LEASE AGREEMENT
Exhibit 10.10
| BUILDING: | 1098 Alta | |||
| PROPERTY: | 1-0001 | |||
| UNIT: | 1 | |||
| LEASE ID: | 0001-SONI01-01 |
THIS “LEASE”, made this 1st day of October, 2004, between XXXX XXXXXXXXX, Trustee, or his
Successor Trustee, UTA dated 7/20/77 (XXXX XXXXXXXXX SURVIVOR’S TRUST) as amended, and XXXXXXX X.
XXXXX, Trustee, or his Successor Trustee, UTA dated 7/20/77 (XXXXXXX X. XXXXX SEPARATE PROPERTY
TRUST) as amended, hereinafter called Landlord, and SONICS, INC., a Delaware corporation,
hereinafter called Tenant.
WITNESSETH:
Landlord hereby leases to Tenant and Tenant hereby hires and takes from Landlord those
certain premises (the “Premises”) outlined in Red on
Exhibit A, attached hereto and
incorporated herein by this reference thereto more particularly described as follows:
A portion
of that certain 61,290± square foot, two-story building (“Building”) located at 0000 Xxxx
Xxxxxx, Xxxxx 000, Xxxxxxxx Xxxx, Xxxxxxxxxx 00000,
consisting of approximately 13,784± square feet
of space (on the first floor of the Building including Tenant’s Proportionate Share of the Common
Area of the Building) and the Personal Property of Landlord pursuant to Paragraph 46 (“Personal
Property of Landlord”). Said Premises is more particularly shown within the area outlined in Red on
Exhibit A attached hereto. The entire parcel, of which the Premises is a part, is shown
within the area outlined in Green on Exhibit A attached. The Premises shall be improved by
Landlord as shown on Exhibit B attached hereto, and, subject to Landlord making said
improvements and to Paragraph 6 (“As-Is Basis”), is leased on an “as-is” basis, in its present
condition, and in the configuration as shown in Red on Exhibit B attached hereto.
The word “Premises” as used throughout this Lease is hereby defined to include the
nonexclusive use of landscaped areas, sidewalks, parking areas and driveways in front of or
adjacent to the Premises, and the nonexclusive use of the area directly underneath or over such
sidewalks and driveways. The gross leasable area of the Building shall be measured from outside of
exterior walls to outside of exterior walls, and shall include any atriums, covered entrances or
egresses and covered Building loading areas.
Said letting and hiring is upon and subject to the terms, covenants and conditions hereinafter
set forth and Tenant covenants as a material part of the consideration for this Lease to perform
and observe each and all of said terms, covenants and conditions. This Lease is made upon the
conditions of such performance and observance.
1. USE. Tenant shall use the Premises only in conformance with
applicable governmental laws, regulations, rules and ordinances for the purpose of
general office, research and development, non-retail sales and storage uses necessary
for Tenant to conduct Tenant’s business, provided that such approved uses shall be in
accordance with all current and future applicable governmental laws and ordinances and
zoning restrictions, and for no other purpose. Notwithstanding anything to the
contrary herein, Tenant shall not do or permit to be done in or about the Premises nor
bring or keep or permit to be brought or kept in or about the Premises anything which
is prohibited by or will in any way increase the existing rate of (or otherwise
affect) fire or any insurance covering the Premises or any part thereof, or any of its
contents, or will cause a cancellation of any insurance covering the Premises or any
part thereof, or any of its contents. Tenant shall not do or permit to be done
anything in, on or about the Premises which will in any way obstruct or interfere with
the rights of other tenants or occupants of the Premises or neighboring premises or
injure or annoy them, or use or allow the Premises to be used for any improper,
immoral, unlawful or objectionable purpose, nor shall Tenant cause, maintain or permit
any nuisance in, on or about the Premises. No sale by auction shall be permitted on
the Premises. Tenant shall not place any loads upon the floors, walls, or ceiling
which endanger the structure, or place any harmful fluids or other materials in the
drainage system of the Building, or overload existing electrical or other mechanical
systems. No waste materials or refuse shall be dumped upon or permitted to remain upon
any part of the Premises or outside of the Building in which the Premises are a part,
except in trash containers placed inside exterior enclosures designated by Landlord
for that purpose or inside of the Building proper where designated by Landlord. No
materials, supplies, equipment, finished products or semi-finished products, raw
materials or articles of any nature shall be stored upon or permitted to remain
outside the Premises, except for patio furniture that Tenant may place, at its sole
cost and expense and risk, in the common patio area (“Exterior Common Area Patio”)
shown in Orange on Exhibit A and Exhibit B. In the event Tenant elects
to place patio furniture in the Exterior Common Area Patio, (a) Tenant shall be
responsible for the maintenance, repair and/or replacement of said patio furniture, as
necessary to maintain sturdy and attractive equipment, throughout the Lease Term, (b)
said patio furniture will be accessible to the other tenants and/or occupants of the
Building and other third parties and (c) Landlord cannot insure the
Initial: MMK
| Multi Tenant/Single Parcel | Page 1 of 29 |
| BUILDING: | 1098 Alta | |||
| PROPERTY: | 1-0001 | |||
| UNIT: | 1 | |||
| LEASE ID: | 0001-SONI01-01 |
security of said patio furniture or be liable in any manner whatsoever for said patio
furniture. Tenant shall not place anything or allow anything to be placed near the glass of any
window, door partition or wall which may appear unsightly from outside the Premises. No loudspeaker
or other device, system or apparatus which can be heard outside the Premises shall be used in or at
the Premises without the prior written consent of Landlord. Tenant shall not commit or suffer to be
committed any waste in or upon the Premises. Tenant shall indemnify, defend and hold Landlord
harmless against any loss, expense, damage, reasonable attorneys’ fees, or liability arising out of
failure of Tenant to comply with any applicable law for which Tenant is obligated to comply under
the terms of this Lease. Tenant shall comply with any covenant, condition, or restriction
(“CC&R’s”) affecting the Premises. There are no CC&R’s affecting the Premises at the time of Lease
execution. In the event CC&R’s are subsequently implemented (i) said CC&R’s shall be applicable to
all tenants within the Building, and (ii) Landlord shall provide a copy of said CC&R’s to Tenant.
The provisions of this paragraph are for the benefit of Landlord only and shall not be construed to
be for the benefit of any Tenant or occupant of the Premises.
2. TERM.
A. Scheduled Lease Term. The “Term” of this Lease shall be for a period of THREE (3)
years and ONE (1) month (unless sooner terminated as hereinafter provided) and, subject to
Paragraphs 2.B and 3, shall commence on the 1st day of January, 2005 (the “Commencement Date”) and
end on the 31st day of January, 2008 (the “Termination Date”). Notwithstanding anything to the
contrary herein, in no event shall the Lease Commence Date be prior
to January 1, 2005 unless the
Premises are occupied by any of Tenant’s operating personnel
prior to January 1, 2005, in which
event the Lease Commencement Date shall be changed from the scheduled Commencement Date of January
1, 2005 to the earlier date that Tenant occupies the Premises.
B. Tender of Possession. Possession of the Premises shall be tendered by Landlord to
Tenant and the Term of the Lease shall commence when the first of the following occurs:
(a) One day after a temporary Certificate of Occupancy or other Building signoff is granted by
the proper governmental agency, or, if the governmental agency having jurisdiction over the area in
which the Premises are situated does not issue certificates of occupancy, then the same number of
days after certification by Landlord’s architect or contractor that Landlord’s construction work
has been completed; or
(b) Upon the occupancy of the Premises by any of Tenant’s operating personnel; or
(c) When the Tenant Improvements have been substantially completed for Tenant’s use and
occupancy and Landlord has delivered the Premises to Tenant, in accordance and compliance with
Paragraph 6.B (“As Is: Tenant Improvements to be Constructed by Landlord”) and Exhibit B of
this Lease; provided, however, that in no event, except as noted in Paragraph 2.B(b) above, shall
the Term of the Lease commence before January 1, 2005; or
(d) As otherwise agreed in writing.
C. Early Entry: Upon receipt of written notice from Landlord (by U.S. Mail, facsimile
or electronic mail) that the Premises is available for Tenant’s entry, Tenant and its agents and
contractors shall be permitted to enter the Premises prior to the Commencement Date for the purpose
of installing at Tenant’s sole cost and expense, Tenant’s trade fixtures and equipment, telephone
equipment, security systems and cabling for computers. Such entry shall be subject to all of the
terms and conditions of this Lease, except that Tenant shall not be required to pay any Rent on
account thereof, provided none of Tenant’s operating personnel occupy said Premises. Any entry or
installation work by Tenant and its agents in the Premises pursuant to this Paragraph 2.C shall (i)
be undertaken at Tenant’s sole risk, (ii) not interfere with or delay Landlord’s work in
the Premises (if any), and (iii) not be deemed occupancy or possession of the Premises for purposes
of the Lease. Tenant shall indemnify, defend, and hold Landlord harmless from any and all loss,
damage, liability, expense (including reasonable attorney’s fees), claim or demand of whatsoever
character, direct or consequential, including, but without limiting thereby the generality of the
foregoing, injury to or death of persons and damage to or loss of property arising out of the
exercise by Tenant of any early entry right granted hereunder. In the event Tenant’s work in said
Premises delays the completion of the interior improvements to be provided by Landlord, if any, or
in the event Tenant has not completed construction of its interior improvements, if any, by the
scheduled Commencement Date, it is agreed between the parties that this Lease will commence on the
earlier of the scheduled Commencement Date of January 1, 2005, or the date described in Paragraph
2.B (‘Tender of Possession”), regardless of the construction status of said interior improvements completed or to
be completed by Tenant or Landlord, as the case may be. It is the intent of the parties hereto that
the commencement of Tenant’s obligation to pay Rent under the Lease not be delayed by any of such
causes or by any other act of Tenant (except as expressly provided herein) and, in the event it is so
delayed, Tenant’s obligation to pay Rent under the Lease shall commence as of the date it would
otherwise have
Initial: MMK
| Multi Tenant/Single Parcel | Page 2 of 29 |
| BUILDING: | 1098 Alta | |||
| PROPERTY: | 1-0001 | |||
| UNIT: | 1 | |||
| LEASE ID: | 0001-SONI01-01 |
commenced absent delay caused by Tenant. Provided the Lease is executed and delivered to
Landlord no later than 5:00 p.m. on November 2, 2004 and Tenant does not interfere with Landlord’s
work in the Premises, Landlord shall deliver early entry of the Premises to Tenant with carpet in
place and cubicles fully installed no later than December 20, 2004.
It is agreed in the event said Lease commences on a date other than the first day of the month
the Term of the Lease will be extended to account for the number of days in the partial month. The
Basic Rent during the resulting partial month will be pro-rated (for the number of days in the partial
month) at the Basic Rent rate scheduled for the projected Commencement Date as shown in Paragraph
4.A.
3. POSSESSION. Subject to the terms and conditions stated herein, if Landlord, for any
reason whatsoever, cannot deliver possession of said Premises to Tenant at the scheduled
Commencement Date, this Lease shall not be void or voidable; no obligation of Tenant shall be
affected thereby; nor shall Landlord or Landlord’s agents be liable to Tenant for any loss or
damage resulting therefrom; but in that event the commencement and termination dates of the Lease,
and all other dates affected thereby shall be revised to conform to the date of Landlord’s delivery
of possession, as specified in Paragraph 2.B above. The above is, however, subject to the provision
that the period of delay of delivery of the Premises shall not exceed thirty_(30) days from the
latter of (i) the scheduled Commencement Date or (ii) the date this Lease is executed by all
parties hereto (except those delays caused by Tenant, Acts of God, strikes, war, utilities,
governmental bodies, weather, unavailable materials, and delays beyond Landlord’s control (“Force
Majeure Delays”) shall be excluded in calculating such period) in which instance Tenant, at its
option, may, by written notice to Landlord, terminate this Lease; provided Tenant submits said
notice to Landlord prior to the expiration of said 30 day period as extended by Force Majeure
Delays.
4. RENT.
A. Basic Rent. Subject to the potential increase in the Aggregate Basic Rent in the event the
Basic Rent Abatement Period is terminated as detailed below, Tenant agrees to pay to Landlord at
such place as Landlord may designate without deduction, offset, prior notice, or demand, and
Landlord agrees to accept as Basic Rent for the Premises the total sum of FIVE HUNDRED
SEVENTY-EIGHT THOUSAND NINE HUNDRED TWENTY-EIGHT AND NO/100 DOLLARS ($578,928.00) (the “Aggregate
Basic Rent”) in lawful money of the United States of America, payable as follows:
Basic Rent Abatement. From the Commencement Date through the date which is thirty-one (31)
days following the Commencement Date, (the “Basic Rent Abatement Period”), the monthly Basic Rent
of $15,162.40 shall be abated and no Basic Rent will be due (the “Basic Rent Abatement”) during the
Basic Rent Abatement Period; however, Tenant will be responsible for all Additional Rent expenses
as outlined in Paragraph 4.D and the fixed monthly Management Fee as outlined in Paragraph 4.E from
the Commencement Date of the Lease. Notwithstanding the foregoing, except for delays caused by
Tenant, it is the intent of the parties hereto that the total Basic Rent Abatement Period shall be
thirty-one (31) days. In the event that the Commencement Date is delayed beyond January 1, 2005,
the Basic Rent Abatement Period shall commence on the actual Commencement Date through the date
which is 31 days later (for example, if the Lease Commences on January 4, 2005 (and provided Tenant
did not cause the delay in the Commencement), the Basic Rent Abatement Period shall be January 4,
2005 through February 3, 2005 (31 days). If Tenant is responsible for the delay in the Lease
Commencement Date, the Basic Rent Abatement Period shall be decreased by one day for each day of
said delay caused by Tenant. The Basic Rent Abatement is conditioned upon Tenant not committing an
act of monetary default throughout the Term of the Lease. If Tenant commits an act of monetary
default at any time during the Term and fails to cure said monetary default after notice and within
the period allowed under this Lease, then (i) Tenant shall immediately pay to Landlord, upon
demand, a sum equal to the total amount of Basic Rent Abatement which has been used by Tenant as of
the date of the occurrence of such event of monetary default, and (ii) all of the Basic Rent
Abatement which has not been used by Tenant as of the date of the occurrence of such event of
monetary default shall thereby automatically terminate and become null and void, and Tenant shall
thereafter pay all Basic Rent when due under this Lease, without regard to the Basic Rent Abatement
provisions of this Lease. For example, if Tenant’s fails to cure a monetary default under the Lease
on April 11, 2005, Tenant shall pay to Landlord, upon demand, the Basic Rent Abatement for the
period of January 1, 2005 through January 31, 2005 in the amount of $15,162.40 (1 month x
$15,162.40 monthly Basic Rent).
Upon Tenant’s execution of this Lease, the sum of FIFTEEN THOUSAND ONE HUNDRED SIXTY-TWO
AND 40/100 DOLLARS ($15,162.40) shall be due, representing the Basic Rent for the month of
February 2005.
On March 1, 2005, the sum of FIFTEEN THOUSAND ONE HUNDRED SIXTY-TWO AND 40/100 DOLLARS ($15,162.40) shall be due, and a like sum due on the first day of each month
thereafter, through and including January 1, 2006.
Initial: MMK
| Multi Tenant/Single Parcel | Page 3 of 29 |
| BUILDING: | 1098 Alta | |||
| PROPERTY: | 1-0001 | |||
| UNIT: | 1 | |||
| LEASE ID: | 0001-SONI01-01 |
On
February 1, 2006, the sum of FIFTEEN THOUSAND EIGHT HUNDRED FIFTY-ONE AND 60/100
DOLLARS ($15,851.60) shall be due, and a like sum due on the first day of each month thereafter,
through and including January 1, 2007.
On February 1, 2007, the sum of SEVENTEEN THOUSAND TWO HUNDRED THIRTY AND NO/100 DOLLARS
($17,230.00) shall be due, and a like sum due on the first day of each month thereafter, through
and including January 1, 2008; or until the entire aggregate sum of FIVE HUNDRED SEVENTY-EIGHT
THOUSAND NINE HUNDRED TWENTY-EIGHT AND NO/100 DOLLARS ($578,928.00) has been paid (as said
Aggregate Basic Rent may be increased as noted above).
B. Time for Payment. Full monthly Rent is due in advance on the first day of each calendar
month. In the event that the Term of this Lease commences on a date other than the first day of a
calendar month, on the date of commencement of the Term hereof Tenant shall pay to Landlord as Rent
for the period from such date of commencement to the first day of the next succeeding calendar
month that proportion of the monthly Rent hereunder for the number of days between such date of
commencement and the first day of the next succeeding calendar month. In the event that the Term of
this Lease for any reason ends on a date other than the last day of a calendar month, on the first
day of the last calendar month of the Term hereof Tenant shall pay to Landlord as Rent for the
period from said first day of said last calendar month to and including the last day of the Term
hereof that proportion of the monthly Rent hereunder for the number of days between said first day
of said last calendar month and the last day of the Term hereof.
C. Late Charge. Notwithstanding any other provision of this Lease, if Landlord does not
receive payment of Rent as set forth in this Paragraph 4 or other amounts due under the Lease
within ten (10) days of the due date, or any part thereof, Tenant agrees to pay Landlord, in
addition to the delinquent Rent due, a late charge for each Rent payment not received by Landlord
within ten (10) days of the due date (“Late Charge”). Said Late Charge shall equal ten percent
(10%) of each Rent payment not received by Landlord within such ten (10) day period. Said Late
Charge shall be paid by Tenant within thirty (30) days after presentation of an invoice from
Landlord or Landlord’s agent setting forth the amount of said Late Charge. Notwithstanding anything
to the contrary herein, Landlord’s failure to issue a Late Charge invoice in the month of any late
payment shall not be considered a waiver of Landlord’s right to collect said Late Charge.
D. Additional Rent. Beginning with the Commencement Date of the Term of this Lease, Tenant
shall pay to Landlord or to Landlord’s designated agent in addition to the Basic Rent and as
Additional Rent the following:
(a) All Taxes relating to the Premises as set forth in Paragraph 13, and
(b) All insurance premiums and deductibles relating to the Premises, as set forth in
Paragraph 17, and
(c) All charges, costs and expenses, which Tenant is required to pay hereunder, together with
all interest and penalties, costs and expenses including reasonable attorneys’ fees and legal
expenses, that may accrue thereto in the event of Tenant’s failure to pay such amounts, and all
damages, reasonable costs and expenses which Landlord may incur by reason of default of Tenant or
failure on Tenant’s part to comply with the terms of this Lease. In the event of nonpayment by
Tenant of Additional Rent, Landlord shall have all the rights and remedies with respect thereto as
Landlord has for nonpayment of Rent.
References to “Proportionate Share” herein and throughout the Lease shall mean the
Proportionate Share allocated to the Premises based on (a) the total square footage of Tenant’s
Premises as a percentage of the total square footage of the Building
(13,784± square foot Premises
divided by 61,290± square foot Building equals 22.49%) or (b) such other equitable basis as
reasonably calculated by Landlord.
The Additional Rent due hereunder shall be paid to Landlord or Landlord’s agent (i) within
five days for taxes and insurance and within thirty (30) days for all other Additional Rent items
after presentation of invoice from Landlord or Landlord’s agent setting forth such Additional Rent
(notwithstanding anything to the contrary herein, Landlord shall not be required to submit ongoing
monthly statements to Tenant reflecting amounts owed as Additional Rent) and/or (ii) at the option
of Landlord, Tenant shall pay to Landlord monthly, in advance, Tenant’s Proportionate Share of an
amount estimated by Landlord to be Landlord’s approximate average monthly expenditure for such
Additional Rent items, which estimated amount shall be reconciled (i) within one hundred twenty
(120) days of the end of each calendar year and (ii) within 120 days of the Termination Date (or as soon thereafter
as reasonably possible if, for whatever reason, the Landlord cannot complete the reconciliation
within said 120 day periods) or more frequently if Landlord elects to do so at Landlord’s sole and absolute
discretion as compared to Landlord’s actual expenditure for said Additional Rent items, with Tenant
paying to
Initial: MMK
| Multi Tenant/Single Parcel | Page 4 of 29 |
| BUILDING: | 1098 Alta | |||
| PROPERTY: | 1-0001 | |||
| UNIT: | 1 | |||
| LEASE ID: | 0001-SONI01-01 |
Landlord, upon demand, any amount of actual expenses expended by Landlord in excess of said
estimated amount, or Landlord crediting to Tenant (providing Landlord may withhold any amount
thereof required to cure Tenant’s default in the performance of any of the terms, covenants and
conditions of this Lease) any amount of estimated payments made by Tenant in excess of Landlord’s
actual expenditures for said Additional Rent Items. Within thirty (30) days after receipt of
Landlord’s reconciliation, Tenant shall have the right, at Tenant’s sole expense, to audit, at a mutually convenient time at
Landlord’s office, Landlord’s records specifically limited to the foregoing expenses. Such audit must be
conducted by Tenant or an independent nationally recognized accounting firm that is not being
compensated by Tenant or other third party on a contingency fee basis. Tenant shall submit to
Landlord a complete copy of said audit at no expense to Landlord and a written notice stating the
results of said audit, and if such notice by Tenant and the respective audit reveals that Landlord
has overcharged Tenant, and the audit is not challenged by Landlord, the amount overcharged shall
be credited to Tenant’s account within thirty (30) days after completion of Landlord’s review and
approval of said audit. The audit rights of Tenant under this Paragraph 4.D may be assigned by
Tenant in the event Tenant assigns its interest in the Lease, provided Tenant obtains Landlord’s
written consent to such assignment; however, the audit rights shall only be applicable to the
period that commences after the date of assignment and/or merger as the case may be.
Notwithstanding anything to the contrary herein, no subtenant shall have any right to conduct an
audit of Landlord’s books and/or records.
Landlord shall, upon request by Tenant, provide Tenant with copies of individual invoices
related to the foregoing actual expenses, either by facsimile or by U.S. mail; however, in no event
shall Landlord be obligated to provide duplicate copies of any invoice or other Lease documentation
to Tenant and/or Tenant’s representative (if any) for an audit of Tenant’s records outside of
Landlord’s office.
E. Fixed Management Fee. Beginning with the Commencement Date of the Term of this Lease,
Tenant shall pay to Landlord, in addition to the Basic Rent and Additional Rent, a fixed monthly
management fee (“Management Fee”) equal to three percent (3%) of the Basic Rent due for each month
during the Term. During the Basic Rent Abatement Period, Tenant shall pay a fixed monthly
Management Fee of $454.87 as calculated on the Basic Rent that would otherwise be due for said
period. Tenant shall be responsible for calculating the monthly Management Fee based on the Basic
Rent schedule shown in Paragraph 4.A above, and for paying said Management Fee by the first day of
each month during the Term of this Lease. Tenant’s failure to pay the monthly Management Fee within
ten (10) days of the due date will result in a Late Charge being assessed pursuant to the terms of
Paragraph 4.C above.
The reference to “Rent” in this Paragraph 4 includes Basic Rent, Additional Rent, and fixed
Management Fee. The respective obligations of Landlord and Tenant under this paragraph shall
survive the expiration or other termination of the Term of this Lease, and if the Term hereof shall
expire or shall otherwise terminate on a day other than the last day of a calendar year, the actual
Additional Rent incurred for the calendar year in which the Term hereof expires or otherwise
terminates shall be determined and settled on the basis of the statement of actual Additional Rent
for such calendar year and shall be prorated in the proportion which the number of days in such
calendar year preceding such expiration or termination bears to 365.
F. Place of Payment of Rent. All Rent hereunder shall be paid to Landlord at the office of
Landlord at: XXXXX/XXXXXXXXX, FILE 1504, XXX 00000, XXX XXXXXXXXX, XX 00000, or to such other
person or to such other place as Landlord may from time to time designate in writing.
G. Security Deposit. Concurrently with Tenant’s execution of this Lease, Tenant shall deposit
with Landlord the sum of THIRTY-TWO THOUSAND THREE HUNDRED NINETY-TWO AND 40/100 DOLLARS
($32,392.40). Said sum shall be held by Landlord as a Security Deposit for the faithful performance
by Tenant of all of the terms, covenants, and conditions of this Lease to be kept and performed by
Tenant during the Term hereof. If Tenant defaults with respect to any provision of this Lease,
including, but not limited to, the provisions relating to the payment of Rent and any of the
monetary sums due hereunder, Landlord may (but shall not be required to) use, apply or retain all
or any part of this Security Deposit for the payment of any other amount which Landlord may spend
by reason of Tenant’s default or to compensate Landlord for any other loss or damage which Landlord
may suffer by reason of Tenant’s default. If any portion of said Security Deposit is so used or
applied, Tenant shall, within five (5) days after written demand therefor, deposit cash with
Landlord in the amount sufficient to restore the Security Deposit to its original amount. Tenant’s
failure to do so shall be a material breach of this Lease. Landlord shall not be required to keep
this Security Deposit separate from its general funds, and Tenant shall not be entitled to interest
on such Security Deposit. If Tenant fully and faithfully performs every provision of this Lease to
be performed by it, the Security Deposit or any balance thereof shall be returned to Tenant (or at Landlord’s option, to the last assignee of Tenant’s interest
hereunder) at the expiration or earlier termination of the Term and after Tenant has vacated the
Premises; provided, however, that Landlord may withhold therefrom the amount necessary to cover the
cost of restoration of the Premises if Tenant fails to do so as required under Paragraph 5 and to cure any then uncured
default
Initial: MMK
| Multi Tenant/Single Parcel | Page 5 of 29 |
| BUILDING: | 1098 Alta | |||
| PROPERTY: | 1-0001 | |||
| UNIT: | 1 | |||
| LEASE ID: | 0001-SONI01-01 |
by Tenant under this Lease. In the event of termination of Landlord’s interest in this Lease,
Landlord shall transfer said Security Deposit to Landlord’s successor in interest whereupon Tenant
agrees to release Landlord from liability for the return of such Security Deposit or the accounting
therefor. Tenant hereby waives the protection of Section 1950.7 of the California Civil Code.
Notwithstanding anything to the contrary above, in the event Tenant has not been in default, after
notice and expiration of any applicable cure period, of any of the terms and/or conditions of the
Lease prior to January 31, 2007, and further provided that Landlord is still holding the full
Security Deposit of $32,392.40 as stated above, Landlord agrees, upon receipt of a written request
from Tenant, that said Security Deposit shall be reduced to $15,162.40 and the balance of the
Security Deposit held at that time, if any, shall be applied to the Basic Rent due for the month of
February 2007. If Tenant commits an act of monetary default, after notice and expiration of any
applicable cure period, at any time prior to and including January 31, 2007, then Tenant’s right to
apply a portion of the Security Deposit held under this Lease to the February 2007 Basic Rent shall
be automatically forfeited by Tenant (without notice from Landlord). In the event Tenant defaults,
after notice and expiration of any applicable cure period, at any time thereafter, the Security
Deposit required under this Lease shall be increased to $32,392.40 and Tenant shall replenish said
Security Deposit and shall pay said replenished amount to Landlord within five (5) days of receipt
of written notice to do so.
5. ACCEPTANCE AND SURRENDER OF PREMISES. By entry hereunder and subject to Tenant’s
“punch list” rights as stated in Paragraph 6.C (“As-Is Basis: Punch List”), Tenant accepts the
Premises as being in good and sanitary order, condition and repair and accepts the Building and
improvements included in the Premises in their present condition and without representation or
warranty by Landlord as to the condition of such Building or as to the use or occupancy which may
be made thereof. Any exceptions to the foregoing must be by written agreement executed by Landlord
and Tenant. Tenant agrees on the last day of the Term, or on the sooner termination of this Lease,
to surrender the Premises promptly and peaceably to Landlord in good condition and repair (damage
by Acts of God, fire, normal wear and tear excepted), with all interior walls cleaned, and repaired
or replaced, if damaged; all floors cleaned and waxed; all carpets cleaned and shampooed; all
broken, marred or nonconforming acoustical ceiling tiles replaced; all windows washed; the air
conditioning and heating systems within the non-common areas of the Premises serviced by a
reputable and licensed service firm and in good operating condition and repair; the plumbing and
electrical systems and lighting within the non-common areas of the Premises in good order and
repair, including replacement of any burned out or broken light bulbs or ballasts; together with
all alterations, additions, and improvements (collectively “Alterations”) which may have been made,
in, to, or on the Premises (except moveable trade fixtures installed and paid for by Tenant;
however, Tenant shall be responsible for repairing any damage caused by the installation and/or the
removal of said items) except as referenced in Paragraph 7 (“Alterations and Additions”), Tenant
shall not be required to remove those Alterations, if any, that are not subject to restoration
pursuant to Landlord’s written Consent to Alterations agreement to be executed by Tenant and
Landlord for each request from Tenant to make Alterations to the Premises. For all other such
Alterations, Tenant shall ascertain from Landlord within thirty (30) days before the end of the
Term of this Lease whether Landlord desires to have the Premises or any part or parts thereof
restored to their condition and configuration as when the Premises were delivered to Tenant and if
Landlord shall so desire, then at Landlord’s option and in Landlord’s sole and absolute discretion,
Tenant shall either (i) pay to Landlord a fee in an amount equal to (a) Landlord’s estimated cost
to restore the Premises to the configuration and condition that existed when the Premises were
delivered Tenant plus (b) subject to Paragraph 30 (“Holding Over”), an amount equal to the daily
prorated Basic Rent due for the last month of the Term times the number of days Landlord estimates
are required to complete said restoration or (ii) Tenant shall restore said Premises or such part
or parts thereof before the end of this Lease at Tenant’s sole cost and expense. In the event
Landlord requires Tenant to pay for the cost of the restoration, the fee shall be paid by Tenant to
Landlord regardless of whether or not Landlord elects to restore all or part of said Premises. In
the event Landlord does not elect to be paid for such work and Tenant is required to complete the
restoration and said restoration is not completed prior to the Termination Date, Tenant
acknowledges that Tenant shall enter into a Hold Over period pursuant to the terms of Lease
Paragraph 30 (“Holding Over”) and Tenant shall automatically be liable to Landlord for the monthly
Hold Over Basic Rent and all other Additional Rent until said restoration is completed by Tenant.
In addition to Tenant’s surrender obligations within the non-Common Areas of the Premises, Tenant
shall pay Landlord for Tenant’s Proportionate Share of the cost to insure that all Common Area
features and systems are in good operating condition and repair, including the lawn and shrubs
(including the replacement of any dead or damaged plantings), the sidewalk, driveways and parking
areas. Prior to the Termination Date, as part of the surrender of Premises procedures, Landlord
will have the Building systems inspected that serve the Premises, at Tenant’s sole cost and
expense, including, but not limited to the HVAC system, plumbing systems and roof membrane (and the
roof structure pursuant to Lease Paragraph 11.C (“Structural Maintenance”), and Tenant shall be
responsible for its Proportionate Share (as reasonably determined by Landlord) of all repairs noted
on said inspection reports. Tenant, on or before the end of the Term or sooner termination of this
Lease, shall remove all of Tenant’s personal property and trade fixtures from
the Premises, and all property not so removed on or before the end of the Term or sooner
termination of this Lease shall be deemed abandoned by Tenant and title to same shall thereupon
pass to Landlord
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without compensation to Tenant. Landlord may, upon termination of this Lease, remove all
moveable furniture and equipment so abandoned by Tenant, at Tenant’s sole cost, and repair any
damage caused by such removal at Tenant’s sole cost. Upon surrender of the Premises to Landlord,
Tenant shall provide Landlord with keys for all interior locking doors and Tenant agrees to pay to
Landlord the cost of Landlord re-keying (i) all exterior doors (including mechanical rooms) and
(ii) all interior doors with locks to which Tenant is not able to provide Landlord keys (provided
that Landlord provided keys to Tenant for said interior doors upon Lease commencement). Tenant may
utilize any existing security system located within the Premises, and Tenant shall not be required
to remove any such existing equipment or related wiring. If Tenant has installed a cardkey system
(which installation is subject to Landlord’s Consent pursuant to Paragraph 7 (“Alterations and
Additions”), Tenant shall also be responsible for the costs Landlord incurs in replacing the doors
and/or door frames in which such cardkey system was installed and removing any and all equipment
and wiring related thereto unless Landlord notifies Tenant in writing prior to the Lease
Termination Date that Landlord wants the cardkey system to remain in the Premises, in which event
the cardkey system shall remain on the Premises after the expiration of the Term and Tenant will
provide Landlord with the cardkeys and instructions for such system along with any other equipment
that is necessary for the operation of said cardkey system. For example, if software and/or
specialized computer systems are required to operate the cardkey system, Tenant shall leave the
cardkey pads, the software (hard copies and assignment of the license to Landlord should Landlord
so elect), the computer and the instructions thereto in place in the Premises. If the Premises is
not surrendered at the end of the Term or sooner termination of this Lease, Tenant shall indemnify
Landlord against loss or liability resulting from the delay by Tenant in so surrendering the
Premises including, without limitation, any claims made by any succeeding Tenant founded on such
delay. Nothing contained herein shall be construed as an extension of the Term hereof or as a
consent of Landlord to any holding over by Tenant. The voluntary or other surrender of this Lease
or the Premises by Tenant or a mutual cancellation of this Lease shall not work as a merger and, at
the option of Landlord, shall either terminate all or any existing subleases or subtenancies or
operate as an assignment to Landlord of all or any such subleases or subtenancies.
6. “AS-1S” BASIS.
A. Leased on “As-ls” Basis. Except as may be noted in this Paragraph 6 and in Paragraph 11
(“Expenses of Operation, Management, and Maintenance of the Common Areas of the Parcel and Building
in Which the Premises are Located”) and subject to Landlord making the improvements shown on
Exhibit B attached hereto, it is hereby agreed that the Premises leased hereunder is leased
strictly on an “as-is” basis and in its present condition, and in the configuration as shown on
Exhibit B attached hereto, and by reference made a part hereof. Except as noted herein, it
is specifically agreed between the parties that after Landlord makes the interior improvements as
shown on Exhibit B, Landlord shall not be required to make, nor be responsible for any
cost, in connection with any repair, restoration, and/or improvement to the Premises in order for
this Lease to commence, or thereafter, throughout the Term of this Lease. Notwithstanding anything
to the contrary within this Lease, Landlord makes no warranty or representation of any kind or
nature whatsoever as to the condition or repair of the Premises, nor as to the use or occupancy
which may be made thereof.
B. Tenant Improvements to be Constructed by Landlord. Notwithstanding anything to the contrary
above, Landlord has agreed to construct and install, at Landlord’s cost and expense, the tenant
improvements specifically listed below (‘Tenant Improvements”) on or before December 20, 2004
(subject to Paragraph 2.C (“Term: Early Entry”), and Landlord shall not be responsible for
providing any additional interior improvements:
| 1) | Remove the walls and related doors as shown in Purple dashed lines on Exhibit B attached hereto, and make any necessary adjustments and/or repairs to the VCT (if any), fire sprinkler system, HVAC supplies and returns, lighting, electrical, and ceiling tiles and grid required as a result of said wall and door removal; | ||
| 2) | Replace the existing VCT (with Landlord’s standard grade VCT) in the “Lunch Room” and the “Break Room” as shown in Green crosshatch on Exhibit B attached hereto; | ||
| 3) | Replace the existing carpet throughout the Premises with Landlord’s standard grade new carpet; | ||
| 4) | Remove the existing VCT and install Landlord’s standard grade new carpet in the rooms shown in Cyan Blue crosshatch on Exhibit B. and shall remove the existing power strip along the wall of one of the said rooms prior to painting the walls per item 5) below; | ||
| 5) | Paint the interior walls throughout the Premises; | ||
| 6) | Provide and install the Furniture listed on Exhibit F attached hereto, which Furniture is to be leased by Tenant pursuant to Paragraph 46 (“Personal Property of Landlord”) and ensure that each cubicle provided and installed by Landlord has (a) one (1) operational 4-port voice and data outlet (two (2) voice and two (2) data outlets) and |
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(b) one working duplex electrical outlet (Landlord shall have the wiring
and outlets tested upon installation to ensure that said wiring and outlets are
in working order); Landlord agrees that the existing server rack in the area
shown in Yellow Crosshatch on Exhibit B shall remain in the Premises and shall
be leased by Tenant per Lease Paragraph 46 (“Personal Property of Landlord”);
| 7) | Install Tenant’s Personal Property listed in Exhibit A of the Xxxx of Sale attached hereto as Exhibit G, which Tenant’s Personal Property is to be purchased by Tenant from Landlord pursuant to Paragraph 47 (“Tenant’s Personal Property”) and ensure that each cubicle of Tenant’s Personal Property has (a) one (1) operational 4-port voice and data outlet (two (2) voice and two (2) data outlets) and (b) one working duplex electrical outlet (Landlord shall have the wiring and outlets tested upon installation to ensure that said wiring and outlets are in working order); | ||
| 8) | Landlord will replace any damaged, stained and/or missing ceiling tiles throughout the Premises; | ||
| 9) | Landlord shall have the electrical system within the Premises inspected and any necessary repairs completed (including the replacement of any broken or non-functioning lights and ballasts); | ||
| 10) | Landlord shall have the HVAC system within the Premises inspected and any necessary repairs completed; | ||
| 11) | Landlord shall have the roof membrane and the balconies for the Building inspected and any necessary repairs completed; and | ||
| 12) | Landlord shall have the plumbing system within the Premises inspected and any necessary repairs completed. |
The Tenant Improvements referenced above shall become a part of the Premises upon installation
and Tenant shall not be required or allowed to remove said Tenant Improvements upon Lease
Termination (except as to Tenant’s Personal Property referenced in Paragraph 6.B.7) above). In the
event this Lease is terminated early due to an uncured default by Tenant and/or a written agreement
between Landlord and Tenant to terminate the Lease prior to the scheduled Termination Date, Tenant
agrees to reimburse Landlord for one hundred percent (100%) of the balance of the unamortized cost
of the Tenant Improvements previously paid for by Landlord that is outstanding as of the early
Termination Date. Said amount shall be paid by Tenant to Landlord by the Termination Date and/or
Landlord may, at its option, deduct part of all of said unamortized Tenant Improvement cost from
Tenant’s Security Deposit.
C. Punch List: In addition to and notwithstanding anything to the contrary in Paragraph 6.A
above, Tenant shall have thirty (30) days after the Commencement Date to provide Landlord with a
written “punch list” pertaining to defects in the Tenant Improvements constructed by Landlord for
Tenant. As soon as reasonably possible after timely receipt of the punch list, Landlord (or one of
Landlord’s representatives if so approved by Landlord), and Tenant shall conduct a joint
walk-through of the Premises (if Landlord so requires), and inspect such Tenant Improvements, using
their best efforts to agree on the incomplete or defective construction related to the Tenant
Improvements installed for Tenant by Landlord. After such inspection has been completed, Landlord
shall prepare, and both parties shall sign, a list of all “punch list” items which the parties
reasonably agree are (i) to be corrected by Landlord (but which shall exclude any damage or defects
caused by Tenant, its employees, agents or parties Tenant has contracted with to work on the
Premises) or (ii) if said defects and/or damaged item(s) are not material, Landlord may elect, in
its sole and absolute discretion, not to repair such item(s), but to acknowledge in written form
the defect and/or damaged item(s); in which case, notwithstanding anything to the contrary in said
Lease Paragraph 5 (“Acceptance and Surrender”), Tenant shall not be responsible upon Lease
Termination to repair said item(s) so noted by Landlord. Landlord shall have thirty (30) days
thereafter (or longer if necessary, provided Landlord is diligently pursuing the completion of the
same) to complete, at Landlord’s expense, the “punch list” items without the Commencement Date of
the Lease and Tenant’s obligation to pay Rent thereunder being affected. Landlord’s obligations
under this Paragraph 6.C shall be of no force and effect if Tenant shall fail to give any such
notice to Landlord within thirty (30) days after the Commencement Date of this Lease.
7. ALTERATIONS AND ADDITIONS. Tenant shall not make, or suffer to be made, any
Alterations to the Premises, or any part thereof, without the written consent of Landlord first had
and obtained by Tenant; such consent shall not be unreasonably withheld and such consent to
Alterations shall not be valid until such time as said consent is executed by both Landlord and
Tenant and a fully executed copy delivered by Landlord to Tenant (“Consent to Alterations”).
Provided Tenant requests in writing such predetermination from Landlord, said Consent to
Alterations shall specify whether Landlord shall require removal of said Alterations. Any Alteration of the Premises except moveable furniture
and trade fixtures, shall at once become a part of the Premises and belong to Landlord. Any such
Alterations shall be paid for one hundred percent (100%) by Tenant. Landlord reserves the right to
approve all contractors and mechanics proposed by Tenant to make such Alterations. As a
pre-condition to Landlord granting its consent to any Alterations, Tenant shall deliver plans and specifications for Landlord’s review and
approval, and within five business days of completion of said Alterations, Tenant shall deliver to
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Landlord an original 1/8” scaled sepia or an other electronic format as solely determined by
Landlord. Tenant shall retain title to all moveable furniture and trade fixtures placed in the
Premises. All heating, lighting, electrical, air conditioning, security systems, floor to ceiling
partitioning, drapery, carpeting, and floor installations made by Tenant, together with all
property that has become an integral part of the Premises, shall not be deemed trade fixtures.
Tenant agrees that it will not proceed to make such Alterations, without having obtained consent
from Landlord to do so, and until five (5) business days from the receipt of such consent, in order
that Landlord may post appropriate notices to avoid any liability to contractors or material suppliers for payment for Tenant’s Alterations. Tenant will at all times
permit such notices to be posted and to remain posted until the completion of work. As a condition
of Landlord’s Consent to Alterations to the Premises, after Landlord provides written Consent to
Alterations and prior to any work commencing on the Alterations, Landlord may, at its sole and
absolute discretion, require Tenant to secure and provide to Landlord at Tenant’s own cost and
expense, a completion and lien indemnity letters of credit, satisfactory to Landlord in the amount
of one hundred fifty percent (150%) of the cost to fund the original construction of any
Alterations (“Letter of Credit A”) and, if Landlord does not agree in the Consent to Alterations
that said Alterations are to remain at the end of the Lease Term, an additional letter of
credit in the amount of one hundred fifty percent (150%) of the cost to fund the subsequent
cost of the removal of said Alterations and the restoration of the Premises at the Termination Date
(“Letter of Credit B”). Said performance Letters of Credit shall be kept in place as follows: for
Letter of Credit A, for sixty (60) days after the completion of the original construction of said
Alterations; and for Letter of Credit B, the later of (a) sixty (60) days after the Termination
Date or (b) sixty (60) days after the completion of the restoration work and Tenant has provided
Landlord with proof of payment to respective vendors and copies of recorded full unconditional lien
release related to the Alterations and/or restoration work. Notwithstanding anything to the
contrary, Landlord hereby waives said performance Letters of Credit with regard to Tenant’s initial
installation of a security system within the Premises; PROVIDED, HOWEVER, that (1) Landlord has
given prior written approval for the security system to be installed by Tenant; and (2) by no later
than January 31, 2005, Tenant shall provide to Landlord (i) written proof of full payment to the
respective vendors for the installation of said approved security system; and (ii) a full
unconditional lien waiver to Landlord for the payment of said security system. Tenant further
covenants and agrees that any mechanic’s lien filed against the Premises for work claimed to have
been done for, or materials claimed to have been furnished to Tenant, will be discharged by Tenant,
by bond or otherwise, within ten (10) days after notice of filing thereof, at the cost and expense
of Tenant. Any exceptions to the foregoing must be made in writing and executed by both Landlord
and Tenant.
8. RULES AND REGULATIONS AND COMMON AREA. Subject to the terms and conditions of this
Lease and such Rules and Regulations as Landlord may from time to time prescribe, Tenant and
Tenant’s employees, invitees and customers shall, in common with other occupants of the
Parcel/Building in which the Premises are located, and their respective employees, invitees and
customers, and others entitled to the use thereof, have the non-exclusive right to use the access
roads, parking areas, and facilities provided and designated by Landlord for the general use and
convenience of the occupants of the Parcel/Building in which the Premises are located, which areas
and facilities are referred to herein as “Common Area”. This right shall terminate upon the
termination of this Lease. Landlord reserves the right from time to time to make changes in the
shape, size, location, amount and extent of Common Area. Landlord further reserves the right to
promulgate such reasonable rules and regulations relating to the use of the Common Area, and any
part or parts thereof, as Landlord may deem appropriate for the best interests of the occupants of
the Parcel/Building (“Rules and Regulations”). Such Rules and Regulations may be amended by
Landlord from time to time, with or without advance notice, and all amendments shall be effective
upon delivery of a copy to Tenant. Landlord shall not be responsible to Tenant for the
non-performance by any other tenant or occupant of the Parcel/Building of any of said Rules and
Regulations. As of the date of this Lease, there are no Rules and Regulations affecting the
Premises.
Landlord shall operate, manage and maintain the Common Area. The manner in which the Common Area
shall be maintained and the expenditures for such maintenance shall be at the discretion of
Landlord.
9. PARKING. Tenant shall have the right to the nonexclusive use of fifty
(50) parking spaces in the common parking area of the Building, which common parking
area may be used by Tenant in common with other tenants or occupants of the Building.
Tenant agrees that Tenant, Tenant’s employees, agents, representatives, and/or invitees
shall not use parking spaces in excess of said 50 parking spaces allocated to Tenant
hereunder. Landlord shall have the right, at Landlord’s sole discretion, to
specifically designate the location of Tenant’s parking spaces within the common
parking area of the Building, in which event Tenant agrees that Tenant, Tenant’s
employees, agents, representatives and/or invitees shall not use any parking spaces
other than those parking spaces specifically designated by Landlord for Tenant’s use.
Said parking spaces, if specifically designated by Landlord to Tenant, may be
reasonably relocated by Landlord at any time, and from time to time if necessary.
Landlord shall give Tenant written notice of any change in Tenant’s parking spaces.
Tenant shall not, at any time, park, or permit to be parked, any trucks or vehicles adjacent
to the loading area so as to interfere in any way with the use of
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such areas, nor shall Tenant, at any time, park or permit the parking of Tenant’s trucks and
other vehicles or the trucks and vehicles of Tenant’s suppliers or others, in any portion of the
common areas not designated by Landlord for such use by Tenant. Tenant shall not park nor permit to
be parked, any inoperative vehicles or equipment on any portion of the common parking area or other
common areas of the Building. Tenant agrees to assume responsibility for compliance by its
employees with the parking provision contained herein. If Tenant or its employees park in other
than designated parking areas, then Landlord may charge Tenant, as an additional charge, and Tenant agrees to pay Ten Dollars
($10.00) per day for each day or partial day each such vehicle is parking in any area other than that
designated. Tenant hereby authorizes Landlord, at Tenant’s sole expense, to tow away from the
Building any vehicle belonging to Tenant or Tenant’s employees parked in violation of these
provisions, or to attach violation stickers or notices to such vehicles; provided, however, that
unless any such vehicle is parked in a dangerous and/or designated no parking zone, Landlord will
attach a twenty-four (24) hour violation notice on said vehicle prior to having the vehicle towed
from the Property. Tenant shall use the parking area for vehicle parking only and shall not use the
parking areas for storage.
10. TENANT MAINTENANCE. Tenant shall, at its sole cost and expense, keep and maintain
the non-common areas of the Premises (including appurtenances) and every part thereof in a high
standard of maintenance and repair, and in good and sanitary condition. Tenant’s maintenance,
repair and replacement responsibilities herein referred to include, but are not limited to,
janitorization, plumbing systems within the non-common areas of the Premises (such as water and
drain lines, sinks), electrical systems within the non-common areas of the Premises (such as
outlets, lighting fixtures, lamps, bulbs, tubes, ballasts), heating and air-conditioning controls
within the non-common areas of the Premises (such as mixing boxes, thermostats, time clocks, supply
and return grills), non-common elevators (if any), and all interior improvements within the
Premises including but not limited to: wall coverings, window coverings, acoustical ceilings, vinyl
tile, carpeting, partitioning, doors (both interior and exterior, including closing mechanisms,
latches and locks), skylights (if any), automatic fire extinguishing systems, and all other
interior improvements of any nature whatsoever. Tenant agrees to provide carpet xxxxxxx under all
rolling chairs or to otherwise be responsible for wear and tear of the carpet caused by such
rolling chairs if such wear and tear exceeds that caused by normal foot traffic in surrounding
areas. Areas of excessive wear shall be replaced at Tenant’s sole expense upon Lease termination.
Tenant hereby waives all rights hereunder, and benefits of, subsection 1 of Section 1932 and
Sections 1941 and 1942 of the California Civil Code and under any similar law, statute or ordinance
now or hereafter in effect.
11. EXPENSES OF OPERATION, MAINTENANCE AND REPAIR OF THE COMMON AREAS OF THE PARCEL AND
BUILDING IN WHICH THE PREMISES ARE LOCATED.
A. Maintenance of the Common Areas of the Parcel. Landlord shall operate, manage and maintain
the Common Areas of the Parcel. As Additional Rent and in accordance with Paragraph 4.D of this
Lease, Tenant shall pay to Landlord Tenant’s Proportionate Share of all expenses of operation,
maintenance and repair of the Common Areas of the Parcel including, but not limited to, license,
permit, and inspection fees; security; utility charges associated with exterior landscaping and
lighting (including water and sewer charges); all charges incurred in the maintenance and
replacement of landscaped areas, lakes, parking lots and paved areas (including repairs’,
replacement, resealing and restriping), sidewalks, driveways, maintenance, repair and replacement
of all fixtures and electrical, mechanical and plumbing systems; supplies, materials, equipment and
tools; the cost of capital expenditures which have the effect of reducing operating expenses,
provided, however, that in the event Landlord makes such capital improvements, Landlord shall
amortize its investment in said improvements (together with interest at the rate of fifteen (15%)
percent per annum on the unamortized balance if Landlord elects to allocate payment to Tenant
monthly over the Term of the Lease, rather than requiring Tenant to pay such amortized costs in one
lump sum) (“Amortized Cost”) as an operating expense in accordance with standard accounting
practices, provided, that such amortization is not at a rate greater than the anticipated savings
in the operating expenses.
B. Maintenance of the Common Areas of the Building. Landlord shall operate, manage and
maintain the Common Areas of the Building. As Additional Rent and in accordance with Paragraph 4.D
of this Lease, Tenant shall pay its Proportionate Share of the cost of operation (including common
utilities), maintenance, and repair of the Building (including structural and common areas such as
lobbies, restrooms, janitor’s closets, hallways, elevators, mechanical and telephone rooms,
stairwells, entrances, spaces above the ceilings and janitorization of said common areas) in which
the Premises are located. The maintenance items herein referred to include, but are not limited to,
all windows, window frames, plate glass, glazing, truck doors, main plumbing systems of the
Building (such as water drain lines, sinks, toilets, faucets, drains, showers and water fountains),
main electrical systems (such as panels and conduits), heating and air-conditioning systems (such as compressors, fans, air handlers, ducts,
boilers, heaters), structural elements and exterior surfaces of the Building; store fronts, roof,
downspouts, Building common area interiors (such as wall coverings, window coverings, floor coverings and
partitioning), ceilings, Building exterior doors, skylights (if any), automatic fire extinguishing
systems,
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and elevators (if any); license, permit and inspection fees; security, supplies, materials,
equipment and tools; the cost of capital expenditures which have the effect of reducing operating
expenses, provided, however, that in the event Landlord makes such capital improvements, Landlord
shall amortize its investment in said improvements (together with interest at the rate of fifteen
percent (15%) per annum on the unamortized balance if Landlord elects to allocate payment to Tenant
monthly over the Term of the Lease, rather than requiring Tenant to pay such amortized costs in one
lump sum) (“Amortized Cost”) as an operating expense in accordance with standard accounting
practices, provided, that such amortization is not at a rate greater than the anticipated savings
in the operating expenses. Tenant hereby waives all rights hereunder, and benefits of, subsection 1
of Section 1932 and Sections 1941 and 1942 of the California Civil Code and under any similar law,
statute or ordinance now or hereafter in effect.
C. Structural Maintenance: Notwithstanding anything to the contrary in Paragraph 11.B
above, (i) Landlord shall repair, including replacement related to, damage to the structural shell,
foundation, and roof structure (but not the interior improvements, roof membrane, or glazing) of
the Building leased hereunder that exist as of the Commencement Date at Landlord’s cost, and (ii)
Landlord shall repair, including replacement related to, damage to the structural shell,
foundation, and roof structure (but not the interior improvements, roof membrane, or glazing) of
the Building leased hereunder occurring after the Commencement Date at Landlord’s cost, however,
Landlord shall amortize the cost of the repair over the useful life of said repair, and Tenant
shall be responsible for paying to Landlord, within thirty days of written notice from Landlord,
one hundred percent (100%) of Tenant’s Proportionate Share of the Amortized Cost over the full Term
of the Lease, plus Tenant’s Proportionate Share of the insurance deductible (if such damage is the
result of an insured peril); provided Tenant has not caused such damage, in which event Tenant
shall be responsible for one hundred percent (100%) of the insurance deductible and any such costs
and expense not reimbursed to Landlord by insurance proceeds for repair and/or replacement or
damage so caused by the Tenant and shall pay such amount to Landlord within thirty (30) days of the
invoice date. For Example: In the event (i) the Amortized Cost of a roof structure repair is
$10,000, and (ii) said repair has a useful life of twenty years, Tenant would be charged its
Proportionate Share of $346.69 ($10,000 / 20 years /12 months = $41.67 x 22.49% = $9.37/month x 37
months = $346.69) as Additional Rent, in which case said amount would be due within thirty (30)
days of Tenant’s receipt of an invoice from Landlord. Tenant hereby waives all rights under, and
benefits of subsection I of Section 1932 and Sections 1941 and 1942 of the California Civil Code
and under any similar law, statute or ordinance now or hereafter in effect. Notwithstanding the
foregoing, a crack in the foundation or exterior walls, or any other defect in the Building that
does not endanger the structural integrity of the Building and/or Premises for which Tenant is or
is not responsible, or which is not life-threatening, shall not be considered material, and
Landlord may elect, in its sole and absolute discretion, not to repair and/or replace the same;
however, Landlord may require Tenant to repair and/or replace the same at Tenant’s sole cost and
expense, within thirty days of written notice from Landlord, if Tenant is responsible.
In the event the Term of the Lease is extended for any reason whatsoever, Tenant’s Proportionate
Share of the Amortized Cost of the earlier repair and/or replacement cost shall be increased to
include the additional amount payable to Landlord due to the Extended Term of the Lease. For
Example: In the event: (i) the roof structure was repaired as illustrated above; and (ii) this
Lease is extended for an additional one year period, Tenant would be liable for an additional
payment to Landlord equal to Tenant’s Proportionate Share of $112.44 ($9.37/month x 12 months) as
Additional Rent. Said payment would be due in full within thirty days of Tenant’s receipt of an
invoice from Landlord.
“Additional Rent” as used herein shall not include Landlord’s debt repayments; cost for the
installation of partitioning or any other tenant improvements for third party tenants; cost of
attracting third party tenants; depreciation; interest; or executive salaries.
12. UTILITIES OF THE BUILDING IN WHICH THE PREMISES ARE LOCATED. As Additional Rent
and in accordance with Paragraph 4.D of this Lease Tenant shall pay its Proportionate Share, (or if
the Building in which the Premises is located is not one hundred percent (100%) leased, said
Proportionate Share for utilities shall be calculated based on (i) Tenant’s Premises square footage
as a percentage of the total square footage leased to Tenant and any other third party tenants in
the Building or (ii) other equitable basis as calculated by Landlord) of the cost of all utility
charges such as water, gas, electricity, (and telephone, telex and other electronic communications
service, if applicable), sewer service, waste pick-up and any other utilities, materials or
services furnished directly to the Building in which the Premises are located, including, without
limitation, any temporary or permanent utility surcharge or other exactions whether or not
hereinafter imposed. Notwithstanding anything to the contrary herein, in the event any utility
charges apply only to the Premises leased by Tenant, Tenant shall place such utilities in Tenant’s name and shall pay the related costs directly to the utility
company(ies).
Landlord shall not be liable for and Tenant shall not be entitled to any abatement or reduction of
rent by reason of any interruption or failure of utility services to the Premises when such
interruption or failure is
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caused by accident, breakage, repair, strikes, lockouts, or other labor disturbances or
labor disputes of any nature, or by any other cause, similar or dissimilar, beyond the reasonable
control of Landlord.
Landlord shall furnish to the Premises between the hours of 8:00 am and 6:00 pm, Mondays
through Fridays (holidays excepted) and subject to the Rules and Regulations of the Common Area
hereinbefore referred to, reasonable quantities of water, gas and electricity suitable for the
intended use of the Premises and heat and air-conditioning required in Landlord’s judgment for the
comfortable use and occupation of the Premises for such purposes. Tenant may, from time to time, have its staff and equipment operate
on a twenty-four (24) hour-a-day, seven (7) day-a-week schedule, and Tenant shall pay for extra
utilities, if any, used by Tenant. Tenant agrees that at all times it will cooperate fully with
Landlord and abide by all regulations and requirements that Landlord may prescribe for the proper
functioning and protection of the Building heating, ventilating and air-conditioning systems.
Whenever heat generating machines, equipment, or any other devices (including exhaust fans) are
used in the Premises by Tenant which affect the temperature otherwise maintained by the
air-conditioning system, Landlord shall have the right to install supplementary air-conditioning
units in the Premises and the cost thereof, including the cost of installation and the cost of
operation and maintenance thereof, shall be paid by Tenant to Landlord upon demand by Landlord.
Tenant will not, without the written consent of Landlord, use any apparatus or device in the
Premises (including, without limitation), electronic data processing machines or machines using
voltage in excess of 120 Volts which will in any way increase the amount of electricity, gas, water
or air-conditioning usually furnished or supplied to Premises being used as general office space,
or connect with electric current (except through existing electrical outlets in the Premises), or
with gas or water pipes any apparatus or device for the purposes of using electric current, gas, or
water. If (i) Tenant shall require water, gas, or electric current in excess of that usually
furnished or supplied to Premises being used as general office space, Tenant shall first obtain the
written consent of Landlord, which consent shall not be unreasonably withheld, or (ii) if Tenant is
found to be using water, gas and/or electrical current in excess of its Proportionate Share (as
such excess usage is confirmed by a study conducted by
Landlord’s contractor(s), Landlord may (a)
adjust the Proportionate Share allocated to Tenant based on Tenant’s actual or estimated use or (b)
cause an electric current, gas or water meter to be installed in the Premises in order to measure
the amount of electric current, gas or water consumed for any such excess use. In the event
Landlord questions Tenant’s usage, Landlord shall employ the services of a licensed electrical or
plumbing contractor to determine what Tenant’s actual use is and Tenant shall be responsible for
paying the cost related to said investigation by the licensed contractor or any other qualified
third party vendor that Landlord may employ to provide such service. The cost of any such meter and
of the installation, maintenance and repair thereof, all charges for such excess water, gas and
electric current consumed (as shown by such meters and at the rates then charged by the furnishing
public utility); and any additional expense incurred by Landlord in keeping account of electric
current, gas, or water so consumed shall be paid by Tenant, and Tenant agrees to pay Landlord
therefor promptly upon demand by Landlord.
13. TAXES.
A. Real Property Taxes. As Additional Rent and in accordance with Paragraph 4.D of this
Lease, Tenant shall pay to Landlord, monthly in advance or as they become due, pursuant to
statements submitted by Landlord, Tenant’s Proportionate Share of all Real Property Taxes relating
to the Premises accruing with respect to the Premises during the Term of this Lease and the
Extended Term (if any). The term “Real Property Taxes” shall also include supplemental taxes
related to the period of Tenant’s Term whenever levied, including any such taxes that may be levied
after the Term has expired. In the event the Premises leased hereunder consist of only a portion of
the entire tax parcel, Tenant shall pay to Landlord monthly in advance or as they become due,
pursuant to statements submitted to Tenant by Landlord, Tenant’s Proportionate Share of such real
estate taxes allocated to the Premises by square footage or other reasonable basis as calculated
and determined by Landlord. If the tax billing pertains 100% to the Premises, and Landlord chooses
to have Tenant pay said real estate taxes directly to the Tax Collector, then in such event it
shall be the responsibility of Tenant to obtain the tax and assessments bills and pay, no less than
ten (10) days prior to delinquency, the applicable real property taxes and assessments pertaining
to the Premises, and failure to receive a xxxx for taxes and/or assessments shall not provide a
basis for cancellation of or non-responsibility for payment of penalties for nonpayment or late
payment by Tenant. The term “Real Property Taxes”, as used herein, shall mean (i) all taxes,
assessments, levies and other charges of any kind or nature whatsoever, general and special,
foreseen and unforeseen (including all installments of principal and interest required to pay any
general or special assessments for public improvements and any increases resulting from
reassessments caused by any change in ownership of the Premises) now or hereafter imposed by any
governmental or quasi-governmental authority or special district having the direct or indirect
power to tax or levy assessments, which are levied or assessed against, or with respect to the value, occupancy or use of, all or any portion of the Premises (as
now constructed or as may at any time hereafter be constructed, altered, or otherwise changed) or
Landlord’s interest therein; any improvements located within the Premises (regardless of
ownership); the fixtures, equipment and other property of Landlord, real or personal, that are an
integral part of and located in the Premises; or parking areas, public utilities, or energy within the Premises; (ii) all charges,
levies or fees
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imposed by reason of environmental regulation or other governmental control of the Premises and
(iii) all costs and fees (including reasonable attorneys’ fees) incurred by Landlord in reasonably
contesting any Real Property Tax and in negotiating with public authorities as to any Real Property
Tax. If at any time during the Term of this Lease the taxation or assessment of the Premises
prevailing as of the Commencement Date of this Lease shall be altered so that in lieu of or in
addition to any Real Property Tax described above there shall be levied, assessed or imposed
(whether by reason of a change in the method of taxation or assessment, creation of a new tax or
charge, or any other cause) an alternate or additional tax or charge (i) on the value, use or
occupancy of the Premises or Landlord’s interest therein or (ii) on or measured by the gross
receipts, income or rentals from the Premises, on Landlord’s business of leasing the Premises, or
computed in any manner with respect to the operation of the Premises, then any such tax or charge,
however designated, shall be included within the meaning of the term “Real Property Taxes” for
purposes of this Lease. If any Real Property Tax is based upon property or rents unrelated to the
Premises, then only that part of such Real Property Tax that is fairly allocable to the Premises
shall be included within the meaning of the term “Real Property Taxes.” Notwithstanding the
foregoing, the term “Real Property Taxes” shall not include estate, inheritance, gift or franchise
taxes of Landlord or the federal or state net income tax imposed on Landlord’s income from all
sources.
Notwithstanding anything to the contrary above , it is agreed that if any special assessments for
capital improvements are assessed, and if Landlord has the option to either pay the entire
assessment in cash or go to bond, and if Landlord elects to pay the entire assessment in cash in
lieu of going to bond, the entire portion of the assessment assigned to Tenant’s Leased Premises
will be prorated over the same period that the assessment would have been prorated had the
assessment gone to bond (including interest) and Tenant shall pay its Proportionate Share over the
Term remaining in the Lease (including the Extended Lease Term if said Lease Term is extended for
any reason whatsoever) as Additional Rent on the first day of the remaining months in the Lease
Term (as may be extended).
B. Taxes on Tenant’s Property. Tenant shall be liable for and shall pay ten days before
delinquency, taxes levied against any personal property or trade fixtures placed by Tenant in or
about the Premises. If any such taxes on Tenant’s personal property or trade fixtures are levied
against Landlord or Landlord’s property or if the assessed value of the Premises is increased by
the inclusion therein of a value placed upon such personal property or trade fixtures of Tenant and
if Landlord, after written notice to Tenant, pays the taxes based on such increased assessment,
which Landlord shall have the right to do regardless of the validity thereof, but only under proper
protest if requested by Tenant, Tenant shall within five (5) days after demand, as the case may be,
repay to Landlord the taxes so levied against Landlord, or the proportion of such taxes resulting
from such increase in the assessment; provided that in any such event Tenant shall have the right,
in the name of Landlord and with Landlord’s full cooperation, to bring suit in any court of
competent jurisdiction to recover the amount of such taxes so paid under protest, and any amount so
recovered shall belong to Tenant.
14. ASSESSMENT
CREDITS. The demised property herein may be subject to a special
assessment levied by the City in which the Premises are located as part of an Improvement District.
As a part of said special assessment proceedings (if any), additional bonds were or may be sold and
assessments were or may be levied to provide for construction contingencies and reserve funds.
Interest shall be earned on such funds created for contingencies and on reserve funds which will be
credited for the benefit of said assessment district. To the extent surpluses are created in said
district through unused contingency funds, interest earnings or reserve funds, such surpluses shall
be deemed the property of Landlord. Notwithstanding that such surpluses may be credited on
assessments otherwise due against the Premises, Tenant shall pay to Landlord, as Additional Rent
if, and at the time of any such credit of surpluses, an amount equal to all such surpluses so
credited. For example: if (i) the property is subject to an annual assessment of $1,000.00, and
(ii) a surplus of $200.00 is credited towards the current year’s assessment which reduces the
assessment amount shown on the property tax xxxx from $1,000.00 to $800.00, Tenant shall, upon
receipt of notice from Landlord, pay to Landlord said $200.00 credit as Additional Rent.
15. LIABILITY
INSURANCE. Tenant, at Tenant’s expense, agrees to keep in force during
the Term of this Lease a policy of commercial general liability insurance with combined single
limit coverage of not less than Two Million Dollars ($2,000,000) per occurrence for bodily injury
and property damage occurring in, on or about the Premises, including parking and landscaped areas.
Such insurance shall be primary and noncontributory as respects any insurance carried by Landlord.
The policy or policies effecting such insurance shall name Landlord, Xxxxxxx X. Xxxxx, as Trustee
of the Xxxxxxx X. Xxxxx Separate Property Trust dated July 20, 1977, as amended; the Xxxxxxx X.
Xxxxx Separate Property Trust; Xxxxxxx X. Xxxxx as an individual; Xxxx Xxxxxxxxx, as Trustee under
the Xxxx Xxxxxxxxx Survivor’s Trust dated July 20, 1977, as amended; the Xxxx Xxxxxxxxx Survivor’s Trust; Xxxx Xxxxxxxxx, as an
individual; and any beneficiaries, trustees and successor trustees, other partners or co-venturers
of Landlord or said trusts as additional insureds (collectively “Landlord Entities”), and shall insure any liability of the
Landlord Entities, contingent or otherwise, covered under the commercial general liability
insurance policy as respects acts or omissions of Tenant, its agents, employees or invitees or
otherwise by any
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conduct or transactions of any of said persons in or about or concerning the Premises,
including any failure of Tenant to observe or perform any of its obligations hereunder; shall be
issued by an insurance company admitted to transact business in the State of California; and shall
provide that the insurance effected thereby shall not be canceled, except upon thirty (30) days’
prior written notice to Landlord. Tenant’s insurance shall be primary as respects to the Landlord
Entities, or if excess, shall stand in an unbroken chain of coverage. In either event, any other
insurance maintained by the Landlord Entities shall be in excess of Tenant’s insurance and shall not be called upon to contribute with any
insurance required to be provided by Tenant. The required insurance shall be reflected on a certificate
of insurance of said policy, which certificate shall be delivered to Landlord concurrently
with Tenant’s return of this executed Lease to
Landlord. If, during the Term of this Lease,
in the reasonable considered opinion of Landlord’s Lender, insurance advisor, or counsel, the amount
of insurance described in this Paragraph 15 is not adequate, Tenant agrees to increase said
coverage to such reasonable amount as Landlord’s Lender, insurance advisor, or counsel shall deem
adequate.
16. TENANT’S
PERSONAL PROPERTY INSURANCE AND XXXXXXX’X COMPENSATION INSURANCE. Tenant shall maintain a policy or policies of fire and property
damage insurance in “all risk” form with a sprinkler leakage endorsement insuring the personal
property, inventory, trade fixtures (and leasehold improvements paid for by Tenant) within the
Premises for the full replacement value thereof. The proceeds from any of such policies shall be
used for the repair or replacement of such items so insured.
Tenant shall also maintain a policy or policies of xxxxxxx’x compensation insurance and any
other employee benefit insurance sufficient to comply with all laws.
17. PROPERTY INSURANCE. Landlord shall purchase and keep in force, and as Additional
Rent and in accordance with Paragraph 4.D of this Lease, Tenant shall pay to Landlord (or
Landlord’s agent if so directed by Landlord) Tenant’s Proportionate Share of the deductibles on
insurance claims and the cost of, policy or policies of insurance covering loss or damage to and/or
destruction of the Building (excluding routine maintenance and repairs and incidental damage or
destruction caused by accidents or vandalism for which Tenant is responsible under Paragraph 10) in
the amount of the full replacement value thereof, providing protection against those perils
included within the classification of “all risks” “special form” insurance and flood and/or
earthquake insurance, if available, plus a policy of rental income insurance in the amount of one
hundred (100%) percent of twelve (12) months Basic Rent, plus sums paid as Additional Rent. If such
insurance cost is increased due to Tenant’s use of the Premises, Tenant agrees to pay to Landlord
the full cost of such increase. Tenant shall have no interest in or any right to the proceeds of
any insurance procured by Landlord for the Premises.
In addition and notwithstanding anything to the contrary in this Paragraph 17, each party to
this Lease hereby waives all rights of recovery against the other party or its officer, employees,
agents and representatives for loss or damage to its property or the property of others under its
control, arising from any cause insured against under the fire and extended “special form” property
coverage (excluding, however, any loss resulting from Hazardous Material contamination of the
Property) required to be maintained by the terms of this Lease to the extent full reimbursement of
the loss/claim is received by the insured party. Each party required to carry property insurance
hereunder shall cause the policy evidencing such insurance to include a provision permitting such
release of liability (“waiver of subrogation endorsement”); provided, however, that if the
insurance policy of either releasing party prohibits such waiver, then this waiver shall not take
effect until consent to such waiver is obtained. If such waiver is so prohibited, the insured party
affected shall promptly notify the other party thereof. In the event the waivers are issued to the
parties and are not valid under current policies and/or subsequent insurance policies, the
non-complying party will provide, to the other party, thirty (30) days’ advance notification of the
cancellation of the subrogation waiver, in which case neither party will provide such subrogation
waiver thereafter and this paragraph will be null and void. The foregoing waiver of subrogation
shall not include any loss resulting from Hazardous Material contamination of the Property or any
insurance coverage relating thereto.
18. INDEMNIFICATION. Landlord shall not be liable to Tenant and Tenant hereby waives
all claims against Landlord for any injury to or death of any person or damage to or destruction of
property in or about the Premises by or from any cause whatsoever, including, without limitation,
gas, fire, oil, electricity or leakage of any character from the roof, walls, basement or other
portion of the Premises but excluding, however, the willful misconduct or negligence of Landlord,
its agents, servants, employees, invitees or contractors of which negligence Landlord has knowledge
and reasonable time to correct. Except as to injury to persons or damage to property to the extent arising from the willful
misconduct or the negligence of Landlord, its agents, servants, employees, invitees, or contractors, Tenant
shall hold Landlord harmless from and defend Landlord against any and all expenses, including
reasonable attorneys’ fees, in connection therewith, arising out of any injury to or death of any person or
damage to or destruction of property occurring in, on or about the Premises, or any part thereof,
from any cause
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whatsoever, accruing and/or occurring during the Term of this Lease. The provisions of
this Paragraph 18 shall survive the expiration or termination of this Lease.
19. COMPLIANCE. Tenant, at its sole cost and expense, shall promptly comply
with all laws, statutes, ordinances and governmental rules, regulations or requirements now or
hereafter in effect governing use or occupancy of the Premises; with the requirements of any
board of fire underwriters or other similar body now or hereafter constituted; and with any
direction or occupancy certificate issued pursuant to law by any public officer; provided, however, that no such failure shall be deemed a
breach of the provisions if Tenant, immediately upon notification, commences to remedy or rectify
said failure. The judgment of any court of competent jurisdiction or the admission of Tenant in
any action against Tenant, whether Landlord be a party thereto or not, that Tenant has violated
any such law, statute, ordinance or governmental rule, regulation, requirement, direction or
provision, shall be conclusive of that fact as between Landlord and Tenant. Tenant shall, at its
sole cost and expense, comply with any and all requirements pertaining to said Premises, of any
insurance organization or company, necessary for the maintenance of reasonable fire and public
liability insurance covering requirements pertaining to said Premises. The provisions of this
Paragraph 19 shall survive the expiration or termination of this Lease.
Any non-conformance of the Premises and/or the improvements installed and paid for by Landlord as
detailed in Paragraph 6.B (“Tenant Improvements to be Constructed by Landlord”), required by the
governing agency to be corrected, shall be corrected at the cost and expense of Landlord if such
non-conformance exists as of the Commencement Date of the Lease and further provided that such
governing agency’s requirement to correct the non-conformance is not initiated as a result of: (i)
any future improvements made by or for Tenant; or (ii) any permit request made to a governing
agency by or for Tenant. Except as noted above, Landlord agrees that the Amortized Cost of capital
improvements necessitated by any new laws, statutes, ordinances or governmental rules,
regulations, or requirements that become effective after the Lease Commencement Date will be
amortized over the useful life of such improvement, and Tenant shall be required to pay its
Proportionate Share of the Amortized Cost as determined by (a) the full Term of subject Lease and
(b) any future extensions of subject Lease with the following exception: Notwithstanding anything
to the contrary above, Tenant will immediately pay 100 percent of the cost of required capital
improvements related to Tenant’s particular use of the Premises and resulting from (i) and (ii)
above.
| Example 1: | Amortized Cost of capital improvement — $10,000 | |||
| Useful life 15 years — $666.67 per year ($55.56 per month) | ||||
| Lease Term — 37 months | ||||
| Cost to Tenant — Proportionate Share of $462.50 ($55.56 x 22.49% = $12.50/month x 37 months = $462.50) | ||||
| Due within thirty (30) days of Tenant’s receipt of an invoice from Landlord | ||||
| Example 2: | Amortized Cost of improvement due to Tenant’s specific use of Premises — $10,000 | |||
| Useful life 15 years | ||||
| Lease Term — 37 months | ||||
| Cost to Tenant—$10,000 | ||||
| Due within thirty (30) days of Tenant’s receipt of an invoice from Landlord |
In the event the Term of the Lease is extended for any reason whatsoever, Tenant’s Proportionate
Share of the earlier Amortized Cost shall be increased to include the additional amount payable to
Landlord due to the Extended Term of the Lease. For Example: In the event: (i) the restrooms are
required to be enlarged due to ADA compliance; and (ii) this Lease is extended for an additional
one year period, Tenant would be liable for an additional payment to Landlord equal to Tenant’s
Proportionate Share of $150.00 ($12.50 x 12 months) as Additional Rent. Said payment would be due
within thirty (30) days of Tenant’s receipt of an invoice from Landlord.
20. LIENS. Tenant shall keep the Premises free from any liens arising out of any work
performed, materials furnished or obligation incurred by Tenant. In the event that Tenant shall
not, within ten (10) days following notice of the imposition of such lien, cause the same to be
released of record, Landlord shall have, in addition to all other remedies provided herein and by
law, the right, but no obligation, to cause the same to be released by such means as it shall deem
proper, including payment of the claim giving rise to such lien. All sums paid by Landlord for such
purpose, and all expenses incurred by it in connection therewith, shall be payable to Landlord by
Tenant on demand with interest at the higher of the (i) prime rate of interest as quoted by the
Bank of America or (ii) Landlord’s borrowing rate (the “Interest Rate”).
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21.
ASSIGNMENT AND SUBLETTING.
A. Requirements. Tenant shall not assign, transfer, or hypothecate the leasehold estate
under this Lease, or any interest therein, and shall not sublet the Premises, or any part thereof,
or any right or privilege appurtenant thereto, or suffer any other person or entity to occupy or
use the Premises, or any portion thereof, without, in each case, the prior written consent of
Landlord which consent will not be
unreasonably withheld. Notwithstanding the above, in the event Tenant enters into a merger and/or
acquisition agreement whereby fifty percent (50%) or more of Tenant’s stock and/or assets are
transferred to a third party entity (“Change in Control”), said Change in Control will require
Landlord’s consent pursuant to the terms of this Paragraph 21.A, and Landlord may, at Landlord’s
option, require that said acquiring entity also be named as a Tenant under this Lease; however, a
sale of Tenant’s capital stock through any public or over-the-counter exchange shall not be deemed
an assignment or a Change in Control, and a sale by any individual investor in Tenant of its stock,
in whatever percentage, shall not be deemed an assignment or a Change in Control. Tenant shall not
sublet the Premises, or any part thereof, to more than two subtenants at any one point in time
without Landlord’s prior written consent, which consent may be withheld at Landlord’s sole and
absolute discretion. Tenant’s failure to obtain Landlord’s prior written consent before entering
into any such assignment, transfer and/or subletting shall be considered a default under this Lease
and Landlord shall retain all of its rights under the Lease, including the right to elect, at
Landlord sole and absolute discretion, to terminate either the Lease and/or the related sublease.
As a condition for Landlord granting consent to any subletting, Landlord shall require for each
such subletting, that: (i) the sublease be a triple net sublease and that the basic rent due under
any such sublease be no less than the then current market rent for subleases with annual increases
at the then prevailing market rent for subleases; (ii) the sublease shall require that the security
deposit due under the sublease be in the form of a letter of credit drawn upon an institutional
lender acceptable and accessible to Landlord in form and content reasonably satisfactory to
Landlord, with the letter of credit being assignable to Landlord, at no cost to Landlord, upon
notice to said financial institution of a default by Tenant under the Lease; (iii) the sublease
shall not provide for subtenant to have an option to extend the term of the sublease or an option
to expand the sublet space; and (iv) the Tenant shall pay to Landlord, monthly throughout the term
of each approved sublease, fifty percent (50%) of all rents and/or additional consideration due
Tenant from the subtenant in excess of the Rent payable by Tenant to Landlord hereunder for each
such subleased space (“Excess Rent”) (with said Excess Rent subject to the terms of Lease Paragraph
4.C (“Late Charge”) and Lease Paragraph 24 (“Bankruptcy and Default”); provided, however, that
before sharing of such Excess Rent, Tenant shall first be entitled to recover from such Excess Rent
the amount of the reasonable leasing commission related to said transaction paid by Tenant to a
third party broker not affiliated with Tenant. Tenant shall, by thirty (30) days written notice,
advise Landlord of its intent to assign or transfer Tenant’s interest in the Lease or sublet the
Premises or any portion thereof for any part of the Term hereof. Within thirty (30) days after
receipt of said written notice, Landlord may for any non-Permitted Transfer, in its sole
discretion, elect to terminate this Lease as to the portion of the Premises described in Tenant’s
notice on the date specified in Tenant’s notice by giving written notice of such election to
terminate. If no such notice to terminate is given to Tenant within said thirty (30) day period,
Tenant may proceed to locate an acceptable sublessee, assignee, or other transferee for presentment
to Landlord for Landlord’s approval, all in accordance with the terms, covenants, and conditions of
this Paragraph 21. Tenant shall provide Landlord with (a) a copy of the assignment and/or other
transfer agreement and a copy of the certification of the change in corporate identity from the
Secretary of State in the case of an assignment, or (b) a copy of the sublease in the case of a
sublease for Landlord’s review, and upon Landlord’s approval of Tenant’s request to sublease and/or
assign, Tenant and the assignee, transferee or subtenant shall execute Landlord’s standard written
consent. If Tenant intends to sublet the entire Premises and Landlord elects to terminate this
Lease, this Lease shall be terminated on the date specified in Tenant’s notice. If, however, this
Lease shall terminate pursuant to the foregoing with respect to less than all the Premises, the
Rent and Tenant’s Proportionate Share, as defined and reserved hereinabove shall be adjusted on a
pro rata basis to the number of square feet retained by Tenant, and this Lease as so amended shall
continue in full force and effect and Landlord, at its cost and expense, shall separately demise
the remaining portion of the Premises leased to Tenant. In the event Tenant is allowed to assign,
transfer or sublet the whole or any part of the Premises, with the prior written consent of
Landlord, no assignee, transferee or subtenant shall assign or transfer this Lease, either in whole
or in part, or sublet the whole or any part of the Premises, without also having obtained the prior
written consent of Landlord. Notwithstanding the above, in no event shall Landlord consent to a
sub-sublease. A consent of Landlord to one assignment, transfer, hypothecation, subletting,
occupation or use by any other person shall not release Tenant from any of Tenant’s obligations
hereunder or be deemed to be a consent to any subsequent similar or dissimilar assignment,
transfer, hypothecation, subletting, occupation or use by any other person. Any such assignment,
transfer, hypothecation, subletting, occupation or use without such consent shall be void and shall
constitute a breach of this Lease by Tenant and shall, at the option of Landlord exercised by written notice to Tenant, terminate
this Lease. The leasehold estate under this Lease shall not, nor shall any interest therein, be
assignable for any purpose by operation of law without the written consent of Landlord. As a
condition to its consent, Landlord shall require Tenant to pay all expenses in connection with any and all subleases and/or
assignments and/or any amendments related thereto, including but not limited to Landlord’s fees for
the
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processing and administration of the consent documentation and Landlord’s attorneys’ fees (if
any), and Landlord shall require Tenant’s subtenant, assignee or transferee (or other assignees or
transferees) to assume in writing all of the obligations under this Lease and for Tenant to remain
liable to Landlord under the Lease.
B.
Grounds to Refuse Proposed Transfer. Notwithstanding the foregoing,
Landlord and tenant agree that it shall not be unreasonable for Landlord to refuse to consent to a
proposed assignment, sublease or other transfer (“Proposed Transfer”) if the Premises or any other portion
of the Property would become subject to additional or different Government Requirements as a
direct or indirect consequence of the Proposed Transfer and/or the Proposed Transferee’s use
and occupancy of the Premises and the Property. However, Landlord may, in its sole discretion, consent to such a
Proposed Transfer where Landlord is indemnified by Tenant and (i) the subtenant or (ii) the
assignee, in form and substance satisfactory to Landlord and/or to Landlord’s counsel, from and
against any and all costs, expenses, obligations and liability arising out of the Proposed Transfer
and/or the Proposed Transferee’s use and occupancy of the Premises and the Property.
C. Voluntary Termination of Lease — Required Sublease Language. Any and all sublease
agreement(s) between Tenant and any and all subtenant(s) (“Subtenant”) (which agreements must be
consented to by Landlord, pursuant to the requirements of this Lease) shall contain the following
language:
“If Landlord and Tenant jointly and voluntarily elect, for any reason whatsoever,
to terminate the Master Lease prior to the scheduled Master Lease termination date,
then, if Landlord so elects, this Sublease (if then still in effect) shall terminate
concurrently with the termination of the Master Lease. Subtenant expressly
acknowledges and agrees that (1) the voluntary termination of the Master Lease by
Landlord and Tenant and the resulting termination of this Sublease shall not give
Subtenant any right or power to make any legal or equitable claim against Landlord,
including without limitation any claim for interference with contract or interference
with prospective economic advantage, and (2) Subtenant hereby waives any and all
rights it may have under law or at equity against Landlord to challenge such an early
termination of the Sublease, and unconditionally releases and relieves Landlord, and
its officers, directors, employees and agents, from any and all claims, demands,
and/or causes of action whatsoever (collectively, “Claims”), whether such matters are
known or unknown, latent or apparent, suspected or unsuspected, foreseeable or
unforeseeable, which Subtenant may have arising out of or in connection with any such
early termination of this Sublease. Subtenant knowingly and intentionally waives any
and all protection which is or may be given by Section 1542 of the California Civil
Code which provides as follows: “A general release does not extend to claims which the
creditor does not know or suspect to exist in his favor at the time of executing the
release, which if known by him must have materially affected his settlement with
debtor.
The term of this Sublease is therefore subject to early termination. Subtenant’s
initials here below evidence (a) Subtenant’s consideration of and agreement to this
early termination provision, (b) Subtenant’s acknowledgment that, in determining the
net benefits to be derived by Subtenant under the terms of this Sublease, Subtenant
has anticipated the potential for early termination, and (c) Subtenant’s agreement to
the general waiver and release of Claims above.
| Initials: | Initials: | ” | ||||||||||
| Subtenant | Tenant |
D. State of Incorporation Change; Name Change. Notwithstanding anything to the contrary above,
Tenant’s re-incorporation in another jurisdiction and/or the act of Tenant changing Tenant’s legal
name shall not be considered an assignment; however, (i) Tenant shall provide Landlord with notice
of such change in Tenant’s name and/or state of incorporation, which notice shall include a copy of
the certification from the Secretary of State and (ii) Tenant and Landlord shall execute Landlord’s
standard acknowledgement for any such change in Tenant’s name and/or state of incorporation.
E. Permitted Transfers. In addition to and notwithstanding anything to the contrary in
Paragraph 21.A above, and provided Tenant is not in default of this Lease beyond the applicable
cure period, Landlord hereby agrees to: (1) consent to Tenant’s assigning or subletting said Lease to:
(i) any parent or subsidiary corporation, or corporation with which Tenant merges or consolidates
provided that (a) said affiliate or successor owns all or substantially all of the assets of
Tenant, (b) the net worth of said parent or subsidiary corporation, or said corporation has a net
worth equal to or greater than the net worth of Tenant (x) at the time of Lease execution or (y) at the time of such assignment, merger, or
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consolidation, whichever is greater (collectively “Permitted Transfers” ), and (c) Tenant shall
give Landlord written notice at least thirty (30) days prior to the effective date of the proposed
purchase, merger, consolidation or reorganization; or (ii) any third party or entity to whom
Tenant, as an ongoing concern, sells all or substantially all of its assets; provided that (a) said
affiliate or successor owns all or substantially all of the assets of Tenant, (b) the net worth of
the resulting or acquiring corporation has a net worth after the merger, consolidation or
acquisition equal to or greater than the net worth of Tenant (x) at the time of Lease execution or
(y) at the time of such merger, consolidation or acquisition, whichever is greater (collectively “Permitted Transfers”), and (c) Tenant shall give Landlord
written notice at least thirty (30) days prior to the effective date of the proposed purchase,
merger, consolidation or reorganization; and (2) waive its right to terminate the Lease due to a
Permitted Transfer. No such assignment or subletting will release the Tenant from its liability and
responsibility under this Lease to the extent Tenant continues in existence following such
transaction. Notwithstanding the above, Tenant shall be required to (a) give Landlord written
notice prior to such assignment or subletting to any party as described in (i) and (ii) above, (b)
execute Landlord’s consent document prepared by Landlord reflecting the assignment or subletting
and (c) pay Landlord’s costs for processing said Consent prior to the effective date of said
assignment or sublease. Nothing herein shall be deemed to permit (i) any assignee to further assign
this Lease or sublet all or any portion of the Premises or (ii) any subtenant to assign its
interest in the sublease to any other party without Landlord’s prior written consent.
22. SUBORDINATION AND MORTGAGES. In the event Landlord’s title or leasehold interest
is now or hereafter encumbered by a deed of trust, upon the interest of Landlord in the land and
Building in which the demised Premises are located, to secure a loan from a lender (hereinafter
referred to as “Lender”) to Landlord, Tenant shall, at the request of Landlord or Lender, execute
in writing an agreement (in form reasonably acceptable to Tenant), subordinating its rights under
this Lease to the lien of such deed of trust, or, if so requested, agreeing that the lien of
Lender’s deed of trust shall be or remain subject and subordinate to the rights of Tenant under
this Lease. Notwithstanding any such subordination, Tenant’s possession under this Lease shall not
be disturbed if Tenant is not in default (and if in default, Tenant’s right to cure said default
has not expired) and so long as Tenant shall pay all Rent and observe and perform all of the
provisions set forth in this Lease and any subordination agreement shall reflect the agreement of
the Lender to the same.
23. ENTRY BY LANDLORD. Landlord reserves, and shall at all reasonable times after at
least twenty four (24) hours notice (except in emergencies) have the right to enter the Premises to
inspect them; to perform any services to be provided by Landlord hereunder; to make repairs or
provide any services to a contiguous tenant(s) (if any); to submit the Premises to prospective
purchasers, mortgagers or tenants; to post notices of non-responsibility; and to alter, improve or
repair the Premises or other parts of the Building, all without abatement of Rent, and may erect
scaffolding and other necessary structures in or through the Premises where reasonably required by
the character of the work to be performed; provided, however that the business of Tenant shall be
interfered with to the least extent that is reasonably practical. Any entry to the Premises by
Landlord for the purposes provided for herein shall not under any circumstances be construed or
deemed to be a forcible or unlawful entry into or a detainer of the Premises or an eviction, actual
or constructive, of Tenant from the Premises or any portion thereof.
24. BANKRUPTCY AND DEFAULT. The commencement of a bankruptcy action or liquidation
action or reorganization action or insolvency action or an assignment of or by Tenant for the
benefit of creditors, or any similar action undertaken by Tenant, or the insolvency of Tenant,
shall, at Landlord’s option, constitute a breach of this Lease by Tenant. If the trustee or
receiver appointed to serve during a bankruptcy, liquidation, reorganization, insolvency or similar
action elects to reject Tenant’s unexpired Lease, the trustee or receiver shall notify Landlord in
writing of its election within thirty (30) days after an order for relief in a liquidation action
or within thirty (30) days after the commencement of any action.
Within thirty (30) days after the court approval of the assumption of this Lease, the trustee
or receiver shall cure (or provide adequate assurance to the reasonable satisfaction of Landlord
that the trustee or receiver shall cure) any and all previous defaults under the unexpired Lease
and shall compensate Landlord for all actual pecuniary loss and shall provide adequate assurance of
future performance under said Lease to the reasonable satisfaction of Landlord. Adequate assurance
of future performance, as used herein, includes, but shall not be limited to: (i) assurance of
source and payment of Rent, and other consideration due under this Lease; (ii) assurance that the
assumption or assignment of this Lease will not breach substantially any provision, such as radius,
location, use, or exclusivity provision, in any agreement relating to the above described Premises.
Nothing contained in this section shall affect the existing right of Landlord to refuse to
accept an assignment upon commencement of or in connection with a bankruptcy, liquidation,
reorganization or insolvency action or an assignment of Tenant for the benefit of creditors or
other similar act. Nothing contained in this Lease shall be construed as giving or granting or creating an equity in the
demised Premises to Tenant. In no event shall the leasehold estate under this Lease, or any
interest therein, be
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assigned by voluntary or involuntary bankruptcy proceeding without the prior written
consent of Landlord. In no event shall this Lease or any rights or privileges hereunder be an asset
of Tenant under any bankruptcy, insolvency or reorganization proceedings.
The failure to perform or honor any covenant, condition or representation made under this
Lease shall constitute a default under this Lease by Tenant upon expiration of the
appropriate grace period hereinafter provided. Tenant shall have a period of five (5)
days from the date of written notice from Landlord within which to cure any default in the
payment of Rent or adjustment thereto. Tenant shall have a period of thirty (30) days
from the date of written notice from Landlord within which to cure any other non-monetary default
under this Lease; provided, however, that with respect to non-monetary defaults not involving
Tenant’s failure to pay Basic Rent or Additional Rent, Tenant shall not be in default
if (i) more than thirty (30) days is required to cure such non-monetary default and
(ii) Tenant commences cure of such default as soon as reasonably practicable after receiving
written notice of such default from Landlord and thereafter continuously and with due diligence
prosecutes such cure to completion. Upon an uncured default of this Lease by Tenant, Landlord shall
have the following rights and remedies in addition to any other rights or remedies available to
Landlord at law or in equity:
(a) The rights and remedies provided for by California Civil Code Section 1951.2
including but not limited to the right to terminate this Lease and/or the recovery of the worth at
the time of award of the amount by which the unpaid Rent for the balance of the Term after the time
of award exceeds the ‘amount of rental loss for the same period that Tenant proves could be
reasonably avoided, as computed pursuant to subsection (b) of said Section 1951.2. Any
proof by Tenant under subparagraphs (2) and (3) of Section 1951.2 of the California Civil Code of the amount of rental loss that could be reasonably avoided
shall be made in the following manner: Landlord and Tenant shall each select a licensed real estate
broker in the business of renting property of the same type and use as the Premises and in the same
geographic vicinity. Such two real estate brokers shall select a third licensed real estate broker,
and the three licensed real estate brokers so selected shall determine the amount of the Rent loss
that could be reasonably avoided from the balance of the Term of this Lease after the time of
award. The decision of the majority of said licensed real estate brokers shall be final and binding
upon the parties hereto. As part of such damages, Landlord shall have the right to recover that
portion of any leasing commission paid by Landlord in connection with this Lease applicable to the
unexpired Term of this Lease.
(b) The rights and remedies provided by California Civil Code Section 1951.4, which allows
Landlord to continue the Lease in effect and to enforce all of its rights and remedies under this
Lease, including the right to recover Rent as it becomes due, for so long as Landlord does not
terminate Tenant’s right to possession; acts of maintenance or preservation, efforts to relet the
Premises, or the appointment of a receiver upon Landlord’s initiative to protect its interest under
this Lease shall not constitute a termination of Tenant’s right to possession.
(c) The right to terminate this Lease by giving notice to Tenant in accordance with applicable
law.
(d) To the extent permitted by law, the right and power to enter the Premises and remove
therefrom all persons and property, to store such property in a public warehouse or elsewhere at
the cost of and for the account of Tenant, and to sell such property and apply such proceeds therefrom pursuant to applicable California law. Landlord may from time to time
sublet the Premises or any part thereof for such term or terms (which may extend beyond the Term of
this Lease) and at such Rent and such other terms as Landlord in its reasonable sole discretion may
deem advisable, with the right to make alterations and repairs to the Premises. Upon each
subletting, (i) Tenant shall be immediately liable to pay Landlord, in addition to indebtedness
other than Rent due hereunder, the reasonable cost of such subletting, including, but not limited
to, reasonable attorneys’ fees, and any real estate commissions actually paid, and the cost of such
reasonable alterations and repairs incurred by Landlord and the amount, if any, by which the Rent hereunder for the period of such subletting (to the extent such period does not
exceed the Term hereof) exceeds the amount to be paid as Rent for the Premises for such period or
(ii) at the option of Landlord, rents received from such subletting shall be applied first to
payment of indebtedness other than Rent due hereunder from Tenant to Landlord; second, to the
payment of any costs of such subletting and of such alterations and repairs; third, to payment of
Rent due and unpaid hereunder; and the residue, if any, shall be held by Landlord and applied in
payment of future Rent as the same becomes due hereunder. If Tenant has been credited
with any Rent to be received by such subletting under option (i) and such Rent shall not be
promptly paid to Landlord by the subtenant(s), or if such rentals received from such subletting
under option (ii) during any month be less than that to be paid during the month by Tenant hereunder, Tenant shall pay any such deficiency to Landlord. Such
deficiency shall be calculated and paid monthly. No taking possession of the Premises by Landlord shall be construed as an
election on its part to terminate this Lease unless a written notice of such intention be given to Tenant. Notwithstanding any such subletting without
termination, Landlord may at any time hereafter elect to terminate this Lease for such previous
breach.
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(e) The right to have a receiver appointed for Tenant upon application by Landlord, to take possession of the Premises and to apply
any rental collected from the Premises and to exercise all other rights and remedies granted to Landlord pursuant to subparagraph (d) above.
25. ABANDONMENT. Tenant shall not vacate or abandon the Premises at any time during the Term of this Lease and if Tenant shall abandon, vacate
or surrender said Premises, or be dispossessed by the process of law, or otherwise, any personal property belonging to Tenant and left on the
Premises shall be deemed to be abandoned, at the option of Landlord, except such property as may be mortgaged to Landlord. Notwithstanding the above, Tenant shall not be in default
under the Lease if it leaves all or any part of Premises vacant so long as (i) Tenant is performing all of its other obligations under the Lease including the obligation to pay Rent (ii) Tenant
provides on-site security during normal business hours for those parts of the Premises left vacant, (iii) such vacancy does not materially and adversely affect the validity or coverage of any policy
of insurance carried by Landlord with respect to the Premises, and (iv) the utilities and heating and ventilation systems are operated and
maintained to the extent necessary to prevent damage to the Premises or its systems.
26. DESTRUCTION. In the event the Premises are destroyed in whole or in part from any cause, Landlord may, at its option:
(a) Rebuild or restore the Premises to their condition prior to the damage or destruction,
or
(b) Terminate this Lease (providing that the Premises is damaged to the extent of thirty-three
and one third percent (33 1/3%) or more of the replacement cost, exclusive of footings, foundations
and floor slabs).
If Landlord does not give Tenant notice in writing within thirty (30) days from the
destruction of the Premises of its election to either rebuild and restore them, or to terminate
this Lease, Landlord shall be deemed to have elected to rebuild or restore them, in which event
Landlord agrees, at its expense except for any deductible, which is the responsibility of the
Tenant, promptly to rebuild or restore the Premises to their condition prior to the
damage or destruction. Tenant shall be entitled to a reduction in Rent from the date of such damage
or destruction, provided Tenant is not using any portion of such damaged area, while such repair is
being made in the proportion that the area of the Premises rendered untenantable by such damage
bears to the total area of the Premises. If Landlord initially estimates that the rebuilding or
restoration will exceed 180 days or if Landlord does not complete the rebuilding or restoration
within one hundred eighty (180) days following the date of destruction (such period of time to be
extended for delays caused by the fault or neglect of Tenant or because of Acts of God, acts of
public agencies, labor disputes, strikes, fires, freight embargos, rainy or stormy weather,
inability to obtain materials, supplies or fuels, acts of contractors or subcontractors, or delay
of the contractors or subcontractors due to such causes or other contingencies beyond the control
of Landlord) (the “Allowed Restoration Period”), then, provided the Premises is damaged to the
extent of 33 1/3% or more of the replacement cost (exclusive of footings, foundations
and floor slabs) and provided the damage or destruction does not result from routine maintenance
and repairs or damage or destruction caused by vandalism and accidents for which Tenant is
responsible under Paragraph 10 (“Tenant Maintenance”), Tenant shall have the right to terminate
this Lease by giving written notice to Landlord within five days following the date
Tenant receives Landlord’s written notice stating that the restoration will exceed the Allowed
Restoration Period. Regardless of whether Landlord and/or Tenant elects to terminate the Lease
early as provided herein, Tenant shall remain liable for the insurance deductible as it relates
to the Premises. Notwithstanding anything herein to the country, Landlord’s obligation to rebuild
or restore shall be limited to the Building and interior improvements constructed by Landlord as
they existed as of the Commencement Date of the Lease and shall not include restoration of
Tenant’s trade fixtures, equipment, merchandise, or any improvements, alterations or additions made
by Tenant to the Premises, which Tenant shall forthwith replace or fully repair at Tenant’s sole
cost and expense provided this Lease is not canceled according to the provisions above.
Unless this Lease is terminated pursuant to the foregoing provisions, this Lease shall remain
in full force and effect. Tenant hereby expressly waives the provision of Section 1932, Subdivision 2, in
Section 1933. Subdivision 4 of the California Civil Code.
In any event that the Building in which the Premises are situated is damaged or destroyed to
the extent of not less then thirty-three and one third percent (33 1/3%) of the replacement cost
thereof, Landlord may elect to terminate this Lease, whether the Premises be injured or not.
Notwithstanding anything to the contrary herein, Landlord may terminate this lease in the event of
an uninsured event or if insurance proceeds are insufficient to cover one hundred percent of the
rebuilding costs net of the deductible.
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Without regard to whether this Lease is terminated pursuant to the foregoing, Tenant,
upon demand by Landlord, shall pay to Landlord Tenant’s Proportionate Share of the deductibles from
any casualty policy Landlord carries pursuant to Paragraph 17 (“Property Insurance”).
27. EMINENT DOMAIN. If all or any part of the Premises shall be taken by
any public or quasi-public authority under the power of eminent domain or conveyance in lieu
thereof, this Lease shall terminate as to any portion of the Premises so taken or conveyed on the
date when title vests in the condemnor, and Landlord shall be entitled to any and all
payment, income, rent, award, or any interest therein whatsoever which may be paid or
made in connection with such taking or conveyance, and Tenant shall have no claim against
Landlord or otherwise for the value of any unexpired Term of this Lease. Notwithstanding the
foregoing sentence, any compensation specifically awarded Tenant for loss of business,
Tenant’s personal property, moving costs or loss of goodwill, shall be and remain the property of
Tenant.
If any action or proceeding is commenced for such taking of the Premises or any
part thereof, or if Landlord is advised in writing by any entity or body having the right or power
of condemnation of its intention to condemn the Premises or any part thereof, then Landlord shall
have the right to terminate this Lease by giving Tenant written notice thereof within sixty (60)
days of the date of receipt of said written advice, or commencement of said action or proceeding,
or taking conveyance, which termination shall take place as of the first to occur of the last day
of the calendar month next following the month in which such notice is given or the date on which
title to the Premises shall vest in the condemnor.
In the event of such a partial taking or conveyance of the Premises, if the portion of the
Premises taken or conveyed is so substantial that the Tenant can no longer reasonably conduct its
business, Tenant shall have the privilege of terminating this Lease within sixty (60) days from the
date of such taking or conveyance, upon written notice to the Landlord of its intention so to do,
and upon giving of such notice this Lease shall terminate on the last day of the calendar month
next following the month in which such notice is given, upon payment by Tenant of the Rent from the
date of such taking or conveyance to the date of termination.
If a portion of the Premises be taken by condemnation or conveyance in lieu thereof and
neither Landlord nor Tenant shall terminate this Lease as provided herein, this Lease shall
continue in full force and effect as to the part of the Premises not so taken or conveyed, and the
Rent herein shall be apportioned as of the date of such taking or conveyance so that thereafter the
Rent to be paid by Tenant shall be in the ratio that the area of the portion of the Premises
not so taken or conveyed bears to the total area of the Premises prior to such taking.
28. SALE OR CONVEYANCE BY LANDLORD. In the event of a sale or conveyance
of the Premises or any interest therein, by any owner of the reversion then constituting Landlord,
the transferor shall thereby be released from any further liability upon any of the terms,
covenants or conditions (express or implied) herein contained in favor of Tenant, and in such
event, insofar as such transfer is concerned, Tenant agrees to look solely to the responsibility of
the successor in interest of such transferor in and to the Premises and this Lease for any
obligations of Landlord first accruing after the date of such transfer, unless the successor in
interest has also agreed in writing to assume any prior obligations of Landlord, in which event
Tenant shall look to the successor in interest for any obligations of Landlord that may have
accrued prior to as well as after said sale or conveyance by Landlord. This Lease shall not be
affected by any such sale or conveyance, and Tenant agrees to attorn to the successor in interest
of such transferor.
29. ATTORNMENT TO LENDEW OR THIRD PARTY. In the event the interest of Landlord in the land and Building in which the Premises are located (whether such
interest of Landlord is a fee title interest or a leasehold interest) is encumbered by
deed of trust, and such interest is acquired by the lender or any third party through judicial
foreclosure or by exercise of a power of sale at private trustee’s foreclosure sale, Tenant hereby
agrees to attorn to the purchaser at any such judicial foreclosure or foreclosure sale and to
recognize such purchaser as the Landlord under this Lease. In the event the lien of the deed of
trust securing the loan from a Lender to Landlord is prior and paramount to the Lease, this Lease
shall nonetheless continue in full force and effect for the remainder of the unexpired Term hereof,
at the same rental herein reserved and upon all the other terms, conditions and covenants herein
contained. In addition to and not withstanding anything to the contrary above, this
Lease shall bind any successor in interest to Landlord, including any party foreclosing any
security interest to which the Premises may be subject, including foreclosure by judicial process
and sale under any power provided in any deed of trust, and Tenant shall not be required to waive any right herein provided.
30. HOLDING OVER. Any holding over by Tenant after expiration or other
termination of the Term of this Lease shall not constitute a renewal or extension of the
Lease or give Tenant any rights in or to the Premises except as expressly provided in this Lease.
Any holding over after the expiration or other termination of the Term of this Lease shall be
construed to be a tenancy from month to month, on the
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same terms and conditions herein specified insofar as applicable except that the monthly
Basic Rent shall be increased to an amount equal to one hundred seventy-five percent (175%)
of the monthly Basic Rent required during the last month of the Term (“Hold Over Basic Rent”);
provided, however, that the monthly Rent shall be prorated based on the actual number of days
in the month for any partial month of the holding over. Holding over conduct within the meaning of
the Lease and this Paragraph 30 shall also include the failure by Tenant to surrender the Premises on the Termination Date in the physical condition described in Paragraphs 5
(“Acceptance and Surrender of Premises”), 7 (“Alterations and Additions”) and 10 (“Tenant Maintenance”) for which conduct Tenant shall be subject to the Hold Over
Basic Rent under this paragraph until the Premises is restored to the condition required under this
Lease. If Landlord elects to receive a cash payment from Tenant in lieu of Tenant completing the restoration work pursuant to Paragraph 5 (“Acceptance and
Surrender of Premises”), and further provided that Tenant pays such sum by the due date, then
Landlord shall not be entitled to receive any Hold Over Basic Rent. However, in the event Landlord
does not elect to receive payment from Tenant and/or Tenant fails to pay Landlord said amount by
the due date (which date shall be determined by Landlord and in all events shall be a date prior to
the Termination Date), Tenant shall be liable to Landlord, at the Basic Rent rate for the last
month of the Term, for the estimated time it would take to complete said restoration, regardless of
whether or not Landlord elects to make such restoration to the Premises.
31. CERTIFICATE OF ESTOPPEL. Tenant shall at any time within ten (10) days
of receipt of notice from Landlord execute, acknowledge and deliver to Landlord an estoppel
statement in writing (i) certifying that this Lease is unmodified and in full force and effect (or,
if modified, stating the nature of such modification and certifying that this Lease, as so
modified, is in full force and effect) and the date to which the Basic Rent and other charges are
paid in advance, if any, and (ii) acknowledging that there are not, to Tenant’s knowledge, any
uncured defaults on the part of Landlord hereunder, or specifying such defaults, if any, are
claimed. Any such statement may be conclusively relied upon by any prospective purchaser or
encumbrancer of the Premises. Tenant’s failure to deliver such statement within such time shall be
conclusive upon Tenant that this Lease is in full force and effect, without modification except as
may be represented by Landlord; that there are no uncured defaults in Landlord’s performance, and
that not more than one month’s Basic Rent has been paid in advance.
32. CONSTRUCTION CHANGES. It is understood that the description of the
Premises and the location of ductwork, plumbing and other facilities therein are subject to such
minor changes as Landlord or Landlord’s architect determines to be desirable in the course of
construction of the Premises, and no such changes shall affect this Lease or entitle Tenant to any
reduction of Rent hereunder or result in any liability of Landlord to Tenant. Landlord does not
guarantee the accuracy of any drawings supplied to Tenant and verification of the accuracy of such
drawings rests with Tenant.
33. RIGHT OF LANDLORD TO PERFORM. All terms, covenants and conditions
of this Lease to be performed or observed by Tenant shall be performed or observed by
Tenant at Tenant’s sole cost and expense and without any reduction of rent. If Tenant shall fail to
pay any sum of money, or other Rent, required to be paid by it hereunder and such failure shall
continue for five (5) days after written notice thereof by Landlord or shall fail to
perform any other term or covenant hereunder on its part to be performed, and such failure shall
continue for thirty (30) days after written notice thereof by Landlord (or such longer grace period
as provided under Paragraph 24), Landlord, without waiving or releasing Tenant from any obligation
of Tenant hereunder, may, but shall not be obliged to, make any such payment or perform any such
other term or covenant on Tenant’s part to be performed. All sums so paid by Landlord and all
necessary costs of such performance by Landlord together with interest thereon at the rate of the
prime rate of interest per annum as quoted by the Bank of America from the date of such
payment or performance by Landlord, shall be paid (and Tenant covenants to make such payment)
to Landlord within five (5) days after demand by Landlord, and Landlord shall have (in
addition to any other right or remedy of Landlord) the same rights and remedies in the event of
nonpayment by Tenant as in the case of failure by Tenant in the payment of Rent
hereunder.
34. ATTORNEYS’ FEES.
A. In the event that either Landlord or Tenant should bring suit for the
possession of the Premises, for the recovery of any sum due under this Lease, or because of the
breach of any provision of this Lease, or for any other relief against the other party hereunder,
then all costs and expenses, including reasonable attorneys’ fees, incurred by the prevailing party
therein shall be paid by the other party, which obligation on the part of the other party shall be
deemed to have accrued on the date of the commencement of such action and shall be enforceable
whether or not the action is prosecuted to judgment.
B. Should Landlord be named as a defendant in any suit brought against
Tenant in connection with or arising out of Tenant’s occupancy hereunder, Tenant shall
pay to Landlord its costs and expenses incurred in such suit, including reasonable attorneys’ fees.
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35. WAIVER. The waiver by either party of the other party’s failure to perform or
observe any term, covenant or condition herein contained to be performed or observed by such
waiving party shall not be deemed to be a waiver of such term, covenant or condition or of any
subsequent failure of the party failing to perform or observe the same or any other
such term, covenant or condition therein contained, and no custom or practice which may develop
between the parties hereto during the Term hereof shall be deemed a waiver of, or
in any way affect, the right of either party to insist upon performance and observance by
the other party in strict accordance with the terms hereof.
36. NOTICES. All notices, demands, requests, advices or designations
which may be or are required to be given by either party to the other hereunder shall
be in writing. All notices, demands, requests, advices or designations by Landlord to Tenant shall
be sufficiently given, made or delivered if personally served on Tenant by leaving the
same at the Premises or if sent by United States certified or registered mail, postage prepaid or
by a reputable commercial carrier’s same day or overnight service addressed to Tenant at the
Premises; Attn: Chief Financial Officer. Notices to Tenant before the Commencement Date shall be
sent to: 0000 X. Xx Xxxxxx Xxxx, Xxxxx 000, Xxxxxxxx Xxxx, XX 00000; Attn: Chief Financial Officer. All notices, demands, requests, advices or designations by Tenant to
Landlord shall be sent by United States certified or registered mail, postage prepaid, or by a
reputable commercial carrier’s same day or overnight service addressed to Landlord at its offices
at: XXXXX/XXXXXXXXX, 0000 XXXXXXX XXXXXXX XXXX., XXXXX 000, XXXXX XXXXX, XX 00000. Each notice,
request, demand, advice or designation referred to in this paragraph shall be deemed
received on the date of the personal service or receipt or refusal to accept receipt of the mailing thereof in the manner
herein provided, as the case may be. Either party shall have the right, upon ten (10)
days written notice to the other, to change the address as noted herein; however, Landlord
shall send Tenant notices to only one address of Tenant.
37. EXAMINATION OF LEASE. Submission of this instrument for examination
or signature by Tenant does not constitute a reservation of or option for a lease, and this
instrument is not effective as a lease or otherwise until its execution and delivery by both
Landlord and Tenant.
38. DEFAULT BY LANDLORD. Landlord shall not be in default unless Landlord
fails to perform obligations required of Landlord within a reasonable time, but in no event later
than (30) days after receipt of written notice by Tenant to Landlord and to the holder of any first
mortgage or deed of trust covering the Premises whose name and address shall have heretofore been
furnished to Tenant in writing, specifying wherein Landlord has failed to perform such obligations;
provided, however, that if the nature of Landlord’s obligations is such that more than thirty (30)
days are required for performance, then Landlord shall not be in default if Landlord commences
performance within such thirty (30) day period and thereafter diligently prosecutes the same to
completion. Landlord shall, however, make a reasonable effort to take immediate action on an
emergency situation that impairs (i) the safety of the Building and/or (ii) the occupancy of the
Building.
39. CORPORATE AUTHORITY. If Tenant is a corporation (or a partnership),
each individual executing this Lease on behalf of said corporation (or partnership) represents and
warrants that he is duly authorized to execute and deliver this Lease on behalf of said corporation
(or partnership) in accordance with the by-laws of said corporation (or partnership in accordance
with the partnership agreement) and that this Lease is binding upon said corporation (or
partnership) in accordance with its terms. If Tenant is a corporation, Tenant shall, within thirty
(30) days after execution of this Lease, deliver to Landlord a certified copy of the resolution of
the Board of Directors of said corporation authorizing or ratifying the specific execution of this
Lease by the individual executing said Lease. In lieu of said corporate resolution, Tenant may
provide Landlord with an outside legal opinion stating that the party executing this Lease on
behalf of Tenant is authorized to do so by the Board of Directors.
40. LIMITATION OF LIABILITY. In consideration of the benefits
accruing hereunder, Tenant and all successors and assigns covenant and agree that, in the event of
any actual or alleged failure, breach or default hereunder by Landlord:
(a) the sole and exclusive remedy shall be against Landlord’s interest in the Premises leased
herein;
(b) no partner of Landlord shall be sued or named as a party in any suit or action (except as
may be necessary to secure jurisdiction of the partnership);
(c) no service of process shall be made against any partner of Landlord (except as
may be necessary to secure jurisdiction of the partnership);
(d) no partner of Landlord shall be required to answer or otherwise
plead to any service of process;
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(e) no judgment will be taken against any partner of Landlord;
(f) any judgment taken against any partner of Landlord may be vacated and set aside at any
time without hearing;
(g) no writ of execution will ever be levied against the assets of
any partner of Landlord;
(h) these covenants and agreements are enforceable both by Landlord and also by
any partner of Landlord.
Tenant agrees that each of the foregoing covenants and agreements shall be applicable to any
covenant or agreement either expressly contained in this Lease or imposed by statute or at common
law.
41. SIGNS. No sign, placard, picture, advertisement, name or notice shall be
inscribed, displayed or printed or affixed on or to any part of the outside of the Building or any
exterior windows of the Building without the written consent of Landlord first had and obtained and
Landlord shall have the right to remove any such sign, placard, picture, advertisement, name or
notice without notice to Tenant and at the expense of Tenant. If Tenant is allowed to print or
affix or in any way place a sign in, on, or about the Premises, upon expiration or other sooner
termination of this Lease, Tenant at Tenant’s sole cost and expense shall both remove
such sign and repair all damage in such a manner as to restore all aspects of the
appearance of the Premises to the condition prior to the placement of said sign.
All approved signs and/or lettering on sign monuments and/or interior Common Area sign
directories, if any, shall be printed, painted, affixed or inscribed at the sole cost and expense
of Tenant by a licensed contractor approved of by Landlord.
Tenant shall not place anything or allow anything to be placed near the glass of any window,
door partition or wall which may appear unsightly from outside the Premises.
Notwithstanding anything to the contrary in this Paragraph 41 and subject to Landlord’s
approval of Tenant’s signage, Tenant shall be entitled to install, at Tenant’s sole cost and
expense, Tenant’s name on (i) Tenant’s Proportionate Share of the monument sign for the
Building in which the Premises are located (the exact placement and size of Tenant’s signage is to
be approved by Landlord), (ii) on the exterior glass adjacent to the entrance to the main lobby of
the Building (the exact placement and size of Tenant’s sign is to be approved by Landlord), and
(iii) on the entrance door to Tenant’s Leased Premises, with the understanding that Tenant shall be
liable for repairing any damage to said monument and door resulting from the installation and or
removal of said signs upon Lease Termination.
42. CONSENT. Whenever the consent of one party to the other is required
hereunder, such consent shall not be unreasonably withheld.
43. AUTHORITY TO EXECUTE. The parties executing this Lease hereby warrant
and represent that they are properly authorized to execute this Lease and bind the parties on
behalf of whom they execute this Lease and to all of the terms, covenants and conditions of
this Lease as they relate to the respective parties hereto.
44. HAZARDOUS MATERIALS. Landlord and Tenant agree as follows with respect
to the existence or use of “Hazardous Materials” (as defined herein) on, in, under or about the
Premises and real property located beneath said Premises and the Common Areas of the Parcel, which
includes the entire parcel of land on which the Premises are located as shown in Green on Exhibit
A attached hereto (hereinafter collectively referred to as the “Property”):
A. As used herein, the term “Hazardous Materials” shall mean any material, waste,
chemical, mixture or by product which is or hereafter is defined, listed or designated under
Environmental Laws (defined below) as a pollutant, or as a contaminant, or as a toxic or hazardous
substance, waste or material, or any other unwholesome, hazardous, toxic, biohazardous, or
radioactive material, waste, chemical, mixture or byproduct, or which is listed, regulated or
restricted by any Environmental Law (including, without limitation, petroleum hydrocarbons or any
distillates or derivatives or fractions thereof, polychlorinated biphenyls, or asbestos). As used
herein, the term “Environmental Laws” shall mean any applicable Federal, State of California or
local government law (including common law), statute, regulation, rule, ordinance,
permit, license, order, requirement, agreement, or approval, or any determination, judgment, directive, or order of any executive or judicial authority at any
level of Federal, State of California or local government (whether now existing or
subsequently adopted or promulgated) relating to pollution or the protection of the environment,
ecology, natural resources, or public health and safety.
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B. Landlord hereby informs Tenant, and Tenant hereby acknowledges, that the
subsurface soil and groundwater of the Premises are contaminated by Hazardous Materials commonly
known as volatile organic compounds as more fully set forth in the environmental documents and
reports listed on Exhibit C (the “Contamination”), copies of which are available for
review at Landlord’s office, and that the Premises is subject to the California Regional Water
Quality Control Board’s (“Regional Board”) Site Cleanup Requirements Order No. 00-002 (the “Order”). The Order is attached hereto as Exhibit D,
and the Contamination is generally described in Section 6 of the Findings of the Order
entitled “Remedial Investigation.” Landlord’s costs with regard to the Contamination specifically
referenced in the Order shall be paid by Landlord and Tenant shall have no obligation to
pay any part thereof. In addition, the use of the Property is restricted pursuant to the
Covenant and Environmental Restriction on Property dated June 10, 2004 (“Deed
Restriction”), which, among other things, (i) restricts the development of the Property to
industrial, commercial or office uses and (ii) prohibits the drilling, boring or otherwise
constructing of a well for the purpose of domestic water supply, unless otherwise expressly
permitted in writing by the Regional Board. A copy of the Deed Restriction is attached
hereto as Exhibit E. Landlord shall indemnify, defend, and hold harmless Tenant against
any and all claims from third parties not related to Tenant, judgments, damages, suits, orders,
government directives, costs, and expenses arising from (i) the Contamination, or (ii) the Order as
may be further amended (“Landlord’s Environmental Indemnity”); provided, however, that Landlord’s
Environmental Indemnity shall be subject to the following limitations and conditions:
| (a) | Landlord’s Environmental Indemnity shall not apply to any economic or consequential damages suffered by Tenant, including but not limited to loss of business or profits. | ||
| (b) | Landlord’s Environmental Indemnity shall not apply to any releases of Hazardous Materials that are caused in connection with Tenant’s use of the Premises or as otherwise provided in Paragraph C above. | ||
| (c) | Tenant acknowledges that Landlord must comply with the Order as may be amended and with directives of government entities including the Regional Board, with respect to the Contamination. Tenant further acknowledges that Contamination-related remediation treatment systems, groundwater monitoring xxxxx, and associated piping and equipment are located on the Premises and may be modified or added to during the term of the Lease (collectively, “Environmental Equipment”), and that Contamination-related environmental investigation and remediation activities (“Environmental Activities”) will be performed on the Premises during the term of the Lease. Tenant shall allow Landlord, and any other party named as a discharger under the Order as may be amended, and their respective agents and contractors to enter the Premises to access the Environmental Equipment and to perform Environmental Activities during the term of the Lease, provided that Tenant’s use and occupancy of the Premises shall not unreasonably be disturbed. | ||
| (d) | Tenant and Landlord shall reasonably cooperate with each other regarding any Environmental Activities to be performed on the Premises during the Term of the Lease. | ||
| (e) | Tenant shall be responsible at its expense for repairing any Environmental Equipment
damaged due to the negligence of Tenant or Tenant’s agents, contractors, or invitees (such
term “invitees” does not include Landlord, any other party named as a discharger under the
Order as may be amended, or their respective agents or contractors). |
||
| (f) | Provided that Landlord is not in material breach of Landlord’s Environmental Indemnity, Tenant shall not perform any Environmental Activities regarding the Contamination without Landlord’s express written consent. |
Tenant acknowledges that the Regional Board will require Landlord to record a restrictive covenant
against the Property that will restrict the use of the Property in general to commercial uses.
Landlord represents that this restrictive covenant, when recorded, will not restrict Tenant in its
proposed use of the Premises pursuant to Paragraph 1 (“Use”).
C. Tenant shall obtain Landlord’s written consent, which may be withheld in Landlord’s
discretion, prior to the occurrence of any Tenant’s Hazardous Materials Activities (defined below)
(and Tenant shall first provide Landlord with a list of said materials used and specify
the location in the Premises where said materials are used and stored, the method of
storage and disposal of the same, and a copy of the related permits); provided, however, that Landlord’s consent shall not be required for normal use
in compliance with applicable Environmental Laws of customary household and office supplies,
such as mild cleaners, lubricants and copier toner. As used herein, the term “Tenant’s Hazardous
Materials Activities” shall mean any and all use, handling, generation, storage, disposal,
treatment, transportation, release, discharge, or emission of any Hazardous Materials on, in,
beneath, to, from, at or about the
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Property, or by Tenant or by any of Tenant’s agents, employees,
contractors, vendors, invitees, visitors or its future subtenants or assignees. Tenant
agrees that any and all Tenant’s Hazardous Materials Activities shall be conducted in strict, full
compliance with applicable Environmental Laws at Tenant’s expense, and shall not result in
any contamination of the Property or the environment. Tenant shall not discharge any Hazardous
Materials in the plumbing, sewer and/or storm drains in the Premises and/or Parcel. Tenant agrees
to provide Landlord with prompt written notice of any spill or release of Hazardous Materials at
the Property during the term of the Lease of which Tenant becomes aware, and further agrees to
provide Landlord with prompt written notice of any violation of Environmental Laws in connection
with Tenant’s Hazardous Materials Activities of which Tenant becomes aware. If Tenant’s Hazardous
Materials Activities involve Hazardous Materials other than normal use of customary household and
office supplies, Tenant also agrees at Tenant’s expense: (i) to install such Hazardous
Materials monitoring, storage and containment devices as required by applicable Environmental Law
(however, in no event shall Tenant discard any Hazardous Materials in the Building plumbing system
and/or the Building sewer system); (ii) provide Landlord with a written inventory of such Hazardous
Materials, including an update of same each year upon the anniversary date of the Commencement Date
of the Lease (“Anniversary Date”); and (iii) on each Anniversary Date, to retain a licensed,
qualified environmental consultant, approved by landlord, to evaluate whether Tenant is in
compliance with all applicable Environmental Laws with respect to Tenant’s Hazardous Materials
Activities. Tenant, at its expense, shall submit to Landlord a report from such environmental
consultant which discusses the environmental consultant’s findings within two (2)
months of each Anniversary Date. Tenant, at its expense, shall promptly undertake
and complete any and all steps necessary, and in full compliance with applicable Environmental
Laws, to fully correct any and all problems or deficiencies identified by the environmental
consultant, and promptly provide Landlord with documentation of all such corrections.
D. Prior to termination or expiration of the Lease, Tenant, at its expense, shall (i) properly
remove from the Property all Hazardous Materials which come to be located at the Property in
connection with Tenant’s Hazardous Materials Activities, and (ii) fully comply with and complete
all facility closure requirements of applicable Environmental Laws regarding Tenant’s Hazardous
Materials Activities, including but not limited to (x) properly restoring and repairing the
Property to the extent damaged by such closure activities, and (y) obtaining from the local Fire
Department or other appropriate governmental authority with jurisdiction a written concurrence that
closure has been completed in compliance with applicable Environmental Laws. Tenant shall promptly
provide Landlord with copies of any claims, notices, work plans, data and reports prepared,
received or submitted in connection with any such closure activities.
E. If Landlord, in its sole discretion, believes that the Property has become contaminated as
a result of Tenant’s Hazardous Materials Activities, Landlord in addition to any other rights it
may have under this Lease or under Environmental Laws or other laws, may enter upon the Property
and conduct inspection, sampling and analysis, including but not limited to obtaining and analyzing
samples of soil and groundwater, for the purpose of determining the nature and extent of such
contamination. Tenant shall promptly reimburse Landlord for the costs of such an investigation,
including but not limited to reasonable attorneys’ fees Landlord incurs with respect to such
investigation, that discloses Hazardous Materials contamination for which
Tenant is liable under this Lease. Notwithstanding the above, Landlord may, at its option and
in its sole and absolute discretion, choose to perform remediation and obtain reimbursement for
cleanup costs as set forth herein from Tenant. Any cleanup costs incurred by Landlord as the result
of Tenant’s Hazardous Materials Activities shall be reimbursed by Tenant within thirty (30) days of
presentation of written documentation of the expense to Tenant by Landlord. Such reimbursable costs
shall include, but not be limited to, any reasonable consultants’ and attorneys’ fees incurred by
Landlord. Tenant shall take all actions necessary to preserve any claims it has against third
parties, including, but not limited to, its insurers, for claims related to its operation,
management of Hazardous Materials or contamination of the Property. Except as may be required of
Tenant by applicable Environmental Laws, Tenant shall not perform any sampling, testing, or
drilling to identify the presence of any Hazardous Materials at the Property, without Landlord’s
prior written consent which may be withheld in Landlord’s discretion. Tenant shall promptly provide
Landlord with copies of any claims, notices, work plans, data and reports prepared, received or
submitted in connection with any sampling, testing or drilling performed pursuant to the preceding
sentence.
F. Tenant shall indemnify, defend (with legal counsel acceptable to Landlord, whose consent
shall not unreasonably be withheld) and hold harmless Landlord, its employees, assigns, successors,
successors-in-interest, agents and representatives from and against any and all claims (including
but not limited to third party claims from a private party or a government authority), liabilities,
obligations, losses, causes of action, demands, governmental proceedings or
directives, fines, penalties, expenses, costs (including but not limited to
reasonable attorneys’, consultants’ and other experts’ fees and costs), and damages, which
arise from or relate to: (i) Tenant’s Hazardous Materials Activities; (ii)
any Hazardous Materials contamination caused by Tenant prior to the Commencement
Date of the Lease; or (iii) the breach of any obligation of Tenant under this Paragraph 44
(collectively, “Tenant’s Environmental Indemnification”). Tenant’s Environmental
Indemnification shall include but is not
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limited to the obligation to promptly and fully reimburse Landlord for losses
in or reductions to rental income, and diminution in fair market value of the Property.
Tenant’s Environmental Indemnification shall further include but is not limited to the obligation
to diligently and properly implement to completion, at Tenant’s expense, any and all environmental
investigation, removal, remediation, monitoring, reporting, closure activities, or other
environmental response action (collectively, “Response Actions”). Tenant shall promptly provide
Landlord with copies of any claims, notices, work plans, data and reports prepared,
received or submitted in connection with any Response Actions.
It is agreed that the Tenant’s responsibilities related to Hazardous Materials will survive
the expiration or termination of this Lease and that Landlord may obtain specific
performance of Tenant’s responsibilities under this Paragraph 44.
45. BROKERS.Tenant represents and warrants that it has not dealt
with any real estate brokers, agents, or finders in connection with the original Term of this
Lease, and knows of no real estate broker, agent or finder who is entitled to a commission in
connection with this Lease (“Lease Commission”), except as follows: Xxxx Xxxxxx and Xxxxx Xxxxxx of
Colliers Xxxxxxx, whose Lease Commission shall be paid by Landlord in accordance with Landlord’s
standard commission policy and schedule. Tenant agrees to defend, protect, indemnify and hold
Landlord harmless from and against all claims for Lease Commissions, finder’s fees, and other
compensation made by any other broker, agent, or finder as consequence of the Tenant’s actions
or dealings with such other broker, agent or finder. The parties hereto acknowledge that
Landlord will not pay an additional Lease Commission to Xxxx Xxxxxx, Xxxxx Xxxxxx,
Colliers Xxxxxxx or to any other broker secured by Tenant in the event the original Term of this
Lease is extended or the square footage leased hereunder is increased for any reason whatsoever.
In the event this Lease is terminated early due to an uncured default by Tenant
and/or a written agreement between Landlord and Tenant to terminate the Lease prior to the
scheduled Termination Date, Tenant agrees to reimburse Landlord for one hundred percent (100%) of
the balance of the unamortized Lease Commission previously paid by Landlord, that is outstanding as
of the early Termination Date. Said amount shall be paid by Tenant to Landlord by the Termination
Date, and/or Landlord may, at its option, deduct part or all of said unamortized Lease Commission
from Tenant’s Security Deposit.
46. PERSONAL PROPERTY OF LANDLORD: Tenant acknowledges that the Furniture
within the Premises (as detailed on Exhibit F attached hereto) (“Furniture”), is the
personal property of Landlord and is being leased hereunder by Tenant (hereinafter referred to as
“Personal Property of Landlord”) free of additional rent. Tenant agrees, at its sole cost and
expense, to maintain, repair and replace the Personal Property of Landlord as needed, normal wear
and tear excepted. Tenant shall not replace, remove, or encumber in any way, any of the Personal
Property of Landlord without Landlord’s prior written consent.
47. TENANT’S PERSONAL PROPERTY: Tenant and Landlord hereby acknowledge
that Tenant’s Personal Property located within the Premises (as set forth in Exhibit A
of the Xxxx of Sale attached hereto as Exhibit G) (“Tenant’s Personal Property”),
is the personal property of Tenant pursuant to the terms and conditions set forth in said Xxxx of
Sale. Tenant agrees that on the last day of the Term, or on the sooner termination of this Lease,
and subject to Paragraph 5 (“Acceptance and Surrender of Premises”) above, Tenant shall
remove Tenant’s Personal Property; provided, however, that Tenant shall ascertain from Landlord
within thirty (30) days before the end of the Term of this Lease which of the four (4)
pre-owned cubicles and four (4) pre-owned chairs within the Premises shall be
removed by Tenant.
48. OPTION TO EXTEND LEASE FOR ONE (1) YEAR: Landlord hereby grants to
Tenant an Option to Extend this Lease Agreement for an additional one (1) year period (“Extended
Term”) upon the following terms and conditions:
A. Notice; Deadline. Tenant shall give Landlord written notice of Tenant’s
exercise of this Option to Extend not earlier than twelve (12) months prior to the scheduled Lease
Termination Date, but not later than nine (9) months prior to the scheduled Lease Termination
Date, in which event the Lease shall be considered extended for an additional one (1) year with:
(i) the Basic Rent to be determined pursuant to Paragraph 48.B below; (ii) the Security Deposit and
terms and conditions subject to amendment by Landlord (Landlord, in its sole and absolute
discretion, may, but is not required to, incorporate its current Lease provisions that are standard
in Landlord’s leases as of the date of Tenant’s exercise of its Option to Extend); and (iii) this Paragraph
48 deleted. In the event that Tenant fails to timely exercise Tenant’s Option to Extend as set
forth herein in writing, Tenant shall have no further Option to Extend this Lease, and
this Lease shall continue in full force and effect for the full
remaining Term hereof, absent this Paragraph 48.
B. Notice and Acceptance of Terms. In the event Tenant timely exercises Tenant’s
Option to Extend as set forth herein, Landlord shall, within fifteen (15) days after receipt of
Tenant’s exercise of its Option to Extend, advise Tenant of the terms and conditions, Basic Rent
(in no event shall the Basic Rent
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be lower than the Basic Rent due for the last month of the initial Lease Term) and
Security Deposit required for the Extended Term of the Lease. Tenant shall have five (5)
days after receipt from the Landlord of said new terms and conditions, Basic Rent and Security
Deposit in which to accept said new Basic Rent, Security Deposit and terms and conditions and enter
into written documentation confirming same. In the event Tenant fails to execute said written
documentation confirming said new terms and conditions, Basic Rent and Security Deposit for the
Extended Term of the Lease within said five (5) day period, Tenant shall have no further
Option to Extend this Lease, and this Lease shall continue in full force and effect for the full
remaining Term hereof absent of this Paragraph 48, with Landlord having no
further responsibility or obligation to Tenant with respect to Tenant’s Option to Extend.
C. Personal Nature of Option to Extend. The option rights of Tenant
under this Paragraph 48, and the Extended Term thereunder, are granted for Tenant’s
personal benefit and may not be assigned or transferred by Tenant, either voluntarily or by
operation of law, in any manner whatsoever (except for a Permitted Transfer as provided for in
Paragraph 21.E (“Permitted Transfers”)). In the event that Landlord consents to a
sublease or assignment under Paragraph 21 (except for a Permitted Transfer as provided
for in Paragraph 21.E (“Permitted Transfers”)), the option granted herein and any Extended Term
thereunder shall be void and of no force and effect (without notice from Landlord), whether or not
Tenant shall have purported to exercise such option prior to such assignment or sublease, and this
Lease will continue in full force and effect for the full remaining Term hereof, absent of this
Paragraph 48.
D. Loss of Option to Extend Right. It is agreed that if Tenant is
at any time prior to exercising its Option to Extend in default of this Lease and has failed to
cure the default after notice and the expiration of any applicable cure period, this Option to
Extend is automatically forfeited by Tenant (without notice from Landlord). In the event said
Option to Extend is forfeited as stated herein, Tenant shall have no further Option to Extend this
Lease. It is further agreed that if Tenant has exercised its Option to Extend and is subsequently
in default prior to, or at any time prior to the commencement of the Extended Term and has failed
to cure the default in the time period allowed, Landlord may at its sole and absolute discretion,
cancel Tenant’s Option to Extend, and this Lease will continue in full force and effect for the
full remaining Term hereof, absent of this Paragraph 48.
49. MISCELLANEOUS AND GENERAL PROVISIONS.
A. Use of Building Name. Tenant shall not, without the written consent of
Landlord, use the name of the Building for any purpose other than as the address of the business
conducted by Tenant in the Premises.
B. Premises Address. It is understood that (i) the current address for the Premises is shown
on page 1 of this Lease, and that (ii) the address for the Premises is subject to
change at any time by the City in which the Premises are located (the “City”). In the
event the address assigned to the Premises is changed by the City, this Lease shall thereafter be
amended to reflect the assigned address for the Premises leased hereunder and Landlord shall not be
liable to Tenant for any costs or expenses incurred by Tenant as a result of said address change.
C. Choice of law/Venue; Severability. This Lease shall in all respects be governed by and
construed in accordance with the laws of the County of Santa Xxxxx in the State of California and
each party specifically stipulates to venue in Santa Xxxxx County. If any provision of
this Lease shall be invalid, unenforceable, or ineffective for any reason whatsoever, all other
provisions hereof shall be and remain in full force and effect.
D. Definition of Terms. The term “Premises” includes the space leased hereby and
any improvements now or hereafter installed therein or attached thereto. The term “Landlord” or any
pronoun used in place thereof includes the plural as well as the singular and the successors and
assigns of Landlord. The term “Tenant” or any pronoun used in place thereof includes the plural as
well as the singular and individuals, firms, associations, partnerships and corporations, and their
and each of their respective heirs, executors, administrators, successors and permitted assigns,
according to the context hereof, and the provisions of this Lease shall inure to the benefit of and
bind such heirs, executors, administrators, successors and permitted assigns.
The term “person” includes the plural as well as the singular and individuals, firms,
associations, partnerships and corporations. Words used in any gender include other genders.
If there be more than one Tenant the obligations of Tenant hereunder are joint and
several. The paragraph headings of this Lease are for convenience of reference only
and shall have no effect upon the construction or interpretation of any
provisions hereof.
E. Time Of Essence. Time is of the essence of this Lease and of each and all
of its provisions.
Initial: MMK
| Multi Tenant/Single Parcel | Page 28 of 29 |
BUILDING: |
1098 Alta | |
PROPERTY: |
1-0001 | |
UNIT: |
1 | |
LEASE ID: |
0001-SONI01-01 |
F. Quitclaim. At the expiration or earlier termination of this Lease,
Tenant shall execute, acknowledge and deliver to Landlord, within ten (10) days after
written demand from Landlord to Tenant, any quitclaim deed or other document required by any
reputable title company, licensed to operate in the State of California, to remove the
cloud or encumbrance created by this Lease from the real property of which Tenant’s
Premises are a part.
G. incorporation of Prior Agreements; Amendments. This instrument
along with any exhibits and attachments hereto constitutes the entire agreement between Landlord and
Tenant relative to the Premises and this agreement and the exhibits and
attachments may be altered, amended or revoked only by an instrument in writing signed by both
Landlord and Tenant. Landlord and Tenant agree hereby that all prior or contemporaneous oral
agreements between and among themselves and their agents or representatives relative to the leasing
of the Premises are merged in or revoked by this agreement.
H. Recording. Neither Landlord nor Tenant shall record this Lease or a
short form memorandum hereof without the consent of the other.
I. Amendments for Financing. Tenant further agrees to execute any reasonable
amendments required by a lender to enable Landlord to obtain financing, so
long as Tenant’s rights hereunder are not substantially affected.
J. Clauses, Plats and Riders. Clauses, plats and riders, if any, signed by
Landlord and Tenant and endorsed on or affixed to this Lease are a part hereof.
K. Diminution of light, Air or View. Tenant covenants and agrees that no
diminution or shutting off of light, air or view by any structure which may be hereafter erected
(whether or not by Landlord) shall in any way affect this Lease, entitle Tenant to any reduction of
Rent hereunder or result in any liability of Landlord to Tenant.
IN WITNESS WHEREOF, Landlord and Tenant have executed and delivered this Lease as of the day
and year last written below.
| LANDLORD: | TENANT: | |||||
| XXXX XXXXXXXXX SURVIVOR’S TRUST | SONICS, INC. | |||||
| a Delaware corporation | ||||||
BY
|
/s/ Xxxx Xxxxxxxxx | BY | /s/ Xxxxxx Xxxxxxxx | |||
| Xxxx Xxxxxxxxx, Trustee | ||||||
Date:
|
11/03/04 | Title | CFO | |||
| XXXXXXX X. XXXXX SEPARATE PROPERTY TRUST | Type or Print Name XXXXXX XXXXXXXX | |||||
| Date: | 11/2/04 | |||||
By |
/s/ Xxxxxxx X. Xxxxx | |||||
| Xxxxxxx X. Xxxxx, Trustee | ||||||
Date: |
11/03/04 | |||||
Initial: MMK
| Multi Tenant/Single Parcel | Page 29 of 29 |
EXHIBIT C TO LEASE AGREEMENT DATED OCTOBER 1, 2004 BY
AND BETWEEN THE XXXX XXXXXXXXX SURVIVOR’S TRUST AND THE XXXXXXX X.
XXXXX SEPARATE PROPERTY TRUST, AS LANDLORD, AND SONICS, INC., AS TENANT.
0000 Xxxx Xxxxxx
Toxic Reports Available for Tenant’s Review at Landlord’s Office
| Date | Consultant | Title of the Report/Investigation | ||
07/27/04
|
Streamborn | Quarterly Self-Monitoring Report 4/1/04-6/30/04 | ||
04/15/04
|
Streamborn | Quarterly Self-Monitoring Report 1/1/04-3/31/04 | ||
03/15/04
|
Streamborn | Letter Report for Groundwater Monitoring Conducted 2/18- 2/19/04 | ||
Initial: MMK
1
EXHIBIT F TO LEASE AGREEMENT DATED OCTOBER 1, 2004, BY
AND BETWEEN THE XXXX XXXXXXXXX SURVIVOR’S TRUST AND THE XXXXXXX X. XXXXX
SEPARATE PROPERTY TRUST, AS LANDLORD, AND SONICS, INC., AS TENANT.
PERSONAL PROPERTY OF LANDLORD TO BE LEASED BY TENANT:
Landlord shall provide and install the following furniture, which shall be leased by Tenant
pursuant to Lease Paragraph 46 (“Personal Property of Landlord”) and:
| Quantity | Description | |
56
|
Pre-owned 7’ x 9’ cubicles (Landlord shall have the cabling and wiring for the cubicles tested in accordance with Lease Paragraph 6.B (“As Is Basis: Tenant Improvements to be Constructed by Landlord”) upon installation_ | |
56
|
Pre-owned Desk chairs | |
1
|
Pre-owned Server Rack (existing in Premises) | |
1
|
New Reception Desk, with one (1) pre-owned chair |
Initial: MMK
