EXHIBIT 10.09
LEASE
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THIS LEASE is made as of this 30th day of September, 1997, by and
between MONTAGUE OAKS ASSOCIATES PHASE I & II, a California general partnership
("Landlord") and ATMI ECOSYS CORPORATION, a California corporation ("Tenant").
WITNESSETH:
Landlord leases to Tenant and Tenant leases from Landlord those
certain premises outlined in red on Exhibit "A" (the "Premises") commonly known
as 000 Xxxxx Xxxx Xxxxxxx, Xxx Xxxx, Xxxxxxxxxx, which Landlord and Tenant
hereby agree consists of approximately twenty thousand five hundred eighty-two
(20,582) square feet in the "Project". As used herein the term Project shall
mean and include all of the land described in Exhibit "B" and all the buildings,
improvements, fixtures and equipment now or hereafter situated on said land.
Tenant covenants, as a material part of the consideration of this
lease, to perform and observe each and all of the terms, covenants and
conditions set forth below, and this lease is made upon the condition of such
performance and observance.
1. Use. Subject to the restrictions contained in paragraph 6
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hereof, Tenant shall use the Premises for general office, research and
development, assembly and manufacturing, warehousing and uses incidental to the
foregoing and shall not use or permit the Premises to be used for any other
purpose.
2. Term. The term shall be for sixty-five (65) months and twenty-
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three (23) days (unless sooner terminated as hereinafter provided) and, subject
to paragraph 3, shall commence on October 1, 1997 ("Commencement Date") and end
on March 23, 2003.
3. Possession.
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(a) If Landlord for any reason cannot deliver possession of the
Premises to Tenant by the scheduled Commencement Date set forth in paragraph 2,
this lease shall not be void or voidable, Landlord shall not be liable to Tenant
for any loss or damage on account thereof and, unless Landlord's failure to
deliver possession of the Premises to Tenant by the scheduled commencement date
set forth in paragraph 2 is caused by Tenant caused delays, Tenant shall not be
liable for rent until Landlord delivers possession of the Premises to Tenant.
If the term commences on a date other than the date specified in paragraph 2
above, then the parties shall immediately execute an amendment to this lease
stating the actual date of commencement and the revised expiration date. The
expiration date of the term shall be extended by the same number of days that
Tenant's possession of the Premises was delayed from that set forth in paragraph
2.
(b) Tenant's inability or failure to take possession of the Premises
when delivery is tendered by Landlord shall not delay the commencement of the
term of this lease or Tenant's obligation to pay rent. Tenant acknowledges that
Landlord shall incur significant expenses upon the execution of this lease, even
if Tenant never takes possession of the Premises, including without limitation
brokerage commissions and fees and legal and other professional fees. Tenant
acknowledges that all of said expenses shall be included in measuring Landlord's
damages should Tenant breach the terms of this lease.
4. Monthly Rent.
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(a) Basic Rent. Tenant shall pay to Landlord basic rent for the
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Premises, in advance commencing as of the Commencement Date of the term, as
follows:
Lease Months Amounts
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October 1, 1997 through September 30, 1999 $26,756.60
October 1, 1999 through September 30, 2001 $28,814.80
October 1, 2001 through September 30, 2002 $30,873.00
October 1, 2002 through March 31, 2003 $31,902.10
Basic rental shall be paid in monthly installments on or before the first day of
the first full calendar month of the term and on or before the first day of each
and every successive calendar month. Basic rent for any partial month shall be
payable in advance and shall be prorated at the rate of 1/30th of the monthly
basic rent per day.
(b) Common Area Charges. In addition to the above basic rent and as
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additional rent, Tenant shall pay to Landlord, subject to adjustments and
reconciliation as provided in paragraph 16 of this lease, the sum of Three
Thousand Seven Hundred Four Dollars and Seventy-six Cents ($3,704.76) on or
before the first day of the first full calendar month of the term and on the
first day of each and every successive calendar month, said sum representing
Tenant's estimated payment of its percentage share of common area charges as
provided for in paragraph 16 of this lease. Payment of common area charges for
any partial month shall be payable in advance and shall be prorated at the rate
of 1/30th of the monthly payment of common area charges per day.
(c) Manner and Place of Payment. All payments of basic rent and common
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area charges shall be paid to Landlord, without deduction or offset, in lawful
money of the United States of America, at the office of Landlord at 0000 Xxxxxxx
Xxxxxx, Xxxxx 000, Xxxxx Xxxxx, Xxxxxxxxxx 00000, or to such other person or
place as Landlord may from time to time designate in writing.
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(d) Security Deposit. Concurrently with Tenant's execution of this lease,
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Tenant shall deposit with Landlord the sum of Twenty-six Thousand Seven Hundred
Fifty-six Dollars and Sixty Cents ($26,756.60) which 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. If Tenant defaults with respect to any provision of this lease,
including but not limited to, the provisions relating to the payment of basic
rent and common area charges, 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
reasonable amount which Landlord may spend by reason of Tenant's default or to
compensate Landlord for any other actual loss or damage which Landlord may
suffer by reason of default. If any portion of said deposit is so used, Tenant
shall, within ten (10) 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
deposit. If Tenant is not in default at the expiration or termination of this
lease, the security deposit or any balance thereof shall be returned to Tenant
not later than thirty (30) days after Tenant has vacated the Premises. In the
event of termination of Landlord's interest in this lease, Landlord shall
transfer said deposit to Landlord's successor in interest, and Tenant agrees
that Landlord shall thereupon be released from liability for the return of such
deposit or any accounting therefor.
5. Intentionally Omitted.
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6. Restriction on Use. Tenant shall not do or permit to be done in or
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about the Premises or the Project, nor bring or keep or permit to be brought or
kept in or about the Premises or Project, anything which is prohibited by or
will in any way increase the existing rate of, or otherwise affect, fire or any
other insurance covering the Project or any part thereof, or any of its
contents, or will cause a cancellation of any insurance covering the Project or
any part thereof, or any of its contents. Tenant shall not do or permit to be
done anything in or about the Premises or the Project which will constitute
waste or which will in any way obstruct or interfere with the rights of other
tenants or occupants of the Project or injure or annoy them, or use or allow the
Premises to be used for any unlawful purpose, nor shall Tenant cause, maintain
or permit any nuisance in or about the Premises or the Project. 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 use the Premises in any manner that will cause or
emit any objectionable odor, noise or light into the adjoining premises or
Common Area. Tenant shall not do anything on the Premises that will cause
damage to the Project and Tenant shall not overload the floor capacity of the
Premises or the Project. No machinery, apparatus or other appliance shall be
used or operated in or on the Premises that will in any manner injure,
unreasonably vibrate or shake the Premises. Landlord shall determine in its
reasonable business judgment whether such odor, noise, light or vibration is
such as to violate the provisions of this paragraph. No waste materials or
refuse shall be dumped upon or permitted to remain upon any part of the
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Premises or the Project except in trash containers placed inside exterior
enclosures designated for that purpose by Landlord, or where otherwise
designated by Landlord; and no toxic or hazardous materials shall be disposed of
through the plumbing or sewage system. No materials, supplies, equipment,
finished products or semi-finished products, raw materials or articles of any
nature shall be stored or permitted to remain outside of the building proper. No
retail sales shall be made on the Premises. Tenant shall comply with any
covenant, condition or restriction ("CC&R's") affecting the Premises.
7. Compliance with Laws. Except as expressly provided in paragraph 8(d),
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Tenant shall, in connection with its use and occupation of the Premises, at its
sole cost and expense, promptly observe and comply with (i) all laws, statutes,
ordinances and governmental rules, regulations and requirements of federal,
state, county, municipal and other governmental authorities, now or hereafter in
effect, which shall impose any duty upon Landlord or Tenant with respect to
Tenant's use, occupancy or alteration of the Premises, (ii) with the
requirements of any board of fire underwriters or other similar body now or
hereafter constituted and (iii) with any direction or occupancy certificate
issued pursuant to law by any public authority; provided, however, that no such
failure shall be deemed a breach of these 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 or not Landlord is a party thereto) 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. This lease shall remain in full force and effect notwithstanding any
loss of use or other effect on Tenant's enjoyment of the Premises by reason of
any governmental laws, statutes, ordinances, rules, regulations and requirements
now or hereafter in effect.
8. Alterations.
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(a) Landlord shall deliver the Premises to Tenant in its "as-is"
condition on the Commencement Date. Tenant acknowledges that Landlord shall have
no obligation to alter or refurbish the Premises or to construct any
improvements or alterations in the Premises for Tenant's benefit. Tenant shall
not make or suffer to be made any alteration, addition or improvement to or of
the Premises or any part thereof (collectively referred to herein as
"alterations") without (i) the prior written consent of Landlord, which consent
shall not be unreasonably withheld or delayed, (ii) a valid building permit
issued by the appropriate governmental authority if required by law, and (iii)
otherwise complying with all applicable laws, regulations and requirements of
governmental agencies having jurisdiction and with the rules, regulations and
requirements of any board of fire underwriters or similar body. Notwithstanding
the foregoing, Tenant may make alterations to the Premises that are
nonstructural and do not affect the electrical, mechanical or heating,
ventilation and/or air conditioning systems, at Tenant's sole cost and expense,
in an amount not to exceed Ten Thousand Dollars ($10,000.00) per year, without
Landlord's prior written consent, but subject to compliance with all the other
terms and conditions set forth in this Paragraph 8.
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Landlord's consent to any requested alteration shall not create on the part of
Landlord or cause Landlord to incur any responsibility or liability for such
alteration's compliance with all laws, rules and regulations of federal, state,
county, municipal and other governmental authorities. Any alteration made by
Tenant (excluding moveable furniture and trade fixtures not attached to the
Premises) shall at once become a part of the Premises and belong to Landlord.
Without limiting the foregoing, all heating, lighting, electrical (including all
wiring, conduit, outlets, drops, xxxx ducts, main and subpanels), air
conditioning, partitioning (other than movable partitions installed by Tenant),
drapery and carpet installations made by Tenant, regardless of how attached to
the Premises, together with all other alterations that have become an integral
part of the Project in which the Premises are a part, shall be and become part
of the Premises and belong to Landlord upon installation and shall not be deemed
trade fixtures, and shall remain upon and be surrendered with the Premises at
the termination of the lease.
If Landlord consents to the making of any alteration by Tenant, the same
shall be made by Tenant at its sole risk, cost and expense and only after
Landlord's written approval of any contractor or person selected by Tenant for
that purpose, which approval shall not be unreasonably withheld or delayed and
the same shall be made at such time and in such manner as Landlord may
reasonably from time to time designate. If the cost of any alteration will
exceed One Hundred Thousand Dollars ($100,000.00), Tenant shall, if required by
Landlord, secure at Tenant's cost a completion and lien indemnity bond for such
work. Upon Tenant's written request at the time Landlord consents to any
alteration as provided herein, Landlord shall notify Tenant whether Landlord
requires such alteration to be removed upon the expiration of the term of this
Lease. Unless Landlord has notified Tenant otherwise at the time Landlord
consents to the alterations, upon the expiration or sooner termination of the
term, Landlord may, at Landlord's sole option, require Tenant, at Tenant's sole
cost and expense, to promptly both remove such alterations made by Tenant and
repair any damage to the Premises caused by such removal, and restore the
Premises to the condition that existed prior to such alteration in accordance
with all applicable laws, statutes, building codes, and regulations in effect as
of the date of such restoration. Any moveable furniture and equipment or trade
fixtures remaining on the Premises at the expiration or other termination of the
term shall become the property of the Landlord unless promptly removed by
Tenant.
(b) Landlord and Tenant acknowledge that Tenant intends to construct
certain improvements to the Premises ("Initial Alterations"). All Initial
Alterations shall be constructed in accordance with this paragraph 8. Prior to
commencement of the Initial Alterations, Tenant shall deliver the plans and
specifications therefor to Landlord for written approval, which approval shall
not be unreasonably withheld, conditioned or delayed. Landlord shall respond to
Tenant's request for approval of Tenant's plans and specifications within
fifteen (15) business days after receipt thereof. If Landlord does not approve
Tenant's plans and specifications, Landlord shall notify Tenant of its objection
thereto in writing. Landlord and Tenant shall thereafter work cooperatively and
in good faith to reach agreement upon mutually acceptable plans and
specifications. Landlord shall inform Tenant at the time Landlord approves the
Initial Alterations
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whether the Initial Alterations or any portion thereof must be removed at the
expiration of the term of the Lease. If Landlord designates any Initial
Alterations for removal, Tenant shall remove such Initial Alterations prior to
the expiration or earlier termination of the Lease, repair any damage to the
Premises caused by such removal, and restore the Premises or portion thereof
where such Initial Alterations were removed in accordance with all applicable
laws, statutes, building codes and regulations in effect as of the date of such
restoration. Tenant shall engage a licensed California contractor, subject to
Landlord's reasonable approval, to construct the Initial Alterations.
(c) Landlord shall provide Tenant an allowance ("Allowance") in an
amount equal to One Hundred Two Thousand Nine Hundred Ten Dollars ($102,910)
(based on Five Dollars ($5) per square foot in the Premises) to be applied
toward the Initial Alterations in accordance with all of the terms and
provisions of this paragraph 8. The Allowance shall only be used to reimburse
Tenant for Initial Alterations to the Premises which shall, subject to
Landlord's right to cause removal thereof in accordance with paragraph 8(b),
become part of the Premises and remain in the Premises upon the expiration or
earlier termination of the lease or to refurbish existing improvements that will
remain in the Premises upon the expiration or earlier termination of the lease.
Tenant shall not be permitted to use the Allowance for furniture, trade
fixtures, equipment or other personal property which Tenant would be permitted
to remove from the Premises upon the expiration or earlier termination of the
Lease. Tenant may request disbursements from the Allowance in writing not more
frequently than once a month. Landlord shall not be obligated to make any
disbursements from the Allowance if there exists a condition, event or act which
would constitute a default by Tenant under this Lease beyond any applicable cure
period. Each request for disbursement shall be accompanied by: (i) a written
request for disbursement itemizing each cost for which payment is requested, in
form and content reasonably acceptable to Landlord; (ii) conditional lien
releases, in form and content reasonably satisfactory to Landlord, from all
persons and entities providing work or materials covered by such requests; (iii)
unconditional lien releases from all persons or entities providing work or
materials who were paid out of the prior disbursements; (iv) invoices, vouchers,
statements, affidavits and/or other documents in a form reasonably acceptable to
Landlord which substantiate and justify the disbursement requested; and (v) such
other documentation reasonably requested by Landlord. Within thirty-five (35)
days after Landlord's receipt of each fully completed disbursement request,
Landlord shall pay the portion of the Allowance sought to be disbursed directly
to the Tenant or the contractors and the subcontractors, laborers, or suppliers
entitled thereto. Notwithstanding the foregoing, Landlord shall have no further
obligation to disburse any amounts from the Allowance from and after June 30,
1998. In addition, Tenant shall not be entitled to any rent reduction or credit
in the event that the Allowance or any portion thereof remains unused for any
reason whatsoever.
(d) If during the term any alteration, addition or change of the
Premises is required by law, regulation, ordinance or order of any public
authority, Tenant, at its sole cost and expense, shall promptly make the same.
If during the term any
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alterations, additions or changes to the Common Area or to the Project in which
the Premises is located is required by law, regulation, ordinance or order of
any public or quasi-public authority, and it is impractical in Landlord's
judgment for the affected tenants to individually make such alterations,
additions or changes, Landlord shall make such alterations, additions or changes
and the cost thereof shall be a common area charge and Tenant shall pay its
percentage share of such cost to Landlord as provided in paragraph 16.
Notwithstanding the foregoing, Landlord shall be responsible, at Landlord's sole
cost and expense, for any alterations, additions or improvements which are
necessary to cause the common area or the exterior of the Project to comply with
the Americans with Disabilities Act of 1990 and all regulations promulgated
thereunder to the extent such compliance was required as of the date of this
Lease.
9. Repair and Maintenance. By entry hereunder, Tenant accepts the
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Premises as being in good and sanitary order, condition and repair. Except as
expressly provided below, Tenant shall at its sole cost keep and maintain the
entire Premises and every part thereof including, without limitation, the
windows, window frames, plate glass, glazing, elevators within the Premises,
truck doors, doors and all door hardware, the interior walls and partitions,
lighting and the electrical, mechanical, and plumbing systems. Tenant shall
also repair and maintain the heating and air conditioning systems (unless
Landlord has elected to keep and maintain the heating and air conditioning
systems as provided below) which shall include, without limitation, a periodic
maintenance agreement with a reputable and licensed heating and air conditioning
service company. If Tenant's use of the heating and air conditioning system is
limited to normal business hours (8:00 a.m. to 6:00 p.m.), such agreement shall
provide for service at least as often as every sixty (60) days; if Tenant's use
of the heating or air conditioning systems extends beyond such normal business
hours this service shall be as often as may be reasonably required by Landlord
and in any event such service shall meet all warranty enforcement requirements
of such equipment and comply with all manufacturer recommended maintenance.
Landlord may elect, at its option, to keep and maintain the heating and air
conditioning systems of the Premises and in such event, Tenant shall pay to
Landlord upon demand the full cost of such maintenance.
Subject to the provisions of paragraph 17, Landlord shall keep and maintain
the roof, structural elements, and exterior walls of the buildings constituting
the Project and Common Area in good order and repair. Tenant waives all rights
under and benefits of California Civil Code Sections 1932(1), 1941, and 1942 and
under any similar law, statute or ordinance now or hereafter in effect. The
cost of the repairs and maintenance which are the obligation of Landlord
hereunder, including without limitation, maintenance contracts and supplies,
materials, equipment and tools used in such repairs and maintenance shall be a
common area charge and Tenant shall pay its percentage share of such costs to
Landlord as provided in paragraph 16; provided, however, that if any repairs or
maintenance is required because of an act or omission of Tenant, or its agents,
employees or invitees, Tenant shall pay to Landlord upon demand the full cost of
such repairs or maintenance.
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10. Liens. Tenant shall keep the Premises and the Project free from any
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liens arising out of any work performed, materials furnished or obligations
incurred by Tenant, its agents, employees or contractors. Upon Tenant's receipt
of a preliminary twenty (20) day notice filed by a claimant pursuant to
California Civil Code Section 3097, Tenant shall immediately provide Landlord
with a copy of such notice. Should any lien be recorded against the Project,
Tenant shall give immediate notice of such lien to Landlord. In the event that
Tenant shall not, within ten (10) days following 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 reasonable expenses (including attorneys' fees) incurred
by it in connection therewith, shall be payable to Landlord by Tenant on demand
with interest at the rate of twelve percent (12%) per annum or the maximum rate
permitted by law, whichever is less. Landlord shall have the right at all times
to post and keep posted on the Premises any notices permitted or required by
law, or which Landlord shall deem proper for the protection of Landlord, the
Premises and the Project and any other party having an interest therein, from
mechanics' and materialmen's liens and like liens. Tenant shall give Landlord
at least fifteen (15) days prior notice of the date of commencement of any
construction on the Premises in order to permit the posting of such notices. In
the event Tenant is required to post an improvement bond with a public agency in
connection with any work performed by Tenant on or to the Premises, Tenant shall
include Landlord as an additional obligee.
11. Insurance. Tenant, at its sole cost and expense, shall keep in force
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during the term (i) commercial general liability and property damage insurance
with a combined single limit of at least $2,000,000 per occurrence insuring
against personal or bodily injury to or death of persons occurring in, on or
about the Premises or Project and any and all liability of the insureds with
respect to the Premises or arising out of Tenant's maintenance, use or occupancy
of the Premises and all areas appurtenant thereto, (ii) direct physical loss-
special insurance covering the leasehold improvements in the Premises and all of
Tenant's equipment, trade fixtures, appliances, furniture, furnishings, and
personal property from time to time located in, on or about the Premises, with
coverage in the amount of the full replacement cost thereof, and (iii) Worker's
Compensation Insurance as required by law, together with employer's liability
coverage with a limit of not less than $1,000,000 for bodily injury for each
accident and for bodily injury by disease for each employee. Tenant's
commercial general liability and property damage insurance and Tenant's Workers
Compensation Insurance shall be endorsed to provide that said insurance shall
not be canceled or reduced except upon at least thirty (30) days prior written
notice to Landlord. Further, Tenant's commercial general liability and property
damage insurance shall be primary and shall be endorsed to provide that Landlord
and XxXxxxxxxx Management Corporation, and their respective partners, officers,
directors and employees and such other persons or entities as directed from time
to time by Landlord shall be named as additional insureds for all liability
using ISO Bureau Form CG20111185 (or a successor
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form) or such other endorsement form reasonably acceptable to Landlord; shall
contain a severability of interest clause and a cross-liability endorsement;
shall be endorsed to provide that the limits and aggregates apply per location
using ISO Bureau Form CG25041185 (or a successor form) or such other endorsement
form reasonably acceptable to Landlord; and shall be issued by an insurance
company admitted to transact business in the State of California and rated
A+VIII or better in Best's Insurance Reports (or a successor report). The
deductibles for all insurance required to be maintained by Tenant hereunder
shall be reasonably satisfactory to Landlord. The commercial general liability
insurance carried by Tenant shall specifically insure the performance by Tenant
of the indemnification provisions set forth in paragraph 18 of this lease
provided, however, nothing contained in this paragraph 11 shall be construed to
limit the liability of Tenant under the indemnification provisions set forth in
said paragraph 18. If Landlord or any of the additional insureds named on any of
Tenant's insurance, have other insurance which is applicable to the covered loss
on a contributing, excess or contingent basis, the amount of the Tenant's
insurance company's liability under the policy of insurance maintained by Tenant
shall not be reduced by the existence of such other insurance. Any insurance
carried by Landlord or any of the additional insureds named on Tenant's
insurance policies shall be excess and non-contributing with the insurance so
provided by Tenant.
Tenant shall, prior to the commencement of the term and at least thirty
(30) days prior to any renewal date of any insurance policy required to be
maintained by Tenant pursuant to this paragraph, provide Landlord with a
completed Certificate of Insurance, using a form acceptable in Landlord's
reasonable judgment, attaching thereto copies of all endorsements required to be
provided by Tenant under this lease. Tenant agrees to increase the coverage or
otherwise comply with changes in connection with said commercial general
liability, property damage, direct physical loss and Worker's Compensation
Insurance as Landlord or Landlord's lender may from time to time reasonably
require.
Landlord shall obtain and keep in force a policy or policies of insurance
covering loss or damage to the Premises and Project, in the amount of the full
replacement value thereof, providing protection against those perils included
within the classification of "all risk" insurance, with increased cost of
reconstruction and contingent liability (including demolition), plus a policy of
rental income insurance in the amount of one hundred percent (100%) of twelve
(12) months' rent (including sums paid as additional rent) and such other
insurance as Landlord or Landlord's lender may from time to time require.
Landlord may, but shall not be obligated to, obtain flood and/or earthquake
insurance. Landlord shall have no liability to Tenant if Landlord elects not to
obtain flood and/or earthquake insurance. The cost of all such insurance
purchased by Landlord, plus any charges for deferred payment of premiums and the
amount of any deductible incurred upon any covered loss within the Project,
shall be common area charges and Tenant shall pay to Landlord its percentage
share of such costs as provided in paragraph 16. If the cost of insurance is
increased due to Tenant's use of the Premises, then Tenant shall pay to Landlord
upon demand the full cost of such increase.
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Landlord and Tenant hereby mutually waive any and all rights of recovery
against one another for real or personal property loss or damage occurring to
the Premises or the Project, or any part thereof, or to any personal property
therein, from perils insured against under fire and extended insurance and any
other property insurance policies existing for the benefit of the respective
parties so long as such insurance permits waiver of liability and contains a
waiver of subrogation without additional premiums.
If Tenant does not take out and maintain insurance as required pursuant to
this paragraph 11, Landlord may, but shall not be obligated to, take out the
necessary insurance and pay the premium therefor, and Tenant shall repay to
Landlord promptly on demand, as additional rent, the amount so paid. In
addition, Landlord may recover from Tenant and Tenant agrees to pay, as
additional rent, any and all reasonable expenses (including attorney fees) and
damages which Landlord may sustain by reason of the failure of Tenant to obtain
and maintain such insurance, it being expressly declared that the expenses and
damages of Landlord shall not be limited to the amount of the premiums thereon.
12. Utilities and Service. Tenant shall pay for all water, gas, light,
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heat, power, electricity, telephone, trash pickup, sewer charges and all other
services supplied to or consumed on the Premises. In the event that any service
is not separately metered or billed to the Premises, the cost of such utility
service or other service shall be a common area charge and Tenant shall pay its
percentage share of such cost to Landlord as provided in paragraph 16. In
addition, the cost of all utilities and services furnished by Landlord to the
Common Area shall be a common area charge and Tenant shall pay its percentage
share of such cost to Landlord as provided in paragraph 16.
If Tenant's use of any such utility or service is materially in excess of
the average furnished to the other tenants of the Project, and such utility or
service is not separately metered, then Tenant shall pay to Landlord upon
demand, as additional rent, the full cost of such excess use, or Landlord may
cause such utility or service to be separately metered, in which case Tenant
shall pay the full cost of such utility or service and reimburse Landlord upon
demand for the costs of installing the separate meter.
Landlord shall not be liable for, and Tenant shall not be entitled to any
abatement or reduction of rent by reason of, the failure of any person or entity
to furnish any of the foregoing services when such failure is caused by
accident, breakage, repairs, strikes, lockouts or other labor disturbances or
labor disputes of any character, governmental moratoriums, regulations or other
governmental actions, or by any other cause, similar or dissimilar, beyond the
reasonable control of Landlord. In addition, Tenant shall not be relieved from
the performance of any covenant or agreement in this lease because of any such
failure, and no eviction of Tenant shall result from such failure.
13. Taxes and Other Charges. All real estate taxes and assessments and
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other taxes, fees and charges of every kind or nature, foreseen or unforeseen,
which are
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levied, assessed or imposed upon Landlord and/or against the Premises, building,
Common Area or Project, or any part thereof by any federal, state, county,
regional, municipal or other governmental or quasi-public authority, together
with any increases therein for any reason, shall be a common area charge and
Tenant shall pay its percentage share of such costs to Landlord as provided in
paragraph 16. By way of illustration and not limitation, "other taxes, fees and
charges" as used herein include any and all taxes payable by Landlord (other
than state and federal personal or corporate income taxes measured by the net
income of Landlord from all sources, and premium taxes), whether or not now
customary or within the contemplation of the parties hereto, (i) upon, allocable
to, or measured by the rent payable hereunder, including, without limitation,
any gross income or excise tax levied by the local, state or federal government
with respect to the receipt of such rent (but not Landlord's state or federal
income tax), (ii) upon or with respect to the possession, leasing, operation,
management, maintenance, alteration, repair, use or occupancy by Tenant of the
Premises or any part thereof, (iii) upon or measured by the value of Tenant's
personal property or leasehold improvements located in the Premises, (iv) upon
this transaction or any document to which Tenant is a party creating or
transferring an interest or estate in the Premises, (v) upon or with respect to
vehicles, parking or the number of persons employed in or about the Project, and
(vi) any tax, license, franchise fee or other imposition upon Landlord which is
otherwise measured by or based in whole or in part upon the Project or any
portion thereof. "Taxes, or other taxes, fees and charges" as used herein shall
not include inheritance, estate, succession, transfer, gift, franchise,
corporation, income or profit taxes incurred by Landlord. If Landlord contests
any such tax, fee or charge, the cost and expense incurred by Landlord thereby
(including, but not limited to, costs of attorneys and experts) shall also be
common area charges and Tenant shall pay its percentage share of such costs to
Landlord as provided in paragraph 16. Landlord shall consider paying any
assessments in the maximum number of installments allowed by law. In the event
the Premises and any improvements installed therein by Tenant or Landlord are
valued by the assessor disproportionately higher than those of other tenants in
the building or Project or in the event alterations or improvements are made to
the Premises, Tenant's percentage share of such taxes, assessments, fees and/or
charges shall be readjusted upward accordingly and Tenant agrees to pay such
readjusted share. Such determination shall be made by Landlord from the
respective valuations assigned in the assessor's work sheet or such other
information as may be reasonably available and Landlord's determination thereof
shall be conclusive.
Tenant agrees to pay, before delinquency, any and all taxes levied or
assessed during the term hereof upon Tenant's equipment, furniture, fixtures and
other personal property located in the Premises, including carpeting and other
property installed by Tenant notwithstanding that such carpeting or other
property has become a part of the Premises. If any of Tenant's personal
property shall be assessed with the Project, Tenant shall pay to Landlord, as
additional rent, the amount attributable to Tenant's personal property within
ten (10) days after receipt of a written statement from Landlord setting forth
the amount of such taxes, assessments and public charges attributable to
Tenant's personal property.
-11-
14. Entry by Landlord. Landlord reserves, and shall at all reasonable
-----------------
times have, the right to enter the Premises (i) to inspect the Premises, (ii) to
supply services to be provided by Landlord hereunder, (iii) to show the Premises
to prospective purchasers, lenders or tenants and to put 'for sale' or 'for
lease' signs thereon, (iv) to post notices required or allowed by this lease or
by law, (v) to alter, improve or repair the Premises and any portion of the
Project, and (vi) to erect scaffolding and other necessary structures in or
through the Premises or the Project where reasonably required by the character
of the work to be performed. Notwithstanding the foregoing, Landlord's right to
place "for lease" signs on the Premises as provided above shall be limited to
the last one hundred eighty (180) days of the term of this Lease. Landlord
shall use reasonable efforts not to interfere with Tenant's use and enjoyment of
the Premises; provided, however, Landlord shall not be liable in any manner for
any inconvenience, disturbance, loss of business, nuisance or other damage
arising from Landlord's entry and acts pursuant to this paragraph and Tenant
shall not be entitled to an abatement or reduction of rent if Landlord exercises
any rights reserved in this paragraph. For each of the foregoing purposes,
Landlord shall at all times have and retain a key with which to unlock all of
the doors in, on and about the Premises (excluding Tenant's vaults, safes and
similar areas designated in writing by Tenant in advance), and Landlord shall
have the right to use any and all means which Landlord may deem proper to open
said doors in an emergency in order to obtain entry to the Premises. Any entry
by Landlord to the Premises pursuant to this paragraph 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.
15. Common Area; Parking. 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 and invitees shall, in common with
other occupants of the Project, and their respective employees and invitees and
others entitled to the use thereof, have the nonexclusive right to use the
access roads, parking areas and facilities within the Project provided and
designated by Landlord for the general use and convenience of the occupants of
the Project which areas and facilities shall include, but not be limited to,
sidewalks, parking, refuse, landscape and plaza areas, roofs and building
exteriors, 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 the Common Area. Landlord shall also have
the right at any time to change the name, number or designation by which the
Project is commonly known.
Tenant shall have the nonexclusive use of eighty-two (82) parking spaces in
the Common Area as designated from time to time by Landlord. Landlord reserves
the right at its sole option to assign and label parking spaces, but it is
specifically agreed that Landlord is not responsible for policing any such
parking spaces. Tenant shall not at any
-12-
time park or permit the parking of Tenant's trucks or other vehicles, or the
trucks or other vehicles of others, adjacent to loading areas so as to interfere
in any way with the use of such areas; nor shall Tenant at any time park or
permit the parking of Tenant's vehicles or trucks, or the vehicles or trucks of
Tenant's suppliers or others, in any portion of the Common Area not designated
by Landlord for such use by Tenant. Tenant shall not park or permit any
inoperative vehicle or equipment to be parked on any portion of the Common Area.
Landlord shall operate, manage and maintain the Common Area. The manner in
which the Common Area shall be operated, managed and maintained and the
expenditures for such operation, management and maintenance shall be comparable
to that of other similar properties located in Santa Xxxxx County. The cost of
such maintenance, operation and management of the Common Area, including but not
limited to landscaping, repair of paving, parking lots and sidewalks, security
and exterminator services and salaries and employee benefits (including union
benefits) of on-site and accounting personnel engaged in such maintenance and
operations management, shall be a common area charge and Tenant shall pay to
Landlord its percentage share of such costs as provided in paragraph 16.
16. Common Area Charges. Tenant shall pay to Landlord, as additional
-------------------
rent, an amount equal to twenty-three and forty-seven one hundredths percent
(23.47%) of the total common area charges as defined below. Tenant's percentage
share of common area charges shall be paid as follows:
Tenant's estimated monthly payment of common area charges payable by Tenant
during the calendar year in which the term commences is set forth in paragraph
4(b) of this lease. Prior to the commencement of each succeeding calendar year
of the term (or as soon as practicable thereafter), Landlord shall deliver to
Tenant a written estimate of Tenant's monthly payment of common area charges.
Tenant shall pay, as additional rent, on the first day of each month during the
term in accordance with paragraph 4(b) of this lease, its monthly share of
common area charges as estimated by Landlord. Within one hundred twenty (120)
days of the end of each calendar year and of the termination of this lease (or
as soon as practicable thereafter), Landlord shall deliver to Tenant a statement
of actual common area charges incurred for the preceding year. If such
statement shows that Tenant has paid less than its actual percentage then Tenant
shall on demand pay to Landlord the amount of such deficiency. If Tenant fails
to pay such excess amount due within thirty (30) days after demand, Tenant shall
pay an additional ten percent (10%) of the amount due as a penalty. If such
statement shows that Tenant has paid more than its actual percentage share then
Landlord shall, at its option, promptly refund such excess to Tenant or credit
the amount thereof to the rent next becoming due from Tenant. Landlord reserves
the right to revise any estimate of common area charges if actual or projected
common area charges show an increase or decrease in excess of ten percent (10%)
from any earlier estimate for the same period. In such event, Landlord shall
deliver the revised estimate to Tenant, together with an explanation of the
reasons therefor, and Tenant shall revise its payments accordingly.
-13-
Landlord's and Tenant's obligation with respect to adjustments at the end of the
term or earlier expiration of this lease shall survive such termination or
expiration.
Within one hundred twenty (120) days after receipt of the itemized
statement of actual common area charges for the prior calendar year, Tenant
shall have the right to request in writing from Landlord further documentation
substantiating any actual common area charge. If Tenant makes such written
request, Landlord shall provide Tenant with copies of invoices or other evidence
of the common area charge in question. Tenant's failure to request such further
backup documentation within the one hundred twenty (120) day period referenced
above shall be deemed a waiver by Tenant of the right to request any
documentation. Tenant shall have no right, pending the receipt of any
documentation, to withhold any payment of the common area charges or any other
amount owed by Tenant under this Lease.
"Common area charges," as used in this lease, shall include, but not be
limited to, (i) all items identified in paragraphs 8, 9, 11, 12, 13 and 15 as
being common area charges; (ii) amortization of such capital improvements having
a useful life greater than one year as Landlord may have installed for the
purpose of reducing operating costs and/or to comply with all laws, rules and
regulations of federal, state, county, municipal and other governmental
authorities now or hereinafter in effect (Tenant's total share of any such
capital improvement shall equal Tenant's proportionate share of the fraction of
the cost of such capital improvement equal to the remaining term of the lease
over the useful life of such capital improvement); (iii) salaries and employee
benefits (including union benefits) of personnel engaged in the operation and
maintenance of the Project (or the building in which the Premises are located)
and payroll taxes applicable thereto; (iv) supplies, materials, equipment and
tools used or required in connection with the operation and maintenance of the
Project; (v) licenses, permits and inspection fees; (vi) a reasonable reserve
for repairs and replacement of equipment used in the maintenance and operation
of the Project; and (vii) all other operating costs incurred by Landlord in
maintaining and operating the Project. Notwithstanding the foregoing, common
area charges shall not include the following: (1) depreciation; (2) principal,
interest, loan fees and penalties relating to any loans encumbering the Premises
or the Project and expenditures relating to any Landlord ground lease payment
and obligations, if any; (3) leasehold improvements made for other tenants of
the Project; (4) refinancing costs; (5) any cost which would otherwise be
considered a common area charge which is reimbursed to Landlord by an insurance
company, condemnor, a tenant, or any other third party (and Landlord shall use
reasonable efforts to be reimbursed by such parties to the extent possible); (6)
cost of repairs determined by a court of competent jurisdiction to have been
caused by Landlord's gross negligence or willful misconduct; (7) costs,
including attorneys fees, incurred by Landlord in connection with its lease
negotiations with either prospective and present tenants or enforcement of
leases, and all brokerage commissions and advertising expenses; (8) expenses
incurred by Landlord in connection with services or equipment supplied to
another tenant for its specific or disproportionate use; (9) Landlord's everyday
corporate and administrative overhead; (10) all costs incurred by Landlord in
connection with any dispute relating to Landlord's title to and
-14-
ownership of the Project; (11) all utility costs for which Tenant directly
contracts with local utility companies; (12) all penalties and costs determined
by a court of competent jurisdiction to be caused by Landlord's or any other
tenant's gross negligence or willful misconduct; and (13) any expenses for
repairs or maintenance which are covered by warranties and service contracts
under which there is no charge to Landlord.
The total common area charges charged to all tenants may not be greater
than the actual total common area charges incurred, and no cost shall be
included more than once in common area charges or any other charge made to the
Tenant under this Lease. Landlord shall not impose any administrative fee on
common area charges.
17. Damage by Fire, Casualty. In the event the Premises are damaged by
------------------------
any casualty which is covered under an insurance policy required to be
maintained by Landlord pursuant to paragraph 11, Landlord shall be entitled to
the use of all insurance proceeds and, subject to this paragraph 17, shall
repair such damage as soon as reasonably possible and this lease shall continue
in full force and effect.
In the event the Premises are damaged by any casualty not covered under an
insurance policy required to be maintained pursuant to paragraph 11, Landlord
may, at Landlord's option, either (i) repair such damage, at Landlord's expense,
as soon as reasonably possible, in which event this lease shall continue in full
force and effect, or (ii) give written notice to Tenant within thirty (30) days
after the date of the occurrence of such damage of Landlord's intention to
cancel and terminate this lease as of the date of the occurrence of the damage;
provided, however, that if such damage is caused by an act or omission of Tenant
or its agent, servants or employees, then Tenant shall repair such damage
promptly at its sole cost and expense. In the event Landlord elects to
terminate this lease pursuant hereto, Tenant shall have the right within ten
(10) days after receipt of the required notice to notify Landlord in writing of
Tenant's intention to repair such damage at Tenant's expense, without
reimbursement from Landlord, in which event this lease shall continue in full
force and effect and Tenant shall proceed to make such repairs as soon as
reasonably possible. If Tenant does not give such notice within the ten (10)
day period, this lease shall be canceled and terminated as of the date of the
occurrence of such damage. Under no circumstances shall Landlord be required to
repair any injury or damage to (by fire or other cause), or to make any
restoration or replacement of, any of Tenant's personal property, trade fixtures
or property leased from third parties, whether or not the same is attached to
the Premises.
If the Premises are damaged or destroyed but can be repaired or restored
within two hundred ten (210) days of the date of destruction to substantially
the condition existing prior to such destruction and if the proceeds of the
insurance payable to the Landlord by reason of such destruction are sufficient
to pay the cost of such repair or restoration, then the insurance proceeds shall
be so applied, Landlord shall promptly repair and restore the Premises and this
lease shall continue, without interruption, in full force and effect. If
Landlord estimates that the Premises cannot reasonably be repaired or restored
within two hundred ten (210) days after the date of destruction to
-15-
substantially the condition existing prior to such destruction, Landlord shall
have the right to either terminate this Lease or to elect to restore the
Premises. Landlord shall give written notice to Tenant of its election to
terminate or restore within forty-five (45) days from the date of such damage.
If Landlord elects to restore, the notice shall include Landlord's reasonable
estimate of the period required to effect such repair. If the estimated time to
repair is in excess of two hundred ten (210) days, then provided Tenant is not
in monetary default hereunder and that such damage or destruction was not caused
by Tenant or its agents, invitees or employees, Tenant shall have the right to
terminate this Lease by written notice of such election delivered to Landlord
within ten (10) days after the date of Landlord's notice. Failure of Tenant to
give Landlord written notice of termination within said ten (10) days shall
constitute Tenant's irrevocable election not to terminate this Lease, and
Landlord shall thereafter commence the repair and restoration of the Premises as
soon as reasonably possible. If the Premises are totally destroyed during the
last twelve (12) months of the term, Landlord may at Landlord's option cancel
and terminate this lease as of the date of occurrence of such damage by giving
written notice to Tenant of Landlord's election to do so within thirty (30) days
after the occurrence of such damage.
If the Premises are partially or totally destroyed or damaged and Landlord
or Tenant repair them pursuant to this lease, the rent payable hereunder for the
period during which such damage and repair continues shall be abated only in
proportion to the square footage of the Premises rendered untenantable to Tenant
by such damage or destruction. Tenant shall have no claim against Landlord for
any damage, loss or expense suffered by reason of any such damage, destruction,
repair or restoration. The parties waive the provisions of California Civil
Code sections 1932(2) and 1933(4) (which provisions permit the termination of a
lease upon destruction of the leased premises), and hereby agree that the
provisions of this paragraph 17 shall govern in the event of such destruction.
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 or the
Project by or from any cause whatsoever except the failure of Landlord to
perform its obligations under this lease where such failure has persisted for an
unreasonable period of time after notice of such failure, provided, however,
that the foregoing waiver shall not extend to any claims Tenant may have against
Landlord arising out of the willful misconduct or gross negligence of Landlord.
Without limiting the foregoing, Landlord shall not be liable to Tenant for any
injury to or death of any person or damage to or destruction of property by
reason of, or arising from, any latent defect in the Premises or Project or the
act or negligence of any other tenant of the Project. Tenant shall immediately
notify Landlord of any defect in the Premises or Project.
Except as to injury to persons or damage to property the principal cause of
which is the failure by Landlord to observe any of the terms and conditions of
this lease or Landlord's willful misconduct or gross negligence, Tenant shall
hold Landlord harmless
-16-
from and defend Landlord against any claim, liability, loss, damage or expense
(including reasonable attorney fees) 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 from any cause whatsoever or on account of the use, condition,
occupational safety or occupancy of the Premises. Tenant shall further hold
Landlord harmless from and defend Landlord against any claim, liability, loss,
damage or expense (including attorney fees) arising (i) from Tenant's use of the
Premises or from the conduct of its business or from any activity or work done,
permitted or suffered by Tenant or its agents or employees in or about the
Premises or Project, (ii) out of the failure of Tenant to observe or comply with
Tenant's obligation to observe and comply with laws or other requirements as set
forth in paragraph 7, (iii) by reason of Tenant's use, handling, storage, or
disposal of toxic or hazardous materials or waste, (iv) by reason of any labor
or service performed for, or materials used by or furnished to, Tenant or any
contractor engaged by Tenant with respect to the Premises, or (v) from any other
act, neglect, fault or omission of Tenant or its agents or employees.
The provisions of this paragraph 18 shall survive the expiration or earlier
termination of this lease.
19. Assignment and Subletting. Tenant shall not voluntarily assign,
-------------------------
encumber or otherwise transfer its interest in this lease or in the Premises, or
sublease all or any part of the Premises, or allow any other person or entity to
occupy or use all or any part of the Premises, without first obtaining
Landlord's written consent, which consent shall not be unreasonably withheld or
delayed subject to compliance with the requirements of this paragraph 19. Any
assignment, encumbrance or sublease without Landlord's consent, shall constitute
a default.
If Tenant desires to sublet or assign all or any portion of the Premises,
Tenant shall give Landlord written notice thereof, specifying the projected
commencement date of the proposed sublet or assignment (which date shall be not
less than thirty (30) days or more than one hundred twenty (120) days after the
date of such notice), the portions of the Premises proposed to be sublet or
assigned, and the identity of the proposed assignee or subtenant. Tenant shall
further provide Landlord with such other information concerning the proposed
assignee or subtenant as reasonably requested by Landlord. Any proposed
assignee or sublessee must agree to assume and agree to perform all the
covenants and conditions of Tenant under this lease. In the case of any
proposed assignment, or in the case of a proposed sublet of all of the Premises
at a time when Tenant has not occupied the Premises, or if the proposed sublet
is for the entire Premises for a sublet term ending within the last twelve (12)
months of the term of this lease, Landlord shall have the right, exercisable by
written notice to be delivered to Tenant within thirty (30) days of receipt of
Tenant's notice, to terminate this lease effective as of the date specified in
Tenant's notice as the proposed commencement date of the assignment or sublease.
If Landlord elects to terminate this lease in accordance with the foregoing
sentence, Tenant shall have the right, within ten (10) days after receipt of
Landlord's notice of termination of the lease, to withdraw its request for
consent to the
-17-
proposed assignment or subletting of the Premises; provided, however, that
Tenant may withdraw such request only twice during the term of this lease. If
Landlord does not elect to terminate this lease and if Landlord consents in
writing to the proposed assignment or sublet, Tenant shall be free to assign or
sublet all or a portion of the Premises subject to the following conditions: (i)
any sublease shall be on the same terms set forth in the notice given to
Landlord; (ii) no sublease shall be valid and no subtenant shall take possession
of the sublet premises until an executed counterpart of such sublease has been
delivered to Landlord; (iii) no subtenant shall have a further right to sublet;
(iv) fifty percent (50%) of any sums or other economic consideration received by
Tenant as a result of such assignment or sublet (except rental or other payments
received which are attributable to the amortization over the term of this lease
of the cost of leasehold improvements constructed for such assignee or
subtenant, and brokerage fees) whether denominated rentals or otherwise, which
exceed, in the aggregate, the total sums which Tenant is obligated to pay
Landlord under this lease (prorated to reflect obligations allocable to that
portion of the Premises subject to such sublease), shall be payable to Landlord
as additional rent under this lease without affecting or reducing any other
obligation of Tenant hereunder; and (v) no sublet or assignment shall release
Tenant of Tenant's obligation or alter the primary liability of Tenant to pay
the rent and to perform all other obligations to be performed by Tenant
hereunder without Landlord's express written consent. Tenant shall pay to
Landlord promptly upon demand as additional rent, Landlord's actual attorneys'
fees and other costs incurred for reviewing, processing or documenting any
requested assignment or sublease, whether or not Landlord's consent is granted.
Tenant shall not be entitled to assign this lease or sublease all or any part of
the Premises (and any attempt to do so shall be voidable by Landlord) during any
period in which Tenant is in default under this lease.
If Tenant is a partnership, a withdrawal or change, voluntary or
involuntary or by operation of law, of any general partner or the dissolution of
the partnership shall be deemed an assignment of this lease subject to all the
conditions of this paragraph 19. If Tenant is a corporation any dissolution,
merger, consolidation or other reorganization of Tenant or the sale or other
transfer of a controlling percentage of the capital stock of Tenant or the sale
of more than fifty percent (50%) of the value of Tenant's assets shall be an
assignment of this lease subject to all the conditions of this paragraph 19.
The term "controlling percentage" means the ownership of, and the right to vote,
stock possessing more than fifty percent (50%) of the total combined voting
power of all classes of Tenant's capital stock issued, outstanding and entitled
to vote. This paragraph shall not apply if Tenant is a corporation the stock of
which is traded through an exchange. Notwithstanding anything contained in this
paragraph 19, Tenant may, without Landlord's prior written consent, sublet the
Premises or assign this lease to (i) corporation controlled by Tenant, (ii) a
successor corporation related to Tenant by merger, consolidation, or other
reorganization, or (iii) a purchaser of all or substantially all of Tenant's
assets so long as Tenant provides evidence satisfactory to Landlord, in
Landlord's reasonable discretion, that Tenant is a surviving entity, the net
worth of the assignee or subtenant is greater than or equal to the net worth of
Tenant at the execution
-18-
of this lease, the use and occupancy of the Premises shall remain the same, and
Tenant remains fully liable under this lease.
The acceptance of rent by Landlord from any other person shall not be
deemed to be a waiver by Landlord of any provision hereof. Consent to one
assignment or sublet shall not be deemed consent to any subsequent assignment or
sublet. In the event of default by any assignee of Tenant or any successor of
Tenant in the performance of any of the terms hereof, Landlord may proceed
directly against Tenant without the necessity of exhausting remedies against
such assignee or successor. Landlord may consent to subsequent assignments or
sublets of this lease or amendments or modifications to this lease with
assignees of Tenant, without notifying Tenant, or any successor of Tenant, and
without obtaining its or their consent thereto and such action shall not relieve
Tenant of liability under this lease.
No interest of Tenant in this lease shall be assignable by operation of law
(including, without limitation, the transfer of this lease by testacy or
intestacy). Each of the following acts shall be considered an involuntary
assignment: (i) if Tenant is or becomes bankrupt or insolvent, makes an
assignment for the benefit of creditors or institutes a proceeding under the
Bankruptcy Act in which Tenant is the bankrupt; or, if Tenant is a partnership
or consists of more than one person or entity, if any partner of the partnership
or other person or entity is or becomes bankrupt or insolvent, or makes an
assignment for the benefit of creditors; (ii) if a writ of attachment or
execution is levied on this lease; or (iii) if, in any proceeding or action to
which Tenant is a party, a receiver is appointed with authority to take
possession of the Premises. An involuntary assignment shall constitute a
default by Tenant and Landlord shall have the fight to elect to terminate this
lease, in which case this lease shall not be treated as an asset of Tenant.
Tenant immediately and irrevocably assigns to Landlord, as security for
Tenant's obligations under this lease, all rent from any subletting of all or a
pan of the Premises as permitted by this lease, and Landlord, as assignee and as
attorneys-in-fact for Tenant, or a receiver of Tenant appointed on Landlord's
application, may collect such rent and apply it toward Tenant's obligations
under this lease; except that, until the occurrence of an act or default by
Tenant, Tenant shall have the right to collect such rent, subject to promptly
forwarding to Landlord any portion thereof to which Landlord is entitled
pursuant to this paragraph 19.
20. Default. The occurrence of any of the following shall constitute a
-------
default by Tenant: (i) failure of Tenant to pay any rent or other sum payable
hereunder within five (5) days of when due; (ii) abandonment of the Premises
(Tenant's failure to occupy and conduct business in the Premises for fourteen
(14) consecutive days shall be deemed an abandonment); or (iii) failure of
Tenant to perform any other term, covenant or condition of this lease if the
failure to perform is not cured within thirty (30) days after notice thereof has
been given to Tenant (provided that if such default cannot reasonably be cured
within thirty (30) days, Tenant shall not be in default if Tenant commences to
cure such failure to perform within the thirty (30) day period and diligently
and in good
-19-
faith continues to cure the failure to perform). The notice referred to in
clause (iii) above shall specify the failure to perform and the applicable lease
provision and shall demand that Tenant perform the provisions of this lease
within the applicable period of time. No notice shall be deemed a forfeiture or
termination of this lease unless Landlord so elects in the notice. No notice
shall be required in the event of abandonment or vacation of the Premises.
In addition to the above, the occurrence of any of the following events
shall also constitute a default by Tenant: (i) Tenant fails to pay its debts as
they become due or admits in writing its inability to pay its debts, or makes a
general assignment for the benefit of creditors; or (ii) any financial
statements given to Landlord by Tenant, any assignee of Tenant, subtenant of
Tenant, any guarantor of Tenant, or successor in interest of Tenant (including,
without limitation, any schedule of Tenant's aged accounts payable) are
materially false. At any time during the term of this lease Landlord, at
Landlord's option, shall have the right to receive from Tenant, upon Landlord's
request, a current annual balance sheet for Landlord's review. Landlord shall
use reasonable efforts to keep Tenant's balance sheet confidential.
In the event of a default by Tenant, then Landlord, in addition to any
other rights and remedies of Landlord at law or in equity, shall have the right
either to terminate Tenant's right to possession of the Premises (and thereby
terminate this lease) or, from time to time and without termination of this
lease, to relet the Premises or any part thereof for the account and in the name
of Tenant for such term and on such terms and conditions as Landlord in its sole
discretion may deem advisable, with the right to make alterations and repairs to
the Premises.
Should Landlord elect to keep this lease in full force and effect, Landlord
shall have the right to enforce all of Landlord's rights and remedies under this
lease, including but not limited to the right to recover and to relet the
Premises and such other rights and remedies as Landlord may have under
California Civil Code Section 1951.4 or successor Code section or any other
California statute. If Landlord relets the Premises, then Tenant shall pay to
Landlord, as soon as ascertained, the reasonable costs and expenses incurred by
Landlord in such reletting and in making alterations and repairs. Rentals
received by Landlord from such reletting shall be applied (i) to the payment of
any indebtedness due hereunder, other than basic rent and common area charges,
from Tenant to Landlord; (ii) to the payment of the cost of any repairs
necessary to return the Premises to good condition normal wear and tear
excepted, including the cost of alterations and the cost of storing any of
Tenant's property left on the Premises at the time of reletting; and (iii) to
the payment of basic rent or common area charges due and unpaid hereunder. The
residue, if any, shall be held by Landlord and applied in payment of future rent
or damages in the event of termination as the same may become due and payable
hereunder and the balance, if any at the end of the term of this lease, shall be
paid to Tenant. Should the basic rent and common area charges received from
time to time from such reletting during any month be less than that agreed to be
paid during that month by Tenant hereunder, Tenant shall pay such deficiency to
Landlord.
-20-
Such deficiency shall be calculated and paid monthly. No such reletting of the
Premises by Landlord shall be construed as an election on its part to terminate
this lease unless a notice of such intention is given to Tenant or unless the
termination hereof is decreed by a court of competent jurisdiction.
Notwithstanding any such reletting without termination, Landlord may at any time
thereafter elect to terminate this lease for such previous breach, provided it
has not been cured.
Should Landlord at any time terminate this lease for any breach, in
addition to any other remedy it may have, it shall have the immediate right of
entry and may remove all persons and property from the Premises and shall have
all the rights and remedies of a landlord provided by California Civil Code
Section 1951.2 or any successor code section. Upon such termination, in addition
to all its other rights and remedies, Landlord shall be entitled to recover from
Tenant all damages it may incur by reason of such breach, including the cost of
recovering the Premises and including (i) the worth at the time of award of the
unpaid rent which had been earned at the time of termination; (ii) the worth at
the time of award of the amount by which the unpaid rent which would have been
earned after termination until the time of award exceeds the amount of such
rental loss that Tenant proves could have been reasonably avoided; (iii) the
worth at the time of the award of the amount by which the unpaid rent for the
balance of the term after the time of award exceeds the amount of such rental
loss that Tenant proves could be reasonably avoided; and (iv) any other amount
necessary to compensate Landlord for all the detriment proximately caused by
Tenant's failure to perform its obligations under this lease or which in the
ordinary course of events would be likely to result therefrom. The "worth at the
time of award" of the amounts referred to in (i) and (ii) above is computed by
allowing interest at the rate of twelve percent (12%) per annum. The "worth at
the time of award" of the amount referred to in (iii) above shall be computed by
discounting such amount at the discount rate of the federal reserve bank of San
Francisco at the time of award plus one percent (1%). Tenant waives the
provisions of Section 1179 of the California Code of Civil Procedure (which
Section allows Tenant to petition a court of competent jurisdiction for relief
against forfeiture of this lease). Property removed from the Premises may be
stored in a public or private warehouse or elsewhere at the sole cost and
expense of Tenant. In the event that Tenant shall not immediately pay the cost
of storage of such property after the same has been stored for a period of
thirty (30) days or more, Landlord may sell any or all thereof at a public or
private sale in such manner and at such times and places that Landlord, in its
sole discretion, may deem proper, without notice to or demand upon Tenant.
21. Landlord's Right to Cure Tenant's Default. Landlord, at any time
-----------------------------------------
after Tenant commits a default, may, but shall not be obligated to, cure the
default at Tenant's cost. If Landlord at any time, by reason of Tenant's
default, pays any sum or does any act that requires the payment of any sum, the
sum paid by Landlord shall be due immediately from Tenant to Landlord and shall
bear interest at the rate of twelve percent (12%) per annum or the maximum rate
permitted by law, whichever is less, from the
-21-
date the sum is paid by Landlord until Landlord is reimbursed by Tenant. Amounts
due Landlord hereunder shall be additional rent.
22. 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 payments, income, rent, award or any
interest therein whatsoever which may be paid or made in connection with such
taking or conveyance. Tenant shall have no claim against Landlord or otherwise
for the value of any unexpired term of this lease. Notwithstanding the
foregoing, Tenant shall be entitled to any compensation for depreciation to and
cost of removal of Tenant's equipment and fixtures and any compensation for its
relocation expenses necessitated by such taking, but in each case only to the
extent the condemning authority makes a separate award therefor or specifically
identifies a portion of the award as being therefor. Each party waives the
provisions of Section 1265.130 of the California Code of Civil Procedure (which
section allows either party to petition the Superior Court to terminate this
lease in the event of a partial taking of the Premises).
If any action or proceeding is commenced for such taking of the Premises or
any portion thereof or of any other space in the Project, 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 portion thereof or
of any other space in the Project, and Landlord shall decide to discontinue the
use and operation of the Project or decide to demolish, alter or rebuild the
Project, or decide that the remaining portion of the Project or Premises cannot
be restored, then Landlord shall have the right to terminate this lease by
giving Tenant written notice thereof within sixty (60) days of the earlier of
the date of Landlord's receipt of such notice of intention to condemn or the
commencement of said action or proceeding. Such termination shall be effective
as of the last day of the calendar month next following the month in which such
notice is given or the date on which title shall vest in the condemnor,
whichever occurs first.
In the event of a partial taking, or conveyance in lieu thereof, of the
Premises and fifty percent (50%) or more of the number of square feet in the
Premises are taken or if Landlord notifies Tenant that it does not elect to
restore the Premises following such partial taking, then Tenant may terminate
this lease. Any election by Tenant to so terminate shall be by written notice
given to Landlord within sixty (60) days from the date of such taking or
conveyance and shall be effective on the last day of the calendar month next
following the month in which such notice is given or the date on which title
shall vest in the condemnor, whichever occurs first.
If a portion of the Premises is taken by power of eminent domain or
conveyance in lieu thereof and neither Landlord nor Tenant terminates this lease
as provided above, then this lease shall continue in full force and effect as to
the part of the Premises not so taken or conveyed and all payments of rent shall
be apportioned as of the date of such
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taking or conveyance so that thereafter the amounts to be paid by Tenant shall
be in the ratio that the area of the portion of the Premises not so taken bears
to the total area of the Premises prior to such taking.
23. Notice and Covenant to Surrender. On the last day of the term or on
--------------------------------
the effective date of any earlier termination, Tenant shall surrender to
Landlord the Premises and all of Tenant's improvements and alterations in their
condition existing as of the commencement of the term or the installation
thereof (other than improvements and alterations required to be removed
hereunder), condemnation, damage by casualty, and normal wear and tear excepted
with all interior vinyl covered walls cleaned and repaired or replaced if marked
or damaged, and the air conditioning and heating system serviced and repaired by
a reputable and licensed service firm (unless Landlord has elected to maintain
such system pursuant to paragraph 9); all to the reasonable satisfaction of
Landlord. On or prior to the last day of the term or the effective date of any
earlier termination, Tenant shall remove all of Tenant's personal property and
trade fixtures, together with improvements or alterations that Tenant is
obligated to remove pursuant to the provisions of paragraph 8, from the
Premises, repair any damage caused by such removal, and restore such areas to
the condition that existed prior to the installation of such trade fixtures or
alterations in accordance with all applicable laws, statutes, building codes,
and regulations in effect as of the date of such restoration. Any personal
property not removed shall be deemed abandoned. In addition, on or prior to the
expiration or earlier termination of this lease, Tenant shall remove, at
Tenant's sole cost and expense, all telephone, other communication, computer and
any other cabling and wiring of any sort installed in the space above the
suspended ceiling of the Premises or anywhere else in the Premises and shall
promptly repair any damage to the suspended ceiling, lights, light fixtures,
walls and any other part of the Premises resulting from such removal.
If the Premises are not surrendered as required in this paragraph, Tenant
shall indemnify Landlord against all loss, liability and expense (including but
not limited to, reasonable attorney fees) resulting from the failure by Tenant
in so surrendering the Premises, including, without limitation, any claims made
by any succeeding tenants. It is agreed between Landlord and Tenant that the
provisions of this paragraph shall survive termination of this lease.
24. Tenant's 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 to remove the cloud or encumbrance created by this lease
from the real property of which the Premises are a part. This obligation shall
survive said expiration or termination.
25. Holding Over. Any holding over after the expiration or termination of
------------
this lease with the written consent of Landlord shall be construed to be a
tenancy from month to month at the monthly rent, as adjusted, in effect on the
date of such expiration or termination. All provisions of this lease, except
those pertaining to the term and any
-23-
option to extend, shall apply to the month to month tenancy. The provisions of
this paragraph are in addition to, and do not affect, Landlord's right of
reentry or other rights hereunder or provided by law.
If Tenant shall retain possession of the Premises or any part thereof
without Landlord's consent following the expiration or sooner termination of
this lease for any reason, then Tenant shall pay to Landlord for each day of
such retention one hundred fifty percent (150%) of the amount of the daily
rental in effect during the last month prior to the date of such expiration or
termination. Tenant shall also indemnify and hold Landlord harmless from any
loss, liability and expense (including, but not limited to, reasonable,
attorneys fees) resulting from delay by Tenant in surrendering the Premises,
including without limitation any claims made by any succeeding tenant founded on
such delay. Acceptance of rent by Landlord following expiration or termination
shall not constitute a renewal of this lease, and nothing contained in this
paragraph shall waive Landlord's right of re-entry or any other right. Tenant
shall be only a tenant at sufferance, whether or not Landlord accepts any rent
from Tenant, while Tenant is holding over without Landlord's written consent.
26. Subordination. In the event Landlord's title or leasehold interest is
-------------
now or hereafter encumbered in order to secure a loan to Landlord, Tenant shall,
at the request of Landlord or the lender, execute in writing an agreement
subordinating its rights under this lease to the lien of such encumbrance, or,
if so requested, agreeing that the lien of lender's encumbrance shall be or
remain subject and subordinate to the rights of Tenant under this lease. Tenant
hereby irrevocably appoints Landlord the attorney-in-fact of Tenant to execute,
deliver and record any such instrument or instruments for and in the name and on
behalf of Tenant to the extent Tenant fails to do so when requested by Landlord.
Notwithstanding any such subordination, Tenant's possession under this lease
shall not be disturbed if Tenant is not in default and so long as Tenant shall
pay all amounts due hereunder and otherwise observe and perform all provisions
of this lease. In connection with any such request to execute a subordination
agreement, Landlord shall use reasonable efforts to obtain a nondisturbance
agreement from the lender. In addition, if in connection with any such loan the
lender shall request reasonable modifications of this lease as a condition to
such financing, Tenant will not unreasonably withhold, delay or defer its
consent thereof, provided that such modifications do not increase the
obligations of Tenant hereunder or materially adversely affect the leasehold
interest hereby created or Tenant's rights hereunder.
27. Certificate of Estoppel. Each party shall, within five (5) calendar
-----------------------
days after request therefor, execute and deliver to the other party, in
recordable form, a certificate stating that the lease is unmodified and in full
force and effect, or in full force and effect as modified and stating the
modifications. The certificate shall also state the amount of the monthly rent,
the date to which monthly rent has been paid in advance, the amount of the
security deposit and/or prepaid monthly rent, and, if the request is made by
Landlord, shall include such other items as Landlord or Landlord's lender may
reasonably request. Failure to deliver such certificate within such time shall
constitute a
-24-
conclusive acknowledgment by the party failing to deliver the certificate that
the lease is in full force and effect and has not been modified except as may be
represented by the party requesting the certificate. Any such certificate
requested by Landlord may be conclusively relied upon by any prospective
purchaser or encumbrancer of the Premises or Project. Further, within five (5)
calendar days following written request made from time to time by Landlord,
Tenant shall furnish to Landlord current financial statements of Tenant.
28. Sale by Landlord. In the event the original Landlord hereunder, or
----------------
any successor owner of the Project or Premises, shall sell or convey the Project
or Premises, all liabilities and obligations on the part of the original
Landlord, or such successor owner, under this lease accruing thereafter shall
terminate, and thereupon all such liabilities and obligations shall be binding
upon the new owner. Tenant agrees to attorn to such new owner and to look
solely to such new owner for performance of any and all such liabilities and
obligations.
29. Attornment to Lender or Third Party. In the event the interest of
-----------------------------------
Landlord in the land and buildings 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 a lender or any
other third party through judicial foreclosure or by exercise of a power of sale
at private trustee's foreclosure sale, Tenant hereby agrees to release Landlord
of any obligation arising on or after any such foreclosure sale and to attorn to
the purchaser at any such foreclosure sale and to recognize such purchaser as
the Landlord under this lease.
30. 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 earlier than thirty (30) days after written notice by Tenant to
Landlord and to the holder of any first mortgage or deed of trust covering the
Premises 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.
If Landlord is in default of this lease, Tenant's sole remedy shall be to
institute suit against Landlord in a court of competent jurisdiction, and Tenant
shall have no right to offset any sums expended by Tenant as a result of
Landlord's default against future rent and other sums due and payable pursuant
to this lease. If Landlord is in default of this lease, and as a consequence
Tenant recovers a money judgment against Landlord, the judgment shall be
satisfied only out of the proceeds of sale received on execution of the judgment
and levy against the right, title and interest of Landlord in the Project of
which the Premises are a part, and out of rent or other income from such real
property receivable by Landlord or out of the consideration received by Landlord
from the sale or other disposition of all or any part of Landlord's right, title
and interest in the Project of
-25-
which the Premises are a part. Neither Landlord nor any of the partners
comprising the partnership designated as Landlord shall be personally liable for
any deficiency.
31. Intentionally Omitted.
---------------------
32. Measurement of Premises. Any reference to square footage of the
-----------------------
Premises is approximate only. Landlord and Tenant waive any claim against the
other regarding the accuracy of any such measurement and agree that there shall
not be any adjustment in basic rent or common area charges or other amounts
payable hereunder by reason of inaccuracies in such measurement.
33. Attorney Fees. If either party commences an action against the other
-------------
party arising out of or in connection with this lease, the prevailing party
shall be entitled to have and recover from the losing party all reasonable
expenses of litigation, including, without limitation, travel expenses, attorney
fees, expert witness fees, trial and appellate court costs, and deposition and
transcript expenses. Subject to the foregoing, if either party becomes a party
to any litigation concerning this lease, or concerning the Premises or the
Project, by reason of any act or omission of the other party or its authorized
representatives, the party that causes the other party to become involved in the
litigation shall be liable to the other party for all expenses of litigation,
including, without limitation, travel expenses, attorney fees, expert witness
fees, trial and appellate court costs, and deposition and transcript expenses.
34. Surrender. The voluntary or other surrender of this lease or the
---------
Premises by Tenant, or a mutual cancellation of this lease, shall not work 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.
35. Waiver. No delay or omission in the exercise of any right or remedy
------
of Landlord or Tenant on any default by the other shall impair such right or
remedy or be construed as a waiver. The receipt and acceptance by Landlord of
delinquent rent or other payments shall not constitute a waiver of any other
default and acceptance of partial payments shall not be construed as a waiver of
the balance of such payment due. No act or conduct of Landlord, including,
without limitation, the acceptance of keys to the Premises, shall constitute an
acceptance of the surrender of the Premises by Tenant before the expiration of
the term. Only a written notice from Landlord to Tenant shall constitute
acceptance of the surrender of the Premises and accomplish a termination of this
lease. Landlord's consent to or approval of any act by Tenant requiring
Landlord's consent or approval shall not be deemed to waive or render
unnecessary Landlord's consent to or approval of any subsequent act by Tenant.
Any waiver by Landlord of any default must be in writing and shall not be a
waiver of any other default concerning the same or any other provision of this
lease.
36. Easements, Airspace Rights. Landlord reserves the right to alter
--------------------------
the boundaries of the Project and grant easements and dedicate for public use
portions of the
-26-
Project without Tenant's consent, provided that no such grant or dedication
shall interfere with Tenant's use of the Premises or otherwise cause Tenant to
incur cost or expense. From time to time, and upon Landlord's demand, Tenant
shall execute, acknowledge and deliver to Landlord, in accordance with
Landlord's instructions, any and all documents, instruments, maps or plats
necessary to effectuate Tenant's covenants hereunder.
This lease confers no rights either with regard to the subsurface of or
airspace above the land on which the Project is located or with regard to
airspace above the building of which the Premises are a part. Tenant agrees
that no diminution or shutting off of light or view by a structure which is or
may be erected (whether or not by Landlord) on property adjacent to the building
of which the Premises are a part or to property adjacent thereto, shall in any
way affect this lease, or entitle Tenant to any reduction of rent, or result in
any liability of Landlord to Tenant.
37. Rules and Regulations. Landlord shall have the right from time to
---------------------
time to promulgate rules and regulations for the safety, care and cleanliness of
the Premises, the Project and the Common Area, or for the preservation of good
order; providing, however, such rules and regulations and CC&R's shall not
unreasonably interfere with Tenant's use of the Premises. On delivery of a copy
of such rules and regulations and CC&R's to Tenant, Tenant shall comply with the
rules and regulations and CC&R's, and a violation of any of them shall
constitute a default by Tenant under this lease. If there is a conflict between
the rules and regulations and CC&R's and any of the provisions of this lease,
the provisions of this lease shall prevail. Such rules and regulations and
CC&R's may be amended by Landlord from time to time with or without advance
notice.
38. Notices. All notices, demands, requests, consents and other
-------
communications which may be given or are required to be given by either party to
the other shall be in writing and shall be sufficiently made and delivered if
personally served or if sent by United States first class mail, postage prepaid.
Prior to the commencement date, all such communications from Landlord to Tenant
shall be served or addressed to Tenant at 000 Xxxxx Xxxx Xxxxxxx, Xxx Xxxx,
Xxxxxxxxxx. On or after the commencement date, all such communications from
Landlord to Tenant shall be addressed to Tenant at the Premises. All such
communications by Tenant to Landlord shall be sent to Landlord at its offices at
0000 Xxxxxxx Xxxxxx, Xxxxx 000, Xxxxx Xxxxx, Xxxxxxxxxx 00000. Either party may
change its address by notifying the other of such change. Each such
communication shall be deemed received on the date of the personal service or
mailing thereof in the manner herein provided, as the case may be.
39. Name. Tenant shall not use the name of the Project for any purpose,
----
other than as the address of the business conducted by Tenant in the Premises,
without the prior written consent of Landlord.
-27-
40. Governing Law, Severability. This lease shall in all respects be
---------------------------
governed by and construed in accordance with the laws of the State of
California. If any provision of this lease shall be held or rendered invalid,
unenforceable or ineffective for any reason whatsoever, all other provisions
hereof shall be and remain in full force and effect.
41. Definitions. As used in this lease, the following words and phrases
-----------
shall have the following meanings:
Authorized representative: any officer, agent, employee or
-------------------------
independent contractor retained or employed by either party, acting within
authority given him by that party.
Encumbrance: any deed of trust, mortgage or other written security
-----------
device or agreement affecting the Premises or the Project that constitutes
security for the payment of a debt or performance of an obligation, and the note
or obligation secured by such deed of trust, mortgage or other written security
device or agreement.
Lease Month: the period of time determined by reference to the day
-----------
of the month in which the term commences and continuing to one day short of the
same numbered day in the next succeeding month; e.g., the tenth day of one month
to and including the ninth day in the next succeeding month.
Lender: the beneficiary, mortgagee or other holder of an
------
encumbrance, as defined above.
Lien: a charge imposed on the Premises by someone other than
----
Landlord, by which the Premises are made security-for the performance of an act.
Most of the liens referred to in this lease are mechanic's liens.
Maintenance: repairs, replacement, repainting and cleaning.
-----------
Monthly Rent: the sum of the monthly payments of basic rent and
------------
common area charges.
Person: one or more human beings, or legal entities or other
------
artificial persons, including, without limitation, partnerships, corporations,
trusts, estates, associations and any combination of human being and legal
entities.
Provision: any term, agreement, covenant, condition, clause,
---------
qualification, restriction, reservation or other stipulation in the lease that
defines or otherwise controls, establishes or limits the performance required or
permitted by either party.
-28-
Rent: basic rent, common area charges, additional rent, and all
----
other amounts payable by Tenant to Landlord required by this lease or arising by
subsequent actions of the parties made pursuant to this lease.
Words used in any gender include other genders. If there be more than
one Tenant, the obligations of Tenant hereunder are joint and several. All
provisions whether covenants or conditions, on the part of Tenant shall be
deemed to be both covenants and conditions. The paragraph headings are for
convenience of reference only and shall have no effect upon the construction or
interpretation of any provision hereof.
42. Time. Time is of the essence of this lease and of each and all of
----
its provisions.
43. Interest on Past Due Obligations; Late Charge. Any amount due from
---------------------------------------------
Tenant to Landlord hereunder which is not paid when due shall bear interest at
the rate of ten percent (10%) per annum from when due (including the grace
period) until paid, unless otherwise specifically provided herein, but the
payment of such interest shall not excuse or cure any default by Tenant under
this lease. In addition, Tenant acknowledges that late payment by Tenant to
Landlord of basic rent or common area charges or of any other amount due
Landlord from Tenant, will cause Landlord to incur costs not contemplated by
this lease, the exact amount of such costs being extremely difficult and
impractical to fix. Such costs include, without limitation, processing and
accounting charges, and late charges that may be imposed on Landlord, e.g., by
the terms of any encumbrance and note secured by any encumbrance covering the
Premises. Therefore, if any such payment due from Tenant is not received by
Landlord when due, Tenant shall pay to Landlord an additional sum of five
percent (5%) of the overdue payment as a late charge. The parties agree that
this late charge represents a fair and reasonable estimate of the costs that
Landlord will incur by reason of late payment by Tenant. Acceptance of any late
charge shall not constitute a waiver of Tenant's default with respect to the
overdue amount, nor prevent Landlord from exercising any of the other rights and
remedies available to Landlord. No notice to Tenant of failure to pay shall be
required prior to the imposition of such interest and/or late charge, and any
notice period provided for in paragraph 20 shall not affect the imposition of
such interest and/or late charge. Any interest and late charge imposed pursuant
to this paragraph shall be and constitute additional rent payable by Tenant to
Landlord.
44. Entire Agreement. This lease, including any exhibits and
----------------
attachments, constitutes the entire agreement between Landlord and Tenant
relative to the Premises and this lease 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 or their agents or
representatives relative to the leasing of the Premises are merged in or revoked
by this lease.
-29-
45. Corporate Authority. If Tenant is a corporation, each individual
-------------------
executing this lease on behalf of the corporation represents and warrants that
he is duly authorized to execute and deliver this lease on behalf of the
corporation in accordance with a duly adopted resolution of the Board of
Directors of said corporation and that this lease is binding upon said
corporation in accordance with its terms. If Tenant is a corporation, Tenant
shall deliver to Landlord, within ten (10) days of the execution of this lease,
a copy of the resolution of the Board of Directors of Tenant authorizing the
execution of this lease and naming the officers that are authorized to execute
this lease on behalf of Tenant, which copy shall be certified by Tenant's
president or secretary as correct and in full force and effect.
As of the date this Lease is executed, Landlord covenants that it has
full authority to enter into this Lease, each person executing this Lease on
behalf of Landlord is duly authorized to execute and deliver this Lease on
behalf of Landlord, and no other person, firm or corporation need join in the
execution of this Lease to make Landlord's execution complete or appropriate.
46. Recording. Neither Landlord nor Tenant shall record this lease or a
---------
short form memorandum hereof without the consent of the other.
47. Real Estate Brokers. Each party represents and warrants to the
-------------------
other party that it has not had dealings in any manner with any real estate
broker, finder or other person with respect to the Premises and the negotiation
and execution of this lease. Each party shall indemnify and hold harmless the
other party from all damage, loss, liability and expense (including attorneys'
fees and related costs) arising out of or resulting from any claims for
commissions or fees that may or have been asserted against the other party by
any broker, finder or other person with whom Tenant or Landlord has or
purportedly has dealt with in connection with the Premises and the negotiation
and execution of this lease.
48. Exhibits and Attachments. All exhibits and attachments to this
------------------------
lease are a part hereof.
49. Environmental Matters.
---------------------
(a) Hazardous Materials. Tenant, its agents, invitees, employees,
-------------------
contractors, sublessees, assigns and/or successors shall not use, store,
dispose, release or otherwise cause to be present or permit the use, storage,
disposal, release or presence of Hazardous Materials (as defined below) on or
about the Premises or Project; provided, however, that the foregoing shall not
prohibit Tenant from using common office, janitorial or kitchen products that
contain de minimis quantities of materials technically classified as Hazardous
Materials so long as all such products are used, stored and disposed in
accordance with all applicable Hazardous Material laws. Notwithstanding the
foregoing, if Tenant at any time during the term of this lease reasonably
determines that it is required to use Hazardous Materials in order to
accommodate operations
-30-
undertaken by Tenant on the Premises as permitted by this Lease, then Tenant
shall notify Landlord of such determination prior to any use thereof and shall
provide in writing: (i) an explanation of the methods Tenant shall use to
monitor the use of the materials, (ii) an estimate of the quantities which
Tenant intends to use from time to time, and (iii) evidence reasonably
satisfactory to Landlord that such materials are related to Tenant's use of the
Premises. Landlord shall review the determination of Tenant based on the
following criteria: the toxicity of the material, the efficacy of the monitoring
plan, the estimate of the quantity, and Tenant's financial condition at the time
of the determination. Landlord shall exercise due diligence to conduct its
review as expeditiously as possible following Tenant's submission of the
information described in (i) through (iii) above. Thereafter, Landlord may, in
its reasonable discretion, by written notice to Tenant, set forth such
conditions upon the use of the material by Tenant as may be reasonably
appropriate (including, without limitation, more frequent monitoring and
reporting than otherwise required by this paragraph 49 and including the
construction and installation at Tenant's sole cost and expense of any
alterations, improvements or fixtures to or in the Premises required by
Hazardous Materials Laws (hereinafter defined) for the use, storage or disposal
of such permitted Hazardous Materials that Landlord deems necessary to protect
the Premises and the Project from the unauthorized or unintentional release or
disposal of such permitted Hazardous Materials. Tenant shall remove any and all
such alterations, improvements or fixtures from the Premises and restore any
damage caused by such removal prior to the expiration of the term in accordance
with paragraph 23 of the lease. Upon completion of Landlord review and the
implementation of any conditions imposed by Landlord, Tenant and Landlord shall
amend this lease to set forth the Hazardous Materials to be used by Tenant in
the Premises ("Permitted Hazardous Materials"). Prior to Tenant using any
Permitted Hazardous Materials, Tenant shall submit to Landlord each hazardous
materials management plan or similar document required by the City of San Xxxx
or any other regulatory agency (collectively, "HMMP"), together with any other
information any department of the City of San Xxxx requires during Tenant's
occupancy of the Premises relating to the use of such Permitted Hazardous
Materials. Landlord may, but without obligation, review the foregoing
information, and such review or failure to review shall not act as an estoppel
or otherwise waive Landlord's rights under this lease or relieve Tenant of its
obligations under the lease. If Landlord reasonably determines in good faith by
inspection of the Premises or review of the HMMP that the methods in use or
described by Tenant are not adequate to prevent or control the existence of
environmental hazards, then Landlord shall appoint a consultant qualified to
review Tenant's HMMP and operations, to inspect the Premises and review the
HMMP, and Tenant shall, at its expense, change the method of use, handling, or
storage of Permitted Hazardous Materials and modify the applicable HMMP if and
as recommended in the consultant's report, or cease the use of that Permitted
Hazardous Material. The cost and expense of such consultant shall be borne
equally by the parties, unless such consultant determines that the methods, or
any part thereto, in use by Tenant are inadequate in any material respect to
prevent or control the existence of environmental hazards, in which event the
cost and expense of such consultant shall be the sole responsibility of Tenant.
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(b) Compliance with Environmental Laws. Tenant shall at all
----------------------------------
times and in all respects comply with all federal, state and local laws,
ordinances, regulations, orders, permits, licenses and operation plans
(collectively "Hazardous Materials Laws") and prudent industry practices
relating to industrial hygiene, environmental protection or the use,
introduction, handling, analysis, generation, manufacture, storage, presence,
disposal, discharge, treatment, transportation, receipt or other acts or
omissions relating to any Hazardous Materials, including without limitation
Permitted Hazardous Materials, on, in, under, at, around, or near the Premises
by Tenant (the foregoing activities are referred to collectively as "Usage"). In
no event shall Tenant operate on the Premises, or any portion of the Project,
any facility required to be permitted or licensed as a hazardous waste facility
or for which interim status as such is required. Tenant shall not store any
Hazardous Materials on the Premises for ninety (90) days or more other than de
minimis quantities of materials technically classified as Hazardous Materials
but commonly used, and actually used by Tenant, for common office, janitorial,
or kitchen purposes.
(c) Hazardous Materials Handling. Tenant shall, at its own
----------------------------
expense, procure and maintain in effect any and all permits, licenses and other
governmental and regulatory approvals required for Tenant's use of the Premises,
including, without limitation, the use and storage of Permitted Hazardous
Materials. Tenant shall cause any and all Permitted Hazardous Materials removed
from the Premises to be removed and transported solely by duly licensed haulers
to duly licensed facilities for final disposal or recycling of such materials
and wastes. All reporting obligations imposed by Hazardous Materials Laws
relating to the Usage of Hazardous Materials are strictly the responsibility of
Tenant. Tenant is "in charge" of Tenant's "facility" as such terms are used in
the Comprehensive Environmental Response, Compensation and Liability Act of 1980
("CERCLA"). Upon expiration or earlier termination of this lease, Tenant shall
cause all Hazardous Materials which were caused by Tenant to be present in, on
or about the Premises or the Project and any tanks or fixtures which were caused
by Tenant to be present in, on or about the Premises or the Project and which
contain or contained Hazardous Materials, to be removed from the Premises and
transported for use, storage or disposal in accordance and compliance with all
applicable Hazardous Materials Laws.
(d) Landlord's Right to Participate. Landlord shall have the
-------------------------------
right to join in and participate in, as a party if it so elects, any legal
proceedings or other actions or hearings affecting the Premises or any part of
the Project which are initiated in connection with any Hazardous Materials Laws
which relate to the Usage of Hazardous Materials in, on or about the Premises or
the Project by Tenant and Tenant shall pay all of Landlord's costs and expenses
(including, without limitation, reasonable attorneys' fees and costs) incurred
in connection therewith. Tenant shall not take any remedial action in response
to the presence of any Hazardous Materials in or about the Premises or the
Project or any buildings which are part of the Project ("Buildings"), except in
the case where loss of life or substantial property damage is imminent or
immediate action is required by any governmental entity, in which event Tenant
shall take immediate remedial action (but such action shall not prejudice
Tenant's reimbursement rights, if
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any, set forth in this lease), nor enter into any settlement agreement, consent
decree or other compromise in respect to any claims relating to any Hazardous
Materials in any way connected with Landlord's interest in the Premises, Project
or Buildings, without first notifying Landlord of Tenant's intention to do so
and affording Landlord reasonable opportunity to appear, intervene or otherwise
appropriately assert and protect Landlord's interest with respect thereto. Any
and all remedial work undertaken by Tenant resulting from the Usage of Hazardous
Materials in, on or about the Premises, Buildings or Project by Tenant shall be
performed in accordance with applicable Hazardous Materials Laws and by a
contractor, under the supervision of an environmental consultant, both of whom
have been approved in advance in writing by Landlord, which approval shall not
be unreasonably withheld or delayed. All costs and expenses of such remedial
work required or permitted by the preceding sentence including without
limitation Landlord's reasonable fees and costs (including, without limitation,
reasonable attorneys' fees and costs) incurred in connection with the monitoring
and review of such remedial work, shall be paid by Tenant.
(e) Environmental Audit; Right of Entry. At any time that
-----------------------------------
Landlord reasonably believes Tenant has failed to perform its obligations
hereunder with respect to Permitted Hazardous Materials, Landlord shall have the
right to require Tenant to undertake and submit to Landlord a periodic
environmental audit from an environmental company approved by Landlord, which
audit shall review and evaluate Tenant's compliance or failure to comply with
this paragraph 49 regarding Tenant's Usage of Permitted Hazardous Materials.
Tenant shall bear the cost of two (2) such audits per calendar year and, in
addition, any audit which discloses a failure by Tenant to comply with the
provisions of this paragraph 49 regarding Tenant's Usage of Permitted Hazardous
Materials. If Tenant disputes the findings of any environmental audit performed
by Landlord and shows to Landlord's reasonable satisfaction that the
requirements of such audit which relate to Tenant's Usage of Permitted Hazardous
Materials are incorrect, then Landlord shall bear the cost of such audit. Tenant
shall promptly comply with all requirements of such audit which relate to
Tenant's Usage of Permitted Hazardous Materials, and at Tenant's sole cost,
Tenant shall cure all matters raised therein as necessary to comply with this
paragraph 49. Tenant shall cooperate with Landlord in furnishing Landlord with
complete information regarding Tenant's Usage of Permitted Hazardous Materials.
Subject to reasonable prior notice to Tenant and Landlord's use of reasonable
efforts to minimize interference with Tenant's operations, Landlord and its
representatives shall have the right to enter the Premises and conduct testing,
monitoring and analysis for Hazardous Materials, review any documents,
materials, inventory, notices or correspondence relating to Hazardous Materials
and review all storage, use, transportation, and disposal facilities and
procedures associated with Hazardous Materials.
(f) Definition. As used herein "Hazardous Materials" shall mean
----------
any petroleum or petroleum by-products, flammable explosives, asbestos, urea
formaldehyde, radioactive materials or waste and any "hazardous substance,"
"hazardous waste," "hazardous materials," "toxic substance" or "toxic waste" as
those terms are
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defined under the provisions of the California Health and Safety Code and/or the
provisions of the Comprehensive Environmental Response, Compensation and
Liability Act (42 U.S.C. "9601, et. seq.) as amended by the Superfund Amendments
-- ----
and Reauthorization Act of 1986 (42 U.S.C. "9601, et. seq.), or any other
-- ----
hazardous or toxic substance, material or waste which is or becomes regulated by
any local governmental authority, the State of California or any agency thereof,
or the United States Government or any agency thereof. Hazardous Materials shall
also include any Permitted Hazardous Materials.
(g) Notices. Tenant shall immediately notify Landlord in writing of:
-------
(i) any enforcement, cleanup, removal or other governmental or regulatory action
instituted, completed or threatened pursuant to any Hazardous Materials Laws,
(ii) any claim made or threatened by any person against Tenant, the Premises,
Project or Buildings relating to damage, contribution, cost recovery,
compensation, loss or injury resulting from or claimed to result from any
Hazardous Materials; and (iii) any reports made to any environmental agency
arising out of or in connection with any Hazardous Materials in, on or removed
from the Premises, Project or Buildings, including any complaints, notices,
warnings, reports or asserted violations in connection therewith. Tenant shall
also supply to Landlord as promptly as possible, and in any event within five
(5) business days after Tenant first receives or sends the same, copies of all
claims, reports, complaints, notices, warnings or asserted violations relating
in any way to the Premises, Project or Buildings or Tenant's use thereof.
Tenant shall promptly deliver to Landlord copies of hazardous waste manifests
reflecting the legal and proper disposal of all Hazardous Materials removed from
the Premises.
(h) Indemnification of Landlord. Tenant shall indemnify, defend (by
---------------------------
counsel acceptable to Landlord), protect, and hold Landlord, and each of
Landlord's partners, employees, agents, attorneys, successors and assigns, free
and harmless from and against any and all claims, liabilities, penalties,
forfeitures, losses or expenses (including reasonable attorneys' fees) for death
of or injury to any person or damage to any property whatsoever (including water
tables and atmosphere) arising from or caused in whole or in part, directly or
indirectly, by (i) the presence in, on, under or about the Premises, Project or
Buildings or discharge in or from the Premises, Project or Buildings of any
Hazardous Materials caused by Tenant or Tenant's use, analysis, storage,
transportation, disposal, release, threatened release, discharge or generation
of Hazardous Materials to, in, on, under, about or from the Premises, Project or
Buildings, or (ii) Tenant's failure to comply with any Hazardous Materials Laws
whether knowingly, unknowingly, intentionally or unintentionally. Tenant's
obligations hereunder shall include, without limitation, and whether foreseeable
or unforeseeable, all costs of any required or necessary repair, cleanup or
detoxification or decontamination of the Premises, Project or Buildings, and the
preparation and implementation of any closure, remedial action or other required
plans in connection therewith. In addition, Tenant shall reimburse Landlord for
(i) losses in or reductions to rental income resulting from Tenant's use,
storage or disposal of Hazardous Materials, (ii) all costs of refitting or other
alterations to the Premises, Project or Buildings required as a result of
Tenant's
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use, storage, or disposal of Hazardous Materials including, without limitation,
alterations required to accommodate an alternate use of the Premises, Project or
Buildings and (iii) any diminution in the fair market value of the Premises,
Project or Buildings caused by Tenant's use, storage, or disposal of Hazardous
Materials. For purposes of this paragraph 49, any acts or omissions of Tenant,
or by employees, agents, assignees, contractors or subcontractors of Tenant or
others acting for or on behalf of Tenant (whether or not they are negligent,
intentional, willful or unlawful) shall be strictly attributable to Tenant.
(i) Survival. The provisions of this paragraph 49 shall survive the
--------
expiration or earlier termination of the term of this lease.
50. Signage. Tenant shall not, without obtaining the prior written
-------
consent of Landlord, install or attach any sign or advertising material on any
part of the outside of the Premises, or on any part of the inside of the
Premises which is visible from the outside of the Premises, or in the halls,
lobbies, windows or elevators of the building in which the Premises are located
or on or about any other portion of the Common Area or Project. If Landlord
consents to the installation of any sign or other advertising material, the
location, size, design, color and other physical aspects thereof shall be
subject to Landlord's prior written approval and shall be in accordance with any
sign program applicable to the Project. In addition to any other requirements
of this paragraph 50, the installation of any sign or other advertising material
by or for Tenant must comply with all applicable laws, statutes, requirements,
rules, ordinances and any CC&R's or other similar requirements. With respect to
any permitted sign installed by or for Tenant, Tenant shall maintain such sign
or other advertising material in good condition and repair and shall remove such
sign or other advertising material on the expiration or earlier termination of
the term of this lease. The cost of any permitted sign or advertising material
and all costs associated with the installation, maintenance and removal thereof
shall be paid for solely by Tenant. If Tenant fails to properly maintain or
remove any permitted sign or other advertising material, Landlord may do so at
Tenant's expense. Any cost incurred by Landlord in connection with such
maintenance or removal shall be deemed additional rent and shall be paid by
Tenant to Landlord within ten (10) days following notice from Landlord.
Landlord may remove any unpermitted sign or advertising material without notice
to Tenant and the cost of such removal shall be additional rent and shall be
paid by Tenant within ten (10) days following notice from Landlord. Landlord
shall not be liable to Tenant for any damage, loss or expense resulting from
Landlord's removal of any sign or advertising material in accordance with this
paragraph 50. The provisions of this paragraph 50 shall survive the expiration
or earlier termination of this lease.
Subject to the compliance with the terms and conditions of this paragraph
50, Tenant is granted use of the monument sign for the Project. Tenant's sign
shall be supplied and installed at its own cost and expense.
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51. Submission of Lease. The submission of this lease to Tenant for
-------------------
examination or signature by Tenant is not an offer to lease the Premises to
Tenant, nor an agreement by Landlord to reserve the Premises for Tenant.
Landlord will not be bound to Tenant until this lease has been duly executed and
delivered by both Landlord and Tenant.
52. Additional Rent. All costs, charges, fees, penalties, interest and
---------------
other payments (including Tenant's reimbursement to Landlord of costs incurred
by Landlord) which Tenant is required to make to Landlord pursuant to the terms
and conditions of this lease and any amendments to this lease shall be and
constitute additional rent payable by Tenant to Landlord when due as specified
in this lease and any amendments hereto.
53. Option to Extend. Landlord grants to Tenant an option to extend the
----------------
term for a period of five (5) years (such extension is hereafter referred to as
the "Extended Term"). The Extended Term shall follow the expiration of the
initial term set forth in paragraph 2(a) ("Initial Term"). All the provisions
of this lease shall apply during the Extended Term except for the amount of the
basic rent. The basic rent for the Extended Term shall be adjusted to ninety-
five percent (95%) of the market rate; provided that in no event shall the basic
rent for the Extended Term be less than the basic rent in effect at the
expiration of the Initial Term. The option is further subject to the following
terms and conditions:
(a) Tenant must deliver its irrevocable written notice of Tenant's
exercise of the option to Landlord not less than six (6) lease months, nor more
than twelve (12) lease months, prior to the expiration of the Initial Term.
Time is of the essence with respect to the time period during which Tenant must
deliver to Landlord its written notice of exercise and, therefore, if Tenant
fails to give Landlord its irrevocable written notice of its exercise of the
option within the applicable time period provided above, then the option shall
expire and be of no further force or effect.
(b) The parties shall have thirty (30) days from the date Landlord
receives Tenant's notice of exercise in which to agree on the amount
constituting the market rate. If Landlord and Tenant agree on the amount of the
market rate, they shall immediately execute an amendment to this lease setting
forth the expiration date of the Extended Term and the amount of the basic rent
to be paid by Tenant during the Extended Term. If Landlord and Tenant are
unable to agree on the amount of the market rate within such time period, then,
at the request of either party, the market rate shall be determined in the
following manner: (i) within thirty (30) days of the request of either party,
Landlord and Tenant shall each select a licensed real estate appraiser with not
less than five (5) years experience in the business of appraising commercial
properties of the same type and use and in the same geographic area as the
Premises, (ii) within fifteen (15) days of their appointment, such two real
estate appraisers shall select a third appraiser who is similarly qualified,
(iii) within thirty (30) days from the appointment of the third appraiser, the
three appraisers so selected shall, acting as a board of arbitrators, then
determine the amount of the market rate, basing their
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determination on standard procedures and tests normally employed in determining
market rates and applying the factors included within the definition of market
rate set forth in subparagraph (c) below. The decision of the majority of said
appraisers shall be final and binding upon the parties hereto. If a majority of
the appraisers are unable to agree on the market rate within the stipulated
period of time, the three opinions of the market rate shall be added together
and their total divided by three (3); the resulting quotient shall be the market
rate. If, however, the low opinion and/or the high opinion are/is more than
fifteen percent (15%) lower and/or higher than the middle opinion, the low
opinion and/or the high opinion, as the case may be, shall be disregarded. If
only one opinion is disregarded, the remaining two opinions shall be added
together and their total divided by two (2) and the resulting quotient shall be
the market rate. If both the low opinion and the high opinion are disregarded as
stated in this paragraph, the middle opinion shall be the market rate. If a
party does not appoint a qualified appraiser within the required time period,
the appraiser appointed by the other party shall be the sole appraiser and shall
determine the market rate. If the two appraisers appointed by the parties are
unable to agree on the third appraiser, either of the parties to this lease, by
giving ten (10) days notice to the other party, can apply to the then president
of the county real estate board of the county in which the Premises are located,
or to the presiding judge of the superior court of that county, for the
selection of a third appraiser who meets the qualifications stated in this
paragraph. Each party shall pay the expense and charges of the appraiser
appointed by it and the parties shall pay the expenses and charges of the third
appraiser in equal shares. When the market rate has been so determined, Landlord
and Tenant shall immediately execute an amendment to this lease stating the
basic rent for the Extended Term.
(c) As used herein, the "market rate" shall be the monthly rent
(triple net) then obtained for five (5) year fixed rate leases of comparable
terms for premises in the Project and in buildings and/or projects within the
same geographical area of similar types and identity, quality and location as
the Project.
(d) Common area charges shall continue to be determined and payable
as provided in paragraph 16 of this lease.
(e) Neither party shall have the right to have any court or other
third party determine the market rate or the basic rent. Tenant shall not
assign or otherwise transfer this option or any interest therein and any attempt
to do so shall render this option null and void. Tenant shall have no right to
extend the term beyond the Extended Term. If Tenant is in default under this
lease at the date of delivery of Tenant's notice of exercise to Landlord, then
such notice shall be of no effect and this lease shall expire at the end of the
Initial Term. If Tenant is in default under this lease on the last day of the
Initial Term, then Landlord may in its sole discretion elect to have Tenant's
exercise of the option be of no effect, in which case this lease shall expire at
the end of the Initial Term.
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54. Guaranty. The obligations of Tenant under this lease shall be
--------
guaranteed by Advanced Technology Materials, Inc., a Delaware corporation,
pursuant to a Guaranty of Lease of even date herewith executed by Advanced
Technology Materials, Inc. ("Guarantor") The Guaranty may terminate at any time
with respect to all obligations of Tenant under this lease (except for those
obligations expressly reserved as provided in paragraph 56 hereof) as of the
date Tenant has satisfied all of the following conditions, which conditions must
be satisfied, if at all, not later than December 31, 1997:
(a) Tenant has provided financial statements to Landlord showing,
to Landlord's reasonable satisfaction, that (i) Tenant has generated Fifteen
Million Dollars ($15,000,000) in annual revenues in one or more fiscal years,
(ii) Tenant has generated One Million Dollars ($1,000,000) in operating income
(on a trailing four-quarters basis), and (iii) Tenant has a current ratio of
assets compared to liabilities in excess of 1.5:1;
(b) Tenant has delivered to Landlord either (i) an unconditional,
irrevocable standby letter of credit in form reasonably acceptable to Landlord,
providing for payment at a location in the San Francisco Bay Area against
presentation of Landlord's drafts at site ("Letter of Credit"), or (ii) a
certificate of deposit ("Certificate of Deposit") for a term of not less than
one year, evidencing an account established by Tenant in a federally insured
financial institution in Tenant's name for the benefit of Landlord, which
account is restricted to withdrawal by Landlord only ("CD Account"), which
Letter of Credit or Certificate of Deposit shall be in the applicable amount set
forth below, depending on the date Tenant satisfies the conditions set forth in
this paragraph 56(a) and (b):
Time Period Amount
----------- --------
Commencement Date - March 23, 1998 $200,000
March 24, 1998 - March 23, 1999 $175,000
March 24, 1999 - March 23, 2000 $125,000
In lieu of providing either the Letter of Credit or Certificate of Deposit,
Tenant may elect to have Guarantor continue the Guaranty by executing and
delivering to Landlord an amendment to the Guaranty that deletes paragraph 30
thereof and reaffirms the obligations of the Guarantor thereunder; and
(c) Tenant has cured any and all monetary defaults and non-
monetary defaults existing under this lease. Within five (5) business days after
the date that Tenant provides Landlord with evidence of Tenant's satisfaction of
the conditions set forth in subparagraph (a) above, Landlord shall give Tenant
written notice of any monetary or non-monetary defaults then existing under this
lease. As a condition to termination of the Guaranty, Tenant shall cure all such
defaults within the applicable time periods specified in paragraph 20 of this
lease. Notwithstanding the foregoing, if all conditions to termination of the
Guaranty, including the cure of any existing defaults, have been
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satisfied, except for the cure of non-monetary defaults which cannot reasonably
be cured within thirty (30) days after the date Landlord gives Tenant written
notice of such defaults but Tenant has commenced to cure such non-monetary
defaults and is diligently pursuing such cure to completion, then the Guaranty
shall terminate as of such thirtieth (30th) day as to all obligations of the
Tenant under this lease except for the obligation relating to the uncured non-
monetary defaults and the obligations set forth in the next paragraph.
If all of the conditions set forth in subparagraphs (a) through (c)
hereof are satisfied, then, except as provided in the next sentence, the
Guaranty shall terminate and Landlord shall execute and deliver to Guarantor an
acknowledgment of the termination of the Guaranty. Notwithstanding the
foregoing, the Guaranty shall not terminate and shall remain in full force and
effect with respect to the indemnity obligations of the Tenant under paragraph
49(h) of this lease for events, acts, or omissions covered by such indemnity
that Landlord shows occurred during the period prior to the termination of the
Guaranty, and with respect to any uncured non-monetary defaults of Tenant as
specified in subparagraph (c) hereof.
If Tenant delivers the Letter of Credit, the Letter of Credit shall be
maintained in effect in the amount required hereunder, whether through
replacement, renewal or extension, through March 23, 2000. If Tenant obtains a
Letter of Credit with an expiration date earlier than set forth in the previous
sentence, Tenant shall deliver a new Letter of Credit in the amount required
hereunder or a certificate of renewal or extension to Landlord at least thirty
(30) days prior to the expiration of the Letter of Credit. Failure to timely
deliver such new Letter of Credit or certificate of renewal or extension to
Landlord shall entitle Landlord to draw upon the Letter of Credit in full and to
retain the proceeds thereof as a security deposit in accordance with paragraph
4(d) of this lease. If Tenant delivers the Certificate of Deposit, Tenant shall
maintain the Certificate of Deposit in effect in the amount required hereunder,
whether through replacement, renewal or extension through March 23, 2000.
Tenant shall deliver a new Certificate of Deposit in the amount required
hereunder or a certificate of renewal or extension of the Certificate of Deposit
to Landlord at least thirty (30) days prior to expiration of the Certificate of
Deposit. Failure to timely deliver such new Certificate of Deposit or
certificate of renewal or extension to Landlord shall entitle Landlord to
withdraw the funds in the CD Account in full and to retain the proceeds thereof
as a security deposit in accordance with paragraph 4(d) of this lease.
The Letter of Credit or Certificate of Deposit shall be held by
Landlord as a security deposit in accordance with the terms and conditions of
paragraph 4(d) of this lease. If Tenant defaults with respect to any provisions
of this lease, Landlord may in accordance with paragraph 4(d) of this lease, but
shall not be required to, draw upon all or any part of the Letter of Credit or
withdraw all or a portion of the funds in the CD Account for payment of any
reasonable amount which Landlord may spend by reason of Tenant's default or to
compensate Landlord for any other actual loss or damage which Landlord may
suffer by reason of default. In the event of termination of Landlord's
-39-
interest in this lease, Landlord may transfer the Letter of Credit or
Certificate of Deposit to Landlord's successor-in-interest, Tenant shall execute
such documents as may be necessary to permit Landlord to transfer the Letter of
Credit or Certificate of Deposit to Landlord's successor-in-interest, and Tenant
agrees that Landlord shall thereupon be released from liability for the return
of the Letter of Credit or Certificate of Deposit or any accounting of the
proceeds therefor.
In the event Tenant meets the conditions set forth in subparagraphs (a)
through (c) above but Guarantor elects to continue the Guaranty as specified in
subparagraph (b), the obligations of Guarantor under the Guaranty shall
terminate as of March 23, 2000 so long as no monetary default by Tenant then
exists and Tenant has cured any non-monetary default of which Landlord has given
Tenant written notice pursuant to paragraph 20 of this Lease; provided, however,
the Guaranty shall continue with respect to the indemnity obligations of Tenant
under paragraph 49(h) of this Lease for events, act, or omissions covered by
such indemnity that Landlord shows occurred prior to termination of the
Guaranty.
Notwithstanding the foregoing, if no monetary default by Tenant then
exists and Tenant has cured any non-monetary default of which Landlord has given
Tenant written notice pursuant to paragraph 20, tenant shall be entitled to
reduce the amount of the Letter of Credit or the balance of the CD Account to
One Hundred Seventy-five Thousand Dollars ($175,000) on March 23, 1998 and to
One Hundred Twenty-five Thousand Dollars ($125,000) on March 23, 1999.
If Tenant reduces the balance of the Letter of Credit or the CD Account
in accordance with the foregoing, Tenant shall provide Landlord with a
replacement Letter of Credit or a new Certificate of Deposit evidencing the
Letter of Credit or the Certificate of Deposit in the amount equal to the
amounts listed above. If no monetary default by Tenant then exists and Tenant
has cured any non-monetary default of which Landlord has given Tenant written
notice pursuant to paragraph 20, the Letter of Credit or the funds in the CD
Account shall be returned to Tenant after March 23, 2000.
55. Quiet Enjoyment. Landlord covenants that Tenant's use and
---------------
enjoyment of the Premises shall not be disturbed during the term of this lease
subject to Tenant's payment of the rent in compliance with the terms of this
lease and subject to the rights of Landlord's lender or any mortgagee of the
Project.
-40-
IN WITNESS WHEREOF, Landlord and Tenant have executed and delivered
this lease on the date first above written.
LANDLORD
MONTAGUE OAKS ASSOCIATES
PHASE I & II, a California general partnership
By: XxXXXXXXXX GROUP (MONTAGUE), a California
general partnership, a general partner
By: /s/ Xxxx X. XxXxxxxxxx
--------------------------------------
XXXX X. XxXXXXXXXX, as Trustee of the
Xxxx X. XxXxxxxxxx and Xxxx XxXxxxxxxx
Intervivos Trust dated February 17, 1982,
a general partner
By: 745 PROPERTY INVESTMENTS, a Massachusetts
voluntary trust, a general partner
By: /s/ Xxxxxx Xxxxxxx
------------------------------------
Its: Vice President
----------------------------------
TENANT:
ATMI ECOSYS CORPORATION, a California corporation
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------
Its: Chief Financial Officer
----------------------------
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