. If Bank of America shall
cease to use its prime or reference rate, then
Landlord shall select the rate of another financial
institution to be substituted therefor, which shall
be a major money center commercial bank.
Late Charge: 2% of the overdue amount.
11. Use: General Office and Warehouse Uses ("Permitted Use")
12. Deposit: None
13. Rental Deposit: $196,482.00 applicable to third (3rd) and fourth
(4th) month's Basic Rent.
14. Brokers: Landlord's and Tenant's Broker: Xxx & Associates
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15. Exhibits: The following exhibits are attached hereto and
incorporated into this Lease:
Exhibit "A".................................... Legal Description of Land
Exhibit "A-1".................................. Legal Description of Expansion Land
Exhibit "A-2".................................. Expansion Space
Exhibit "B".................................... Work Letter
Schedule 1 to Work Letter...................... Final Plans and Specifications
Exhibit "C".................................... Preliminary Report
Exhibit "D".................................... Commencement Date Acknowledgment
Exhibit "E".................................... Delivery Date Acknowledgment
Exhibit "F".................................... Subordination, Non-Disturbance and Attornment Agreement
The foregoing Basic Terms are hereby incorporated into and made a
part of this Lease. Each reference in this Lease to the Basic Terms shall
mean the information set forth above and shall be construed to incorporate
all of the terms provided under the particular Lease paragraph pertaining to
such information. In the event of a conflict between the Basic Terms and the
Lease, the Lease shall prevail.
Dated: November 24, 1997 LANDLORD:
OPUS WEST CORPORATION, a
Minnesota corporation
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------
Name: Xxxxxx X. Xxxxxxx
---------------------------
Title: President
---------------------------
Dated: November 20, 1997 TENANT:
PETCO ANIMAL SUPPLIES, INC., a
Delaware corporation
By: /s/ Xxxxx X. Xxxxx
---------------------------
Name: Xxxxx X. Xxxxx
---------------------------
Title: Sr. VP Finance
---------------------------
By:
---------------------------
Name:
---------------------------
Title:
---------------------------
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LEASE AGREEMENT
This
Lease Agreement (the "Lease"), which includes the Basic Terms
(as hereinafter defined), dated as of November __, 1997 ("Effective Date"),
is made by and between Landlord and Tenant.
ARTICLE 1
LEASE OF PREMISES AND LEASE TERM
1.1 PREMISES. Landlord, for and in consideration of the rents,
covenants and agreements hereinafter set forth, hereby leases to Tenant and
Tenant hereby leases from Landlord, upon and subject to the terms, covenants
and conditions hereinafter set forth, all that certain parcel of land
situated in the County of Riverside, and State of
California delineated on
Exhibit "A" attached hereto and incorporated herein ("Land"), together with
those certain Landlord's Improvements as defined in the Work Letter attached
hereto as Exhibit "B" ("Work Letter") to be constructed by Landlord,
including an approximately three hundred thirty thousand (330,000) square
foot building ("Building") and all other improvements, machinery, equipment,
fixtures and other property (except Tenant's trade fixtures), to be installed
or located thereon and all additions, alterations and replacements thereof
(collectively "Improvements"). Herein the Land and the Improvements are
referred to collectively as the "Premises". Tenant acknowledges that this
Lease is subordinate and subject to (a) all liens, encumbrances, deeds of
trust, reservations, covenants, conditions, restrictions and other matters
affecting the Premises ("Title Matters") (i) in effect on the Effective Date
of this Lease as specified in Exhibit "C" attached hereto and incorporated
herein ("Preliminary Report") or (ii) approved or deemed approved pursuant to
this Section 1.1, ("Permitted Encumbrances") and (b) any law, regulation,
rule, order or ordinance of any governmental entity applicable to the
Premises or the use or occupancy thereof, in effect on the execution of this
Lease or thereafter promulgated. In the event that, after the Effective Date
any new Title Matters appear of record, such matters shall be subject to the
review and approval of Tenant which approval shall not be withheld so long as
the new Title Matter does not materially and adversely impair the use or
occupancy by Tenant of the Premises for its intended purpose. Tenant shall
deliver written notice to Landlord of its approval or disapproval of such
Title Matters within ten (10) days after delivery by Landlord to Tenant of
such new Title Matter. If Tenant fails to respond within such ten (10) day
period and Landlord delivers a written reminder notice to Tenant and Tenant
fails to respond within five (5) days of the delivery of the written reminder
notice, the new Title Matter shall be deemed approved.
1.2 TERM OF LEASE. The initial term of this Lease ("Initial
Term") shall commence on the Delivery Date (defined in Section 1.3 below) as
such date may be extended until (i) the date of Substantial Completion of the
Landlord's Improvements (as defined in the Work Letter) ("Commencement
Date"); provided Tenant shall be permitted by the City to occupy and use the
Premises at such time. The Initial Term shall end on the date which is
eighty-six (86) months after the Commencement Date unless sooner terminated
pursuant to the terms of this Lease. Any reference to the Term of this Lease
or similar reference shall be a reference to the Initial Term together with
any renewal terms of this Lease specified in Article 17. Any reference to
Lease Year shall refer to each consecutive twelve (12) month period during
the Term commencing on the Commencement Date. For purposes of this Lease, a
"Lease Month" shall be defined as those successive calendar month periods
beginning with the Commencement Date and continuing through the Initial Term
or any Renewal Term of this Lease.
1.2.1 ACKNOWLEDGMENT OF COMMENCEMENT DATE. Tenant shall,
within ten (10) business days of request therefor by Landlord, execute an
acknowledgment of the Commencement Date prepared by Landlord in the form of
Exhibit "D" attached hereto and incorporated herein ("Commencement Date
Acknowledgment"), provided, however, that the failure of Tenant to execute
such acknowledgment shall not affect any obligation of Tenant hereunder or
the Landlord's determination of the Commencement Date. If the Tenant fails to
execute and deliver such Commencement Date Acknowledgment or provide written
notice of Tenant's disagreement with the contents thereof, then Landlord may
deliver a written reminder notice. If Tenant fails to respond in writing to
the written reminder notice within five (5) days, Landlord may deliver a
second written reminder notice. If Tenant fails to respond in writing to the
second written reminder notice within five (5) days, then Landlord and any
prospective purchaser or encumbrancer may conclusively presume and rely upon
the fact that the Commencement Date is the date specified in the Commencement
Date Acknowledgment.
1.2.2 EARLY OCCUPANCY. Tenant shall be entitled to early
occupancy of the Premises thirty (30) days prior to the Commencement Date in
accordance with this Section 1.2.2 and the Work Letter. Tenant's early
occupancy of the Premises for installation of furniture, fixtures and
equipment shall be subject to all the terms and conditions of this Lease,
other than the obligation to pay Basic Rent. Early occupancy of the Premises
shall not advance the expiration date of this Lease. Landlord shall have the
right to charge Tenant for any utility costs incurred as a result of Tenant's
early occupancy of the Premises. If during Tenant's early occupancy of the
Premises, Tenant desires to have security for the Premises, Tenant shall
provide such security at no cost to Landlord.
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1.3 DELIVERY OF PREMISES. Landlord shall use its commercially
reasonable efforts to deliver the Premises to Tenant on or before August 1,
1998 ("Delivery Date" with Landlord's Improvements) (as defined in the Work
Letter) Substantially Completed. If Landlord is unable to deliver the
Premises to Tenant by August 1, 1998, then Tenant shall be entitled to
receive from Landlord the amount of Five Thousand Dollars ($5,000) per day
for the first fifteen (15) days beyond August 1, 1998 that Landlord fails to
deliver the Premises (subject to force majeure as provided in Section 19.21)
and Ten Thousand Dollars ($10,000) per day for the fifteen (15) days beyond
August 15, 1998 that Landlord fails to deliver the Premises (subject to force
majeure as provided in Section 19.21) and the Delivery Date shall be deemed
to have occurred on such later date. If Landlord fails to deliver the
Premises on or before September 1, 1998 subject to extension for force
majeure as provided in Section 19.21 of this Lease, then Tenant shall, as
Tenant's sole and exclusive remedy, have the option to terminate this Lease
by delivering written notice ("Termination Note") to Landlord. If Tenant
accepts delivery of the Premises, then Tenant shall be deemed to have waived
its right to terminate the Lease as provided for under this Section 1.3.
Notwithstanding anything herein to the contrary, in the event Landlord
tenders possession of the Premises to Tenant in a substantially completed
condition during that period of time from October 1, 1998 through and
including November 30, 1998 (the "Non- Acceptance Period"), then, Tenant
shall have the right not to accept possession of the Premises during such
period by notifying Landlord, within five (5) days of the tender of
possession of the Premises to Tenant, in which case the Commencement Date
shall not occur until December 1, 1998.
1.3.1 ACKNOWLEDGMENT OF DELIVERY DATE. Tenant shall,
within ten (10) business days of request therefor by Landlord, execute an
acknowledgment of the Delivery Date prepared by Landlord in the form of
Exhibit "E" attached hereto and incorporated herein ("Delivery Date
Acknowledgment"), provided, however, that the failure of Tenant to execute
such acknowledgment shall not affect any obligation of Tenant hereunder or
the Landlord's determination of the Delivery Date. If the Tenant fails to
execute and deliver such Commencement Date Acknowledgment or provide written
notice of Tenant's disagreement with the contents thereof, then Landlord may
deliver a reminder notice. If Tenant fails to respond to the reminder notice
within five (5) days, Landlord may deliver a second reminder notice. If
Tenant fails to respond to the second reminder notice within five (5) days,
then Landlord and any prospective purchaser or encumbrancer may conclusively
presume and rely upon the following facts: (i) the Delivery Date is the date
specified in the Delivery Date Acknowledgment and (ii) that the Premises were
in acceptable condition and were delivered in compliance with all of the
requirements of Work Letter.
ARTICLE 2
RENTAL AND OTHER PAYMENTS
2.1 BASIC RENT. In consideration of the leasing of the Premises
and the construction of the Landlord's Improvements described in the Work
Letter, Tenant covenants to pay Landlord in advance, on the first day of each
and every calendar month during the Term, at the address of Landlord as
specified in Item 3 of the Basic Terms, or at such other place as Landlord
may from time to time designate in writing, a rental for the Initial Term of
this Lease calculated based upon the amounts specified in Item 10 of the
Basic Terms ("Basic Rent"). Upon Substantial Completion (as defined in the
Work Letter) of the Landlord's Improvements, Landlord shall deliver to Tenant
a certificate from Landlord's architect certifying the square footage of the
Premises ("Square Footage Certification") together with a calculation of the
Basic Rent. For purposes of calculating the Basic Rent, the Premises shall be
measured from the face of the exterior walls. Tenant shall have the right to
independently confirm such square footage by an architect certified in the
state of
California. In the event Tenant's confirmation of such square
footage differs from the calculation provided by Landlord, Tenant shall
provide notice to Landlord within fifteen (15) days after Landlord's delivery
of its Square Footage Certification. Landlord and Tenant shall have fifteen
(15) days after delivery of Tenant's notice to reach agreement on the final
measurement of the square footage of the Premises. In the event Landlord and
Tenant fail to reach agreement on the square footage of the Premises within
such fifteen-day period, then Landlord's architect and Tenant's architect
shall together select a third architect whose determination shall be binding
on the parties. Such selection shall be made within fifteen (15) days after
Landlord and Tenant determine that they cannot reach agreement on the square
footage of the Premises. In the event Landlord's architect and Tenant's
architect cannot reach agreement on a third architect, then the matter shall
be referred to the local office of the American Institute of Architects who
shall make such selection. The third architect so selected shall then make a
final determination of the square footage within fifteen (15) days of such
architect's selection and Landlord shall revise the Square Footage
Certification to reflect this final determination. The parties shall each
bear the costs of their own architect and shall share the costs equally of
any third architect. If the Square Footage Certification differs from the
approximate square footage of the Building set forth in Section 1.1 above,
then the Basic Rent shall be adjusted to reflect the square footage set forth
in the Square Footage Certification.
2.1.1 FREE RENT PERIODS. During the first two (2)
calendar months of the Initial Term, Basic Rent shall be abated ("Free Rent
Period").
2.2 ADDITIONAL RENT. Except as otherwise specifically provided
in Section 7.1 of this Lease, the Basic Rent shall be net to Landlord so that
this Lease shall yield, net to Landlord, the Basic Rent payable under this
Lease for each year of the Term of this Lease and that all charges payable by
Tenant under this
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Lease for Property Taxes, insurance premiums, utility charges, maintenance,
repair and replacement expenses, all expenses relating to compliance with
laws, and all other costs, fees, charges, expenses, reimbursements and
obligations of every kind and nature whatsoever relating to the operation and
use of the Premises, and/or the Expansion Land (defined below) (whether or
not Tenant has exercised the Expansion Land Option) which may arise or become
due during the Term or by reason of events occurring during the Term of this
Lease or which relate to the performance by Tenant of all the terms,
covenants, conditions and agreements to be performed, paid or observed by
Tenant hereunder shall be paid or discharged by Tenant, at Tenant's sole cost
and expense. Notwithstanding anything to the contrary, Tenant shall not be
responsible for any property management fees or earthquake insurance premiums
paid by Landlord during the Term of this Lease. Except as otherwise provided
in Section 7.1 or 14.9 of this Lease, all payments of Basic Rent and
Additional Rent shall be payable without previous demand therefor and without
any right of setoff or deduction whatsoever. All charges payable by Tenant
other than Basic Rent, however denoted, are called "Additional Rent." Unless
this Lease provides otherwise, all Additional Rent shall be paid with the
next installment of Basic Rent falling due. Rent for any partial month shall
be prorated on the basis of the number of days within such calendar month and
paid within ten (10) days of the later of (a) invoice from Landlord or (b)
the Commencement Date. Basic Rent and Additional Rent are sometimes
collectively referred to as "Rent" or "rent."
2.3 RENTAL DEPOSIT. Upon execution of this Lease, Tenant shall
deposit with Landlord the sum specified in the Basic Lease Provisions as the
Rental Deposit. The Rental Deposit shall be held by Landlord without
obligation or liability for payment of interest thereon as security for the
faithful payment of Basic Rent by Tenant, but shall be applicable to the
third (3rd) and fourth (4th) month's Basic Rent payments without offset or
deduction therefrom.
ARTICLE 3
PAYMENT OF PROPERTY TAXES AND ASSESSMENTS
3.1 PAYMENT OF PROPERTY TAXES. Provided Landlord delivers the
Property Tax xxxx to Tenant (if delivered to Landlord) promptly upon receipt
thereof, but no later than twenty (20) days prior to the day on which any
fine, penalty, interest or cost may be added thereto for the non- payment
thereof, Tenant covenants and agrees to pay during the Term of this Lease, as
Additional Rent, before any fine, penalty, interest or cost may be added
thereto for the nonpayment thereof, all Property Taxes (as defined in Section
3.2 below), which become due and payable during the Term of this Lease.
Within ten (10) days of written request from Landlord, Tenant shall furnish
Landlord with satisfactory evidence that the Property Taxes have been paid.
If any Property Taxes shall cover any period of time prior to or after the
term of this Lease, Tenant's share of such Property Taxes shall be equitably
prorated to cover only the period of time within the tax fiscal year during
which this Lease shall be in effect.
3.2 PROPERTY TAXES. "Property Taxes" shall include general real
property and improvement taxes, any form of assessment, special assessment or
reassessment, license, permit or inspection fee or tax, commercial rental tax
(but only to the extent the same is in lieu of some existing Property Taxes),
levy, charge, penalty or similar imposition, whatsoever or at all imposed by
any authority having the direct or indirect power to tax, including any city,
county, state or federal government, or any school, agricultural, lighting,
drainage or other improvement or special assessment district thereof, or any
agency or public body, and all other charges or burdens of whatsoever kind
and nature incurred in the use, occupancy, ownership, operation, leasing or
possession of the Premises, and/or the Expansion Land (whether or not Tenant
has exercised the Expansion Land Option) without particularizing by any known
name or by whatever name hereafter called, and whether any of the foregoing
be general or special, ordinary or extraordinary, foreseen or unforeseen.
Property Taxes shall include, without limitation, the following: (i) any tax
imposed upon the transaction or based upon a reassessment of the Premises,
and/or the Expansion Land (whether or not Tenant has exercised the Expansion
Land Option) due to a change in ownership or transfer of all or part of
Landlord's interest in the Premises the Land, and/or the Expansion Land
(whether or not Tenant has exercised the Expansion Land Option); (ii) any
assessments, taxes, fees, levies or charges in addition to, or in
substitution, partially or totally, for any items previously included within
the definition of Real Property Taxes; (iii) any tax or charge for fire
protection, street lighting streets, sidewalks, road maintenance, refuse,
sewer, water or other services provided to the Premises, and/or the Expansion
Land (whether or not Tenant has exercised the Expansion Land Option) by any
governmental agency; and (iv) capital levy, sales or use tax, gross receipts
tax or other tax on the rents received therefrom, or a franchise tax, or an
assessment, levy or charge measured by or based in whole or in part upon such
rents or value, now or hereafter imposed. Property Taxes do not, however,
include Landlord's state or federal income, franchise, estate or inheritance
taxes.
3.3 TENANT'S RIGHT TO CONTEST PROPERTY TAXES. Tenant shall have
the right at its own expense, and upon prior notice to Landlord, to contest
the amount or validity, in whole or in part, of any Property Taxes by
appropriate proceedings diligently conducted in good faith, but only after
payment of such Property Taxes, unless such payment, or a payment thereof
under protest, would operate as a bar to such contest or interfere materially
with the prosecution thereof, in which event, notwithstanding the provisions
of Section 3.1 hereof, Tenant may defer payment of such Property Taxes if
neither the Premises, and/or the Expansion Land
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(whether or not Tenant has exercised the Expansion Land Option)]nor any
portion thereof would, by reason of such deferment, be in danger of being
forfeited or lost and so long as such deferment will not otherwise materially
and adversely impact the Premises, and/or the Expansion Land (whether or not
Tenant has exercised the Expansion Land Option) or impair the value of the
Premises, and/or the Expansion Land (whether or not Tenant has exercised the
Expansion Land Option). Upon the termination of any such proceedings, Tenant
shall pay the amount of such Property Taxes as finally determined in such
proceedings, with any costs, fees, including attorney's fees, interest,
penalties, fines and other liability in connection therewith. Landlord shall
not be required to join in any proceedings referred to in this Section unless
the provisions of any law, rule or regulation at the time in effect shall
require that such proceedings be brought by or in the name of Landlord, in
which event Landlord shall join in such proceedings. Landlord shall not
ultimately be subject to any liability for the payment of any fees, including
attorney's fees, costs and expenses in connection with such proceedings and
Tenant shall reimburse Landlord for all such fees (including reasonable
attorney's fees), costs and expenses on demand.
3.4 LANDLORD'S RIGHT TO CONTEST PROPERTY TAXES. In addition to
the right of Tenant under Section 3.3 to contest the amount or validity of
Property Taxes, Landlord shall also have the right, but not the obligation,
to contest the amount or validity, in whole or in part, of any Property Taxes
not contested by Tenant. Any such contests by Landlord shall be at Landlord's
sole expense; provided, however, that if the amounts payable by Tenant for
Property Taxes are reduced (or if a proposed increase in such amounts is
avoided or reduced) by reason of Landlord's contest of Property Taxes, Tenant
shall reimburse Landlord for the costs incurred by Landlord in contesting
Property Taxes, but such reimbursements shall not be in excess of the amount
saved by Tenant by reason of Landlord's actions in contesting such Property
Taxes.
ARTICLE 4
USE
4.1 PERMITTED USE. Tenant may use the Premises only for the
Permitted Use specified in Item 11 of the Basic Terms. Tenant shall not use
or occupy the same, or knowingly permit them to be used or occupied, contrary
to any statute, governmental, quasi-governmental or administrative rule,
order, ordinance, requirement or regulation applicable thereto ("Regulatory
Requirement"), or in any manner which would violate any certificate of
occupancy affecting the same, or which would make void or voidable any
insurance then in force with respect thereto or which would cause structural
injury to the Improvements or cause the value or usefulness of the Premises,
or any portion thereof, substantially to diminish (reasonable wear and tear
excepted), or which would constitute a public or private nuisance or waste
and Tenant agrees that it will promptly, upon discovery of any such use, take
all necessary steps to compel the discontinuance of such use. Landlord
represents that the Premises are zoned for the Permitted Use.
4.2 ACCEPTANCE OF PREMISES. Tenant shall accept delivery of the
Premises with Landlord's Improvements, as set forth on Exhibit "B"
substantially completed. Within thirty (30) days of Substantial Completion (as
defined below) of Landlord's Improvements, Landlord and Tenant shall provide a
"punchlist" identifying the corrective work of the type commonly found on an
architectural punchlist with respect to Landlord's Improvements, which list
shall be based on whether such items were required by the approved Final Plans
and Specifications. Within ten (10) Business Days after delivery of the
punchlist, Landlord shall commence the correction of punchlist items and
diligently pursue such work to completion. The punchlist procedure to be
followed by Landlord and Tenant shall in no way limit Tenant's obligation to
occupy the Premises under the Lease nor shall it in any way excuse Tenant's
obligation to pay Rent as provided under the Lease unless such punch list
items preclude Tenant from occupying the Premises as reasonably determined by
Tenant. Nothing in this Section 4.2 shall be deemed to diminish any obligation
of Landlord under Section 7.1. Tenant acknowledges, that except as
specifically provided in this Lease and the Work Letter, neither Landlord nor
any agent of Landlord has made any representation or warranty with respect to
the Premises or the Building or with respect to the suitability or fitness of
either for the conduct of Tenant's business or for any other purpose. Tenant
shall comply with the Permitted Encumbrances.
4.3 RULES AND REGULATIONS. Tenant shall comply with all rules
and regulations adopted by Landlord from time to time for the Project;
provided that such rules and regulations are applied in a non-discriminatory
manner, and do not adversely affect Tenant's hours of operation or otherwise
adversely affect the operation of Tenant's business. In the event of any
conflict between such rules and regulations and the provisions of this Lease,
this Lease shall prevail.
4.4 TENANT'S OBLIGATIONS. Tenant shall obtain and pay for all
permits, required for Tenant's occupancy of the Premises and shall promptly
take all substantial and non-substantial actions necessary to comply with all
applicable Regulatory Requirements regulating the particular type of use by
Tenant of the Premises, including, without limitation, the Occupational
Health and Safety Act and the Americans with Disabilities Act.
4.5 CONDITION OF PREMISES. Landlord shall deliver the Premises
to Tenant clean and free of debris on the Commencement Date, with Landlord's
Improvements Substantially Completed as provided in the Work Letter and,
except as disclosed in the Phase 1 Report, (defined below), the improvements
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constructed by Landlord as Landlord's Improvements shall, as of the
Commencement Date, not contain Hazardous Materials (defined below) in
violation of any of the Hazardous Materials Laws (defined below).
ARTICLE 5
HAZARDOUS MATERIALS
5.1 HAZARDOUS MATERIALS. The term "Hazardous Material(s)" shall
mean any toxic or hazardous substance, material or waste or any pollutant or
contaminant or infectious or radioactive material, including but not limited
to those substances, materials or wastes regulated now or in the future under
any of the statutes or regulations listed in Section 5.2, and any and all of
those substances included within the definitions of "hazardous substances,"
"hazardous materials," "hazardous waste," "hazardous chemical substance or
mixture," "imminently hazardous chemical substance or mixture," "toxic
substances," "hazardous air pollutant," "toxic pollutant," or "solid waste"
in the statutes or regulations in Section 5.2. Hazardous Materials shall also
mean any and all other similar terms defined in other federal, state and
local laws, statutes, regulations, orders or rules, and materials and wastes
which are, or in the future become, regulated under applicable local, state
or federal law for the protection of health or the environment, or which are
classified as hazardous or toxic substances, materials or wastes, pollutants
or contaminants, as defined, listed or regulated by any federal, state or
local law, regulation or order or by common law decision, including, without
limitation, (i) trichloroethylene, tetrachloroethylene, perchloro- ethylene
and other chlorinated solvents, (ii) oil or any petroleum products or
fractions thereof, (iii) asbestos, (iv) polychlorinated biphenyls, (v)
flammable explosives, (vi) urea formaldehyde and (vii) radioactive materials
and waste, and (viii) infectious waste.
5.2 HAZARDOUS MATERIALS LAWS. The term "Hazardous Materials
Law(s)" shall mean any federal, state or local laws, ordinances, codes,
statutes, regulations, administrative rules, policies and orders, and other
authority, existing now or in the future, which classify, regulate, list or
define hazardous substances, materials, wastes contaminants, pollutants
and/or the Hazardous Materials, including without limitation the following
statutes and regulations, and any other legal authority, regulations, or
policies relating to or implementing such statutes and regulations:
5.2.1 FEDERAL. Comprehensive Environmental Response,
Compensation and Liability Act of 1980 ("CERCLA" or "Superfund"), as amended
by the Superfund Amendments and Reauthorization Act of 1986 ("XXXX"), 42
U.S.C. Section 9601 et seq.; Resource Conservation and Recovery Act of 1976
("RCRA"), 42 U.S.C. Section 6901 et seq.; Clean Water Act ("CWA"), 33 U.S.C.
Section 1251 et seq.; Clean Air Act ("CAA"), 42 U.S.C. Section 78401 et seq.;
Toxic Substances Control Act ("TSCA"), 15 U.S.C. Section 2601 et seq.; The
Refuse Act of 1899, 33 U.S.C. Section 407; Occupational Safety and Health Act
("OSHA"), 29 U.S.C. Section 651 et seq.; Hazardous Materials Transportation
Act, 49 U.S.C. Section 1801, et seq.; United States Department of
Transportation Table (49 CFR 172.101 and amendments thereto) and the
Environmental Protection Agency Table (40 CFR Part 302 and amendments
thereto);
5.2.2
CALIFORNIA. Xxxxxxxxx-Xxxxxxx-Xxxxxx Hazardous
Substance Account Act ("
California Superfund"), Cal. Health & Safety Code
Section 25300 et seq.;
California Hazardous Waste Control Act, Cal. Health &
Safety Code Sections 25100 et seq.; Xxxxxx-Cologne Water Quality Control Act
("Xxxxxx-Cologne Act"), Cal. Water Code Section 13000 et seq.; Hazardous
Waste Disposal Land Use Law, Cal. Health & Safety Code Section 25220 et seq.;
Safe Drinking Water and Toxic Enforcement Act of 1986 ("Proposition 65"),
Cal. Health & Safety Code Section 25249.5 et seq.; Hazardous Substances
Underground Storage Tank Law, Cal. Health & Safety Code Section 25280 et
seq.;
California Hazardous Substance Act, Cal. Health & Safety Code Section
28740 et seq.; Air Resources Law, Cal. Health & Safety Code Section 39000 et
seq.; Hazard-ous Materials Release Response Plans and Inventory, Cal. Health
& Safety Code Sections 25500-25541; Toxic Pits Cleanup Act of 1984 ("TCPA"),
Cal. Health & Safety Code Sections 25208-25208.17;
5.2.3 OTHER LAWS AND REGULATIONS. All other regulations
promulgated pursuant to said foregoing laws or any amendments or replacement
thereof, provided such amendments or replacements shall in no way limit the
original scope and/or definition of Hazardous Materials defined herein as of
the execution date of this Lease.
5.2.4 PHASE I ENVIRONMENTAL ANALYSIS. Landlord has
delivered to Tenant two (2) Phase I Environmental Analysis Reports ("Phase 1
Reports") covering the Premises, and the Expansion Land, respectively and
Tenant acknowledges that this shall be deemed satisfaction of any obligation
on the part of Landlord to disclose any and all Hazardous Materials on or
relating to the Premises, and the Expansion Land as required hereunder or by
any Hazardous Materials Laws.
5.3 COMPLIANCE WITH HAZARDOUS MATERIALS LAWS. Tenant shall not
cause or knowingly and intentionally permit any Hazardous Materials to be
brought upon, kept, or used in connection with the Premises or by Tenant, its
agents, employees or contractors in a manner or for a purpose prohibited by
or which could result in liability under any applicable law, regulation, rule
or ordinance, including, without limitation, the Hazardous Materials Laws.
Tenant shall, at its own expense, at all times and in all respects comply
with all Hazardous Materials Laws relating to the industrial hygiene,
environmental protection or the use, analysis, generation, manufacture,
storage, presence, disposal or transportation of any Hazardous
8
Materials brought thereon by Tenant, its agents, employees, or contractors.
Tenant shall, at its own expense, procure, maintain in effect and comply with
all conditions of any and all permits, licenses and other governmental and
regulatory approvals relating to Hazardous Materials that are brought upon,
knowingly and intentionally permitted to be brought upon, kept, or used in
connection with the Premises and/or the Expansion Land by Tenant or Tenant's
agents, employees, or contractors ("Tenant's Agents") and Tenant shall cause
any and all said Hazardous Materials to be removed from the Premises and/or
the Expansion Land and transported in accordance with and in compliance with
all Hazardous Materials Laws. Tenant shall in all respects, handle, treat,
deal with and manage any and all Hazardous Materials that are brought upon,
knowingly and intentionally permitted to be brought upon, kept, or used in
connection with the Premises by Tenant or Tenant's Agents, in complete
conformity with all applicable Hazardous Materials Laws and prudent industry
practices regarding the management of such Hazardous Materials. Upon
expiration or earlier termination of this Lease, Tenant shall at its own
expense, cause all Hazardous Materials (to the extent such Hazardous
Materials are generated, stored, released or disposed of during the Term of
this Lease by Tenant or Tenant's Agents) to be removed from the Premises
and/or the Expansion Land and transported for use, storage or disposal in
accordance and in compliance with all applicable Hazardous Materials Laws.
Tenant shall not take any remedial action in response to the presence of any
Hazardous Materials in, on, about or under the Premises and/or the Expansion
Land or in any Improvements situated on the Land and/or the Expansion Land,
nor enter into any settlement agreement, consent, decree or other compromise
in respect to any claims relating to any way connected with the Premises or
the Improvements on the Land and/or the Expansion Land without first
notifying Landlord of Tenant's intention to do so and affording Landlord
ample opportunity to appear, intervene or otherwise appropriately assert and
protect Landlord's interest with respect thereto.
5.4 NOTICE OF ACTIONS. Tenant shall immediately notify Landlord
in writing of (a) any enforcement, clean-up, removal or other governmental or
regulatory action instituted, completed or threatened pursuant to any
Hazardous Materials Laws; (b) any written claim made or threatened by any
person against Landlord, or the Premises, relating to damage, contribution,
cost recovery, compensation, loss or injury resulting from or claimed to
result from any Hazardous Materials; and (c) any written reports made to any
environmental agency arising out of or in connection with any Hazardous
Materials in, on or about the Premises or with respect to any Hazardous
Materials removed from the Premises, including, any complaints, notices,
warnings, reports or asserted violations in connection therewith. Tenant
shall also provide to Landlord, as promptly as possible, and in any event
within five (5) business days after Tenant first receives or sends the same,
with copies of all written claims, reports, complaints, notices, warnings or
asserted violations relating in any way to the Premises or Tenant's use
thereof. Upon written request of Landlord (to enable Landlord to defend
itself from any claim or charge related to any Hazardous Materials Law),
Tenant shall promptly deliver to Landlord notices of hazardous waste
manifests reflecting the legal and proper disposal of all such Hazardous
Materials removed or to be removed from the Premises and/or the Expansion
Land. All such manifests shall list the Tenant or its agent as a responsible
party only if such Hazardous Materials were caused or knowingly and
intentionally permitted to be brought upon the Premises or Expansion Land by
Tenant, its agent, employees, or contractors, and in such case shall not
attribute responsibility for any such Hazardous Materials to Landlord.
5.5 DISCLOSURE AND WARNING OBLIGATIONS. Tenant shall also
comply with all laws, ordinances and regulations regarding warning
obligations with respect to the presence or danger of Hazardous Materials or
as otherwise may be required by law (to the extent Tenant has knowledge
thereof). Tenant acknowledges and agrees that it will promptly notify
Landlord prior to reporting to any governmental or quasi-governmental
agencies any matters relating to Hazardous Materials and Landlord shall have
the right to review such reports. So long as Tenant will not be in violation
of any laws requiring Tenant to make such reports, Landlord shall have the
right to assume control over the making of such reports to the applicable
governmental or quasi-governmental agencies. Tenant further agrees to
cooperate with Landlord in complying with all Hazardous Materials Laws
regarding the disclosure of, the presence or danger of Hazardous Materials,
including, with limitation, all notices or other requirements under
California Health and Safety Code Section 25919 et seq., and 25249.5 et seq.
and California Code of Regulations Section 12000 et seq. Notwithstanding the
foregoing, Tenant shall prior to delivering any notices required by this
Section 5.5 to any governmental entity or agency, deliver written notice to
Landlord of the same so as to afford Landlord opportunity to take over such
obligation if Landlord so desires.
5.6 TENANT INDEMNIFICATION. Tenant shall indemnify, defend
(with counsel reasonably acceptable to Landlord), protect and hold Landlord
and each of Landlord's officers, directors, partners, employees, agents,
attorneys, successors and assigns (collectively "Landlord's Indemnitees")
free and harmless from and against any and all claims, liabilities, damages,
costs, penalties, forfeitures, losses or expenses (including reasonable
attorneys' fees) for death or injury to any person or damage to any property
whatsoever (including water tables and atmosphere) ("Claims") to the extent
arising or resulting in whole or in part from the presence or discharge of
Hazardous Materials to the extent such Hazardous Materials are in excess of
legally permissible amounts under the Hazardous Materials Laws by Tenant,
Tenant's agents, employees, or contractors in, on, under, upon or from the
Premises and/or the Expansion Land or the Improvements located thereon or
from the transportation or disposal of Hazardous Materials to or from the
Premises and/or the Expansion Land to the extent caused by Tenant.
9
5.7 LANDLORD INDEMNIFICATION. Landlord shall indemnify, defend
(with legal counsel reasonable acceptable to Tenant) and hold Tenant and
Tenant's officers, directors, partners, employees, agents, attorneys,
successors and assigns (collectively, "Tenant's Indemnitees") free and
harmless from and against any and all Claims to the extent arising or
resulting in whole or in part from the presence or discharge of Hazardous
Materials to the extent such Hazardous Materials are in excess of legally
permissible amounts under the Hazardous Materials Laws by Landlord, or its
employees, agents or contractors in, on, under, upon or for the Premises
and/or the Expansion Land or the Improvements thereon or from the
transportation or disposal of Hazardous Materials by Landlord or its
employees, agents, or contractors. Landlord's obligations hereunder shall
include, without limitation, and whether foreseeable or unforeseeable, all
costs of any required or necessary repairs, clean-up or detoxification or
decontamination of the Premises and/or the Expansion Land or the
Improvements, and the presence and implementation of any closure, remedial
action or other required plans in connection therewith, and shall survive the
expiration of or early termination of the term of this Lease and any costs
and fees incurred in the enforcement of the indemnity action. In addition,
with respect to any Hazardous Materials that are in excess of the legally
permissible amounts under the Hazardous Materials Laws that were on the Land
and/or the Expansion Land at the time that the Phase 1 Reports were issued
and which were not disclosed by the Phase 1 Reports ("Pre-existing Hazardous
Materials"), Landlord agrees to remediate such Pre-existing Hazardous
Materials if, as and when required by a governmental agency to the extent
required by such governmental agency. Landlord further agrees to indemnify
and hold Tenant harmless from any fines, penalties or other fees imposed
against Tenant by such governmental agency as a result of such Pre-exiting
Hazardous Materials. Notwithstanding the foregoing, nothing in this Section
5.7 shall be deemed to impose any obligation or liability on Landlord for
remediation, indemnification or payment of any fines, penalties or other fees
if the same would not have been imposed but for some act or omission of
Tenant.
5.8 ENVIRONMENTAL AUDITS. Landlord shall have the right, at any
time during the term of this Lease, to conduct an environmental audit. If
Landlord conducts such an audit, it shall be at Landlord's sole cost and
expense, except that if said audit discloses the presence of Hazardous
Materials on the Premises, or the Expansion Land in violation of Tenant's
obligations under this Article 5, then the cost of such audit shall be borne
by Tenant. If the audit confirms the presence of Hazardous Materials in on or
under the Premises, or the Expansion Land or the groundwater thereunder in
violation of Tenant obligations under this Article 5, Landlord shall have the
right to require Tenant to immediately commence all necessary remediation,
abatement, removal and cleanup actions to return the Premises, and/or the
Expansion Land and any other property of whatever nature to their condition
existing prior to the appearance of Hazardous Materials. Any plan of
remediation, abatement, removal and cleanup shall be subject to the prior
approval of Landlord, in its sole discretion. Except as specified above,
Tenant shall not perform or cause to be performed, any Hazardous Materials
surveys, studies, reports or inspections, relating to the Premises, and/or
the Expansion Land without obtaining Landlord's advance written consent.
5.9 ASSIGNMENT AND SUBLETTING. If (i) any anticipated use of
the Premises by any proposed assignee or sublessee involves the generation,
storage, use, treatment or disposal of Hazardous Materials in a manner or for
a purpose prohibited by any governmental agency or authority, or (ii) the
proposed assignee or sublessee is subject to an enforcement order issued by
any governmental activity in connection with the use, disposal, or storage of
Hazardous Materials, it shall not be unreasonable for Landlord to withhold
its consent to an assignment or subletting to such proposed assignee or
sublessee.
ARTICLE 6
SERVICES AND UTILITIES
During the Term of this Lease, Tenant will pay, when due, all
charges of every nature, kind or description (including, without limitation,
charges imposed by any utility company as a condition precedent to furnishing
or continuing to furnish utilities or services to the Premises) for utilities
furnished to the Premises or chargeable against the Premises, including all
charges for water, sewage, heat, gas, light, garbage, electricity, telephone,
steam, power, or other public or private utility services and any charges or
fees for present or future water or sewer capacity to serve the Premises, any
charges for the underground installation of gas or other utilities or
services, and other charges relating to the extension of or change in the
facilities necessary, and requested by Tenant, to provide the Premises with
adequate utility services. Notwithstanding the foregoing, nothing contained
herein shall be deemed to limit Landlord's obligations to complete Landlord's
Improvements pursuant to the terms of the Work Letter.
ARTICLE 7
MAINTENANCE, REPAIR AND ALTERATION OF PREMISES
7.1 CONSTRUCTION WARRANTY AND LANDLORD OBLIGATIONS. Except to
the extent caused by Tenant's specific use of the Premises or the negligent
acts or intentional misconduct of Tenant, its agents, employees, or
contractors, or as otherwise provided under this Lease, Landlord shall repair
and maintain in good order, condition and repair the foundation, exterior
walls and structural portions of the roof of the Building ("Structural
Portions of the Building"). However, Landlord shall not be obligated to
maintain or repair windows,
10
doors, plate glass, surfaces of exterior walls, or the membrane or other
nonstructural elements of the roof and the same shall not be deemed to be
included within the definition of the Structural Portions of the Premises
Building. Landlord warrants, as Landlord's sole and exclusive warranty
concerning the Landlord's Improvements and the Improvements (including the
HVAC System), the Landlord's Improvements and the Improvements (including the
HVAC System) against defective workmanship and/or materials for a period of
one (1) year from the date of Substantial Completion (as defined in the Work
Letter) of Landlord's Improvements and Landlord agrees, at its sole cost and
expense, to repair or replace any defective item occasioned by poor
workmanship and/or materials during said one-year period, and performance of
such one- year warranty shall be Landlord's sole and exclusive obligation
with respect to defective workmanship and/or materials, and Tenant's rights
to enforce such one-year warranty shall be Tenant's sole and exclusive remedy
with respect to such defective workmanship and/or materials in limitation of
any contract, warranty or other rights, whether express or implied, that
Tenant may otherwise have under applicable law. Landlord covenants that it
will obtain, as part of the costs of the Landlord's Improvements, a ten (10)
year roof warranty. Landlord shall assign to Tenant, to the extent permitted
under any such warranties provided to Landlord, on a non-exclusive basis, all
rights Landlord may have under any warranties provided by contractors or
subcontractors. From and after the expiration of the one-year warranty of
Landlord against defective workmanship and materials, Landlord agrees to
cooperate with Tenant in the enforcement by Tenant, at Tenant's sole cost and
expense, of any express warranties or guaranties of workmanship or materials
given by subcontractors or materialmen or any service contracts that
guarantee or warrant against defective workmanship or materials or provide
service or repair for a period of time in excess of the one-year period
described above. Notwithstanding anything to the contrary, Landlord, at
Landlord's sole cost and expense, shall be solely responsible for repairing
latent structural defects in the Structural Portions of the Building during
the Initial Term and any Renewal Terms (provided that if Tenant has
penetrated, attached any item to, or otherwise damaged the same, Landlord
shall not be responsible for, nor shall Landlord remedy, any defects
attributable to such actions or conditions). During the Initial Term, Tenant
shall be responsible for annual roof inspections and clean out of gutters and
down spouts and Landlord shall be responsible for all other related
maintenance of the roof structure (exclusive of the roof membrane) including
all roof leaks during the first five (5) years of Initial Lease Term
(provided that if Tenant has penetrated, attached any item to, or otherwise
damaged the same, Landlord shall not be responsible for, nor shall Landlord
remedy, any defects attributable to such actions or conditions). Thereafter,
Tenant's exposure shall be capped at Five Thousand Dollars ($5,000.00)
annually inclusive of inspections and clean out of gutters and down spouts.
7.2 TENANT'S MAINTENANCE. Except as otherwise expressly
provided in this Lease, Tenant, at its sole cost and expense, throughout the
Term of this Lease, including the warranty period specified in Section 7.1
above, whether Tenant is occupying or has vacated the Premises), shall take
good care of the Premises (including the Landlord's Improvements any
improvements hereafter erected or installed on the Land), and shall keep the
same in at least the same order, condition and repair (including interior
repainting and refurnishing, as needed), as when received and shall make and
perform all routine maintenance thereof and all necessary repairs thereto,
interior and exterior, structural and nonstructural, ordinary and
extraordinary, foreseen and unforeseen, of every nature, kind and
description. When used in this Article 7, "repairs" shall include all
necessary replacements, renewals, alterations, additions and betterments,
interior and exterior, structural and non-structural, ordinary and
extraordinary, foreseen and unforeseen, of every nature, kind and
description, including, without limitation, any repairs, replacements,
renewals, alterations and additions required by any governmental law,
ordinance or regulations now or hereafter enacted relating to the Premises.
All repairs made by Tenant shall be at least equal in quality, workmanship
and cost to the original work and shall be made by Tenant in accordance with
all laws, ordinances and regulations whether heretofore or hereafter enacted.
7.3 TENANT'S WAIVER OF CLAIMS AGAINST LANDLORD. Except as
otherwise specifically provided in this Lease or the Work Letter or this
Lease, Landlord shall not be required to furnish any services or facilities
or to make any repairs or alterations in, about or to the Premises or any
improvements hereafter erected thereon.
ARTICLE 8
CHANGES AND ALTERATIONS
8.1 TENANT'S CHANGES AND ALTERATIONS. Tenant shall not make any
alterations, additions or improvements ("Alterations") to the Property,
without Landlord's prior written consent, which shall not be unreasonably
withheld, except for non structural alterations in the interior of the
Building that do not affect the Structural Portions of the Building or
exterior of the Building ("Permitted Alterations"). All Alterations shall be
done promptly and in a good and workmanlike manner and in compliance with all
laws, ordinances, orders, rules, regulations and requirements of all federal,
state and municipal governments and appropriate departments, commissions,
boards and officers thereof, and in accordance with the orders, rules and
regulations of the Board of Fire Underwriters where the Premises are located,
or any other body exercising similar functions. All such Alterations which
affect the Structural Portions of the Building or the exterior of the
Building ("Structural or Exterior Alterations") shall be performed by a
contractor approved by Landlord, in its reasonable discretion. If required by
Landlord, Tenant shall provide demolition and/or lien and completion bonds in
form and amount satisfactory to Landlord in connection with any Structural or
Exterior Alterations.
11
Tenant shall promptly remove any Alterations constructed in violation of this
Section upon Landlord's written request. All permanent Alterations (i.e.
other than Tenant's movable trade fixtures and equipment), including the
Permitted Alterations made or installed by Tenant shall immediately, upon
completion or installation thereof, become the property of Landlord without
payment therefor by Landlord, and shall be surrendered to Landlord on the
expiration of the Term of this Lease. Prior to commencement of the
Alterations, Tenant shall deliver Builder's All Risk Insurance, in an amount
acceptable to Landlord, in conformance with the requirements of Article 10 of
this Lease. Notwithstanding anything to the contrary set forth herein, Tenant
agrees, at Tenant's sole cost and expense, and within ten (10) days request
therefor by Landlord at the end of the Lease Term or earlier termination
thereof, to remove any of the following types of Permitted Alterations and
repair the Premises where such Permitted Alterations were situated to the
same or better condition than existed prior to Tenant installation of said
Permitted Alterations: racking, Permitted Alterations to create manufacturing
and/or office space, drop ceilings, mezzanines, and demising walls. To the
extent Tenant removes any other Alterations, Tenant shall also, within ten
(10) days of removal thereof, restore the Premises to the condition that
existed prior to Tenant's installation of such Alterations.
8.2 LIENS. Tenant shall keep the Premises free from any
mechanics', materialmen's, designer's or other liens arising out of any work
performed, materials furnished or obligations incurred by or for Tenant or
any person or entity claiming by, through or under Tenant. Landlord shall
have the right at all times to post and keep posted on the Premises any
notices which it deems necessary for protection from such liens. If any such
liens are filed and are not released of record by payment or posting of a
proper bond within thirty (30) days after such filing, Landlord may, without
waiving its rights and remedies based on such breach by Tenant and without
releasing Tenant from any obligations hereunder, cause such liens to be
released by any means it shall deem proper, including payment of the claim
giving rise to such lien or posting security to cause the discharge of such
lien, in which event all amounts paid by Landlord shall immediately be due
and payable by Tenant as Additional Rent. Tenant hereby indemnifies,
protects, defends and holds Landlord and Landlord's Indemnitees and the
Premises harmless from any liability, cost, obligation, expense (including,
without limitation, reasonable attorneys' fees and expenses and attorneys'
fees incurred in enforcing of this indemnity), or claim of any mechanics',
materialmen's, design professional's or other liens in any manner relating to
any work performed, materials furnished or obligations incurred by or for
Tenant or any person or entity claiming by, through or under Tenant. Tenant
shall notify Landlord in writing fifteen (15) days prior to commencing any
Alterations so that Landlord shall have the right to record and post notices
of non-responsibility or any other notices deemed necessary by Landlord on
the Premises. Tenant shall not create, and shall within thirty (30) days
discharge and satisfy of record, any other lien, encumbrance, charge,
security interest, or other right or interest which shall be or become a
lien, encumbrance, charge or security interest upon the Premises, or any
portion thereof.
8.3 COMPLIANCE WITH LAWS. Landlord warrants, that provided that
the Tenant Work, and any subsequent Alterations, is in compliance with all
present laws, codes, regulations and ordinances, upon completion of
Landlord's Improvements, the utilities, including without limitation the
HVAC, (as hereinafter defined), the structural portions, the interior and the
exterior of the Premises will meet with all laws, codes, regulations and
ordinances in effect at the time the Premises is delivered by Landlord to
Tenant and will be in good working condition and order (except for punch-list
items). If, at any time, the Premises or such utilities do not meet with such
laws, codes, regulations and ordinances as required by regulations of
governing authorities (other than as a result of Tenant's negligent acts or
the failure of Tenant Work or Tenant's Alterations to comply with such laws,
codes, regulations and ordinances), then, except for work that is
specifically required as a result of the business operation being conducted
by Tenant, the Premises will be brought up to the proper standards at
Landlord's expense. Landlord's receipt of all governmental permits required
for initial occupancy shall be deemed satisfaction of the foregoing
representations and obligations. Landlord shall also be responsible for
paying any and all fines or penalties assessed by any governmental authority
if the Premises fails to meet codes and regulations of governmental
authorities during the Term of this Lease, other than as a result of the
failure of the Tenant Work or Alterations and/or improvements made by Tenant
to comply with all laws, codes, regulations and ordinances as required by
regulations of governing authorities. Tenant shall be responsible for paying
any and all fines or penalties for the failure of the Tenant Work and
Alterations and/or improvements made by Tenant to comply with all laws,
codes, regulations and ordinances as required by regulations of governing
authorities during the Term of this Lease and shall cause the Tenant Work and
any Alterations and/or improvements made by Tenant to be brought up to the
proper standards at Tenant's expenses.
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ARTICLE 9
RIGHTS RESERVED BY LANDLORD
9.1 LANDLORD'S ENTRY. In addition to any other right of entry
provided to Landlord in this Lease, Landlord reserves the right, at all
reasonable times and upon twenty-four (24) hours prior notice to Tenant
except in case of emergency when no notice shall be required (but Landlord
will use reasonable efforts to give prior or contemporaneous notice), to
enter the Premises to: (i) inspect them; (ii) show the Premises to
prospective purchasers, mortgagees or tenants (provided that Landlord shall
only show the Premises to prospective tenants during the last (6) six months
of the Lease Term); (iii) post notices of non-responsibility or other notices
as may be customary in the State of California; (iv) for performance of any
of Landlord's repair and/or maintenance rights or obligations; or (v) to
exercise any other rights, obligations or remedies that Landlord may have
under this Lease. Landlord and its authorized representatives may enter the
Premises at any time in case of emergency and shall have the right to use any
and all means which Landlord may deem proper to open such doors during an
emergency in order to obtain entry to the Premises. Any entry to the Premises
obtained by Landlord in the event of any emergency shall not, under any
circumstances, be construed or deemed to be a forcible or unlawful entry
into, or detainer of, the Premises, or to be an eviction of Tenant from the
Premises or any portion thereof.
9.2 LANDLORD'S CURE. If Tenant shall default in the performance
of its obligations under this Lease and if such default is not cured within
the applicable periods provided in Article 14, Landlord upon twenty (20) days
prior notice to Tenant (except in emergency in which case no notice shall be
required) may, but shall not be obligated to, make any such payment or
perform any such act on Tenant's part without waiving its right based upon
any default of Tenant and without releasing Tenant from any obligations
hereunder. Except as may be specifically provided to the contrary in this
Lease, Tenant shall pay to Landlord, within twenty (20) days after delivery
by Landlord to Tenant of statements therefor, sums equal to expenditures
reasonably made and obligations reasonably incurred by Landlord in connection
with the remedying by Landlord of Tenant's defaults. If there are any
outstanding monetary obligations of Tenant under this Lease attributable to
the period prior to the expiration or termination of this Lease, such
obligations shall survive the termination or expiration of this Lease and
such amount shall be payable to Landlord within ten (10) days after receipt
of notice therefor from Landlord.
ARTICLE 10
INDEMNITY AND INSURANCE
10.1 TENANT'S INSURANCE OBLIGATIONS. Tenant, at its sole cost
and expense, shall obtain and continuously maintain in full force and effect
during the Term of this Lease, commencing with the earlier to occur of (a)
Commencement Date or (b) the date Tenant first occupies the Premises,
policies of insurance covering the Improvements constructed, installed or
located on the Premises naming the Landlord, as an additional insured,
against (a) loss or damage by fire; (b) loss or damage from such other risks
or hazards now or hereafter embraced by an "Extended Coverage Endorsement,"
including, but not limited to, windstorm, hail, explosion, vandalism, riot
and civil commotion, damage from vehicles, smoke damage, water damage and
debris removal; (c) loss for damage by earthquake if requested by Landlord
(provided that Landlord shall reimburse Tenant for the cost of insurance
allocable to earthquake coverage); (d) loss from so-called explosion,
collapse and underground hazards; and (e) loss or damage from such other
risks or hazards of a similar or dissimilar nature which are now or may
hereafter be customarily insured against with respect to improvements similar
in construction, design, general location, use and occupancy to the
Improvements other than loss for flood. At all times, such insurance coverage
shall be in an amount equal to 100% of the then "full replacement cost" of
the Improvements exclusive of excavations, foundations and footings "Full
Replacement Cost" shall be interpreted to mean the cost of replacing the
improvements without deduction for depreciation or wear and tear, and it
shall include a reasonable sum for architectural, engineering, legal,
administrative and supervisory fees connected with the restoration or
replacement of the Improvements in the event of damage thereto or destruction
thereof. If a sprinkler system shall be located in the Improvements,
sprinkler leakage insurance shall be procured and continuously maintained by
Tenant at Tenant's sole cost and expense. Prior to occupancy of the Premises,
Tenant shall deliver to Landlord a copy of such insurance policy.
10.2 INSURANCE COVERAGE. During the Term of this Lease, Tenant,
at its sole cost and expense, shall obtain and continuously maintain in full
force and effect comprehensive general liability insurance or commercial
liability insurance against any loss, liability or damage on, about or
relating to the Premises, or any portion thereof, with limits of not less
than Three Million Dollars ($3,000,000.00) combined single limit, per
occurrence and aggregate, coverage on an occurrence basis. Such insurance
shall specifically insure (by contractual liability endorsement) Tenant's
indemnity obligations under this Lease.
The insurance set forth in this Section 10.2 shall be maintained by
Tenant at not less than the limits set forth herein. To the extent it is
customary in the marketplace for insurance limits to be higher than those
specified in this Section 10.2, such limits may be increased, upon written
notice from Landlord to Tenant, at the end of each five (5) year period
during which this Lease is in effect ("Adjustment Date") based upon
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increases (if any) in the Index (defined below). The most recent Index in
publication prior to the Commencement Date shall be the "Base Index." On each
Adjustment Date, the insurance limits shall be increased by the percentage
equal to the percentage increase (if any) in the most recent Index in
publication prior to the Adjustment Date ("Comparison Index") over the Base
Index. The term "Index" as used in this Lease shall mean the United States
Department of Labor, Bureau of Labor Statistics Consumer Price Index for
Urban Wage Earners and Clerical Workers, Los Angeles-Long Beach-Anaheim
Average Subgroup "All Items," (1982-84 = 100). If the 1982-84 base of the
Index should hereafter be changed, then the new base shall be converted to
the 1982-84 base and the base as so converted shall be used. If at any time
the Index should not exist in the format recited herein, Landlord shall
substitute any official index published by the Bureau of Labor Statistics, or
successor or similar governmental agency, as may then be in existence and
shall, in Landlord's opinion, be most nearly equivalent thereto.
10.3 INSURANCE PROVISIONS. All policies of insurance required by
this Article shall provide that the proceeds thereof shall be payable to
Tenant and Landlord as their interests appear, and if Landlord so requests
shall also be payable to any contract purchaser of the Premises and the
holder of any mortgages now or hereafter becoming a lien on the fee of the
Premises, or any portion thereof, provided that any such mortgagee has
provided Tenant with the Non-Disturbance Agreement (defined below). Tenant
shall not, on Tenant's own initiative or pursuant to request or requirement
of any third party, take out separate insurance concurrent in form or
contributing in the event of loss with that required in Section 10.1 hereof,
unless Landlord is named therein too as an additional insured with loss
payable as in said Section 10.1 provided. Tenant shall immediately notify
Landlord whenever any such separate insurance is taken out and shall deliver
to Landlord original certificates evidencing the same. Any such insurance
obtained and maintained by Tenant shall name Landlord, and, if requested by
Landlord, Landlord's mortgagee, as an additional insured therein, provided
that any such mortgagee has provided Tenant with the Non-Disturbance
Agreement (defined below), and such insurance shall be obtained and
maintained from and with a reputable and financially sound insurance company
authorized to issue such insurance in California. Each policy required under
this Article 10 shall have attached thereto (a) an endorsement that such
policy shall not be canceled or materially changed without at least thirty
(30) days prior written notice to Landlord, and (b) an endorsement to the
effect that the insurance as to the interest of Landlord shall not be
invalidated by any act or neglect of Landlord or Tenant and an "agreed value"
endorsement. All policies of insurance, together with any endorsements
reflecting the changes to the policy required to comply with this Lease,
shall be written in companies reasonably satisfactory to Landlord and
licensed in the state in which the Premises are located. Such certificates of
insurance shall be in a form reasonably acceptable to Landlord, shall be
delivered to Landlord upon commencement of the Term and prior to expiration
of such policy, new certificates of insurance, shall be delivered to Landlord
not less than twenty (20) days prior to the expiration of the then current
policy Term. In the event Tenant shall fail to procure such insurance, or to
deliver such policies or certificates and appropriate endorsements, Landlord
may, at its option, procure such policies for the account of Tenant after
five (5) days' written notice, and the cost thereof shall be paid by Tenant
to Landlord as Additional Rent within fifteen (15) days after delivery to
Tenant of bills therefor.
10.4 WAIVER OF SUBROGATION. Tenant shall cause to be inserted in
the policy or policies of insurance required by this Article 10 hereof a
so-called "Waiver of Subrogation Clause" as to Landlord. Each party hereby
waives, releases and discharges the other party, its agents and employees
from all claims whatsoever arising out of loss, claim, expense or damage to
or destruction covered or coverable by insurance required under this Article
10 notwithstanding that such loss, claim, expense or damage may have been
caused by such other party, its agents or employees, and each party agrees to
look to the insurance coverage only in the event of such loss.
10.5 RENTAL ABATEMENT INSURANCE. Landlord may maintain insurance
coverage (including loss of use and rental abatement coverage) upon Tenant's
business and upon all personal property of Tenant or the personal property of
others kept, stored or maintained on the Premises against loss or damage by
fire, windstorm or any other casualties or causes for such amount as Landlord
may desire. Tenant shall reimburse Landlord for the actual and commercially
reasonable costs of such rental abatement insurance, covering a period not to
exceed eighteen (18) months, on an annual basis. Tenant shall pay such
amounts to Landlord as Additional Rent, no later than thirty (30) days after
receipt of a statement therefor from Landlord. Landlord shall have the right
to require payments on a semi-annual or annual basis. The failure of Landlord
to deliver a statement for such charges shall not constitute a waiver of
Landlord's rights to collect such amounts if delivered within six (6) months.
Tenant shall have the right, upon at least six (6) months prior notice, to
elect to carry its own business interruption or rental abatement insurance,
in amounts reasonably acceptable to Landlord and which satisfy the
requirements set forth in Section 10.3 and this Section 10.5 of this Lease.
In such case, Landlord shall cancel the rental abatement insurance. Tenant
agrees that such policies shall contain a waiver of subrogation clause as to
Landlord.
10.6 INDEMNIFICATION BY TENANT. To the fullest extent allowed by
law, Tenant shall at all times indemnify, protect, defend with legal counsel
reasonably acceptable to Landlord) and hold Landlord and Landlord's
shareholders, officers, directors, partners, employees, lender, managing
agent, successors and/or assigns (collectively, "Landlord's Indemnities")
harmless against and from any and all claims, costs, liabilities, actions and
damages (including, without limitation, attorneys' fees and costs and costs
related to the enforcement of this indemnity provision) arising from or out
of any occurrence in, upon or about the Premises
14
or the occupancy or use by Tenant of the Premises, or the condition of the
Premises to the extent caused by any act or omission of Tenant, its agents,
contractors, servants, tenants, invitees (i.e. persons directed or requested
by Tenant to enter the Premises) or licensees (collectively "Tenant's
Agents") or arising from any act or negligence of Tenant or Tenant's Agents,
or a default by Tenant under this Lease or, to the extent covered by
insurance Tenant is required to carry under this Lease, arising from any
accident, injury or damage whatsoever caused to any person, or entity
occurring during the Term of this Lease, in or about the Premises, and from
and against all costs, attorney's fees, expenses and liabilities incurred in
or about any such claim or action or proceeding brought thereon.
Notwithstanding the foregoing, Tenant shall not have any liability hereunder
or otherwise with respect to any claim, cost, liability, action or damage
caused by the negligence or wilful misconduct of Landlord or any of
Landlord's Indemnitees or Landlord's Agents or any material default by
Landlord under this Lease. In case any action or proceeding be brought
against Landlord by reason of any such claim, Tenant, upon notice from
Landlord, covenants to defend such action or proceeding by counsel reasonably
satisfactory to Landlord.
10.7 INDEMNIFICATION BY LANDLORD. To the fullest extent allowed
by law, Landlord shall at all times indemnify, protect, defend (with legal
counsel reasonably acceptable to Tenant) and hold Tenant and Tenant's
shareholders, officers, directors, partners, employees, affiliates,
successors and/or assigns (collectively, "Tenant's Indemnitees") harmless
against and from any and all claims, costs, liabilities, actions and damages
(including, without limitation, attorneys' fees and costs and costs related
to the enforcement of this indemnity provision) arising from or out of any
negligence or willful misconduct by Landlord or any of the Landlord's
Indemnities or Landlord's Agents, in, on, or about the Premises or any breach
by Landlord of its obligations under this Lease, and from and against all
costs, attorneys' fees, expenses and liabilities incurred in or about any
such claim or action or proceeding brought thereon; provided, however, that
in no event shall Landlord be obligated to indemnify, defend and hold Tenant
or any of Tenant's Indemnitees or Tenant's Agents harmless to the extent of
any claims, costs, liabilities, actions or damages arising from or out of, or
occasioned in whole or in part by, the negligence or wilful misconduct of
Tenant, Tenant's Indemnitees or Tenant's Agents or any material default by
Tenant under this Lease. In case any action or proceeding be brought against
Tenant by reason of any such claim, Landlord, upon notice from Tenant,
covenants to defend such action or proceeding by counsel reasonably
satisfactory to Tenant. Landlord shall cause the obligations under this
Section 10.7 to be covered under Landlords policy of commercial general
liability insurance.
ARTICLE 11
ASSIGNMENT AND SUBLETTING
11.1 RESTRICTION ON OTHER TRANSFERS. Except as specifically
permitted in Section 11.2 below, Tenant shall not assign, sublease, mortgage,
pledge, transfer, or otherwise encumber or dispose of this Lease, or any
interest therein, or in any manner assign, mortgage, pledge, transfer or
otherwise encumber or dispose of its interest or estate in the Premises, or
any portion thereof ("Transfer"), without obtaining Landlord's prior written
consent in each and every instance, which consent shall not be unreasonably
withheld, delayed or conditioned. If Landlord fails to respond to any request
by Tenant for Landlord's consent or approval within twenty (20) days of such
request, Tenant shall provide Landlord with a second written request. If
Landlord fails to respond to such second written request within ten (10) days
of Landlord's receipt thereof, Landlord shall be deemed to have consented to
such Transfer; provided that such second written request specifically states
that Landlord's failure to respond within ten (10) days shall be deemed
consent under this Section 11.1 of this Lease. No Transfer shall release
Tenant from its liability under this Lease. Tenant acknowledges and agrees
that this covenant and agreement is a material inducement to the decision of
Landlord to lease the Premises to Tenant and that Landlord may use its sole
and absolute discretion hereunder. Landlord shall have the right to withhold
consent to any sublessee in the event any of the conditions set forth in
Section 5.8 of this Lease apply.
11.2 PERMITTED TRANSFERS. Notwithstanding the provisions of
Section 11.1, Tenant shall have the right, without Landlord's prior consent,
to Transfer all or any portion of the Premises to a related entity or
affiliate of Tenant. Tenant may also Transfer the lease to any successor
entity, whether by merger, consolidation or otherwise, and to any entity that
purchases all or substantially all of Tenant's assets. Finally Tenant shall
be permitted to assign or sublease to an Affiliate (as hereinafter defined)
of Tenant. The foregoing Transfers described in this Section 11.2 are
referred to as "Permitted Transfers." No such Permitted Transfer shall
require Landlord's prior approval or consent, provided that Tenant shall
provide to Landlord written notice of the Transfer, within a reasonable time
thereafter, including the name of the transferee and the terms of the
Transfer, and an agreement executed by the transferee acceptable to and in
favor of Landlord whereby the transferee agrees to assume Tenant's
obligations under this Lease. No such Permitted Transfer shall release Tenant
from its liability under this Lease. As used herein, the term "Affiliate"
shall mean any person, directly or indirectly through one or more
intermediaries, controlling, controlled by, or under common control with the
person in question, which, in the case of a person which is a partnership,
shall include each of the partners thereof and each of their Affiliates. The
term "control," as used in the immediately preceding sentence, means, with
respect to a person that is a corporation, the right to exercise, directly or
indirectly, more than twenty percent (20%) of the voting rights attributable
to the shares of the controlled corporation, and, with respect to a person
that is not a corporation, the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of the
controlled person.
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11.3 SUBLEASE REQUIREMENTS. Any sublease permitted under this
Article 11 shall contain provisions to the effect that, except as may
otherwise be specifically agreed to by Landlord in writing, (i) such sublease
is only for actual use and occupancy by the sublessee; (ii) such sublease is
subject and subordinate to all of the terms, covenants and conditions of this
Lease and to all of the rights of Landlord thereunder; and (iii) Tenant shall
continue to be and remain liable under the Lease. In the case of a sublease,
a copy of any sublease fully executed and acknowledged by Tenant and the
sublessee shall be mailed to Landlord ten (10) days prior to the effective
date of such sublease, which sublease shall be in form and content reasonably
acceptable to Landlord.
11.4 NO MERGER. No merger shall result from Tenant's sublease of
the Premises under this Article 11, Tenant's surrender of this Lease or the
termination of this Lease in any other manner.
11.5 PROFITS ON TRANSFER. In the event that Tenant shall make a
permitted Transfer hereunder of all or any portion of the Premises (the
"Transfer Space"), then the following shall apply: Tenant shall pay Landlord
monthly, as Additional Rent, at the same time as the monthly installment of
Basic Rent required hereunder, fifty percent (50%) of the "Profit" payable by
the Transferee pursuant to the terms reserved in the Transfer agreement,
assignment or sublease. For purposes of this Section 11.5, "Profit" shall
mean all rent and other amounts paid or payable by the Transferee to Tenant
pursuant to the terms of the Transfer which are in excess of the applicable
Basic Rent and Additional Rent (if the obligation to pay Additional Rent is
not passed through to or assumed by the Transferee under this Lease) after
deducting therefrom Tenant's actual and reasonable costs incurred in
connection with the Transfer, including but not limited to reasonable real
estate commissions, costs of renovations or improvements, reasonable tenant
improvement allowances, reasonable attorneys fees and reasonable rent
concessions.
11.5.1 TENANT'S PROFIT STATEMENT. Tenant shall and hereby
agrees that it will furnish to Landlord upon written request from Landlord a
complete statement, setting forth in detail the computation of all profit
derived and to be derived from such assignment or sublease, such computation
to be made in accordance with generally accepted accounting principles.
Tenant agrees that Landlord or its authorized representatives shall be given
access, at all reasonable times (at Tenant's Southern California office) upon
ten (10) business days advance notice, not to exceed more than one (1) time
per year per Transfer, to the books, records and papers of Tenant relating
directly to any such assignment or subletting.
ARTICLE 12
DAMAGE OR DESTRUCTION
12.1 DESTRUCTION AND RESTORATION. Tenant covenants and agrees
that in case of damage to or destruction of the Improvements after the
Commencement Date by fire or otherwise, Tenant at its sole cost and expense,
shall promptly restore, repair, replace and rebuild the same ("Restoration")
as nearly as possible to the condition that the same were in immediately
prior to such damage or destruction with such changes or alterations as may
be reasonably acceptable to Tenant or required by law. Tenant shall forthwith
give Landlord written notice of such damage or destruction upon the
occurrence thereof and specify in such notice, in reasonable detail, the
extent thereof. The Restoration shall be carried on and completed in
accordance with the provisions and conditions of this Lease. All insurance
proceeds shall be held by Landlord and Tenant as co-trustee. If the insurance
moneys in the hands of Landlord and Tenant as co-trustees shall be deemed to
be insufficient by Landlord to pay the entire costs of the Restoration,
Tenant agrees, only to the extent Tenant failed to maintain the insurance
Tenant is required to maintain under this Lease, to pay any deficiency
promptly upon demand that would have been paid by the insurance company had
Tenant maintained the required insurance.
12.2 APPLICATION OF INSURANCE PROCEEDS. All insurance moneys
recovered by Landlord or Tenant shall be held by Landlord and Tenant as
co-trustees on account of such damage or destruction, less the costs, if any,
to Landlord of such recovery, shall be applied to the payment of the costs of
the Restoration and shall be paid out from time to time as the Restoration
progresses, in accordance with requirements imposed by Landlord or any
mortgagee of record, provided that any such mortgagee has theretofore or
concurrently provided, Tenant with the Non-Disturbance Agreement (defined
below). Tenant shall furnish Landlord at the time of any such payment with
lien releases and evidence reasonably satisfactory to
Landlord that there are no unpaid bills in respect to any work, labor,
services or materials performed, furnished or supplied in connection with such
Restoration.
12.3 CONTINUANCE OF TENANT'S OBLIGATIONS. No destruction of or
damage to the Premises, or any portion thereof, by fire, casualty or
otherwise shall permit Tenant to surrender this Lease or shall relieve Tenant
from its liability to pay to Landlord the Basic Rent and Additional Rent
payable under this Lease or from any of its other obligations under this
Lease, and Tenant waives any rights now or hereafter conferred upon Tenant by
present or future law or otherwise to quit or surrender this Lease or the
Premises, or any portion thereof, to Landlord or to any suspension,
diminution, abatement or reduction of rent on account of any such damage or
destruction.
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12.4 DAMAGE OR DESTRUCTION AT END OF LEASE TERM. In the event
the damage or destruction occurs during the last eighteen (18) months of the
Lease Term, then, notwithstanding the provisions of Section 12.1 and 12.2,
Tenant shall not be obligated to complete such Restoration so long as Tenant
assigns to Landlord all insurance proceeds except those amortized and
allocable to Tenant's Work (as defined in the Work Letter) (including the
amount of any deductibles and any other amounts necessary) so that Landlord
can complete such Restoration.
12.5 WAIVER OF CALIFORNIA STATUTES. Tenant waives the protection
of any statute, code or judicial decision which grants a Tenant the right to
terminate a lease in the event of damage or destruction of the Premises,
including, but not limited to, the provisions of Sections 1932(2) and 1933(4)
of the Civil Code or any successor statute or law. Tenant agrees that the
provisions of this Article shall govern the rights and obligations of
Landlord and Tenant in the event of any damage or destruction of the
Premises. Notwithstanding the foregoing, Basic Rent and Additional Rent shall
be abated proportionately during any period of repair under this Article for
a period not to exceed eighteen (18) months; provided that Tenant has
complied with the requirements of Section 10.5.
ARTICLE 13
CONDEMNATION
13.1 CONDEMNATION OF ENTIRE PREMISES. If, during the Term of
this Lease, the entire Premises shall be taken as the result of the exercise
of the power of eminent domain (hereinafter referred to as the
"Proceedings"), this Lease shall terminate on the date of vesting of title
pursuant to such Proceedings. In any taking of the Premises, or any portion
thereof, whether or not this Lease is terminated as in this Article provided,
Tenant shall not be entitled to any portion of the award for the taking of
the Premises or damage to the Improvements, except as otherwise provided for
in Section 13.3 with respect to the restoration of the Improvements, or for
the estate or interest of Tenant therein, all such award, damages,
consequential damages and compensation being hereby assigned to Landlord, and
Tenant hereby waives any right it now has or may have under present or future
law to receive any separate award of damages for its interest in the
Premises, or any portion thereof, or its interest in this Lease, except that
Tenant shall have, nevertheless, the limited right to prove in the
Proceedings and to receive any award which may be made for damages to or
condemnation of Tenant's movable trade fixtures and equipment, and for
Tenant's relocation costs in connection therewith.
13.2 PARTIAL CONDEMNATION/TERMINATION OF LEASE. If, during the
Term of this Lease, less than the entire Premises, but more than ten percent
(10%) of the floor area of the Building, or more than fifteen percent (15%)
of the land area of the Premises, shall be taken in any such Proceedings,
this Lease shall, upon vesting of title in the Proceedings, terminate as to
the portion of the Premises so taken, and Tenant shall have the right to
terminate this Lease if the business of Tenant conducted in the portion of
the Premises taken cannot reasonably be carried on with substantially the
same utility and efficiency in the remainder of the Premises and Tenant
cannot construct or secure substantially similar space to the space so taken,
on the Premises. Such termination as to the remainder of the Premises shall
be effected by notice in writing given not more than sixty (60) days after
the date of vesting of title in such Proceedings, and shall specify a date
not more than sixty (60) days after the giving of such notice as the date for
such termination.
13.3 PARTIAL CONDEMNATION/CONTINUATION OF LEASE. If ten percent
(10%), or less, of the floor area of the Building, or fifteen percent (15%),
or less, of the Land, shall be taken in such Proceedings, or if more than ten
percent (10%) of the floor area of the Building or more than fifteen percent
(15%) of the Land is taken (but less than the entire Premises), and this
Lease is not terminated as in Section 13.2 hereof provided, this Lease shall,
upon vesting of title in the Proceedings, terminate as to the parts so taken.
The net amount of the award (after deduction of all costs and expenses,
including attorneys' fees), shall be held by Landlord and Tenant as
co-trustees and applied as hereinafter provided. Tenant, in such case,
covenants and agrees, at Tenant's sole cost and expense (subject to
reimbursement to the extent hereinafter provided), promptly to restore that
portion of the Improvements on the Premises not so taken to a complete
architectural and mechanical unit for the use and occupancy of Tenant as in
this Lease provided. In the event that the net amount of the award (after
deduction of all costs and expenses, including attorney's fees) that may be
received by Landlord and held by Landlord and Tenant as co-trustees in any
such Proceedings is insufficient to pay all costs of such restoration work,
Landlord may elect to either (a) terminate the Lease in accordance with the
provisions of Section 13.1 or (b) continue the Lease and restore that portion
of the Improvements on the Premises not so taken to a complete architectural
and mechanical unit for the use and occupancy of Tenant as in this Lease
provided. If Landlord elects to terminate the Lease under this Section 13.3,
Landlord shall deliver to Tenant written notice of Landlord's election to
terminate along with an estimate of the amount of the deficiency between the
costs of complete restoration and the award ("Deficiency Amount"), Tenant may
continue the Lease in effect by delivery written notice to Landlord, within
fifteen (15) days of receipt of Landlord's termination notice, of its
election to continue the Lease and pay the Deficiency Amount. If Tenant
elects to continue the Lease, Tenant shall deliver to Landlord and Tenant as
co-trustees the Deficiency Amount within fifteen (15) days of written request
by Landlord. If the Premises are restored, the award amounts shall be
disbursed in accordance with the same requirements set forth in Section 12.2
of this Lease. If the Lease is terminated, the award amounts shall be
disbursed in accordance with Section 13.1.
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13.4 CONTINUANCE OF OBLIGATIONS. In the event this Lease is not
terminated, then from and after the date of vesting of title in such
Proceedings, Tenant shall continue to pay the Basic Rent and Additional Rent
and other charges payable hereunder, as in this Lease provided, to be paid by
Tenant, subject to an abatement of a just and proportionate part of the Basic
Rent according to the extent and nature of such taking as may be mutually
agreed upon by Tenant and Landlord.
13.5 TENANT'S WAIVER. Tenant waives the protection of any
statute, code or judicial decision which grants Tenant a right to any
compensation other than that set forth in this Article in the event of a
taking, including, but not limited to, California Code of Civil Procedure
Section 1265.150 or any successor statute or law.
ARTICLE 14
DEFAULTS; REMEDIES
14.1 EVENTS OF DEFAULT. The occurrence of any of the following
shall constitute a default and breach of this Lease by Tenant:
14.1.1 FAILURE TO PAY. If Tenant fails to pay such Rent
or such charge as and when due where such failure continues for ten (10) days
after written notice thereof by Landlord to Tenant.
14.1.2 FAILURE TO PERFORM. If Tenant fails to perform any
of Tenant's nonmonetary obligations under this Lease for a period of thirty
(30) days after written notice from Landlord; provided that if more time is
required to complete such performance, Tenant shall not be in default if
Tenant commences such performance within the thirty (30)-day period and
thereafter diligently pursues its completion.
14.1.3 OTHER DEFAULTS. (i) If Tenant makes a general
assignment or general arrangement for the benefit of creditors; (ii) a
petition for adjudication of bankruptcy or for reorganization or
rearrangement is filed by or against Tenant and is not dismissed within sixty
(60) days; (iii) if a trustee or receiver is appointed to take possession of
substantially all of Tenant's assets located at the Premises or of Tenant's
interest in the Lease and possession is not restored to Tenant within sixty
(60) days; or (iv) if substantially all of Tenant's assets located at the
Premises or of Tenant's interest in this Lease is subjected to attachment,
execution or other judicial seizure which is not discharged within sixty (60)
days. If a court of competent jurisdiction determines that any of the acts
described in this Subsection is not a default under this Lease, and a trustee
is appointed to take possession (or if Tenant remains a debtor in possession)
and such trustee or Tenant transfers Tenant's interest hereunder, then
Landlord shall receive, as Additional Rent, the difference between the Rent
(or any other consideration) paid in connection with such assignment or
sublease and the Rent payable by Tenant hereunder.
The notices required by this Section are intended to satisfy any and all
notice requirements imposed by law on Landlord and are not in addition to any
such requirement.
14.2 REMEDIES. On the occurrence of any default by Tenant,
Landlord may, at any time thereafter, with or without any additional notice
or demand and without limiting Landlord in the exercise of any right or
remedy which Landlord may have:
(a) Terminate Tenant's right to possession of the
Property at any time by any lawful means, in which case this Lease shall
terminate and Tenant shall immediately surrender possession of the Property
to Landlord. In such event, Landlord shall be entitled to recover from Tenant
all damages incurred by Landlord by reason of Tenant's default, including (i)
the worth at the time of the award of the unpaid Rent and other charges which
Landlord had earned at the time of the termination; (ii) the worth at the
time of the award of the amount by which the unpaid Basic Rent, Additional
Rent and other charges which Landlord would have earned after termination
until the time of the award exceeds the amount of such rental loss that
Tenant proves Landlord could have reasonably avoided; (iii) the worth at the
time of the award of the amount by which the unpaid Basic Rent, Additional
Rent and other charges which Tenant would have paid for the balance of the
Lease Term after the time of award exceeds the amount of such rental loss
that Tenant proves Landlord could have reasonable avoided; and (iv) any other
amount, including court costs necessary to compensate Landlord for all the
detriment proximately caused by Tenant's failure to perform its obligations
under the Lease or which in the ordinary course of things would be likely to
result therefrom, including, but not limited to, any costs or expenses
Landlord incurs in maintaining or preserving the Property after such default,
the cost of recovering possession of the Property, expenses of reletting,
including necessary renovation or alteration of the Property, Landlord's
reasonable attorneys' fees incurred in connection therewith, and any real
estate commission paid or payable. As used in subparts (i) and (ii) above,
the "worth at the time of the award" is computed by allowing interest on
unpaid amounts at the Maximum Rate of Interest set forth in Item 10 of the
Basic Terms. As used in subpart (iii) above, the "worth at the time of the
award" is computed by discounting such amount at the discount rate of the
Federal Reserve Bank of San Francisco at the time of the award, plus one
percent (1%). If Tenant has abandoned the Property, Landlord shall have the
option of (i) retaking possession of the Property and recovering from Tenant
the amount specified in this Paragraph 14.1.5(a), or (ii) proceeding under
Paragraph 14.1.5(b) or (c);
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(b) Maintain Tenant's right to possession, in which
case this Lease shall continue in effect whether or not Tenant has abandoned
the Property. Landlord shall be entitled to enforce all of Landlord's rights
and remedies under this Lease, including the right to recover the Rent as it
becomes due. This remedy is intended to and is hereby declared to be that
described in California Civil Code Section 1951.4. During the period Tenant
is in default, Landlord may enter the Premises and relet them, or any part of
them, to third parties for Tenant's account. Tenant shall be liable
immediately to Landlord for all costs Landlord incurs in reletting the
Premises, including brokers' commissions, expenses of remodeling the Premises
required by the reletting, and like costs. Reletting can be for a period
shorter or longer than the remaining Term of this Lease. Tenant shall pay to
Landlord the Rent due under this Lease on the dates the Rent is due, less the
Rent Landlord receives from reletting. No act by Landlord allowed by this
Section 14.2(b) will terminate this Lease unless Landlord notifies Tenant in
writing that Landlord elects to terminate this Lease. After Tenant's default
and for so long as Landlord does not terminate Tenant's right to possession
of the Premises, if Tenant obtains Landlord's consent, Tenant will have the
right to assign or sublet its interest in this Lease, but Tenant will not be
released from liability. If Landlord elects to relet the Premises as provided
in this Section 14.2(b), Rent that Landlord receives from reletting will be
applied to the payment of: (i) first, any indebtedness from Tenant to
Landlord other than Rent due from Tenant; (ii) second, all costs, including
for maintenance, incurred by Landlord in reletting; and (iii) third, Rent due
and unpaid under the Lease. After deducting the payments referred to in this
Section 14.2(b), any sum remaining from the Rent Landlord receives from
reletting will be held by Landlord and applied in payment of future Rent as
Rent becomes due under this Lease. If, on the date Rent is due under this
Lease, the Rent received from the reletting is less than the Rent due on that
date, Tenant will pay to Landlord, in addition to the remaining Rent due, all
costs, including for maintenance, Landlord incurred in reletting which remain
after applying the Rent received from the reletting; and/or
(c) Pursue any other remedy now or hereafter available
to Landlord under the laws or judicial decisions of the state in which the
Property is located.
14.3 RIGHT OF LANDLORD TO RE-ENTER. In the event of any
termination of this Lease, Landlord shall have the immediate right to enter
upon and repossess the Premises, and any personal property of Tenant may be
removed from the Premises and stored in any public warehouse at the risk and
expense of Tenant.
14.4 CUMULATIVE REMEDIES. Landlord's exercise of any right or
remedy shall not prevent it from exercising any other right or remedy.
14.5 MITIGATION. Landlord shall have the obligation to use all
reasonable efforts to mitigate any loss or damages suffered by Landlord on
account of any default by Tenant.
14.6 LIMITATION ON REMEDIES. Notwithstanding anything to the
contrary in this Article 14, Landlord shall not be permitted to accelerate
the payment of Rent for the remainder of the Lease Term unless there has been
a monetary default by Tenant for over 60 days. Except as otherwise
specifically provided in this Lease, neither Landlord nor Tenant shall not be
entitled to recover consequential and/or punitive damages from the other as a
result of the breach of this Lease.
14.7 LEGAL COSTS. Each party shall reimburse the other party,
upon demand, for any reasonable costs or expenses incurred by such other
party in connection with any actual breach or default of the non-performing
party under this Lease, whether or not suit is commenced or judgment entered.
Such costs shall include reasonable legal fees and costs incurred for the
negotiation of a settlement, enforcement of rights or otherwise. Tenant shall
also indemnify, protect, defend and hold Landlord harmless from all costs,
expenses, demands and liability (including, without limitation, attorneys'
fees and costs, including attorneys fees as a result of the enforcement of
this indemnity) incurred by Landlord if Landlord becomes or is made a party
to any claim or action (a) instituted by Tenant (other than against
Landlord), or by any third party against Tenant, or by or against any person
holding any interest under or using the Premises by license of or agreement
with Tenant; (b) for foreclosure of any lien for labor or material furnished
to or for Tenant or such other person; (c) otherwise arising out of or
resulting from any act or transaction of Tenant or such other person; or (d)
necessary to protect Landlord's interest under this Lease in a bankruptcy
proceeding, or other proceeding under Title 11 of the United States Code, as
amended. Tenant shall defend Landlord against any such claim or action at
Tenant's expense with counsel reasonably acceptable to Landlord or, at
Landlord's election, Tenant shall reimburse Landlord for any legal fees or
costs incurred by Landlord in any such claim or action.
14.8 NO WAIVER. No failure by Landlord or by Tenant to insist
upon the performance of any of the terms of this Lease or to exercise any
right or remedy consequent upon a breach thereof, and no acceptance by
Landlord of full or partial rent from Tenant or any third party during the
continuance of any such breach, shall constitute a waiver of any such breach
or of any of the terms of this Lease. None of the terms of this Lease to be
kept, observed or performed by Landlord or by Tenant, and no breach thereof,
shall be waived, altered or modified except by a written instrument executed
by Landlord and/or by Tenant, as the case may be. No waiver of any default of
either party herein shall be implied from any omission by the other party to
take any action on account of such default. One or more waivers by either
party shall not be construed as a waiver of a subsequent breach of the same
covenant, term or condition. No statement on a payment check
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from Tenant or in a letter accompanying a payment check shall be binding on
Landlord. Landlord may, with or without notice to Tenant, negotiate such
check without being bound to the conditions of such statement.
14.9 WAIVER BY TENANT. Tenant hereby waives all claims by
Landlord's re-entering and taking possession of the Premises and removing and
storing the property of Tenant as permitted under this Article 14 and will
save Landlord harmless from all losses, costs or damages occasioned Landlord
thereby. No such reentry shall be considered or construed to be a forcible
entry by Landlord. If Landlord fails to perform any of Landlord's obligations
under this Lease, which failure continues for more than fifteen (15) days
after Tenant's delivery of written notice to Landlord specifying such
failure, or if such failure is of a nature that it requires more than fifteen
(15) days to remedy and continues beyond the time reasonably necessary to
cure (and Landlord has not undertaken procedures to cure the failure withing
such fifteen (15) day period and diligently pursued such efforts to complete
such cure), Tenant may deliver a reminder notice ("Reminder Notice"). If
Landlord fails to commence to cure such failure within fifteen (15) days of
receipt of Tenant's Reminder Notice and diligently pursue the same to
completion, then Tenant may incur reasonable expenses necessary to perform
the obligation of Landlord specified in such notice and invoice Landlord
therefor. If Landlord fails to reimburse Tenant within fifteen (15) days
following receipt of such invoice, then Tenant may deliver a reminder notice
("First Reminder Notice"). If Landlord fails to reimburse Tenant within
fifteen (15) days of receipt of Tenant's First Reminder Notice, Tenant may
deliver a second reminder notice ("Second Reminder Notice"). If Landlord
fails to reimburse Tenant within fifteen (15) days of receipt of Tenant's
Second Reminder Notice, then Tenant may apply the cost of such repairs
against the next Basic Rent obligations due hereunder, and invoice Landlord
therefor.
Notwithstanding anything contained herein to the contrary, Tenant's
rights to deduct from Basic Rent shall be restricted to any amount per month
not in excess of the sum of twenty-five percent (25%) of the Basic Rent;
provided, however, that the sum which was not capable of offset as a result
of such cap shall bear interest at the Maximum Rate of Interest from thirty
(30) days after the date Tenant first invoiced Landlord for such expenses to
be offset until the date Tenant actually recovers such costs through offset.
It is further agreed that, if any default by Landlord cannot be cured by
Tenant by the expenditure of a sum that is recoverable from future offsets as
authorized in this Lease by the end of the then applicable Term, the
aforesaid twenty-five percent (25%) figure shall be increased to such
percentage of the Basic Rent as is necessary in order to assure that such sum
is recoverable from future offsets.
14.9.1 DELINQUENT RENTAL PAYMENTS. Any installment of
Basic Rent or Additional Rent or any other charges payable by Tenant under
the provisions hereof which shall not be paid when due or within ten (10)
days thereafter shall be subject to a late payment fee of two percent (2%) of
the unpaid amount per month commencing on the date said payment is due ("Late
Payment Fee"). Tenant acknowledges that Tenant's failure to pay Basic Rent or
Additional Rent when due may cause Landlord to incur unanticipated costs. The
exact amount of such costs are impractical or extremely difficult to
ascertain. The parties agree that such charge specified above represents a
fair and reasonable estimate of the costs Landlord will incur by reason of
such late payment and acceptance of such late charge does not constitute a
waiver of Tenant's default or limit any other remedy of Landlord. The late
charge shall be deemed Rent and the rights to require it shall be in addition
to all of Landlord's rights and remedies hereunder or at law. Notwithstanding
the foregoing, Tenant shall not be subject to the late payment fee specified
herein unless Landlord has given Tenant ten (10) days written notice of any
payment of Additional Rent or Basic Rent that is past due ("Late Payment
Notice"); provided that after Tenant's receipt of two (2) such Late Payment
Notices in any Lease Year, Landlord shall no longer be required to deliver a
Late Payment Notice in order to collect the late payment fee during said
Lease Year. Notwithstanding the foregoing, Landlord waives its right to
collect the Late Payment Fee the first time Landlord would otherwise be
entitled to such a Late Payment Fee in any Lease Year.
ARTICLE 15
PROTECTION OF CREDITORS
15.1 SUBORDINATION. This Lease and all rights of Tenant therein,
and all interest or estate of Tenant in the Premises, or any portion thereof,
shall be subject and subordinate to the lien of any mortgage, deed of trust,
or other document of like nature ("Mortgage"), which at any time may be
placed upon the Premises, or any portion thereof, by Landlord, and to any
replacements, renewals, amendments, modifications, extensions or refinancing
thereof, and to each and every advance made under any Mortgage. Tenant agrees
at any time hereafter, and from time to time on demand of Landlord, to
execute and deliver to Landlord a Subordination, Non-Disturbance and
Attornment Agreement in the form of Exhibit "F" attached hereto and
incorporated herein ("SNDA") and any other instruments, releases or other
documents that may be reasonably required for the purpose of subjecting and
subordinating this Lease to the lien of any such Mortgage and which are
reasonably acceptable to Tenant. It is agreed, nevertheless, that so long as
Tenant is not in default in the payment of Basic Rent and Additional Rent and
the performance and observance of all covenants, conditions, provisions,
terms and agreements to be performed and observed by Tenant under this Lease,
that such SNDA or other instrument, release or document shall not interfere
with, hinder or molest Tenant's right to quiet enjoyment under this Lease,
nor the right of Tenant to continue to occupy the Premises, and all portions
thereof, and to conduct its business thereon in accordance with the
covenants, conditions,
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provisions, terms and agreements of this Lease. The lien of any such Mortgage
shall not cover Tenant's trade fixtures or other personal property located in
or on the Premises.
15.2 ATTORNMENT. If Landlord's interest in the Premises is
acquired by any ground lessor, beneficiary under a deed of trust, mortgagee,
or purchaser at a foreclosure sale or by any new person or entity as a result
of any transfer by Landlord, Tenant shall attorn to the transferee of or
successor to Landlord's interest in the Premises and recognize such
transferee or successor as Landlord under this Lease if all obligations and
liabilities accruing under this Lease after such acquisition are assumed in
writing by such transferee or successor. Tenant waives the protection of any
statute or rule of law which gives or purports to give Tenant any right to
terminate this Lease or surrender possession of the Premises upon the
transfer of Landlord's interest.
15.3 ESTOPPEL CERTIFICATES.
15.3.1 Within fifteen (15) business days after Landlord's
or Tenant's written request (the "Requesting Party"), the non-requesting
party (the "Responding Party") shall execute, acknowledge and deliver to the
Requesting Party a written statement certifying: (i) that this Lease (and all
guaranties, if any) is unmodified and in full force and effect (or, if there
have been any modifications, that the same is in full force and effect, as
modified, and stating the modifications); (ii) that this Lease has not been
canceled or terminated; (iii) the last date of payment of the Basic Rent and
other charges and the time period covered by such payment; (iv) whether or
not there are then existing any breaches or defaults by such party or the
other party known by such party under this Lease, and specifying such breach
or default, if any, or any setoffs or defenses against the enforcement of any
such breach of this Lease (or of any guaranties) upon the part of Landlord or
Tenant (or any guarantor), as the case may be, to be performed or complied
with (and, if so, specifying the same and the steps being taken to remedy the
same) and (v) such other statements as reasonably required by The Requesting
Party, or any lender or prospective lender, investor or purchaser. the
Responding Party shall deliver such statement to the Requesting Party within
fifteen (15) business days after the Requesting Party's request. Any such
statement by Tenant may be given by Landlord to any prospective purchaser or
encumbrancer of the Premises. Such purchaser or encumbrancer may rely
conclusively upon such statement as true and correct.
15.3.2 If the Responding Party, does not deliver such
statement to the Requesting Party within such fifteen (15) business day
period, then the Requesting Party may deliver a second request and if the
Responding Party does not deliver such statement to Landlord within five (5)
business days after receipt of such second request, then the Requesting
Party, and any prospective purchaser or encumbrancer, may conclusively
presume and rely upon the following facts: (i) that the terms and provisions
of this Lease have not been changed except as otherwise represented by the
Requesting Party; (ii) that this Lease has not been canceled or terminated
except as otherwise represented by the Requesting Party; (iii) that not more
than one month's Base Monthly Rent or other charges have been paid in
advance; and (iv) that the Requesting Party is not in default under this
Lease. In such event, the Responding Party shall be estopped from denying the
truth of such facts.
15.4 MORTGAGEE PROTECTION CLAUSE. Tenant agrees to give any
mortgagees and/or trust deed holders, by registered mail, a copy of any
notice of default, served upon the Landlord, provided that prior to delivery
of such notice Tenant has been notified in writing (by way of Notice of
Assignment of Rents and Leases, or otherwise) of the addresses of such
mortgagees and/or trust deed holders and the same have executed a
Non-Disturbance Agreement as provided and defined below. Tenant further
agrees that if Landlord shall have failed to cure such default within the
time provided for in this Lease, then the mortgagees and/or trust deed
holders shall have an additional fifteen days (15) within which to cure such
default or if such default cannot be cured within that time, then such
additional time as may be necessary if within such fifteen days (15) any
mortgagee and/or trust deed holder has commenced and is diligently pursuing
the remedies necessary to cure such default (including but not limited to
commencement of foreclosure proceedings if necessary to effect such cure), in
which event this Lease shall not be terminated while such remedies are being
so diligently pursued.
15.5 NON-DISTURBANCE. Landlord represents that as of the
Effective Date of this Lease, there is no mortgage encumbering the Land. With
respect to any future Mortgages, Tenant's subordination is expressly
conditioned upon Landlord's delivery to Tenant of a fully executed
Recognition and Non-Disturbance Agreement substantially in the form of the
SNDA or in such other form and substance as may be reasonably acceptable to
Tenant with respect to such Mortgage ("Non-Disturbance Agreement").
ARTICLE 16
TERMINATION OF LEASE
16.1 SURRENDER OF PREMISES. At the expiration of the Term of
this Lease or earlier termination of this Lease, Tenant shall surrender the
Premises together with all alterations placed thereon by Tenant (except
Alterations Tenant elects to remove or Alterations Landlord, in the exercise
of reasonable discretion, informed Tenant, in connection with Landlord's
approval of the installation thereof, that Landlord would require
21
Tenant to remove upon the expiration of the Lease) in the same condition as
the same were in upon delivery of possession thereto at the Commencement Date
of the term of this Lease, reasonable wear and tear excepted, and shall
surrender all keys to the Premises to Landlord at the place then fixed for
the payment of Basic Rent and shall inform Landlord of all combinations on
locks, safes and vaults, if any. Tenant shall at such time remove all of its
property therefrom and all alterations and improvements placed thereon by
Tenant unless Landlord requires Tenant to leave the same. Tenant shall repair
any damage to the Premises caused by such removal, and any and all such
property not so removed shall, at Landlord's option, after five (5) business
days notice to Tenant, become the exclusive property of Landlord or be
disposed of by Landlord, at Tenant's cost and expense, without further notice
to or demand upon Tenant. If the Premises be not surrendered as above set
forth, Tenant shall indemnify, protect, defend and hold Landlord harmless
against loss or liability resulting from the delay by Tenant in so
surrendering the Premises, including, without limitation, any claim made by
any succeeding occupant founded on such delay. All property of Tenant not
removed within thirty (30) days after the last day of the Term of this Lease
shall be deemed abandoned. Tenant hereby appoints Landlord its agent to
remove, at Tenant's cost, all property of Tenant from the Premises left
thirty (30) days or longer after termination of this Lease and to cause its
transportation and storage for Tenant's benefit, all at the sole cost and
risk of Tenant and Landlord shall not be liable for damage, theft,
misappropriation or loss thereof and Landlord shall not be liable in any
manner in respect thereto.
16.2 HOLDING OVER. In the event Tenant remains in possession of
the Premises after expiration of this Lease, and without the execution of a
new lease, it shall be deemed to be occupying the Premises as a tenant from
month to month, subject to all the provisions, conditions and obligations of
this Lease insofar as the same can be applicable to a month-to-month tenancy,
except that the Basic Rent shall be escalated to one hundred twenty-five
percent (125%) of the then current Basic Rent for the Premises.
ARTICLE 17
RENEWAL OPTIONS
17.1 OPTIONS TO RENEW. Tenant shall have the right, to be
exercised as hereinafter provided, to extend the term of this Lease ("Renewal
Option") for up to two (2) periods of five (5) years each (each such five (5)
year period is sometimes hereinafter referred to as a "Renewal Term") upon
the following terms and conditions and subject to the limitations set forth
below.
17.1.1 NO EVENT OF DEFAULT. At the respective times
hereinafter set forth for the exercise of each Renewal Option and at the time
of the commencement of each Renewal Term, this Lease shall be in full force
and effect and there shall be no uncured Event of Default under this Lease,
but Landlord shall have the right, at its sole discretion, to waive any such
condition regarding an Event of Default.
17.1.2 FAIR MARKET RENT. The Premises shall be leased to
Tenant on an "as is" basis on the same terms, covenants and conditions
contained in this Lease, except that the annual Basic Rent for the Premises,
including all buildings, structures and fixtures erected thereon, together
with all additions, alterations and replacements thereof (except Tenant's
moveable trade fixtures, machinery and equipment) shall be adjusted to
reflect ninety-five percent (95%) of the Fair Market Rent (as hereinafter
defined) for the Premises, as of the date of commencement of such Renewal
Term ("Adjusted Basic Rent"); provided that in no event shall such Adjusted
Basic Rent be less than the Basic Rent for the Lease Year immediately prior
to the Renewal Term.
17.1.3 EXERCISE OF RENEWAL TERM(S). Tenant shall exercise
its right to extend the Term of this Lease for any Renewal Term set forth in
this Article 17, if at all, by notifying Landlord, in writing, of its
election to exercise the right to renew and extend the term of this Lease at
least nine (9) months prior to the expiration of the Initial Term or the
applicable Renewal Term, as the case may be.
17.1.4 DETERMINATION OF FAIR MARKET RENT. In calculating
the Fair Market Rent, the Premises shall be deemed to include all buildings,
structures and fixtures erected thereon, together with all additions and
replacements thereof (except Tenant's moveable trade fixtures, machinery and
equipment). Not earlier than eighteen (18) months prior to the expiration of
the Initial Term and each Renewal Term, Tenant may notify Landlord of its
desire to consider renewal of this Lease. Thereafter, Landlord and Tenant
shall make a good faith effort to agree upon the "Fair Market Rent" of the
Premises for the ensuing Renewal Term. In the event Landlord and Tenant fail
to agree within sixty (60) days after delivery of Tenant's notice ("Initial
Rent Determination Period"), the "Fair Market Rent" shall be determined by
arbitration in accordance with the process described below. Without limiting
the foregoing, in determining the Fair Market Rent, the following factors
shall be considered: the amount per rentable square foot that a willing,
comparable, non-equity tenant would pay, and a willing landlord of a
comparable property in the marketplace (as set forth above) would accept in
an arm's-length transaction giving appropriate consideration to rental rates
per rentable square foot, escalation clauses (including, but not limited to,
operating expenses and real estate taxes), abatement provisions reflecting
free rent, if any, length of lease term, size and location of premises being
leased, tenant improvement allowances, if any, and any other generally
applicable terms and conditions of tenancy for the subject space.
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17.1.5 ARBITRATION. All arbitrators appointed by or on
behalf of either party or appointed pursuant to the provisions hereof shall
be MAI members of the American Institute of Real Estate Appraisers with not
less than ten (10) years of experience in the appraisal of improved
commercial and industrial real estate in the Riverside, California area and
be devoting a substantial amount of time to professional appraisal work at
the time of appointment and be in all respects impartial and disinterested.
If the parties are unable to agree upon the Fair Market Base Rent during the
Initial Rent Determination Period, then within fifteen (15) days after
termination of the Initial Rent Determination Period, each party shall
deliver to the other party a notice specifying the name, address and
professional qualifications of the person designated to act as arbitrator on
its behalf. The two (2) arbitrators so selected shall select a third
arbitrator no later than thirty (30) days after the Initial Rent
Determination Period. If the party receiving a request for arbitration fails
to appoint its arbitrator within the time above specified, or if the two (2)
arbitrators so selected cannot agree on the selection of the third arbitrator
within the time above specified, then either party, on behalf of both
parties, may request such appointment of such second or third arbitrator, as
the case may be, by application to any Judge of the District Court of the
County of Riverside, State of California, upon ten (10) days prior written
notice to the other party of such intent. The decision of the arbitrators so
chosen shall be given within a period of thirty (30) days after the
appointment of such third arbitrator. The arbitrators so selected shall have
all rights and power conferred on him or her by the California Code of Civil
Procedure Sections 1280 et seq. or any successor statute or law, and except
as otherwise provided for herein, the arbitration proceedings shall be
carried on and governed by such statute. No discovery shall be permitted by
the Landlord and Tenant in the arbitration except that all parties shall make
available to the arbitrators such information as may be requested by such
arbitrators. Acting independently of each other and without consultation with
each other, each of said three arbitrators, within sixty (60) days after
appointment of the third appraiser, and his or her acceptance of such
appointment, shall make their appraisal and submit to Landlord and Tenant a
written report and appraisal setting forth the appraiser's opinion as to the
fair market value of the Premises. The two appraisals of all of the
appraisals reported by the three appraisers that are closest in amount shall
be averaged (or if the appraisal is less than one of the other appraisals and
more than the other appraisal by the same amount, all three appraisals shall
be averaged). Such averaged amount shall be the Fair Market Rent of the
Premises. All arbitrators appointed by or on behalf of either party or
appointed by the Presiding Judge of the Superior Court of Riverside County,
California as hereinafter provided, shall be in all respects impartial and
disinterested. Each party shall pay the fees and expenses of the arbitrator
appointed by or on behalf of such party and the fees and expenses of the
third arbitrator shall be borne equally by both parties. Landlord and Tenant
shall then execute an amendment recognizing the Fair Market Rent for the
Renewal Term and the fact Tenant shall pay ninety-five percent (95%) of such
Fair Market Rent or the Basic Rent for the Previous Lease Year, whichever is
greater.
ARTICLE 18
EXPANSION OPTION
18.1 OPTION TO EXPAND. Tenant shall have the right, to be
exercised as hereinafter provided, to expand the Premises ("Expansion
Option") into space to be constructed on the Land adjacent to the Premises,
which land is more particularly described on Exhibit "A-1" attached hereto
and incorporated herein ("Expansion Land") together with certain improvements
to be constructed thereon, including an approximately ninety-five thousand
(95,000) square foot addition to the Building, depicted as the Expansion
Space on Exhibit "A-2" ("Expansion Space"), upon the following terms and
conditions and subject to the limitations set forth below.
18.2 NO EVENT OF DEFAULT. At the respective times hereinafter
set forth for the exercise of the Expansion Option and the delivery of the
Expansion Space, this Lease shall be in full force and effect and there shall
be no uncured Event of Default (as defined below) under this Lease.
18.3 EXERCISE OF EXPANSION OPTION. Tenant may exercise its right
to expand by notifying Landlord, in writing, of its election to exercise the
Expansion Option ("Notice of Exercise") at least nine (9) months prior to the
desired occupancy date for the Premises, which Notice of Exercise shall
specify the exact desired occupancy date ("Desired Occupancy Date"); provided
that, subject to the provisions below, there will still be at least five (5)
years remaining in the Initial Term after the Desired Occupancy Date. In the
event that there will not be at least five (5) years remaining in the Initial
Term at the time Tenant desires to exercise its Expansion Option, Tenant may
still exercise its Expansion Option up until nine (9) months prior to the end
of the Initial Term ("Expansion Option Termination Date") if, in Tenant's
Notice of Exercise, Tenant indicates that it is also electing to extend the
Initial Term by the number of days necessary to cause there to be exactly
five (5) years between the Desired Occupancy Date and the expiration of the
Initial Term ("Extension Election"). In the event, Tenant exercises the
Extension Election, the commencement date for the Expansion Space shall occur
upon Substantial Completion of the Expansion Space Landlord's Improvements
(as described in the Work Letter) ("Expansion Space Commencement Date"). The
term of the Lease for the Expansion Space shall terminate concurrently with
the Term of the Lease for the balance of the Premises.
18.4 EXPANSION TERMS. The Expansion Space shall be leased to
Tenant on the same terms, covenants and conditions contained in this Lease,
except as provided in this Article and except that the Basic
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Rent for the Expansion Space due and payable each month shall be computed in
accordance with Section 18.5 below and paid along with the Basic Rent
provided in Item 10 of the Basic Terms. The Basic Rent per rentable square
foot for the Expansion Space shall be increased from time to time in
accordance with any proportionate increases to the Basic Rent provided under
Item 10 of the Basic Terms and under Section 18.3 above (provided that
increases in the Expansion Space Rent shall not occur until the sixty-third
(63rd) month after the Expansion Space Commencement Date). If Tenant
exercises any Expansion Option, Landlord and Tenant shall enter into an
amendment of this Lease setting forth the adjusted Basic Rent and other
relevant provisions based on the increase in the area of the Premises
effective on the Expansion Space Commencement Date. If Tenant exercises its
Expansion Option, then (a) all references to the Premises shall include the
Expansion Space and Expansion Land, and all references to the Land shall
include the Expansion Land, effective as of the Expansion Space Commencement
Date; (b) Landlord shall be subject to the same monetary penalties for
failure to deliver the Expansion Space by the Desired Occupancy Date as are
(provided in Section 1.3 for failure to deliver the Premises by August 1,
1998 provided that Tenant shall not have the termination rights set forth in
Section 1.3); and (c) Tenant shall be entitled to the same early occupancy
rights for the Expansion Space as those set forth in Section 1.2.2 and in the
Work Letter for the Premises.
18.5 EXPANSION SPACE BASIC RENT. Commencing on the Expansion
Space Commencement Date, Tenant shall pay Basic Rent for the Expansion Space
in the amount provided in this Section 18.5 at which time Tenant shall no
longer be required to pay the portion of the Basic Rent described as "Monthly
Rent for Expansion Land" in Item 10 of the Basic Terms. The Basic Rent, paid
monthly, for the Expansion Space shall be the product of ten and one half
percent (102%), multiplied by the following costs ("Expansion Space Basic
Rent"):
(1) The Expansion Land valued at $525,000;
(2) The cost of building the Expansion Space
(inclusive of a tenant improvement allowance not
to exceed Five Dollars ($5.00) per square foot) as
determined by (a) the lowest competitive bid by
general contractors acceptable to both parties or
(b) Landlord's in-house general contractor at a
fee of five percent (5%) of Hard Costs (defined
below);
(3) Commercially reasonable and standard Architectural
and engineering fees, permit fees, governmental
charges, soil testing costs and surveying costs
incurred by Landlord in connection with the
Expansion Space building;
(4) A three percent (3%) development fee on all Hard
Costs. As used herein, the term "Hard Costs" shall
mean the actual costs paid by Landlord to
construct the Improvements, including without
limitation, all amounts paid to the contractors,
suppliers, and all general contractors, all
architectural, engineering and other design
consultants and on-site overhead costs directly
attributable to the Expansion Space, all standard
fees paid to the governmental agencies for the
construction of the Improvements, and other costs
commonly included in what is customarily known as
"Hard Costs";
(5) The best available interim financing costs, not to
exceed the Maximum Rate of Interest specified in
Item 10 of the Basic Terms; and
(6) Any standard real estate commission paid or due
and payable by Landlord in connection with the
Expansion Space or Expansion Land.
18.6 FREE RENT PERIOD. The first two (2) calendar months of the
Expansion Space Basic Rent shall be abated.
18.7 FAILURE TO EXERCISE EXPANSION OPTION. In the event Tenant
fails to exercise the Expansion Option during the Initial Term only, for so
long as there has been no Expansion Space Commencement Date, Tenant shall
continue to pay the portion of the Basic Rent described as "Monthly Rent for
Expansion Land." In the event that Tenant has not exercised the Expansion
Option as of the Expansion Option Termination Date, then notwithstanding
anything to the contrary contained herein, commencing on the first day
following the Expansion Option Termination Date, Tenant shall no longer be
required to pay the Monthly Rent for Expansion Land or any Taxes or other
Additional Rent attributable to the Expansion Land.
ARTICLE 19
MISCELLANEOUS PROVISIONS
19.1 NOTICES. All notices, demands and requests which may be or
are required to be given, demanded or requested by either party to the other
shall be in writing. All notices, demands and requests shall be sent by
United States registered or certified mail, postage prepaid or by Federal
Express or other
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reputable independent overnight courier service, addressed at the addresses
specified in the Basic Terms or at such other place as either party may
designate to the other party by written notice, and shall be deemed to have
been delivered on the date the same is (i) postmarked, if sent by certified
mail, or (ii) deposited, if sent by Federal Express or such other reputable
overnight courier service, but shall not be deemed received until (a) one (1)
business day following deposit with Federal Express or other reputable
overnight courier service, or (b) three (3) days following deposit in the
United States Mail if sent by certified mail.
19.2 LANDLORD'S CONTINUING OBLIGATIONS. The term "Landlord," as
used in this Lease so far as covenants or obligations on the part of Landlord
are concerned, shall be limited to mean and include only the owner or owners
at the time in question of the fee of the Premises, and in the event of any
transfer or transfers or conveyance the then grantor shall be automatically
freed and relieved from and after the date of such transfer or conveyance of
all liability as respects the performance of any covenants or obligations on
the part of Landlord contained in this Lease thereafter to be performed,
provided (a) that such liability is assumed in writing by the transferee and
(b) that any funds in the hands of such landlord or the then grantor at the
time of such transfer, in which Tenant has an interest, shall be turned over
to the grantee, and any amount then due and payable to Tenant by Landlord or
the then grantor under any provision of this Lease shall be paid to Tenant.
19.3 NET LEASE. Landlord and Tenant do each state and represent
that it is the intention of each of them that, except as otherwise provided
herein, this Lease be interpreted and construed as a net lease and, except as
otherwise provided in this Lease, all Basic Rent and Additional Rent shall be
paid by Tenant to Landlord without abatement, deduction, diminution,
deferment, suspension, reduction or setoff.
19.4 SUCCESSORS. The covenants and agreements herein contained
shall bind and inure to the benefit of Landlord, its successors and assigns,
and Tenant and its permitted successors and assigns.
19.5 MEMORANDUM OF LEASE. Upon not less than fifteen (15)
business days prior written request by Landlord or Tenant, the other party
agrees to execute and deliver to the requesting party a Memorandum of Lease,
in recordable form, setting forth the following: (a) the date of this Lease;
(b) the parties to this Lease; (c) the term of this Lease; and (d) the legal
description of the Premises.
19.6 CAPTIONS AND INTERPRETATION. The captions of the Articles
or Sections of this Lease are to assist the parties in reading this Lease and
are not a part of the terms or provisions of this Lease. Whenever required by
the context of this Lease, the singular shall include the plural and the
plural shall include the singular. The masculine, feminine and neuter genders
shall each include the other. In any provision relating to the conduct, acts
or omissions of Tenant, the term "Tenant" shall include Tenant's agents,
employees, contractors, invitees, successors or others using the Premises
with Tenant's expressed or implied permission.
19.7 RELATIONSHIP OF PARTIES. This Lease does not create the
relationship of principal and agent, or of partnership, joint venture, or of
any association or relationship between Landlord and Tenant, the sole
relationship between Landlord and Tenant being that of landlord and tenant.
19.8 ENTIRE AGREEMENT. Any exhibits, addenda and schedules
attached hereto shall be incorporated herein as though fully set forth
herein. All preliminary and contemporaneous negotiations are merged into and
incorporated in this Lease. This
Lease Agreement together with the Exhibits
contains the entire agreement between the parties. No subsequent alteration,
amendment, change or addition to this Lease shall be binding upon Landlord or
Tenant unless reduced to writing and signed by the party to be charged with
their performance.
19.9 SEVERABILITY. If any covenant, condition, provision, term
or agreement of this Lease shall, to any extent, be held invalid or
unenforceable, the remaining covenants, conditions, provisions, terms and
agreements of this Lease shall not be affected thereby, but each covenant,
condition, provision, term or agreement of this Lease shall be valid and in
force to the fullest extent permitted by law.
19.10 LANDLORD'S LIMITED LIABILITY. Tenant agrees to look solely
to Landlord's interest in the Premises and any income derived directly
therefrom for recovery of any judgment from Landlord, it being agreed that
Landlord (and if Landlord is a partnership, its partners, whether general or
limited, and if Landlord is a corporation, its directors, officers or
shareholders) shall never be personally liable for any personal judgment or
deficiency decree or judgment against it.
19.11 SURVIVAL. All obligations of Landlord and Tenant (together
with interest or money obligations at the Maximum Rate of Interest) accruing
prior to expiration of the Term of this Lease shall survive the expiration or
other termination of this Lease.
19.12 ATTORNEYS' FEES. In the event of any litigation or judicial
action in connection with this Lease or the enforcement thereof or the
enforcement of any indemnity obligation hereunder, the prevailing party in
any such litigation or judicial action shall be entitled to recover all
reasonable costs and expenses of any such judicial action or litigation
(including, but not limited to, reasonable attorneys' fees, costs and
expenditures fees) from the other party. XX XX
-------- ------
Landlord Tenant
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19.13 BROKER. Each party represents and warrants that it has not
had any dealings with any realtors, brokers or agents in connection with the
negotiation of this Lease except for Xxx & Associates, whose commission shall
be payable by Landlord, and each party agrees to hold the other party
harmless from and against the failure to pay any realtors, brokers or agents
and from any cost, expense or liability for any compensation, commission or
changes claimed by any other realtors, brokers or agents claiming by, through
or on behalf of such party with respect to this Lease and/or the negotiation
hereof.
19.14 GOVERNING LAW. This Lease shall be governed by the laws of
the State of California. All covenants, conditions and agreements of Tenant
arising hereunder shall be performable in the county wherein the Premises are
located. Any suit arising from or relating to this Lease shall be brought in
the county wherein the Premises are located, and the parties hereto waive the
right to be sued elsewhere.
19.15 TIME IS OF THE ESSENCE. Time is of the essence with respect
to the performance of every provision of this Lease in which time of
performance is a factor.
19.16 JOINT AND SEVERAL LIABILITY. All parties signing this Lease
as Tenant shall be jointly and severally liable for all obligations of Tenant.
19.17 DELIVERY OF CORPORATE DOCUMENTS. In the event that Tenant
is a corporation, Tenant shall, without charge to Landlord, at any time and
from time to time within fifteen (15) days after written request by Landlord,
if required by a prospective lender or purchaser, deliver to Landlord, in
connection with any proposed sale or mortgage of the Premises, the following
instruments and documents:
(a) Certificate of Good Standing in the state of
incorporation of Tenant and in the state in which
the Premises are located issued by the appropriate
state authority and bearing a current date;
(b) A copy of Tenant's articles of incorporation and
bylaws, and any amendments or modifications thereof
certified by the secretary or assistant secretary of
Tenant.
19.18 TENANT'S FINANCIAL CONDITION. Prior to the Effective Date,
and within fifteen (15) business days after written request from Landlord (so
long as Landlord has a reasonable basis for requesting such information based
upon Tenant's financial condition) and not more than one (1) time per twelve
month period, Tenant shall deliver to Landlord financial statements prepared
in accordance with generally accepted accounting principles consistently
applied ("GAAP") as are reasonably required by Landlord to verify the net
worth of Tenant, or any assignee, subtenant or guarantor of Tenant provided
that Tenant shall not be required to provide any information that would
constitute a violation of the rules and regulations of the Securities
Exchange Commission. In addition, Tenant shall deliver to any lender or
proposed purchaser of the Premises, Project, Land and/or Expansion Land or
any portion thereof designated by Landlord any financial statements prepared
in accordance with GAAP required by any lender or purchaser to facilitate the
sale, financing or refinancing of the Premises or Project or any portion
thereof. Tenant represents and warrants to Landlord that (a) each such
financial statement is a true and accurate statement as of the date of such
statement; and (b) at all times after the date of any such statement during
the Lease Term or any extension thereof, Tenant's net worth, as stated
therein, shall not be reduced. All financial statements shall be confidential
and shall be used only for the purposes set forth herein. Each such financial
statement shall be executed by Tenant and shall, if requested by Landlord, be
certified by Tenant to be true and correct. Notwithstanding the foregoing, if
Tenant is a publicly traded company. Tenant may provide Landlord with copies
of Tenant's latest 10-Q and 10-K filings with the Securities Exchange
Commission in lieu of the above referenced financial statements.
19.19 PROVISIONS ARE COVENANTS AND CONDITIONS. All provisions,
whether covenants or conditions, on the part of the Landlord, or on the part
of Tenant, shall be deemed to be both covenants and conditions.
19.20 BUSINESS DAYS. As used herein, the term "business days"
shall mean any day which is not a Saturday, Sunday or a legal holiday in the
State of California.
19.21 FORCE MAJEURE. If either party shall be delayed or
prevented from the performance of any act required hereunder, other than the
payment of Rent, Additional Rent or any other sums required to be paid
hereunder, by reason of acts of God, strikes, lockouts, labor troubles,
inability to procure materials, respect of governmental laws or regulations,
or by reason of any order or direct of any legislative, administrative or
judicial body, or any government department, or by reason of not being able
to obtain any licenses, permissions or authorities required therefor, or
other causes without fault or beyond the reasonable control of such party,
then notwithstanding anything to the contrary contained herein, performance
of such acts by such party shall be excused for the period of the delay and
the period of the performance of any such acts shall be extended for a period
equivalent to the period of such delay; (herein such delays are sometimes
referred to as "Force Majeure".)
19.22 NO CONTINUOUS OPERATION. Notwithstanding anything in this
Lease to the contrary, nothing herein shall be construed as an obligation for
Tenant to open or operate its business in the Premises. Tenant
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shall have the right to remove Tenant's personal property and cease
operations in the Premises at any time and at Tenant's sole discretion.
However, the right to cease to operate its business shall not affect Tenant's
obligation to pay all amounts due hereunder and to perform all covenants and
obligations hereunder. Tenant agrees, at such time it is operating its
business in the Premises, to conduct its business in a first-class manner,
consistent with reputable business standards and practices.
19.23 WAIVER OF LANDLORD'S LIEN. Landlord hereby waives any
contractual, statutory or other Landlord's lien on Tenant's furniture,
moveable trade fixtures, supplies, equipment and inventory. Tenant shall have
the absolute right from time to time during the Term hereof and without
Landlord's further approval, written or otherwise, to grant and assign a
mortgage or other security interest Tenant's furniture, fixtures, supplies,
equipment and inventory to Tenant's lenders in connection with Tenant's
financing arrangement. Landlord agrees to execute such confirmation
certificates and other documents (except amendments to this Lease unless
Landlord hereafter consents in its sole and absolute discretion) as Tenant's
lenders may reasonably request in connection with any such financing.
19.24 SUBMISSION OF LEASE. Submission of this instrument for
examination or signature by Tenant does not constitute a reservation of or an
option for lease, and it is not effective as a lease or otherwise until
execution and delivery by both Landlord and Tenant.
Landlord and Tenant have signed this Lease at the place and on the
dates specified adjacent to their signatures below and have initialed all
Exhibits and Addenda which are attached to or incorporated by reference in
this Lease.
Dated: November 24, 1997 LANDLORD:
OPUS WEST CORPORATION, a
Minnesota corporation
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------
Name: Xxxxxx X. Xxxxxxx
Title: President
Dated: November 20, 1997 TENANT:
PETCO ANIMAL SUPPLIES, INC., a
Delaware corporation
By: /s/ Xxxxx X. Xxxxx
-----------------------------
Name: Xxxxx X. Xxxxx
-----------------------------
Title: Sr VP Finance
-----------------------------
By:
-----------------------------
Name:
-----------------------------
Title:
-----------------------------
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